Their Biz in the Crapper - GM Kicking Tires of New Ad Company

DETROIT, March 14, 2005; Reuters reported that General Motors has put its advertising buying business, estimated to be worth at least $2.8 billion, up for bid in order to cut costs and respond to the changing advertising landscape, a spokeswoman said on Monday.

GM, one of the largest U.S. advertisers, sent a letter last week to Starcom Mediavest, a unit of France's Publicis Groupe, to compete for the business currently done by General Motors Mediaworks and LCI, which are both units of Interpublic Group of Cos Inc., said GM spokeswoman Peg Holmes.

Interpublic shares fell 68 cents, or 5.4 percent to $11.83 in midday trade on the New York Stock Exchange. Interpublic, under review by the U.S. Securities and Exchange Commission for a 2002 restatement of several years worth of earnings, last week said it would delay its 2004 annual report and indicated it may again restate prior results.

"The media landscape has changed so much, so quickly. We just thought it was time to take a fresh look at the entire operation," Holmes said. "We're as interested in new ideas as we are in cost efficiencies."

GM, which has been losing vital U.S. market share to foreign rivals led by Toyota Motor Corp., last year spent $2.8 billion on advertising in media tracked by TNS Media Intelligence, a provider advertising and marketing information.

GM has bought advertising through the Interpublic units for more than 10 years, Holmes said. Before centralizing through the Interpublic units, various GM divisions bought advertising separately.

GM Mediaworks bought advertising from national, local, print and nontraditional media, which includes Internet and radio. LCI purchased advertising in coordination with GM's dealers. The growing volume of advertising done in coordination with GM's dealers was one of the reasons for the review, Holmes said.

Starcom Mediavest's sibling company, General Motors Planworks, has planned and researched GM's advertising efforts since 2000.

GM expects to make a decision on the advertising review within two months, Holmes said.