While General Motors's decision to consolidate its estimated $3.5 billion media account at SMG's GM Planworks unit was driven in a large part by greater cost efficiencies, it also has big implications for the way GM buys media and the type of media it uses. The buying assignment, which had been handled by Interpublic's dedicated GM Mediaworks unit for five years, will now re-integrate the auto marketer's planning and buying at a time when media decisions are becoming more strategic than ever, and when big marketers are beginning to zero-base how they communicate with their consumers.
"We think that consolidating our buying unit with planning will allow us to achieve additional operating efficiencies," said Ryndee Carney, a GM spokesperson. "It's going to help us act on new solutions, to address some of the media and marketing issues we have currently."
Some of the issues Carney cited were increasing media fragmentation and the growth of digital video recorders and video-on-demand, "which present obstacles and opportunities in terms of getting our message out," she said.
Dennis Donlin, the president of GM Planworks, said the consolidation of buying with planning would enable the dedicated GM media unit to better integrate the kind of "communications planning" systems SMG has been developing for its other clients, including P&G.
"As the new media environment emerges, when we see the blending of a lot of Internet protocol with the television landscape, particularly for information-intensive product decisions like automobiles. We think that opens up a lot of opportunities," he said. In particular, Donlin cited the "blending" of marketing and media research.
"That has been driving a lot of [GM's] thinking, and now this lets us take that to execution, because we think in this new communications planning environment, planning strategy and execution are influencing each other as never before."
As to whether this win comes at a difficult time, with the network upfront presentations being less than a week away, Donlin said that both Mediaworks and Planworks had already been working on strategy throughout the review and will continue to do so through Oct.1, when the GM buying assignment is officially handed over to SMG from Interpublic.
"Mediaworks is a dedicated organization like Planworks, so we've been working in partnership with them for an extended period of time," Donlin said. "And actually, in the last couple of days, we've been reviewing our strategy and our approach. The Mediaworks team will represent GM in the upfront, and we are in total strategic sync with them. They will have the authority to negotiate on GM's behalf, and we will be supporting them."
As to whether SMG has enough bench strength to handle such a huge amount of business, Donlin said that he expects some Mediaworks employees to eventually come over with the business.
"We went through this when we formed Planworks--our philosophy is to create an organization that uses the depth [within] the Starcom MediaVest Group--and we have a lot of talent within Planworks itself--and we will mix in some talent from the outside," Donlin said.
As to the effect on IPG, industry observers say that despite not being an indictment of its work, the pain will likely spur vast reforms of its media properties, not just Universal-McCann.
When asked what the cost of losing the GM business is to IPG, a spokesman pointed to an investor's conference call with IPG executives last month, where the figure was put at roughly $5 billion.
As many media veterans also noted, cost and philosophy were also at issue between Betsy Lazar, general director of media operations at GM, decided to put the account into review two months ago, sources said. Lazar replaced Michael Browner in March 2004, as he stepped down to take an early retirement package from GM and join American Media, publisher of The Star and National Enquirer, as a consultant.
Lazar, sources noted, was under pressure to cut costs and had simply gotten along better with Starcom--and had embraced the view that planning should have greater prominence than media buying.
"This whole pitch was a farce to begin with," said one media executive who is not connected to either SMG or IPG. "What I get, from just hearing things off the street, is that the client wanted to consolidate planning and buying together, and [Lazar] loves Starcom, thinks the planning is great, didn't want to re-pitch that, since they did it two years ago. So, this was just a fait accompli. If they wanted to give the business to Starcom, they should have just done it, rather than go through this process that wasn't taken very seriously by the client."
Another media veteran, also not involved with either agency, added: "Clearly, the client decided she wanted planning and buying together. It doesn't take anything away from Starcom; I think they're a great operation and I can't imagine that they won't do an excellent job on the business. But this is not exactly a death-blow for IPG media--it is going to put a gun to John Dooner's head about moving on what he's been dragging his feet on for four years, and that is revamping a media operation that has been hemorrhaging people for years. Maybe less than a year from now, we'll all be marveling at the comeback."