McCann and Goodby to work together on global Chevy brief, but how harmoniously?

March 28, 2012

Once again, General Motors CMO Joel Ewanick has demonstrated his ability to surprise and to innovate, with the announcement of his “Commonwealth” solution to the global Chevrolet creative account.

GM spent $4.7bn on advertising last year, and the majority of that was channelled through Chevy, a brand accounting for 70% of GM’s US sales. So, all eyes will be on what Ewanick, after much agonising, has done with one of the world’s largest creative accounts.

Which is, exactly? The easy bit is that he has fired most of the 70 agencies that were, somehow, somewhere, working on the account – superfluously bloating management and production costs.

More controversially, Ewanick has placed the two winning agencies, Goodby Silverstein & Partners and McCann Erickson, in a joint venture dubbed Commonwealth. It will be based in Detroit, home of GM, but have 3 other creative hubs dotted across the globe at Milan, Mumbai and Sao Paolo. And the controversial bit is that the two agencies – Goodby, which holds the Chevy business in the USA, and McCann, which is strong in Latin America, Mexico, China and Canada – are owned by rival ad holding companies, Omnicom and Interpublic Group respectively. Omnicom and IPG are 50/50 owners of Commonwealth, we are told, but profits will be allocated “geographically”.

That in itself may be cause for friction. But just as interesting is who and what will be running Commonwealth day to day. It is to be led by an eight-strong “global advisory board”, overseeing creative initiatives and strategy, which consists principally of Jeff Goodby, the Goodby Silverstein & Partners founder, who will be creative chairman, Washington Olivetto, McCann Worldgroup Latin America chairman and chief creative officer, Linus Karlsson, the McCann New York and London chairman, and chief creative officer and Prasoon Joshi, the chairman of McCann Worldgroup India. A hat-tip to Goodby’s creative eminence, but note McCann’s dominance on the board.

Now, before muttering “sacks” and “cats”, let’s all take a deep breath and peer long and carefully into the glass half-full. There certainly is a rational case for Commonwealth, or something very like it. And part of it is saving an estimated $2bn in production and management costs over 5 years.

What’s more, we can expect some unwonted co-operative zeal from the two rival agencies. Both will be hugely relieved they have landed the business.

Goodby started as early favourite, not least because it was hand-picked for the US business by Ewanick himself. But  the work has disappointed. And, despite the pleasing publicity surrounding the Ford-knocking Silverado spots at this year’s Super Bowl, there have been gnawing doubts at the Goodby office about the agency’s ability to retain the account.

McCann, on the other hand, desperately needed a coup of any kind to stabilise its faltering performance. True, this is not the outright win that leaves it the undisputed global agency of record earlier rumoured. But it’s a fairly decent outcome, which consolidates McCann’s already strong position in high-growth emerging markets.

But once the novelty has worn off, what then? Will the creative dream-team pull together to make Chevrolet’s global message more consistent, or will the nightmare of agency politics take over? It’s anyone guess. For that very reason Ewanick should be taken at his word in describing Commonwealth as “historic”. We’ll find out soon enough how deep Chevy really runs.

It’s not over yet, says Hermann Simon

September 9, 2009

Hermann SimonIt’s all over then? Economists certainly think so. Data published by the National Institute for Economic and Social Research, a think tank, suggest the recession ended in May. There’s plenty of circumstantial evidence as well. House prices are apparently stabilising and the City seems to have been gripped with merger fever as the FTSE 100 brushes 5000 for the first time since Lehman’s collapse last year.

Not everyone agrees, however. One eminent dissenter, whom I met this week, is Hermann Simon, co-founder of international strategy and marketing consultancy Simon-Kucher & Partners. He’s not impressed by the uptick in economic activity and warns of a ‘W-shaped’ – or double-dip  – recession. In his opinion, a lot of credit failures have yet to materialise. He’s also suspicious of the economic statistics coming out of China. Exports are 40% of China’s GDP – and in June they dipped 26%. The state says it will make up the deficit from internal growth, but Simon is not convinced.

“There’s no easy way out of this recession,” he says. “We won’t get back to where we were merely by cost-side solutions. What we need are revenue-side solutions.”

Handily enough, he has some; 33 in fact, which form the core of his new book Beat the Crisis – 33 Quick Solutions for Your Company. That’s too many to enumerate here. But the gist is, whatever you do, don’t get involved in slashing prices because of a reduction in demand. By all means offer added value, as Hyundai did in the USA with its 3-month guarantee against job loss, or give a discount on bundled products, but don’t cut the price of individual items. One arresting example of  price support is the champagne industry. In 2008, it sold 340 million bottles of French bubbly. This year, it reckons on selling only 260 million, so it has taken the extraordinary step of destroying excess volume. Simon says this has worked. Prices have remained stable, despite champagne being a luxury, discretionary item associated with the good times.

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