What's Wrong with Bob Lutz Taking a Vacation Before He Wields the Axe?

Everyone in the ad world is atwitter about Bob Lutz being given the reins of General Motors marketing and advertising. And that certainly will be the main event for a couple of years to come. Being responsible for the $600 million that Chevrolet spends on advertising every year; Buick’s $100 million; Cadillac’s $200 million; GMC Trucks’ $200 million; and GM corporate other $100 million – for a grand total of $1.2 billion—is nothing to sneeze at.

But the bigger problem revolves around what Lutz and his boss, GM CEO Fritz Henderson, are going to do to make these marques best sellers. And already a drumbeat has started in the industry saying Lutz isn’t up to the task, either because he doesn’t have the training, or, at 77 is too old to understand how to spin a good idea through the new media matrix. As marketing strategist Al Ries wrote in AdAge this week, “Bob Lutz seems to be on the wrong track when he immediately focuses on fixing the advertising….Advertising at GM is not broken. Marketing is.”

What set everyone off was Lutz’s first move, which was to call in each of GM’s half dozen agencies for a 20-minute review of their work. Apparently he didn’t find any of it very inspiring. And then he decamped for a long-planned holiday on the Caribbean island of Montserrat.

Well first of all, I think the guy deserved a rest. He’s just survived seven grueling years trying to retool GM’s product line, six months of Obama administration-ordered, GM downsizing and a 60-day journey through bankruptcy.

But Ries and others, I believe, are selling him short if they don’t think he’s enough of a marketer to get things moving. As he told veteran car writer David Kiley in Business Week, “Most people assume I’m an engineer. Actually my MBA is in marketing from the University of California….[and] I was head of marketing and sales at BMW in Munich when ‘The Ultimate Driving Machine’ tagline was born.”

Can Lutz and his colleagues unlock the power of these venerable old car brands? I don’t think anyone can say. What we know is that the new team at GM has only three or four years to get this right—and they have just about every force imaginable working against them.

Besides the clock, they have to keep an eye out for government [U.S. and Canadian] which now owns a majority of their stock—but really doesn’t know anything about making and marketing automobiles. Second, for every brand in almost every category they’re losing market share. Never mind that this has been a terrible time for cars and trucks in general and that money is tight, making consumers windy of making big purchases and GM’s board and banks less than ready to fund any new products. And even if they had some good cars in the pipeline, it’s still not known how important fuel efficiency will be or where they’re going to find affordable new battery designs to help them catch up with the Japanese in hybrid manufacturing.

Al Ries is right about one thing: the biggest challenge facing the Lutz team is how to position Chevrolet, Cadillac and Buick-- and how to make each of them “best of class” in their individual market segments.

Cadillac can’t just occasionally have a good model. People have to start perceiving it as the equal of Mercedes, BMW and Lexus. And then Buick has to be up there fighting BMW, Audi, Acura, Infiniti, Hyundai and Ford and Chrysler in the “just under premier” class of mid-priced luxury cars.

Then Chevrolet has to go up against Ford, Chrysler, Jeep and the giant imports, Toyota, Honda, Volkswagen, Hyundai and Nissan. [And, of course, many of these “imports” are manufactured in the U.S. so “made in the U.S.A’ doesn’t necessarily point consumers at a GM car.]

So let’s give Lutz his couple of weeks off the radar in Montserrat. Then he has to come back and make some decisions, fast. Either stay with the current agency line-up or bring in fresh blood. Either keep the CMOs he inherited or retool his own internal team. Either leave the muddy positioning of his three main car brands where they are or sharpen their positioning overnight. Lutz told Ries: “I think you will very quickly see a drastic change in the tone and content of our advertising. And if you don’t, it will mean I have failed.”

This is not a game for the feint of heart. Let’s hope Lutz is as feisty and sure-footed as he sounds. He needs a vision, a plan and then near perfect execution.

The Enduring Power of "Old Media"

There is lots of excitement about social media and increases in spending on online display and search advertising—especially as a means for growing new brands and maintaining sales of established brands in this most difficult year. But in the rush to embrace “new media,” there seems to be an almost obscene push to discount the strength of old media, especially as it involves print and TV. Certainly newspapers seem to be in a free-fall this year, and many leading consumer print titles are showing major advertising drops. But that doesn’t mean old media has completely lost its punch.

If new media can be said to command 15% or so of U.S. media spend this year, that still leaves 85% of a $260 billion or $160 billion pie—depending on your methodology –- devoted to building brands the old-fashioned way.

It’s hard to be specific about where things stand, because someone has moved the goalposts. Usually at this time of year, the industry depends on Interpublic’s venerable director of forecasting Bob Coen to call the field. But Coen has just retired and his successor at Interpublic’s Magna unit, Brian Weiser, has changed the way Magna is going to keep score.

In the shorthand of media forecasting, Weiser says he’s going to use a deductive “top down” methodology, based on reported revenues of media companies and other factors; whereas Coen used a so-called “bottoms-up” methodology, that projected volume based on spending estimates and rate cards.

