Ad firms could lose big in GM/Chrysler merger
GM and Chrysler spent a combined $4.75 billion on marketing last year which funded thousands of jobs, from the CEOs of ad agencies to the guys pasting up billboards on the Interstate. So how would a merger of the two companies affect the advertising industry?
Advertising Age asked several players in the biz what they thought of the idea of Chrysler and GM hooking up and most few positive things to say. The consensus was that GM already has too many brands to promote, adding three more wouldn't benefit anyone. The execs said they would expect GM to at least sell off Chrysler, if not Dodge, too, which would trim GM's ad budget, but also cut the number of marketing firms needed.
At first it would seem Chrysler's agency, Omnicom Group's BBDO, would be an instant loser. But auto consultant Gordon Wangers gives the firm some chance of being kept on. Wangers said GM might just see potential in BBDO's experience and creativity, and throw even more business its way.
The magazine also speculates that GM's veteran VP of sales, Mark LaNeve, would have a better chance of keeping his job in a merger instead of Chrysler's VP-chief Marketing Officer Deborah Wahl Meyer.
Don't think this concerns you? Think again. Consider where your local newspaper or favorite magazine gets most of its funding. Still not concerned? TV shows, televised sporting events, motorsports, and, uh, blogs, are all ad based, with automotive ads being a big source of income. Fewer brands means fewer ads.
[Source: Advertising Age]
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Reader Comments (Page 1 of 1)
inteller 9:04AM (10/23/2008)
I haven't seen any dodge ads lately so it seems to me the ad agencies could only do better.
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Brent 10:03AM (10/23/2008)
Chrysler has been advertising $6,000 off 300C's. :)
AZZO45b 10:09AM (10/23/2008)
Haven't seen ANY Dodge ads lately....you're not paying attention then. I've seen newspaper, print & net ads for the Dodge division
hatchbacks are cool 9:05AM (10/23/2008)
NO! renault should buy Chrysler .
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Julius 9:18AM (10/23/2008)
Too bad Renault only wants 20% of Chrysler, not the whole deal. And Cerberus is looking to ditch the whole deal.
TJ 9:15AM (10/23/2008)
women and children hardest hit......
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Jo 9:45AM (10/23/2008)
Maybe fewer brands means MORE ads from smaller companies like Mazda and Suzuki that now have a better shot at "standing out" in a less crowded market?
Puh-LEASE! Get a real sales guy in there - he can spin this any way you want! ;)
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The Other Bob 9:29AM (10/23/2008)
I am as pro-domestic autos as anyone, but I hope Nissan and Renault take over Chrysler.
It just seems to be a better fit, with less duplication and will hopefully lead to less layoffs at either GM or Chrysler.
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Mobius_1 9:29AM (10/23/2008)
Well, if GM or Chrysler didn't somehow end up with so many brands each, they might be able to save quite a lot of cash each year on advertising the same car for various brands.
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Polly Prissy Pants 9:36AM (10/23/2008)
Oh no, fewer ads in the world, how sad. I always say that if there's anything the world needs it's MORE ads, not less.
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Jei 9:41AM (10/23/2008)
I don't think it would make sense for GM to purchase Chrysler and then just sell it off again for some other owner(s) to gain profits, when GM could do some work and benefit from profits for itself.
GM, I expect, should buy Chrsysler, trim/close either Chrysler or Dodge model brands and retain & keep selling Jeeps.
Hummer and Jeep should benefit from each other by basically consolidating the brands, but offer models from both brands (but not badge-engineered models)....Hummer & Jeep should coexists as Hummer needs smaller models, and Jeeps needs larger models.
Chrysler brand trims can be eliminated, but offer the same (or better) near-lux trim on Dodge models. i.e. The highest model trim for the a Dodge Caravan would be the Town & Country Limited package. I don't know about the 300 model line though...that's a toughy. I would prefer they bring back the Magnum to again offer a full-size family wagon with plenty of engine options up to SRT8.
GM could also position Chrysler to continue on with partnerships with Nissan-Renault, Chery, etc and allow them to make short-run specialty vehicles that could bring higher net profits.
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Nightcrawler 1:13PM (10/23/2008)
If the Magnum sold, it would still be around. Why the heck would they bring it back?
It's one of those cars that seems kind of cool to people like us, but that doesn't mean we or anyone else actually goes out and buys one. (See the G8 for an even better example)
Andy 9:59AM (10/23/2008)
GM/Chrysler is imminent! Once its done Some existing brands will be no more. Pontiac axed, Chrysler axed, GMC axed, possibly dodge too but there is a business case being discussed for them.
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Ed 10:29AM (10/23/2008)
OK, call me crazy, but I wouldn't mind seeing GM, Chrysler, and Ford merge all together into one company. Then they could streamline their models and brands to what makes the most sense and cut the rest. In the meantime, can they get a few engineers and a factory running to make a scooter while you redesign and retool for future automobiles? There are a bunch of those scooters emerging now around my area and they are all foreign. The American automakers are once again going to loose a potential spot they could dominate in this country. Scooter sales would hopefully help the immediate bleeding until they got back on their feet.
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jdemonto 11:02AM (10/23/2008)
I think this is all smoke.....
Lets say it does happen, the government would prevent such a large merger from happening as 50K+ people would be out of work maybe even more.....
Jason
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Travis 11:04AM (10/23/2008)
headline should be:
Merger could allow auto companies to spend less on advertising, leading to a better product and lower prices.
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Pete 11:40AM (10/23/2008)
The money spent on advertising compared to the actual development and production of said vehicle would come out to less than $1 per vehicle.
You have no argument.
ChaoZ 11:44AM (10/23/2008)
Umm, yeah. I'm fairly sure they've looked at the numbers to see if its advertising generates a proportional return.
In an ideal world, everybody would be enthusiasts, know every car out there and no advertising would be necessary.
Ryan 12:23PM (10/23/2008)
Also, do not forget about accounting firms. I know Chrysler is a GIANT client for KPMG, and if Chrysler is taken over by GM, KPMG can kiss their business from Chrysler goodbye and that means a large amount of money, too.
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Charlie 2:39PM (10/23/2008)
Niether agency has helped. Both Chrysler and GM's sales are down double-digit. Time to find a new agency and media buying company as well. Start fresh. New CMO's as well.
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