Was GM’s Nepotistic Ad Spending More Effective than Facebook?

Printer-friendlyPrinter-friendlyEmail to friendEmail to friend

The Detroit Free Press reported on Friday that General Motors failed to initially disclose possible conflicts when it awarded a $600,000 contract to Mother New York, an ad agency with ties to GM's Chief Financial Officer, Dan Ammann. Ammann's wife, Pernilla Ammann, is a partner and Chief Operating Officer at the ad agency. In typical Government Motors' fashion, Ammann dubiously denies having had knowledge of the deal. Before looking at what the money purchased, let's look at the likelihood that Ammann really knew nothing.

Honestly, is it likely that a CFO at a major corporation would not know that his wife's firm just received a $600,000 contract from his firm? How might the conversation between the two have gone at the time the windfall was received by Mrs. Ammann's firm? Maybe something like this:

Mrs. Ammann: "Hi Honey, how was work today?"

Mr. Ammann: "Just fine Dear, still trying to figure out how to get that share price up. How about you, anything new?"

Mrs. Ammann: "Same old, same old. Should we do Chinese or pizza tonight?"

C'mon now, are we seriously expected to believe that the CFO of GM did not know that a $600,000 contract was awarded to his wife's firm? Even if Ammann was that unaware of how money was being spent at GM, his wife would have certainly been aware of the contract and would have mentioned it. Under the scenario of Mr. and Mrs. Ammann having busy schedules that kept them apart, the magnitude of a major contract from GM to Mother New York would have been at least worthy of a phone call to discuss. It is hard to believe that ignorance and not lack of ethics was the reason the conflict was not initially disclosed.

So, what did GM get for $600,000? Here is a link to one of the "webisodes" produced by Mother New York to commemorate Chevy's centennial celebration. In the words of Mother New York's website, the ad campaign "tells the history of Chevrolet through the eyes of owners, dealers and their communities." The webisode link provided tells the story of Bridgeville, PA and one of their dealerships. I'm not sure where these webisodes are posted or who would be viewing them, but I personally found the video so boring that I stopped viewing half way through. No offense to the fine people living in Bridgeville, I'm sure it's a great town.

It is amazing to me that GM so cavalierly spends money on these types of projects. Who is viewing these webisodes and how many additional sales are they resulting in? Do the marketing gurus at GM think that these webisodes are more effective than the Facebook ads that were recently cut?

It appears to me that this is just one more example of wealth being redistributed to cronies that are connected to Government Motors. The conflict of interest oversight brings into question how reliable financial reporting under the leadership of Ammann is. If the man claims that he did not even know that his wife's firm received a $600,000 contract, how can he be trusted with the rest of the accounting at GM?

It is unlikely that legal actions or further investigations will be sparked by the Mother New York incident. If the Department of Energy can give millions of dollars worth of contracts to law firms with ties to the GM bankruptcy process without question, why should Government Motors think that they would be questioned about a mere $600,000 ad contract? But for the folks shopping for new cars who believe the shady actions at GM should not go unrecognized, this is just another reason to buy that Ford or Hyundai.

Mark Modica is an NLPC Associate Fellow.