As result, whereas Coen was forecasting a $258.7 billion U.S. media spend in 2009, Weiser predicts it will finish at $161.0 billion. That’s a decline of almost a third. But using Weiser’s methodology for the entire year, declines within some categories are much more modest. While Weiser said online spending would come in at $23 billion, a drop of 2%, he still forecasts magazines at $16 billion, national TV $32 billion; local TV $15 billion; radio $14 billion and so on. Overall he says spending will be down due to the slowdown in the economy and some marketers need to slash costs, but actual declines for TV will be only 14%, and should expand on an average annual basis through 2014. According to Joe Mandese in Mediapost.com, “Weiser said the U.S. ad economy declined 18% during the first and second quarters of 2009, but expects conditions to improve during the second half of this year, leading to an aggregate decline of 14.5%.” And the turn-around is supposed to come in 2010, when indicators for many traditional media categories (but not newspapers) are headed north.

Net-net: If I were a marketer looking to learn how to capitalize on the growing interest in social and online media, I might set aside a quarter of my budget for new media placements—but I’d still count on old media to be an underlying driver of my business.

Reports of the death of TV and magazines are, in the words of Mark Twain, greatly exaggerated.

When a Brand Changes Its Spots

Strong brands are hard to change. Take Starbucks. Howard Schultz has retaken control of the company and is trying to return the Starbucks store experience to his original vision: a place where people can enjoy the sensation of slowing down and contemplating life’s simple rewards. He wants you to be able to “smell the coffee.” The problem is that since he bought and built Starbucks in the mid ‘80s, the company has grown from a tiny regional brand to a $10 billion, global colossus, dependent for its revenues on many extensions, including express drive-thrus, where the only thing a consumer smells is another car’s exhaust.

So while it may be difficult for Schultz to replicate the original impulse that drew people to his brand, it’s not impossible. Likewise for people. If, like me, you are a fan of Danielle Sacks pieces in Fast Company you may have read her profile of former Wal-Mart marketer Julie Roehm and how she is gradually overcoming her image as “The Scarlet Woman in Bentonville.” http://www.fastcompany.com/magazine/137/the-scarlet-woman-of-bentonville.html

In 2006 Wal-Mart fired Roehm as its chief marketing officer for, among other things, receiving gifts—including a sushi dinner and some vodka—from DraftFCB, the agency to which she ultimately awarded the company’s $580 million advertising account. Lawsuits were exchanged.

As the article points out, when Roehm arrived in Bentonville, she was already a celebrated marketing strategist—having won “Automotive Marketer of the Year” accolades from Brandweek and been named to Ad Age’s “Advertising Hall of Achievement.” In fact, she had carved out quite a reputation in Detroit, where she led the successful U.S. launch of the Ford Focus and later, as director of global marketing communications for DaimlerChrysler, oversaw $1.6 billion in advertising for Chrysler, Jeep and Dodge.

In other words, Roehm made her marketing bones as a gear-head. But what could she do moving denim and salt lamps? She probably never should have tried the switch to retailing—especially when the job required embracing the generally humorless, rigid middle-American values represented by Wal-Mart. In the last three years, the lawsuits have been dropped and Roehm has formed her own consulting firm, Backslash Media, and worked on projects for Credit Suisse and interactive marketer Acxiom.

But ironically, due to the vagaries of the housing market in Bentonville. she and her husband have not been able to sell their $1 million mansion and, therefore, been forced to stay on in a company town where she has been unofficially been branded a “scarlet woman” –- enduring the kind of vilification once suffered by Sarah Good and Mary Eastley in the witch trials of Salem, Massachusetts, in 1692. Roehm, of course, hasn’t been put to the stake—but she and her family have been exorcised from the local social scene. A serious hiccup for Roehm’s career?

Maybe not. Most people in business have second acts and recover from setbacks. Nationally, most executives would be inclined to overlook Roehm’s missteps at Wal-Mart in order to enlist her significant marketing skills. Wolfgang Bernhard, Chrysler’s former chief operating officer recalls how she rejuvenated the Dodge brand with the in-your-face campaign, “Grab life by the horns.” “Normally from marketing people, you never get a message so powerful,” Bernhard says. “She did it.”

Lessons learned: Besides paying attention to salary or titles, high-fliers need to get over past epiphanies and take a cold, hard look at the challenges a new job in a new town for a new company requires. And companies need to do a better job explaining culture and goals to new executives and prospects. That aside, you could say the culture of marketing in America is itself kind of limiting and cloistered. Just about everyone at the Association of National Advertisers annual meetings knows one another. They follow each other’s careers and have opinions about peers strengths and weaknesses. That’s what getting a reputation at the top of American business is all about. Times change. Someone branded a rebel in one era, might be regarded as a bold, innovative thinker in another. I doubt that we’ve heard the last of Julie Roehm. Hopefully her next berth will be a better fit and her tenure a little bit longer.