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GM Plans Shift in Local Ad Business

Feb 13, 2006  •  Post A Comment

General Motors’ new ad buyer, GM Planworks, told local stations last week that it is changing the way it does business with them.

GM Planworks, a division of Starcom MediaVest Group, said it planned to eliminate the so-called “share deals” that put the bulk of GM’s local money into the same one or two stations in each market year after year. GM spends hundreds of millions of dollars in regional ads.

Instead, Planworks will encourage all of the outlets in a market-both broadcast stations and cable operators-to come to GM with their best offers.

“Our partners understand that this is an opportunity to build business and were focused and listening to what we were asking of stations,” the agency said in a statement. “Our approach will help us level the playing field and result in a more robust marketplace for GM’s local media investments.”

The new system takes effect in the second quarter. It also affects the local dealer spending handled by GM Planworks.

Under the old system, in return for a deal that guaranteed a station a minimum share of GM’s business, those stations provided GM with “pod exclusivity,” which means no other automaker ads run in a commercial pod that includes a GM spot. Those stations also agreed to give GM “bonus weight,” or extra commercials, sometimes worth 15 percent to 20 percent on top of the ads GM paid for.

The new arrangement could be costly to some big traditional network affiliates. But having one of GM’s share deals could be a mixed blessing.

In some cases, share deals made it tough to accept ads from other automakers, and the bonus spots became very expensive. On the other hand, with GM as the biggest spender in the biggest spending category for local television, stations that didn’t have share deals were in many cases shut out from doing more business with the automaker.

“Where we have them, we think they work out well. Where we don’t have them, we don’t see how it works for the other station,” said Andy Fisher, president of Cox Broadcasting. “And I say that with a smile because I’m sure each of our competitors would have a mirroring view.”

The share deals also put General Motors in something of a straitjacket, limiting the amount of money it could spend on stations whose ratings have improved over the years or whose demographics more closely match a particular auto model. The change could also result in more GM money moving to cable.

It was unclear whether GM would get more media for its money than it got under the old system.

In place of the share deals, Starcom expects all of the stations to compete for GM business. Price efficiency will be a key factor, but the automaker will also be looking for creativity from the stations in putting together value added deals and creating programs that better engage potential car buyers, such as exclusive sponsorships of entire programs. The added competition is designed to push prices lower for the automaker.

GM still wants pod exclusivity, but that will be monitored differently than in the past. Some stations were skeptical about Planworks plans to enforce pod exclusivity, using sophisticated software and random checks to police its policy.

GM Planworks officials did not say whether regional spending will increase or decrease, but station sources said that in some markets GM’s spending in the first quarter was flat, while in others it was down as much as 40 percent.