Ewanick out at GM. What of Commonwealth?
July 30, 2012 | Matthew Creamer, Rupal Parekh for Advertising Age | Comments
Two weeks ago, Joel Ewanick was sitting through a day of press meetings to introduce an ad campaign for the launch of the Cadillac ATS, General Motors‘ long-in-the-making attempt to take on BMW’s 3-series. Flanked by Cadillac Ad Director Molly Peck and a few PR people, Ewanick proudly showed off the new work. It seemed like business as usual – as usual as it ever is for the controversial chief marketing officer.
As of Sunday, he’s gone from the automaker’s top marketing job after a tumultuous two-year reign during which he completely overhauled GM’s longstanding agency relationships, dueled with Facebook and announced plans to pull GM out of the Super Bowl. GM did not elaborate on his sudden departure, but spokesman Greg Martin told Automotive News that Ewanick “failed to meet the expectations the company has of an employee.”
When Ewanick’s comment came, it was via Twitter: “It has been a privilege and honor to work with the GM team and to be a small part of Detroit’s turnaround. I wish everyone at GM all the best.”
While the upheaval of agencies and marketing by Ewanick, who is fond of grand gestures, provide plenty of speculative fodder for the reasoning behind his departure, the bottom line may instead be something simpler: GM’s market share struggles.
GM’s global sales rose 2.9% to 4.67 million units in the first half of the year, according to Bloomberg News. Rival Toyota Motor Corp., meanwhile, posted a 34% gain to 4.97 million following last year’s earthquake, putting the Japanese automaker on track to reclaim the global sales title for the year. GM has lost U.S. share this year, posting a 4% sales gain through six months in a market that’s up 15%. July results will be announced on Wednesday, Aug. 1.
Ewanick is being immediately replaced on an interim basis by Alan Batey, a Brit who was promoted by GM in 2010 to handle North American sales for Chevy after some 20 years of global experience in the car sector. Perhaps tellingly about the trust he’s earning in the organization, Batey was recently promoted to a newly created role of VP-U.S. sales and service, the top sales executive in the U.S., reporting to Mark Reuss, North America president.
Although it’s not clear why Ewanick’s tenure came to such an abrupt end, a lot of attention is sure to focus on his decision this spring to pull paid advertising from Facebook because of concerns over ad effectiveness, a headline-grabbing move that smarted the social network, not only because of the budget. The timing hurt too, because Ewanick’s announcement came on the eve of its initial public offering. But before the hubbub had died down, there was talk of a makeup between the two companies. In July, the Wall Street Journal reported that the issue had gone above Ewanick’s head, with GM CEO Dan Akerson in contact with Facebook Chief Operating Officer Sheryl Sandberg.
During the recent Cadillac press meeting, Ewanick confirmed that talks with Facebook were continuing but didn’t play them up. When asked if Facebook would be part of the Cadillac ATS marketing, he deferred to Peck, who said that Cadillac would post content on the Facebook brand page but not buy ads. Ewanick spoke up, at once jokingly and acidly, saying, “Why didn’t you buy paid ads?” He repeated this question a few times, like a man weary of being asked the question. He also confirmed that GM still had no plans to advertise in the Super Bowl, but declined to discuss the reasoning.
However Ewanick’s departure is spun, his exit after two years of overseeing GM’s global marketing – which put him in charge of an ad budget worth several billion dollars – will have big repercussions for the automaker. Akerson will need to install a replacement who, like it or not, will inherit a host of decisions Ewanick made, chief among them whether to follow out Ewanick’s plans to stay on the sidelines during the Super Bowl.
But a far bigger impact will be felt too, one that trickles down to scores of ad agency employees Ewanick was directing to create advertising for Chevrolet and other brands.
After all, when GM just four months ago said it was building a dedicated agency for Chevy called Commonwealth, adland was floored — if also largely dubious. It’s practically unheard of for two rival ad holding companies to agree to team up formally as did Omnicom Group and Interpublic Group for the venture, but GM touted the Detroit-based venture as a “first-of-its-kind” way to combine creative talent and strategic leadership.
Many staffers upended their lives in San Francisco and in other cities to move to Detroit. It’s been a hopeful thing for the city too, which has been especially battered by the recession’s effect on the auto industry. And while Commonwealth alone can’t return all the ad positions that were slashed in Detroit back in 2008 and 2009, the hope has been that it would help in getting there.
The news of Ewanick’s departure seems unexpected even for those close to Ewanick, such as Jeff Goodby, a longtime friend. For his part, Goodby is optimistic that the work they collaborated on with Commonwealth can continue.
“We have been friends with – and fans of – Joel Ewanick for a long time now, so this turn of events is unsettling for us,” Goodby told Ad Age. “But there are big challenges, and we will go forward.”
“As for the Commonwealth structure he set up, it has been a big success, I think,” Goodby said. “It has GM marketers from around the world working more closely together than ever. We are about to embark on a big new consolidation of strategy and work. We have no reason to believe that the current relationships won’t continue to be enormously successful.”
McCann WorldGroup CEO Nick Brien declined to comment.
Executives familiar with the matter suggest that a contract has been finalized so a new executive can’t unwind Commonwealth anytime soon. And if it’s true what was said by Ewanick back when it was announced in March – the consolidation of the more than 70 shops to one to work globally on the Chevy brand could create $2 billion in savings over the next five years – that would suggest GM might have every intention of pushing forward with a plan that promises cost efficiencies.
But long term, history has proven that these sorts of structures often don’t outlive their masterminds for very long. Case in point: The three-year contract that Dell inked with WPP. After the marketing executives who put that idea together were gone, others who came in didn’t necessarily support the idea, so it was folded shortly after the contract’s expiration.
To read the original story in Advertising Age, click here.