As GM Reviews Media Agencies, Lessons from 1992 GM Review - Full Report

Originally published October 2011In 1992 General Motors conducted an indepth internal review of advertising industry trends and issues focusing on implications for organizational changes in GM39s US advertising agency media planning and buying relationships The consulting report that led to that 1992 review provides surprising insights for agencies engaged in a similar review being undertaken now by GM with several parallels that are startling two decades later The 1992 review led by then CMO Phil Guarascio Advertising Director Michael Browner and Media Director Betsy Lazar resulted in the full consolidation of all media buying under a single dedicated GM Mediaworks organization within the Interpublic Group of Companies IPG A few years later all GM media planning was concentrated at Starcom Media Group soon followed by the integration of media buying and buying at Publicis Media Groupe39s GM Planworks division I served as consultant at the time for General Motors and developed the reports and recommendations that led to the creation of GM Mediaworks and GM Planworks The recommendations then focused on leadership control and consolidation The results of the current review are likely to be focused on the same issues with a similar outcomeThis time the review covers the full global GM media account 337 billion in 2010 according to Ad Age39s Data Center of which an estimated 6570 is invested in the United States The review is likely to include some of the additional estimated 1 billion the company invests globally in nonadvertising promotional initiatives some of which is now being shifted to social marketing efforts and should be incorporated into the media agency review The parallels between the 1992 review and the review two decades later are striking and for the several global advertising and media agency holding companies with a vested interest in the outcome as well as for the hundreds of media companies that depend on GM for a significant share of their revenues there are important lessons to be learnedThe goal of the 1992 review was to quotdetermine if the current media structure and GM39s relationships with its advertising agencies and media partners will continue to be as effective in the future as they have been in the pastquot The 1992 report I prepared for GM management notes that quotthe structure of media buying and selling as we know it today will be radically altered in just a few short yearsquot and that the company needs to quotbe ahead of the industry in recognizing change and acting in its own best interestsquot I added quotto be as effective as GM39s agency media buying relationships are currently and have been in the past few years those relationships will need to be reorganized to anticipate and stay ahead of a radically changing media landscapequot In 1992 GM was just several months ahead of the sweeping restructuring of the agency business resulting from the unbundling of media departments from their parent agency organizations and the consolidation of media buying and planning within a few major holding companies and less than a handful of large independents Zenith Media and Carat existed only in Europe Televest later to become Mediavest was the first unbundled media agency but handled TV only GM retained different agency media departments for buying each individual network daypart Mindshare Optimedia OMD PHD Mediacom Starcom Mediaedge did not yet existOne of GM39s concerns was the growing realization that administratively agencies were quotunder pressure to evaluate a wide ranging selection of media and to provide clients with improved information on effectivenessquot Yet at the same time agencies were challenged by declining margins and shrinking profitability quotRather than approaching the business with a visionary strategic sense of the future agencies are responding tactically in an effort to build a more cost effective structure in their media departmentquotThe report anticipated the continuing commoditization of media costs and the efforts by media agencies and their parent companies to diversify into research and other areas to generate alternative profit centers It also foresaw the emerging issues of media cost transparency and arbitrage as a point of potential conflict between US agencies and their clients Conversely though the report acknowledged agencies39 tendency to quotbe cautious and more likely to seek to maintain the status quoquot The trend in media buying I wrote in 1992 has been to quotsplit it up Spread it out Go for the lowest pricequot I recommended that GM be proactive in developing an organizational model that would bring together quota tightly knit group of individuals dedicated to GM with no competing interestsquot an organizational structure that would address the quotinevitable reaction to media fragmentation increased media commoditization computerization and your basic competitive drive to pull all your energies and forces together to stay ahead of the pack of wolves that are always biting at your heelsquotAs one packaged goods marketing executive commented at the time quotthere39s just too many media dollars being spent on too many media options for me to leave it in the hands of the agency without tight controls As far as consolidation goes I can39t control four five or six agencies So if I want control I39d better consolidatequot The central issue for GM outlined in the 1992 report was quothow can GM maintain its dominance clout and intelligence resources in the media buying arenaquot The issues today I expect are1 quotHow can GM increase its domestic and global media dominance clout and intelligence resources especially in digital marketing 2 How can the company best adapt to the radically altered multiplatform interconnected marketplace to effectively manage consumer dealer and vendor communications and relationships3 How can GM best measure analyze and evaluate the performance of its marketing investments to assure realtime optimizationquotThe responses to these questions that GM executives involved in the review process are likely to arrive at will be focused on the same strategic goals identified by Guarascio Browner and Lazar in 1992 that resulted in dramatic and radical restructuring of multiple buying resources into a single consolidated and dedicated media buying unitamp183 Maximized spending leverage and cloutamp183 Intensive coordination of media spending within individual media companies integrated across multiple media categoriesamp183 Optimum communications among media buyers strong communications controls between buyers and planners and effective communications between media planners and GM executivesamp183 Increased knowledge of specialized and customized media opportunities increased attention on marketing relationships and partnerships with multiplatform media companiesamp183 Full staff commitment exclusively to General Motors with the benefits of staffing continuity development of creative media programs and administrative cost benefitsamp183 More effective integration of media planning and buying with advertising creative development promotional initiatives dealer activity and customer incentives and communicationsWhile several options were considered in 1992 the report concluded that a single dedicated unit operating within a major agency holding company would ultimately deliver the greatest benefits and best address the changing media landscape GM has operated under this model ever since The questions today areamp183 Should this same model now be incorporated globally or should the current model of different media specialists in different global regions should continue to applyamp183 Should different agencies handle digital media and legacy media or should they be integratedamp183 Should promotion budgets remain separated from media considerations and planning or is social media forcing integration across all marketing platformsIn 1992 I concluded quotThe core message emanating from this study of the advertising landscape of the future is that consolidation is good consolidation is beneficial consolidation creates greater efficiencies consolidation maximizes General Motors39 relative position in the media marketplace We can find no justification for splitting the media buying among two or more agenciesquot The report argued that a dedicated unit would assure quottotal GM control over staffing staff continuity single purpose and focus of employees enhanced communications further development of marketing partnerships maintenance and control of proprietary information and strategies and additional opportunities from media By operating a dedicated unit within a major advertising agency organization GM can gain the benefits of having the staffs of the agency39s companies available for consultation without having to provide information or insight in returnquotIn 1992 and since then GM management has embraced the model put forward in the 1992 report The issue for 2012 and beyond is whether the current trends in media and marketing which like 1992 are on the cusp of exploding now require GM to expand the 1992 US model to the global stage and across all media and marketing resources Or has the market changed so dramatically that the 1992 consolidation model is no longer relevant and in need of a complete realignment reassessment restructuring and reorganizationMy bet is on expanded consolidation

Become a Thought Leader. Share your thought leadership article with industry professionals & have them archived in Thought Leadership

As GM Reviews Media Agencies, Lessons from 1992 GM Review - Full Report

Author

Publish date

Channel

Jack Myers

Hispanic Leadership Roundtable: Inclusion, Mentorship, and Building the Next Generation (Video) - By Juan Ayala

More Videos:

Become a Thought Leader. Share your thought leadership article with industry professionals & have them archived in Thought Leadership

As GM Reviews Media Agencies, Lessons from 1992 GM Review - Full Report

Enjoying This Commentary? There's More to Love

Jack Myers

Hispanic Leadership Roundtable: Inclusion, Mentorship, and Building the Next Generation (Video) - By Juan Ayala

The payment was successful

Cookies