Media economy
GM: No more major spending cuts
By Toni Fitzgerald
Jun 22, 2009 - 8:01:53 AM

General Motors has slashed ad spending severely over the past year as it fought to stay afloat and eventually filed for bankruptcy.

But it looks like those cuts may be over. The company is planning to spend up to $50 million per month on advertising over the next few months, as it comes up with a plan to exit Chapter 11, according to statements by GM late last week.

That spending will be necessary to reassure people that the brand is still alive, despite the bankruptcy, and that the company has a vision for the future.

Over the past year, GM had cut back on its ad spending, pulling out of big events like the Emmy and Oscar awards and going from the No. 2 advertiser in the country to No. 3.

Last year GM reduced ad spending by 15 percent compared to 2007, according to Nielsen, from $2.49 billion to $2.11 billion. It has made further reductions this year, to between $40 million and $50 million per month.

That’s having a big impact on the automotive category, where spending plunged nearly 28 percent during first quarter, according to Nielsen’s most recent release, from $2.6 billion to just under $1.9 billion.

Still, Media Life’s Media Economy Newsletter recently reported that auto ad spending “will begin recovering later this year and gradually return to the spending levels of a few years ago, with nearly full recovery five years out,” spurred in part by spending by foreign automakers like Honda looking to exploit domestic automakers’ woes.

It is also dependent on sales of cars returning to prerecession levels of 16 million or 17 million per year.

Right now, GM is still on the hook for ads purchased before filing for bankruptcy. In its Chapter 11 filing, the company listed money owned to Publicis’ Starcom MediaVest at $121.5 million. It also owes several million to Interpublic Group.


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