General Motors yesterday confirmed Detroit’s second-worst kept secret -- the first being the dire financial plight addressed by the appointment of an emergency financial manager yesterday –- when it announced that Commonwealth, Chevrolet’s agency of record, will heretofore consist solely of Interpublic’s McCann Worldgroup with Omnicom’s Group’s Goodby, Silverstein & Partners taking a powder.
The phrasing of GM’s release about the development was curious: “Commonwealth, Chevrolet’s global advertising agency, has notified General Motors that it plans to change its ownership structure, transitioning from a partnership between McCann Worldgroup and Goodby, Silverstein & Partners.”
The unusual structure of the 50-50 partnership between two agencies with different corporate parents was “established at the will of former GM Chief Marketing Officer Joel Ewanick,” as the Detroit Free Press’ Nathan Bomey puts it.
It was probably doomed the day Ewanick was given the boot last July for “[failing] to meet the expectations the company has of its employees." (Most news reports cited an internally controversial deal with Manchester United as the immediate cause but Ad Age’s Rich Thomaselli pointed to other cultural difficulties in a piece he wrote in August 2012.)
“A source familiar with the agreement described the deal as McCann buying out Commonwealth’s stake in the partnership,” Bomey says. Terms were not disclosed.
Bottom line: “People close to GM's marketing operations said the companies Ewanick turned to and created struggled to handle the constant marketing and advertising demand associated with a big automotive account,” the Wall Street Journal’s Jeff Bennett and Suzanne Vranica wrote in a story earlier this week that also presaged General Motors’ announcement that its Cadillac account, now at Fallon Worldwide, will be conducting a review. Fallon has been invited to participate.
“GM spent almost $975 million alone on Chevrolet advertising in the U.S. and $243 million on Cadillac, according to Kantar Media,” the Journal reports.
Ad Age’s Rupal Parekh broke the news of Goodby’s imminent departure last week, writing that the decision was “part of GM's quest to find a new road -- one that takes it far, far away from the haphazard marketing decisions that were made under [Ewanick].”
Alan Batey, who was named GM’s interim head of marketing had earlier “scrapped the ‘Chevy Runs Deep’ tagline criticized by consumers and replaced it with the new ad theme, ‘Find New Roads,’ and moved Silverado trucks from Commonwealth to Publicis Groupe's Leo Burnett.
“Commonwealth remains Chevrolet’s global agency of record and a key partner as we launch 25 products globally in 2013 and roll out our ‘Find New Roads’ brand promise,” Batey, who is also VP, U.S. Sales and Service, said in a statement yesterday.
“Chevrolet is building enthusiasm around the world for its products and we look forward to working with the Commonwealth team to continue our momentum. Any change in ownership structure should have no impact on our plans to grow the Chevrolet brand around the world.”
Parekh reports this morning that the 200 or so employees who had been hired by Goodby have been offered the opportunity to stay with Commonwealth. They “will be offered employment consistent with their current employment terms,” according to McCann.
The employees of San Francisco-based Goodby may experience a bit of culture shock in making the transition to the New York-based agency, Parekh suggests, but “at the end of the day, the opportunity to keep their jobs -- and continue to work from the same office, with the same people -- may prove compelling for the majority of them.”
Chevy executives “had grown increasingly frustrated with Commonwealth’s Chevrolet advertising,” sources tell Bloomberg’s Tim Higgins. “A Chevrolet Malibu advertisement that highlighted the car’s stop-start technology, for example, was seen as ineffective, one of the people said,” Higgins writes while pointing out that Malibu’s U.S. sales rose just 3% last year against the industry’s average 13%, and deliveries this year are down 12%.