General Motors could be moving towards a performance-based compensation system for all its u.s. agencies similar to the fee-plus-incentive method already in place for Hal Riney & Partners of San Francisco, the agency for its new Saturn division.
gm is holding its 1993 u.s. marketing budget at the 1992 level, while looking to introduce agency accountability into the equation.
The US$140-million Oldsmobile business, now under review, could be the next results-based contract for the automaker.
Accountability emerged as an issue with the investiture of new gm management last November.
Chairman and ceo Robert Stempel resigned and was replaced by Jack Smith as president/ceo, and John Smale as chairman.
gm’s other u.s. agencies are paid a commission of 9% of media expenditures, reduced from 15% by the automaker in the late 1980s.
In Canada, gm’s 1993 ad budget will also be maintained at its 1992 level, but agency accountability is not yet an issue.
Dave Parks, director of advertising for General Motors of Canada, says the company’s three Canadian agencies are compensated in a traditional method, although he will assess any major changes in the u.s. to see if they could be applied in Canada.
Parks says gm treats its Canadian agencies as ‘partners’ and wants to ensure they are justly rewarded for their services.
He says if agencies are not treated fairly services deteriorate because of agency layoffs and the advertiser risks losing its core of expertise.
He would not reveal figures, but says all three GM Canada agencies work under an identical method of compensation based on a fixed fee for media spending and a fixed production fee.
MacLaren:Lintas of Toronto handles English-language advertising for gm, with Cossette Communication-Marketing of Montreal in charge of the French-language business.
The Toronto office of Cossette is the agency for the Saturn division, Saab and Isuzu.
