GM Body Blow to IPG: US Media Buying Goes to Publicis

12 May 2005

'All you know about luck for certain is that it's bound to change,' wrote US poet Bret Harte in his 1871 classic The Outcasts of Poker Flat.

'When, oh when?' Interpublic Group is plaintively inquiring.

The beleaguered agency holding company - the world's third largest by annual billings - learned Wednesday that its largest client General Motors is to consolidate its $3.6 billion (€2.81bn; £1.92bn) media planning and buying assignment with Publicis Groupe's General Motors Planworks in Detroit.

Hitherto Planworks handled only media planning, with buying the remit of IPG's GM Mediaworks - a unit of Publicis' Starcom MediaVest network. Now, in the wake of a lengthy review, GM has decided to consolidate the entire media assignment with the Publicis unit.

However, the creative element of the auto giant's advertising is unaffected by the decision and remains spread across a number of IPG shops.

According to GM Planworks president Dennis Donlin, the combination of media buying and planning under one roof will benefit GM. "The new model requires kind of a seamless dialog between planning and buying, and that's what we're trying to set up," he said.

In a statement yesterday, IPG co-chairman/ceo Michael I Roth said: "We put together a very strong team and an excellent proposal for General Motors' domestic media needs. While we regret that this decision did not favor us, General Motors remains a valued client and business partner."

UBS' senior analyst Brian S Shipman opines in a note to investors that although the news is unwelcome for Interpublic, it's not catastrophic. "While we view this loss as a disappointment, the company has demonstrated its operational competitiveness with recent wins at Nokia and Intel," Shipman wrote.

Data sourced from New York Times; additional content by WARC staff