Hot on the heels of its very public decision to defriendFacebook (NAS: FB) by pulling its ads from the social-media giant, General Motors (NYS: GM) dropped another marketing bombshell late last week: It's punting on the Super Bowl.
Just as bidding for next year's Super Bowl ad slots was about to begin, GM announced -- loudly -- that it won't be participating. Company officials say the slots have become too expensive -- but the company's booking strong profits, and the Super Bowl is well suited to GM's marketing needs.
What's going on?
A big move from a very big ad player
In the insular little world of advertising, this is a big deal. You may not realize it, but GM is a huge consumer of ad services: The automaker was America's third largest advertiser last year, with a $1.8 billion budget that trailed only consumer megaliths AT&T (NYS: T) and Procter & Gamble (NYS: PG) in terms of total U.S. spending.
GM ran several different ads during the most recent Super Bowl, including a much-talked-about piece for the Chevy Volt that featured a visit from confused aliens. These were just the latest in a string of GM entries going back years -- the company skipped the event during its death spiral in early 2009 but spent $82.8 million advertising in the Super Bowl from 2002 through last year.
It has been a particularly good platform for GM, as rival Ford (NYS: F) hasn't advertised during the event for several years. So why is GM skipping this year's round? It's unclear.
Is it just about the money?
GM's chief marketer, Joel Ewanick, said in a statement that GM "simply can't justify the expense" . Prices for the coveted Super Bowl ad slots are expected to increase significantly -- about 9%, to around $3.8 million for a 30-second spot, according to The Wall Street Journal.
Is it just a matter of saving money, maybe to help boost GM's stock price? That's one possibility: GM is still partly owned by the U.S. government, and CEO Dan Akerson would dearly love to see the feds sell their shares. That's unlikely to happen until the stock price rises significantly.
But I don't think that's a complete explanation. It's true that Ewanick has announced a goal of cutting $2 billion from Chevrolet's ad budget -- GM's biggest and most visible -- over the next five years. But some analysts think there's a little more to the Super Bowl story than simply cost control.
Michelle Krebs at industry watchers Edmunds said in a statement that "it feels premature for GM to make such a big decision" with the Super Bowl months away. As Krebs pointed out, this decision is puzzling if only because GM's long-awaited line of new pickups and big SUVs is due to be launched early in 2013. The timing of the Super Bowl -- and its audience -- would seem to make it an ideal platform to advertise those vehicles, she said.
Ewanick is an extremely capable marketing executive with a long track record of success, so it's safe to assume that GM has a good reason for this move. And it's unlikely that financial considerations alone are behind it. A GM spokesman confirmed to Advertising Age that the company's overall 2012 marketing spending would be roughly in line with what the automaker spent in 2011 -- and GM is known to be spending heavily on movie product-placement deals and other high-profile efforts.
So what's really happening?
Ewanick has recently shaken up GM's global advertising efforts, going from using dozens of agencies to tapping a single firm to handle its ad-buying efforts -- and pushing all parties to be disciplined about spending. The company is looking to refocus its ad spending, moving from a simple strategy of reaching the most people to a more targeted approach, maximizing its outreach to potential customers.
GM's very public refusal to enter next year's Super Bowl ad fray, coming on the heels of the Facebook announcement, is probably just a reflection of that approach -- and a loud signal to the advertising world that GM is changing its strategy.
From a shareholder's perspective, I like this move. It's one more sign that GM's new generation of leaders aren't afraid to change the internal status quo in a smart, financially disciplined way. While it remains to be seen how this particular change in strategy will play out, it's yet another sign that GM has changed -- and is changing -- for the better.
GM's leaders are radically rethinking the company's approach to business -- a rethink that has yet to be reflected in the auto giant's stock price. While that could be creating a nice buying opportunity, we've come across another stock pick that has so much promise that we've dubbed it "The Motley Fool's Top Stock for 2012." This company is revolutionizing commerce in Latin America and could be a golden opportunity for savvy investors. You can get instant access to the name of this company and the full story -- download it now.
At the time thisarticle was published Fool contributor John Rosevear owns shares of Ford and General Motors. Follow him on Twitter at@jrosevear. The Motley Fool owns shares of Ford.Motley Fool newsletter serviceshave recommended buying shares of Procter & Gamble, Ford, and General Motors and have recommended creating a synthetic long position in Ford. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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