One of the largest advertisers in the world has made a significant statement about which ad platforms have the most value; and the strategy is out with the old, and out with the new.
The auto maker has been in the spotlight in recent weeks for some contrarian announcements about big-ticket advertising properties; pulling millions of advertising dollars out of that old promotional behemoth, the Super Bowl broadcast, and the newest tech giant to go public, Facebook Inc. On Thursday, General Motors Co. announced Chevrolet has struck a 5-year agreement to be the automotive partner with the world’s most popular soccer club, Manchester United. The new partnership is an attempt to expand GM’s marketing to a more global scope.
But the statement is about more than footie versus football and Facebook. It also signals a wider shift, as companies look beyond the North American market to drive much of their growth.
“You would be astonished how much Hyundai is spending on marketing in Brazil,” said GM’s chief marketing officer Joel Ewanick. “We have to be focused on what’s happening in Shanghai and Sao Paolo … outside of the United States, we have to do a better job.”
While soccer is not as popular a sport in the U.S., it has a very large following around the world, which is where the company is focusing, Mr. Ewanick said. To put the announcement in perspective, Mr. Ewanick said 400 million people consider themselves to be fans of the NFL, but more than eight times that many – 3.5 billion, or half the world’s population – are fans of soccer. 660 million are Manchester United followers.
The move gives the car maker an opportunity to speak to consumers in an environment less cluttered with advertising from direct competitors, said Chris Stutzman, an industry analyst with Forrester Research. With both Facebook and the Super Bowl, “you still have to disrupt and compete for attention,” he said.
“The places where they do have a voice, they want to own the conversation more.”
That can be difficult to do in the Super Bowl, the most high-profile TV advertising event in the U.S. each year. GM’s move last week to pull out of the 2013 Super Bowl broadcast raises questions about the cost of the 30-second spots, which has ballooned, reaching new records annually: last year it was roughly $3.5-million. Industry watchers have pondered how long this could continue before advertisers begin to question whether they can justify the cost. At the presentation in Detroit on Thursday, Mr. Ewanick explained the decision. While he said the Super Bowl is “near and dear to my heart” and has provided return on investment in the past, GM has drawn the line. It will increase its marketing spend on other NFL properties, he said, but not the Super Bowl.
“It’s getting to be too expensive, where enough is enough,” Mr. Ewanick said. “When do you stop? When do you keep taking increases year over year over year when you haven’t actually seen audience increases?”
The decisions were made following an annual review of the marketing budget that occurs every spring at GM – which is also when it made the choice to pull $10-million of paid advertising from Facebook, after GM’s consumer research showed that fans found banner ads distracting and did not click on them. He called Facebook a “car club” and said the company will use the social network in future, but he was not sure when. All advertisers are seeking out the wisest strategies for digital ad spending – a challenge for Facebook, as it works to convince those advertisers that its paid ads are worth the price. The social network is great for maintaining brand awareness, and GM will continue to have unpaid branded Facebook pages where it gathers “fans” online and interacts with customers. According to consulting firm Maritz research, less than 1 per cent of consumers surveyed in the U.S. and Canada said that Facebook influenced their car purchasing decisions.
“What the GM move shows is that all manufacturers, regardless of who they are, will start re-examining the effectiveness of their marketing expenditures. Nothing is above reproach – all the line items in the marketing budget,” said Chris Travell, Maritz’s vice-president of strategic consulting.
GM has made the review of its marketing budget – and a stronger global branding position – a major priority.
“Every cent counts. Every penny counts,” Mr. Ewanick said.
While Chevrolet will not be on the Manchester United jersey as sponsors Aon and Nike are, it will be using its partnership to market the car to football fans. Some examples he noted are the Chevrolet China Cup, which will see Manchester United play games in Shanghai and one other city. China is a major marketing focus for Chevrolet, where the brand is growing, and cited Man U’s large fan base in Asia as an attractive factor for the partnership.
This is not the first step Chevrolet has taken in shifting its global advertising focus recently. In March, the company announced it would consolidate its advertising under one agency.
It created Detroit-based agency Commonwealth, a 50-50 joint venture between Goodby Silverstein & Partners (which is owned by Omnicom Group) McCann Erickson Worldwide (of Interpublic Group). Rather than having multiple agencies handling its advertising in different markets or for different platforms (such as digital,) Chevrolet announced that the new combined agency would be responsible for creating its campaigns in most markets around the world, on all platforms.
Previously, GM had worked with 70 different agencies, and predicted the consolidation will save the company $2-billion over the next five years. (Carat is GM’s agency for media buying and planning.) Commonwealth will operate out of global hubs in Detroit, Sao Paolo, Mumbai, and Milan.