GM cuts $200 million from ad budget

[BigPontiac]

GM cuts $200 million from ad budget

Automaker will concentrate on product launches

By JAMIE LAREAU | AUTOMOTIVE NEWS

AutoWeek | Published 02/06/06, 8:14 am et

DETROIT -- In the wake of its financial disaster in 2005, General Motors is cutting its 2006 national marketing budget by more than $200 million, sources close to GM say.

The cuts come in a year of crucial product launches and renewed attempts to promote GM's new price strategy.

GM's national ad budget will be about $1.3 billion this year, sources say. Older vehicles and brands such as Buick and Pontiac will suffer as GM concentrates its spending on product launches, including the critical full-sized SUVs and pickups.

The cuts are aimed at improving profits after an $8.55 billion net loss in 2005, says an informed source who asked not to be named.

In a Jan. 20 interview with Automotive News, Mark La-Neve, GM's vice president of vehicle sales, service and marketing, declined to disclose GM's marketing budget. He acknowledged, "We're trying to get costs down throughout the company. I would say one of the last places that we cut is marketing expenses, but we're trying to push down costs in the entire company."

As is normal at GM, LaNeve said advertising support will be based on the potential for revenue from the various vehicles. "So we're spending more on the (full-sized trucks) than we would on the (Pontiac) Solstice launch," LaNeve said.

GM executives say marketing for its redesigned full-sized SUVs and pickups remains substantial. A separate source familiar with GM's advertising strategy says GM's major divisions face varying prospects:

Saturn will get a budget boost. This year, Saturn will launch the Sky roadster, the Aura mid-sized car and the Outlook crossover.

Pontiac and Buick will get marketing budget trims.

Cadillac and Chevrolet marketing budgets remain flat compared with last year.

Article continued

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[-Camaro-]

This is no good, this is no good at all! They already don't do enough advertisements to get things known about their products, but now it'll be worse, unless they hire people who know what they're doing and actually advertise their strengths...

[Drew Dowdell]

what they do spend, they need to spend in better ways.

They really need to get new AD guys.

[Flybrian]

They need to advertise the right things. People are sick of Red Tag Events. This isn't Sears.

[turbo200]

I will say this about Honda and toyota: there are some ads they do wonderfully that totally capture a great reason to buy thier cars. The ad people see something barely innovative about the vehicle and take that aspect and run with it in the ads.

Case in point: Element product launch. One ad has all four doors open as you overlook a beautiful lake in a wilderness setting. How many nature lovers do you think that ad sold. Hell, that ad sold me on the car. Made me want that crappy little box.

The other thing I'll say is how I wish they could have cut the ad budget when there cars were still crappy, and not when they were just getting good.

[bobo]

Less frequent good ads is better than more bad ads, especially when the ads give an impression of distressed merchandise. The new Lucerne print ad (with the old-style library pocket) that reinforces the library quiet cabin is good, except that they don't show the car anywhere. At least it shows some creativity.

[Cadillacfan]

Sounds like they're giving up a little bit. Either that.. or they're learning how to spend their money more wisely instead of just throwing money at it.

[jbartley]

this makes complete sense.

Pontiac & Buick have the smallest lineups-

I mean, how much does Buick need for the lucerne and lacrosse, and those others that are going away?

[Guest Josh]

Considering the sales volume of the Lucerne...keep spending dollas on it. Plus the Enclave hits later this year. The Lucerne is Buicks saving grace right now...the Enclave will be it later.

Don't pull $$$ from Buick and be prepared to spend more no the G6 'vert.

[pow]

The sale announcement ones should be dropped, replaced with more product or brand ads. All the Hummer commercials I've seen were excellent... they really help convey a certain image.

[regfootball]

there's not enough fresh product to advertise

[andretti]

GM is eating their limbs to stay alive! They will not survive if they don't advertise well AND often enough.

[Newbiewar]

GM is eating their limbs to stay alive!  They will not survive if they don't advertise well AND often enough.

hrmmm well technically, that would reduce the sticker price...

because inside the stickerprice is the local and national advertisement budgets...

soo... technically 200million dollars should reduce the sticker price...

well between 700,000k units...

should reduce the price of each vehicle 285$... if evenly spread between buick and pontiac

[Jazzhead]

The money being spent on advertising is one thing, the effectiveness of those ads is another. Rather than Buick touting its windshield wipers, it should run a comprehensive ad showing its entire lineup, showing off the LaCrosse, the Lucerne and a sneak peak of the upcoming Enclave. Sort of like what Toyota does with its lineup of SUVs. Buick consumers from as little as three years ago may know absolutely nothing about those model names. If Buick is going to cast aside the brand equity in its old names, then it must respond with aggressive, content-oriented advertising to promote the new.

[FUTURE_OF_GM]

DETROIT -- In the wake of its financial disaster in 2005,

Disaster??!?!

General Motors is cutting its 2006 national marketing budget by more than $200 million, sources close to GM say.

Stupid move...

GM's national ad budget will be about $1.3 billion this year, sources say. Older vehicles and brands such as Buick and Pontiac will suffer as GM concentrates its spending on product launches, including the critical full-sized SUVs and pickups.

GM advertising is virtually non existent for these divisions anyway... Or is it that the advertising sucks so bad that it's too forgettable to notice.

The cuts are aimed at improving profits after an $8.55 billion net loss in 2005, says an informed source who asked not to be named.

But, of course... That's it GM... Think SHORT term... To hell with Long term... Right?

Saturn will get a budget boost. This year, Saturn will launch the Sky roadster, the Aura mid-sized car and the Outlook crossover.

Saturn apparently has A LOT of growth potential.... Hopefully GM can execute "the new Saturn" well enough, it might just be that money that saves Buick or Pontiac's rear end.

Pontiac and Buick will get marketing budget trims.

Trims?

Hell of a way to revive 'damaged brands'.... Cut their ad budget...

GM is launching full-sized SUVs now. If sales of those vehicles soar, GM might allocate more marketing money at midyear. But if the vehicles perform poorly, expect more cuts, the second source says. The source spoke on the condition of anonymity to avoid angering GM.

You know what that means...

Historically, GM has led media spending among automakers.

Hey, what a surprise... The media biting the hand that feeds it. Talk about getting screwed over.

Of course... When you're dealing with 1.5 BILLION, 200 million isn't too much to worry about.

what they do spend, they need to spend in better ways.

They really need to get new AD guys.

Agreed 100%.... GM's problem isn't the amount of money it spends, but rather the quality and effectiveness of that money... And as far as that goes, they've been pissing away a lot of money for a very long time.

[FUTURE_OF_GM]

Less frequent good ads is better than more bad ads, especially when the ads give an impression of distressed merchandise.  The new Lucerne print ad (with the old-style library pocket) that reinforces the library quiet cabin is good, except that they don't show the car anywhere.  At least it shows some creativity.

LOL.. Yep, that's typical GM...

Drop a lot of money on something that DOESN'T EVEN SHOWCASE THE PRODUCT.

[Satty]

Isn't this the opposite of what Buickman wanted?

[axoid]

This could be a good thing, forcing them to advertise smarter, not just more.

[sciguy_0504]

Disaster??!?!

It almost was a damn disaster.

[MyerShift]

This is no good. GM does obviously need new advertising people. They ads that demonstrate why a GM product is great or better than the competition.

Umm, excuse me, but if anyone else was intelligent enough to actually pull that library card out of its holder, they would see that the Lucerne is clearly pictured on the opposite side. Let's try some trial-and-error or extra observation before making a statement.

[w00t_man]

Yeah, i was just about to post that...the car's on the other side of the card.