Report: General Motors Is Reviewing Its Agencies

(MoneyWatch)  FRIDAY UPDATE: IPG is begging its employees to lobby their Congress-persons in favor of the bailout. "GM has asked that we weigh in with our representatives in Congress," says a note to the IPG troops. "We hope you will consider sharing this information with your employees so that they can make themselves heard on this important issue should they choose to."

The collapse of the Detroit car companies and their ad budgets gathered pace Thursday when it emerged that General Motors may have begun a review of all its ad agencies, and that the Martin Retail Group (Publicis) has already been told its contract is not guaranteed beyond the end of the year. Martin handles Buick, Pontiac, GMC and Cadillac dealers. Here's the money-quote from Reuters:

"In this climate, it's obvious that (GM is) evaluating every agreement with advertising agencies," the source said. "(GM is) obviously looking at at all (its) business in this volatile environment, and yes, (GM is) looking at every contract as (it) comes to renewal...They (vendors) know the reality as well.

Martin's Dave Martin says it's business as usual. Most of GM's U.S. advertising is handled by units of Interpublic Group and Publicis.

Reuters' report seems to rely on a single quoted source, but the move is entirely predictable. The Big 3 are failing or about to fail, and even if they get their bailout they will need to cut costs. (Holding companies have as much as 6 percent of their revenue tied up in car accounts.)

At the same time, car buyers no longer look to TV ads to help them choose vehicles. They go on the internet where advertising is cheap and there's a lot more information. General Motors announced earlier this year that it would not advertise in next year's Super Bowl; its budget is down overall by 8.7 percent.

Likewise, Chrysler's ad spend this year has fallen by 7.8 percent. Chrysler CMO Deborah Wahl Meyer recently expressed her distaste for big expensive campaigns:

That idea of bombarding consumers with GRPs to build top-of-mind awareness is, we think, a big waste of marketing dollars. The consumer process increasingly starts with a search engine. It's accurate to say that 'awareness' is overrated.

Gentlemen (and ladies), prepare your defense pitches!

Photo courtesy of Flickr user Detroit Derek, CC.