Julie Roehm on the GM, Chrysler bankruptcies—Part I


Given the news that GM declared bankruptcy yesterday (and Chrysler recently as well), Fox Business News contributor and Meta CEO Julie Roehm spoke to RBR/TVBR regarding radio and TV advertising for both automakers–how does she see their marketing/ad departments evolving from this bankruptcy process? How will this affect national business in Radio and TV and also the BBDO factor, which just sent out a memo for Chrysler regarding a longer lead time for payment?

Julie Roehm Audio:

Here we have FOX Business News Contributor/Media-CEO Julie Roehm.  She’s also a Marketing Consultant for a variety of companies.  How are you doing today Julie?
I’m well today Carl and you?

Not too shabby.  We like to go to you regarding a lot of the automotive developments in marketing and advertising really based off your long history with Ford and Chrysler.  Today obviously GM has officially declared bankruptcy which is not a great day in American history but it is what it is and people are going to have to adjust on the broadcast side, the agency side and the marketing side within and without so I just came together with about four questions.  The first one we have is regarding advertising for radio and TV overall for and Chrysler. How do you see the marketing and ad departments evolving from this whole bankruptcy process?

I guess it’s anybody’s guess only because you’re doing and particularly now in the case with GM with 70% plus ownership by the government and by the track record that we have seen them utilize within Chrysler in terms of looking at least at the bankruptcy plan and the idea that for the nine week bankruptcy time period for me just willy nilly decide to cut the advertising budget in half.  I guess for me it mean I don’t know what to expect because I don’t think that currently the car appointees, the people, the car czar and the people who have been appointed to help Chrysler and GM through it thus far has had any experience in the auto industry whatsoever and I know that many critics will say well isn’t that a good thing?  I mean look where the car industry is.  Well yes and no but I think it would certainly help to be able to restructure if you understood some of the intricacies of the car business.  Or if you’d had some experience on the retail side of the car business because that’s really what the customer sees.  I also think distribution is one of the biggest issues facing the car industry today and so I think that experience is really important, but back to your question Carl. 

With a marketing perspective my expectation is that the marketing is going to have a very difficult time.  I don’t know exactly how it will evolve in terms of the current staff, personnel, vendors, agencies but my expectation is that they’re going to at least until they get out of Chapter 11 that they’ll probably keep things fairly consistent just in terms of the players in the game.  In terms of the spending and how they’re going to allocate spending again the only insight that I had from the Chrysler thus far in bankruptcy from a marketing perspective is what was reported about the 100 plus million marketing budget that they sent to Washington and was just I feel like it was arbitrarily cut in half.  I don’t know if the number they sent was a good number or what was included in it but I can pretty much tell you that the idea of just cutting anything by a percentage is always a bad way to go.  For me that means as somebody who doesn’t understand media-mix and marketing platforms to simply decide that they’re going to take a percentage out versus looking at what are the things that need to be done versus what maybe does not need to be done right now.  So if that is any indication of what we expect to see in the GM bankruptcy time period I don’t think it would give me a very warm fuzzy feeling if I was in marketing. 

What happens on the other side?  I tend to be hopeful because I have a soft spot for my counterparts and my friends in Detroit and I think this country needs an American Auto Industry.  I think that we have to be competitive with our International rivals.  I think however that we also need to be very cognizant of what our short falls are and I’m hopeful that because there are some good examples of what needs to be done and some very bad examples of what not to do I’m hopeful that we can come out on the other side of this a much stronger industry both in Detroit and elsewhere.

Well that’s what we all hope, that’s for sure.  Next question is how will this affect national business in radio and TV, especially considering the BBDO letter which was just sent out for Chrysler regarding a longer lead time for payment.  How might that affect national business?

I still haven’t talked with the folds at BBDO and some very good friends there and I also know a lot of people who are on the production and the direction side in the television business industry in New York and they’re very familiar with, again I don’t know exactly which letter if it’s all within the same letter in the same vein, but they’re very familiar with the new rules with working with Chrysler you know via BBDO about far longer lead times and other issues that I think is probably very shocking for most people who worked with the car industry over the years.  They were the ones that you could definitely count on.  A lot of those companies are small, the creative production companies and they can’t take the risk, don’t want to take the risk or don’t have that kind of lead time to offer.  So I know it’s likely a very big challenge to find the kind of quality and talent that certainly BBDO was used to getting on behalf of their client.  However, things are I guess the idea that you’re in a recession is a good thing for many because there are very challenged people out there who are just looking for a chance to work for a car account whether it’s a bankrupted one or not.  Hopefully they’ll be able to use their resources to find still the very best that they can for Chrysler and in the future for GM. 

I think that when it comes to the amount of spend in the radio and the TV industry my guess is and it’s only that, is that during this time of the bankruptcy restructuring that you’re going to see a much more traditional use of the media dollars probably bow well for radio and television.  My guess is also that you’re going to see a little of what we’ve been seeing from Chrysler which is a national television push to let people know that we’re here and to see large array of the kinds of exciting products that they feel that they have.  The same will probably go for GM.  GM might have even a little bit more work to do because of their choosing to stick with four of the brands versus all of the brands and they’re going to need to let people know who are loyal to some of those brands that they’re looking to divest what the situation is going to be for those people and for those divisions that are going to be supported. What are the vehicles that we can expect to see from them? 

So I think that television and radio will be heavily used in this restructuring period and probably going forward.  Now my hope is that they have some smart people in there or continue to have smart people in there that are going to mend a much better media mix that’s a bit more complex and a bit more far reaching in terms of creating messaging and actual conversation with customers because I think that’s one of the areas where Detroit has really been lead astray or has gone wrong in the past several months.  I think that GM and Chrysler in particular have allowed and maybe it’s not fair to say that they’ve allowed it maybe they’ve been overwhelmed by it but the message has really been coming from DC.  I know that if I was running a brand and the company the last people that I would want to be espousing my brand attributes or perception about me would be Washington D.C.

Tomorrow, she addresses:
How will this affect the local dealers and what should Radio and TV do to help the local dealers move inventory? Any advice for broadcasters over the next six months going into 2010?