Should GM Cut Back On Advertising During Bankruptcy? They Don't Think So

Up until its recent plunge into bankruptcy, GM had been our nation’s second-largest advertiser — behind only Procter & Gamble. The company spent $2 billion dollars annually for the past few years — and though they’ve recently cut back and fallen into third place behind Verizon, the company apparently plans to continue to spend their pre-bankruptcy budget of $40-50 million a month on ads.

The news, of course, has ad agencies breathing a little easier. GM already owes several agencies and media buyers millions of dollars — and the industry overall is hurting. As for the content of the ads, GM has been taking its cues from the airline industry — particularly Northwest Airlines (now Delta).

From the WSJ:

Leading up to its Chapter 11 filing, GM studied how other industries handled communicating with the public while in financial hardship, zeroing in on airlines and particularly Northwest Airlines, which filed for bankruptcy protection in 2005.

GM found that by using its frequent-flier database and sending email and letters to customers, Northwest, which has since left bankruptcy court and was acquired last year by Delta Air Lines, was able to reassure many customers very quickly that it would continue to fly.

In a campaign that began airing shortly after its Chapter 11 filing, GM went beyond reassurance. In a TV spot dubbed “Reinvention,” created by Interpublic’s Deutsch, it acknowledged its problems but painted a more positive picture of the future.

“This is not about going out of business, this is about getting down to business, because the only chapter we are focused on is chapter one,” intones the narrator of the ad, which is scheduled to end later this month.

What do you think? Should GM be cutting back on advertising until it emerges from bankruptcy? Or is it important to reassure the public?

GM Will Hold Ad Budget Steady [WSJ]

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