GM and Carat, its media agency, asked TV networks for significant pricing rollbacks, receiving a refusal from the major broadcast networks.
GM, which recently stopped advertising on Facebook, and won’t take part at the next Super Bowl next year, seeks cuts as large as 20%in the cost of reaching 1,000 people. Usually, advertisers ask TV networks for rollbacks during a major economic downturn, but this year pricing is on the rise.
GM is known as one of the biggest TV advertising spenders, with $1.1 billion on TV ads only in 2011, being the third U.S. TV advertiser after Procter & Gamble and AT&T. Although all the TV networks have refused to talk with GM so far, if an agreement is settled the company’s demand for price cuts would mean significant recalculations in the amount of ad time the networks will sell this year. The networks also have to take into consideration what impact would have no GM money in the upfront.
“They have a pretty low base to begin with,” the ad-buying executive said. “They have been an advertiser since the dawn of time and they are a founding or incumbent sponsor on a lot of network, so they get a very low base.”