RANTS #459

August 20, 2008

Closing the “perception gap” just got a little harder for GM.

By Peter M. De Lorenzo

Detroit . With GM announcing its pullout as an advertiser from both the 2009 Academy Awards and Primetime Emmy Awards broadcast, as well as canceling the GM Style event, which kicked-off the last two North American International Auto Show weeks, it’s clear that the across-the-board cuts that CEO Rick Wagoner announced recently are starting to have a serious impact on GM’s image-building efforts - and just when the company can least afford it too.

GM, like the other Detroit-based automakers, is in a desperate race to convince consumers that they’re building cars worthy of consideration. Despite the glowing reviews given to such outstanding new products as the Cadillac CTS, Buick Enclave and Chevrolet Malibu (the Corvette is a perennial star for GM), and with more on the way, the company is finding it exceedingly difficult to close the “perception gap” that exists in the American consumer mindset.

This “perception gap” - which I've often written about – is painfully real and centers around the fact that GM (and Detroit) lost a generation of buyers to the Asian and German brands due to past years of building vehicles burdened with excuses, piss-poor quality and a stunning lack of imagination. The period that now haunts Detroit translates to include vehicles built roughly between the mid-70s all the way to 2000 – a devastating span of 25 years - in which the Motor City unleashed a stream of mediocre vehicles (with a few notable exceptions) on the American landscape that paled in comparison to the competition in terms of reliability, real-world satisfaction and fundamental desirability.

And the people who were left embittered by those vehicles for whatever reason walked away from the domestic brands for good, never to look back. These consumers - and now their offspring - are not only reluctant to buy Detroit vehicles - they find it difficult to even muster the energy to give them a passing look, no matter how good the reviews.

That means that - on top of every other challenge they’re struggling with - the Detroit automakers are faced with the daunting uphill struggle of convincing the American consumer public that their vehicles are competitively worthy.

Traditionally, the best way to reach the American consumer was through mainstream television programming, but that model has been blown to smithereens by the Internet and all of the associated properties and cross-pollination that’s available to it.

But even though network TV has taken a huge hit in recent years, the “big bang” events like the Super Bowl and the Academy Awards, etc., have remained strong and particularly adept at delivering the kind of mass audiences that companies crave. (A perfect example is NBC’s Olympics’ coverage going on right now. The first week's ratings have been huge, and NBC gets the added benefit of spreading its coverage across all of its properties in a media blitz that is unprecedented.)

With all of this in mind then, and under the gun to reduce spending at every opportunity, GM is now cutting its participation in high-profile events like the Academy Awards and turning its attention to more focused and targeted marketing campaigns.

Will it work? Will redirecting its reduced ad spending to its own cadence – the company’s 100^th Anniversary coming up beginning September 16, more experiential marketing programs, the Internet and product launches timed for its own schedule rather than revolving them around the “big bang” events – make up for the fact that they’ll be missing in action on the highest-profile events that the country watches? Will this redirected marketing strategy help close the “perception gap?”

How about "no"?

In this case GM is once again running up against its self-induced corporate Achilles Heel of too many models-too many divisions-too many dealers. By slashing ad spending across the board, GM is crafting a marketing retreat when, in fact, if it had fewer divisional mouths to feed, the company could actually spend more money on fewer marketing targets, while still covering the “big bang” marketing events and reducing overall marketing spending.

In a land where (for better or worse) image is everything, and GM in particular is in a heated battle to enhance its image every chance it gets, I believe that cutting participation in the “big bang” events is a no-win move.

GM needs to gain traction in the market and in order to do so they need two key ingredients: 1. Outstanding products and 2. The marketing wherewithal to promote those products.

GM has No. 1 covered with several excellent new vehicles already on the road and with more on the way.

But if they don’t have the marketing firepower to launch and support those vehicles - including being able to burnish the company’s image through participation in the “big bang” media events – then I’m afraid the dreaded “perception gap” will stay right where it is.

Thanks for listening, see you next Wednesday.