NASCAR, marketing may get 2nd look

Analyst says GM must consider everything, but some cuts could be risky.

Bryce G. Hoffman and Eric Morath / The Detroit News

The cuts announced by General Motors Corp. Tuesday are not limited to jobs and factories — they also will extend to marketing, event sponsorships and, potentially, even NASCAR.

"While we are committed to maintaining adequate resources to support launch products and brand advertising, we will implement significant reductions in promotional and event budgets, motor sports activities and back-office expenses," CEO Rick Wagoner told employees Tuesday morning, adding that these cuts are expected to save the company $2.5 billion by the end of next year.

Speaking to reporters after Wagoner’s speech, GM North American President Troy Clarke said the company is taking a hard look at its support of activities like the Specialty Equipment Market Association’s annual show in Las Vegas.

"We’ve got 20 hotrods at the SEMA show," he said. "Certainly, that’s an important segment of the market, but do we lose something if we only had 10, or five or three?"

Nor would Clarke rule out taking a second look at GM’s support of NASCAR. Asked about that, he said only that the company was not prepared to discuss it at this time.

Some of the NASCAR teams GM sponsors were already on the telephone Tuesday trying to find out how the cuts might affect them, said Jan Thomas, who handles communications for Chevy Racing.

"Everyone understands the market that we are in," she said. "We don’t have any specifics. We’ll just have to wait and see what happens."

Rebecca Lindland, an industry analyst with Global Insight Inc., said it makes sense for GM to reconsider everything, given the significant financial challenges facing the company today. But she said such moves are a gamble.

"It’s a risky move to cut back on NASCAR. It’s less risky to cut back on SEMA. It’s a sexy show for the industry, but does it bring people into the showroom? That’s what they need to look at," she said. "They need to quantify it and focus on where they can really see tangible benefits."

Lindland also expects GM to take a hard look at its sponsorship of high-profile events like Major League Baseball games. "There still is a lot of icing in their cake of marketing dollars," she said.

Clarke said GM will take a more focused approach to marketing its cars and trucks.

"There is a tendency to use 30,000-foot marketing initiatives and hope in the deluge of advertising that you touch people who are, in fact, your target customer," he said.

"In the case of the Malibu, we went through extensive efforts to identify who the target customer was, how they view their choices in their market, how those choices could be influenced and how they preferred to be communicated to. A lot of energy with Malibu was spent on communicating directly to a targeted customer, and it turned out to be extremely effective."

That approach could affect Detroit-area ad agencies like Warren’s Campbell-Ewald, the agency of record for the Chevrolet brand. Mark Benner, director of corporate communications for the firm, said he could not comment on his client’s moves.

Lindland said there are a lot of opportunities for GM to get more creative about spending advertising dollars, particularly in nontraditional advertising media like the Internet. "It’s reapplying and reallocating the resources," she said. "It’s not just cutting them."

Wagoner said the time has come for GM to rethink how it approaches all aspects of its business. "Typically when you say legacy costs, that’s associated with pension and retiree health care obligations," he told reporters Tuesday. "But when you’ve been in business 100 years, other parts of the business have spending patterns that are more legacy in nature."