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July 03, 2021

Should GM trim its advertising budget during bankruptcy?

By Jason Buckland, Sympatico / MSN Finance

By now, we’ve all seen General Motor’s new “Reinvention” ad on TV, a humbled, let’s-get-down-to-business admission of the auto maker’s faults and atonements for the future.

And I’ll be the first to admit, the commercial is well done. After glimpses of Detroit’s glittering sunset at dusk, we see a shot of Ben Roethlisberger throwing a majestic, slow-mo spiral at the 26-second mark as the narrator beams, “Reinvention is the only way we can fix this. And fix it, we will.” Makes you want to stand up and salute the red, white and blue.

Quietly, though, the ad has set off debate among those concerned with the company’s finances.

Up until its recent dip into bankruptcy, GM had long been the U.S.’ second-largest advertiser, behind only Procter & Gamble. Though the auto maker currently finds itself in third place (Verizon is now in second), it had still spent about $2 billion annually on marketing campaigns in the years leading up to Chapter 11.

Considering the massive taxpayer bailouts levied upon the auto giant, many presumed GM would use the money to solidify the quality of its declining product rather than splurge on an advertising blitz, which may suggest intentions of rebuilding business from the top-down.

That was not the case earlier this month when GM announced it would continue its ad spending, consequences be damned, at a price tag in the neighbourhood of $50 million each month.

The case of ‘Should GM use bailout money to advertise or not?’ offers an intriguing chicken-and-egg argument over the merits of marketing. Two differing questions jump to mind:

If you’re in GM’s corner on advertising and brand awareness, the issue becomes, What better way to jumpstart sales and save the company than to alert the public we’re still here?

If you’re against the decision, well, it becomes somewhat of a personal affair. How dare GM use all that money – OUR money – to fund these high-priced smoke and mirror games when they could be using it to fix the undependable cars and reckless mismanagement that pushed them to bankruptcy in the first place?

Both camps are right on this one, which is what makes it such a tough philosophical debate. This Consumerist poll shows 68% of readers don’t approve of GM’s strategy (they’d “be more reassured if they stopped wasting money”), and you kind of get the sense this might be the consensus among the rest of the general public.

There’s only one way GM can silence its critics on this one, and that’s to simply sell cars. The odds of recovery may be in the auto maker’s favour, but only time will tell if they’ve made the right decision or not.



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...