How to fix Detroit: Stop renting media channels. Part I

GM is back in the news asking for more loans and giving the government its plan.  President Obama doesn’t seem like he has much sympathy for their history of bumbling and mismanagement.  Neither does the public, Gallup just released new data that says 72% of Americans are against giving GM and Chrysler additional bailout money.  The sentiment is broad based across all demo groups. If the economy was good, I could see Obama saying no to more taxpayer money.  However, given the delicate state of the economy, the President is giving them a shot at redemption.  You could fill a book shelf with the collective mistakes of both management and the UAW, but I’ll focus on marketing and illustrate how the US auto companies, particularly GM is stuck deep the world of old media.

One of the most memorable experiences of my career was an attempt to sell auto advertising into PC Magazine in the late 90’s.  I was PC Magazine’s marketing director, and King Fish President Cam Brown was then the Associate Publisher.  We made it our personal mission to break the category so off to Detroit we went.  PC Mag had great demos of high income male gadget/tech geeks who loved the magazine and spent two hours reading each issue.  This was the perfect audience for Detroit and back then we had nearly 7 million readers and a circ of 1.2 million.  However, we were lucky to get 15 minute meetings with young and clueless media planners who only cared about two things. The pubs ranking in syndicated research and how much merchandising they could squeeze out of your book.  And, they made it clear that it was very hard to get on a plan if you were not already getting space. 

It is hard to do justice to what a bizarre world it was, not to mention that the depressing city revolved around keeping things exactly the same.  The media planners couldn’t get over the “environment” of PC Magazine.  They were running ads in every special interest pub measured in the JD Power study but they could not wrap their heads around the idea of their unimaginative ads appearing next to a technology review.  We could almost never get by that hurdle.  We did sell a few programs (Jeep, Ford) but more often than not, no one was interested in even exploring a new idea.

When driving around the Troy/Detroit metro area you could sense that one day the jig would be up and the whole system would come crashing down.  They were spending hand over fist for print and TV advertising to promote uninspired cars that people didn’t want to buy.  While at the same time they were overpaying everyone involved and locking themselves into insane union contracts that make GM more of a healthcare provider than car manufacturer.

Take a look at the latest research I could find on eMarketer from this summer.  We are in the new media age and GM has barely changed their spending mix.  Interactive spending is up, but still a fraction of TV. The vast majority goes to the rented media channels of broadcast and print.  It is common knowledge that most people start their auto shopping online, yet the overwhelming majority of their spending is on television.  The government is going to ask them to change some of their business practices in return for bailout money.  Maybe Mr. Obama will come across this blog on his BlackBerry so in part II I’ll have the audacity to tell GM what they are doing wrong and to fix it.