GM begins £400m Euro media review

General Motors is conducting a review of its estimated £400 million pan-European media planning and buying arrangements just one year after completing a market-by-market pitch across the region.

The review involves the GM roster agencies Universal McCann, Initiative and Carat. Sources said the review was an opportunity for GM to evaluate its relationships with each agency and to consider if it can create savings and a better service by consolidating the business.

A pitch is expected this autumn, but it is unclear if non-roster agencies will be invited.

The Interpublic agencies Initiative and Universal hold the bulk of the business. Carat has the GM account in Germany while Universal works for GM's other major markets outside the UK.

The news is a blow to Initiative, the incumbent on the £85 million UK account. It won the consolidated Vauxhall, Saab and Daewoo business less than a year ago and was awarded a one-year contract running from January.

Initiative has a long relationship with the Vauxhall brand, via Western Media, which held the account before its merger with Initiative in 2001.

If Initiative is forced to defend its UK GM business, this will mirror its position with Unilever, which in May called a pan-European pitch a year after reappointing Initiative to the UK business. The Unilever pitch is on-going.

Retaining Unilever and GM is vital to Initiative in the UK as the two pieces of business account for around £290 million of its £490 million billings, according to Nielsen Media Research figures.

GM kicked off a market-by-market review of its agency relationships across Europe in April 2003, but stopped short of looking at consolidating the business.

Its UK review involved Initiative, Universal (which held Saab), Carat and Starcom Group. Vauxhall spends £60 million, Saab £17 million and Daewoo £8 million.

GM's recent fortunes have been mixed. Its profits rose in the second quarter of 2004 but its chief executive, Rick Wagoner, said that they were still "well below expectations".

However, its 2003 sales across Europe grew significantly. Net sales grew from $23.9 billion in 2002 to $27.48 billion in 2003. It has a market share of 10 per cent of cars sold in Western Europe.

Patrick Dunster, Vauxhall's marketing communications manager, who oversaw last year's UK review, was not available for comment.


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