Campbell-Ewald will have the Chevrolet Silverado business, but loses Malibu, Terrain and Equinox, three growing product lines.
Though it officially remains the “agency of record,” Detroit ad agency Campbell-Ewald has just been dealt a devastating blow by Chevrolet, the huge automaker with which it has partnered for eight decades. The decision could cost the agency hundreds of millions of dollars in the next year alone.
Coming out of its bankruptcy, mid-year, GM officials warned they were going to rethink that long-term relationship, which meant CE could lose some, possibly all of an account that has, in peak years, generated business industry insiders estimate at more than $1 billion a year.
After the proverbial “extensive review,” Chevy has notified Campbell-Ewald it will retain the agency of record title, and will continue to handle the giant brand’s retail business, but the most lucrative work, developing, creating and managing Chevrolet’s national advertising campaigns is now up for grabs.
The competing mega-ad agency Publicis has won the bidding for three of Chevrolet’s most important products, the Malibu sedan, and the Equinox and Traverse crossovers. Campbell-Ewald will maintain the work on the Silverado and Silverado HD pickups, but in the current market, and looking towards the future, the truck side of the business is looking to steadily decline, experts note. CE will also do “contextually relevant” work for Chevy’s ad presence during the upcoming Winter Olympics.
“We look forward to continuing our long-standing partnership with Campbell-Ewald, and forging a new relationship with Publicis,” said Kim Brink, Chevrolet General Director, in a prepared release.
The shift in direction means that Campbell-Ewald could still get significant amounts of Chevy’s national advertising, said the brand’s spokesman, Klaus-Peter Martin, but “What they don’t have anymore is a guarantee. “Whenever we need a new prod campaign, we will reach out to multiple agencies for the best ideas”
That is sending shockwaves through the Detroit ad community – which is already reeling in the wake of numerous other defections. BBDO, for example, is closing its Detroit office after losing the big Chrysler account. Cadillac has switched agencies, as well.
But the decision to make Campbell-Ewald bid and beg for each bit of business is particularly unusual – and, some industry insiders are adding, “onerous.”
“Who ever heard of buying advertising by the pound?” asked Marty Bernstein, a former ad industry executive who now serves as TheDetroitBureau.com’s media columnist.
“This won’t work at all,” Bernstein contended. “How can you do creative in a vacuum since the agency normally helps you develop the marketing goals and objectives?” This approach means Chevy is on its own doing the research and setting out the goals – with its severely reduced staff – and it may only start a bidding war among advertising agencies that might not understand what’s needed, nor have Chevy’s interest at heart.
Chevrolet spokesman Martin declined to say how much of the brand’s ad business will be impacted by the new policy. But Bernstein points to industry reports suggesting Chevy spent about $850 million on national ad work in 2008 and something under $700 million this year – a figure that reflects the collapsing car market as well as parent GM’s bankruptcy.
Like the rest of General Motors, Chevy has been downsized significantly in recent years. But in an interview with TheDetroitBureau.com, earlier this week, the brand’s new general manager, Jim Campbell, noted, “Chevy will account for over 70% of GM sales” under the automaker’s turnaround plan. And that could mean even more dollars devoted to marketing and advertising.
How much Campbell-Ewald will get out of that pot remains to be seen, but it clearly won’t be anywhere near what it used to be.