Chrysler advertising budget slashed during bankruptcy

Chrysler wanted to spend US$134 million ($225 million) in advertising over the nine weeks it is expected to be in bankruptcy. The US Treasury's auto industry task force gave it half that.

So if General Motors, which is wrestling with the possibility of a Chapter 11 filing itself, is wondering how much influence the task force will have over marketing, the answer is plenty.

Transcripts from the US Bankruptcy Court for the Southern District of New York, which is hearing the Chrysler case, showed that the task force at least understands that advertising is a necessary expense - even if it doesn't think Chrysler needs $134 million for nine weeks of car ads.

Robert Manzo, executive director of Capstone Advisory Group and a consultant to Chrysler, testified at a May 4 hearing that the task force "believed that it was not feasible to not spend anything on marketing and advertising for fear of eroding the image of the brand," during the company's bankruptcy. Manzo also testified that this "hotly discussed" matter resulted in the task force basically slashing in half the amount Chrysler wanted for advertising in the period.

US Bankruptcy Court Judge Arthur Gonzalez then asked the witness: "Idle plants; why market?" referring to Chrysler's shutdown of its factories for nine weeks.

"The belief on all sides was that it was essential for Chrysler not to lose its brand image in the marketplace," Manzo testified. "Advertising and marketing dollars are critical to make sure the right message is out there about Chrysler, what's happening to Chrysler during this interim period and why Chrysler will be a brand going forward that is one that a consumer should continue to look at as one of their purchase opportunities."

Indeed, that's what the automaker is attempting with the national TV campaign from BBDO, Detroit, that's running in prime time on ABC, NBC and Fox to try to calm consumers' fears about the future of its Dodge, Jeep and Chrysler vehicles.

The first of two 30-second spots is dubbed Bright Future, and it refers to Chrysler's reorganisation and alliance with Fiat S.p.A. that will build a "meaner and leaner" company for the future. The push is a departure for Chrysler, which earlier this year cut network broadcast out of its budget in favour of more inexpensively priced local TV.

Steven Landry, Chrysler's executive vice president of sales and marketing, said in a statement that the effort "gives us the opportunity to reinforce that it's business as usual and demonstrate a bright future ahead for Chrysler."

That sentiment struck a discordant note with some readers of Automotive News' sister publication Advertising Age after a story on the campaign was published on AdAge.com.

"Business as usual? Isn't that what got American car companies in trouble in the first place?

"Business as usual gave us cars no one wanted to buy, zero innovation, outdated labour practices and a lot of taxpayer money thrown in to keep a sinking ship from going under," commented Jeff from Boston.

"How about some unusual business practices - like a successful American car company?"

- AP