GM dealers get more say in ads

Automaker moves to placate dealers, who sought more control over regional campaigns.

Sharon Terlep / The Detroit News

General Motors Corp., with sales declining and dealers grumbling, will relinquish almost all control of nearly $500 million in regional advertising.

The automaker is yielding to pressure from dealers who want the freedom to choose their own ad agencies and craft regional campaigns.

GM now requires its 750 dealer groups nationwide to use ad agencies picked by the company. Those ad shops, in turn, produce commercials and other types of ads tightly controlled by the automaker.

Keeping a tight rein on advertising by dealer ad groups has allowed GM to carefully craft messages going out to consumers — control that’s been key to the automaker’s efforts to strengthen the image of its eight brands.

But starting April 1, dealers can hire whomever they like to create regional campaigns.

"There was a lot of discontent among the dealers in that they didn’t have many options," said John McEleney, an Iowa dealer selling the Chevrolet, Buick, Pontiac and Cadillac brands. "GM determined it just wasn’t working. They were looking at market share and looking at sales."

GM’s national campaigns won’t change, nor will those done by individual dealers. The change affects ads run by clusters of dealers, called dealer ad groups, who pool their money to pay for commercials and ads.

Dealers aren’t required to participate in the groups, but if they did under the current system, they had to use a national agency of GM’s choosing.

Ford Motor Co.’s system is similar to GM’s, but allows the dealers flexibility to craft more local ads, spokesman Jim Cain said. Ford has no plans to change its dealer ad strategy.

But Honda Motor Co. and Toyota Motor Corp. recently moved to give local ad groups more input in advertising, said Greg Solman, West Coast editor of Adweek, who follows the auto industry.

Honda groups in northern and then southern California broke from their national shop last year, and some Toyota dealers in the East Coast followed suit.

GM dealers in markets with no major ad agencies may have a hard time finding local talent, Solman said. "The quality of ad agency is simply not available in every local market," he said.

GM eliminated dealer ad groups in 1999, and then reformed them a year later.

Several dealers said GM’s system has been a point of contention among the carmaker’s dealer network, with the criticism intensifying as GM’s U.S. sales continue to dip in an overall sluggish market. Sales are down 6 percent through November.

GM’s top executives, frustrated that some new models have wowed critics but failed to generate enthusiasm among consumers, said in September that the company was reviewing its marketing strategy and ad budgets to identify promotional efforts that are paying off and consider whether and where to spend more money.

GM has since launched the new Chevrolet Malibu sedan. A well-received makeover and the massive marketing blitz appear to be resonating with car buyers.

Regional ads, mostly television spots, are a critical part of GM marketing. Its dealer groups spent $489 million on marketing during the first nine months of 2007, according to TNS Media Intelligence.

"A lot of us dealers were feeling that we weren’t leveraging our ad dollars the way we could have," said Marc Jacobson, owner of Jay Pontiac/Buick/GMC in Bedford, Ohio. "It was pretty much cookie-cutter before — we’d go into a toolbox and pick the ads they wanted to run."

GM began considering a switch based on feedback from dealers, said spokeswoman Ryndee Carney. GM determined that dealers’ needs are varied enough that many could benefit from more tailored ads.

"In Texas, for example, customers have more pickups," Carney said. "In the Northeast they have more passenger cars. Dealers felt they need more customized options. We realize that we’ll be giving up some (control) under the new process. However, we feel we’ve matured in defining, differentiating and building our eight brands to the point that the local ads will reflect that fact."

Dealers can opt to stick with the ad agencies already chosen by GM, which will continue to craft regional ads for the automaker. The agencies will now report to the dealers. If they switch, the dealer groups will have to cover any extra costs involved in choosing a separate ad agency or creating a regional ad.