DEBORAH YAOThe company that oversees much of the advertising for General Motors Corp. said Friday that the automaker owes it $50 million, an amount that could grow if GM's international subsidiaries also file for bankruptcy protection. The amount that Interpublic Group of Cos. disclosed in a regulatory filing is more than triple the $16 million listed in the bankruptcy filing GM made Monday. That's because IPG has yet to bill GM for some projects just completed or still in progress. Interpublic is one of GM's largest ad agencies. In turn, GM is one of Interpublic's largest clients and brings in around $350 million in business annually. Interpublic's Campbell-Ewald unit handles the Chevrolet brand while Deutsch has Saturn, one of the divisions GM is selling. McCann Erickson does work for Saab and, along with Deutsch, handles some GM corporate work. Interpublic is currently awaiting a court decision to be designated a "critical vendor," which could give it a better chance of recouping much or all of what's owed. Interpublic previously estimated that it could be owed as much as $150 million by GM. The disclosure of a much lower figure shows the agency has a good handle on its exposure to GM, said Barry Lucas, senior vice president of research at Gabelli & Co. Inc. in Rye, N.Y.
Lucas said he was cautiously optimistic that the auto advertising slump may be bottoming out, with Chrysler LLC emerging from bankruptcy and GM already going through it. "We know that automobile ad spending is down precipitously ¿ 50 to 60 percent this year ¿ so how much worse does it get?" he said. "It always could be worse, but it's hard to envision that it could be much worse." But auto ads won't be growing again right away, he said, as GM and Chrysler shut down brands and dealerships close. TNS Media Intelligence, an advertising research firm, said automotive ad spending at GM could fall to $1.3 billion to $1.4 billion from last year's $2.1 billion ¿ a decline of at least a third. In addition, GM's dealerships could cut ad spending to $450 million to $500 million from $770 million in 2008. GM is the nation's largest automotive advertiser and ranks in the top five across industries, said Jon Swallen, senior vice president of research at TNS. He said any upswing in auto ad spending will depend largely on a rebound in vehicle sales.
GM's other ad-related creditors include Publicis Groupe, the Paris-based advertising conglomerate, which listed $25 million as the amount it's owed. But the company said Thursday that its exposure is about 55 million euros, or about $77 million. In addition, Starcom Mediavest Group Inc., a media buying firm owned by Publicis, lists $121.5 million it is owed by GM. In Chrysler LLC's bankruptcy filing, Omnicom Group Inc.'s BBDO Detroit advertising unit listed $58.1 million in trade debt owed by the automaker. Shares of Interpublic were up 30 cents, or 5.6 percent, to close Friday at $5.70.