Cadillac starts search for new advertising agency, incumbent firm decides not to seek renewal

Cadillac looking for new advertising agency

MILWAUKEE — General Motors Co. is looking for an advertising firm for its Cadillac division — a bright spot for the company — but its incumbent agency won’t be among the candidates.

The luxury division of the troubled auto maker said in a statement Friday it has started a review process to get a new creative advertising agency.

“We think we can do better. We have done some good marketing and advertising in the past, but we do think we can take it up another level,” CEO Fritz Henderson said on a Web chat Friday.

Companies often hold agency reviews, where agencies pitch new work, and then make a selection. Industry insiders say incumbent agencies typically resubmit themselves during a review, but that’s not what current agency, Modernista!, chose to do.

Modernista!, which had done Cadillac’s advertisements for nine years, said in a statement it decided to part ways due to “creative and strategic differences.”

The company, an independent Boston firm with about 130 employees, also had done Hummer advertisements and spokeswoman Tracy Brady said that would end this winter.

GM is selling Hummer and Saab, and scrapping Pontiac and Saturn so it can concentrate on GMC, Chevrolet, Buick and Cadillac.

Brady said Cadillac was the company’s largest account and it’s likely layoffs will take place.

“It’s too soon to determine what layoffs there will be but we look forward to re-entering the category,” she said. The firm also handles ads for retirement fund manager TIAA-CREF and makeup company Avon Products Inc., among others.

The move comes as the Detroit-automaker overhauls its advertising, with a bigger marketing push in the last part of the year as it looks to recoup sales. GM used chairman Edward Whitacre Jr. in an ad to launch the campaign, which asks consumers to give its cars a chance and promises them the option to return them within 60 days if they change their minds.

Cadillac is a major focus for GM now as it tries to combat a sales slump amid the recession, a time when consumers are limiting their big-ticket purchases. Sales in the Cadillac division are down nearly 44 percent so far this year, but have improved to a drop of 8.8 percent in September, with strong sales of the Cadillac SRX Crossover. GM’s overall sales fell 45 percent in September.

Cadillac’s advertising spending has dropped this year, in line with a drop in all GM advertising spending, as the “Old GM” filed for Chapter 11 bankruptcy protection and received about $50 billion in U.S. government aid.

GM spent $81.3 million on Cadillac advertisements in the first half of 2009, down 27 percent from the same period last year, according to TNS Media Intelligence. The spending represents about 10 percent of GM’s total advertising spending in the same period of about $782.1 million. That figure was down 25.3 percent from GM’s first half ad spending in 2008 of $1.05 billion.

The move to another agency for Cadillac, one of GM’s premier brands, was widely expected, said Peter De Lorenzo, a former ad executive who publishes autoextremist.com, a Web site that follows and is often critical of the auto industry and GM. He said the firm hit its peak for the Cadillac brand with an ad with television star Kate Walsh for the 2008 Cadillac CTS.

“I think they just felt that Modernista had gone as far as they could go with Cadillac and they want to go with someone else,” he said.

Earlier in the week, the company announced U.S. sales chief Mark LaNeve was leaving the company. He had previously served as head of Cadillac and led the brand’s revamp to appeal to younger buyers and improve sales.

(This version CORRECTS to Co. sted Corp.)