Tag Archives: marketing spend

GM to cut 2009 marketing spend

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In a 40-page document of financial results released today, General Motors Corporation has disclosed that it will slash marketing in the US by $800 million this year alone, including vehicle incentives.

A report from AdAge.com says that in a December 2008 filing, GM had said it would cut advertising and marketing spending in the US by $600 million by 2012. In document released today, the automaker says the cuts were necessary due to lower sales volumes.

Ray Young, GM’s chief financial officer, says that the automaker had to use a lot of incentives in the fourth quarter to offset the lack of credit from GMAC, but still eliminated leasing in Canada last year and is reducing leasing in the U.S.

“That’s an expensive form of incentive,” explains Young.

GM reported a global net loss of $30.9 billion for 2008, including a net loss of $9.6 billion in the fourth quarter.

All four of GM’s regions around the world moved into the red, but the biggest losses were in the US.

GM’s debt balance grew to $45.3 billion in the fourth quarter, which includes the $13.4 billion the company has already received in federal loans since late last year.

It asked the US government for $16.6 billion more in February, saying it needed another $4.6 billion within weeks and an additional $12 billion more to avoid bankruptcy.

GM has also reported that its net liquidity slid from $27.3 billion in the fourth quarter of 2007 to $14 billion at the end of December 2008.

Australian company directors to spend through slowdown

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A survey of Australian company directors has revealed an overwhelming trend to continue – or increase their marketing spend, despite the slowing of the Australian economy, something marketingmag.com.au blogger Brendon Cook discussed a month ago here.

Brendon, CEO of oOH Media, had this to say then:

Research by Professor Patrick Barwise for the London Business School found:

he most successful firms maxmise long-term shareholder
value by maintaining or increasing their ad spending when the economy
slows down and weaker rivals cut back.

While we must accept that there will be some advertisers who will
take the easy option to appease short-term shareholder value and will
slash marketing during the tough times, the good news is that more and
more companies are heeding the research advice.

This survey then, conducted by the Australian Institute of Company Directors and strategy and marketing consultancy, Growth Solutions Group (GSG) to guage a boardroom perspective on priority marketing issues and intent for level of marketing spend, confirms Brendons post.

One hundred and thirty-four Australian company directors responded to the survey, with only 1 percent planning to cut marketing investment, with 94 percent confirming no intent to cut marketing spend of which 49 percent are planning to increase.

More than one third (37 percent) identified their biggest marketing challenge as staying competitive in a difficult marketplace with limited resources, including time and budget.

GSG co-founder and managing director, Graeme Chipp said the survey results emphasise that when times are tough, confidence in strategy and willingness to sustain a focused marketing investment are paramount.

Staying competitive in an increasingly difficult market place with limited resources was clearly the number one challenge for Board Directors, Mr Chipp said.

The survey we conducted shows company leaders clearly understand that to do this they must maintain their presence in the market, he said.

The survey also found that the main reason behind plans to increase were offensive marketing reasons. 28 percent of respondents felt an increased marketing spend was important to increase awareness and share of mind, 14 percent to stay ahead of competition – as they cut
And 8 percent to grow share/ enter new markets.

The survey findings also highlighted that the interaction and direction of marketing is mixed across many boards.

  • Forty percent stated that marketing was not a key driver or had limited impact on company’s competitive advantage
  • While 70 percent felt the marketing function effectively engaged the board, 30 percent did not.
  • Forty-four percent of board’s discuss role and impact of marketing at best once or twice year.
  • Only half of the Company Directors surveyed planned to spend more time on customer related issues.

Our experience is that a ‘whole of company’ marketing approach starts in the boardroom. This data provides further evidence of the continuing challenge facing marketers to earn the due respect and attention of many directors around the role and impact marketing can deliver to company value. Mr Chipp said.

Those Board Directors who valued the role of marketing, considered its role pivotal in securing their company’s competitive advantage, invested more time in the marketing process and will be better equipped to witness the results on the bottom line.