Agency Spy : Universal McCann lands Chrysler
December 9, 2009
It appears that Agency Spy has the scoop that Chrysler has handed it’s Advertising Agency Media Buying business to Universal McCann.
This report has been rumoured to be happening for some time, but agency spy has the confirmation.
It appears that the Chrysler account has been floating around being pieced out to multiple agencies, so this is just another part of the pie.
Though we were told yesterday evening by agency folks that the deal “looks good but it isn’t a done deal”, we can now safely say that effective immediately, Universal McCann is Chrysler’s new AOR for media buying/planning for Jeep, Dodge and Ram brands in the U.S., Canada and Mexico. — Agencyspy is reporting
At least this went to an ad agency in the US …. sigh…
RIP ad agency BBDO Detroit
November 9, 2009
Agency Spy has a breaking news report that ad agency BBDO Detroit is closing it’s doors on January 29th. Meaning that the game is over for the advertising agency.
The agency historically obtained most of it’s business from Chrysler, and when that business dried up, so did everything from payroll to rent. Meaning, like any other company it’s forced to close its doors. 485 people are currently working in that office, and the vast majority of them will be given walking papers.
This is a major blow to what’s left of the Detroit advertising business. The City has been in the great depression in earnest for quite some time now. A 4 bedroom home could be bought in Detroit for $3,000 dollars… the same home went for $100,000 several years ago.
Anyone want BBDO’s current office? Out guess that you can get into a holding company office for pennies on the dollar. Just like the rest of the business model.
This is going to be rough for those nearly 500 people being fired, there are not many viable alternatives to employment within a large radius of the city. The city recently reported a 35% unemployment rate (nearly 50% when you account for underemployment IE: Mechanical engineers working at McDonalds)
This is bad.
Ad Agency BBDO Finds out from Trade Journals about Chrysler Review
August 30, 2009
“As we launch a new company with a brand-focused organization, we are looking for fresh ways to communicate in the marketplace,” Chrysler said in a statement. “As a result, we are currently soliciting creative input on a limited number of specific projects from a select group of ad agencies.” BBDO told us to contact Chrysler for any questions as they are not to comment on the situation as they are finding the details in real time.
So in essence BBDO found out they were getting canned though the trade journals. For a nearly 1 billion dollar advertising account, that’s a hell of a way to find out.
The company is looking for new direction in their marketing, stronger online presence and a smaller advertising budget going forward. If the rumors are correct the final decision will be made in Italy, not in the United States.
This is perhaps one of the single biggest fallouts since the great recession has started, and this one will forever change the face of BBDO, expect massive layoffs. You don’t lose a billion dollar account and don’t expect to lose employees.
Interpublic : GM owes us $50 million not $15 million
June 5, 2009
Interpublic is launching a broadside against the bankruptcy documents provided by General Motors, that only listed about $15 million, earlier Interpublic was fighting for “top position of losses” with Publicis to see who lost the most with the GM bankruptcy stating that figure was around $150 million (10x the amount GM said it owes them).
Regardless, this bankruptcy is turning out to be an advertising agency nightmare as several firms are constantly re-adjusting how much their companies are owed.
The fact of the matter is that advertising agencies are sort of on the back burner in terms of priority, payroll and vendors that actually supply parts to build the cars will take the lead. Clearly the Obama administration feels that Advertising needs to be cut down for the car companies, as he cut the Chrysler advertising budget by half.
These advertising agencies are going to get paid fractions of the dollar, if that.
Enjoy the new reality, Government motors isn’t going to be the monster in advertising it was 5 years ago.
Obama cuts Chrysler advertising budget in half
May 12, 2009
Chrysler wanted to spend $134 million in advertising over the nine weeks it’s in bankruptcy, however the Obama auto-industry task force gave it only half that. This is to be expected, as we have reported earlier that Chrysler owes Ad Agency BBDO $58,000,000. Omnicom Group is listed as it’s second largest creditor…. See this is our problem now, as it was last month when we published this story.
It’s worth noting, when your second largest creditor is your ad agency, exactly what was Chrysler spending their money on… seriously… like this company spent everything they had on advertising… and nothing on R&D …. no wonder they are where they are… in bankruptcy.
The Federal Government viewed at least half of Chrysler’s advertising budget as a waste of money, hence why it denied it… and honestly despite being in the advertising industry.. it’s hard to validate the entire sum in light of the cash crunch and the fact it is in bankruptcy.
The problem is people, when you are on government dollars, you are going to have to expect government results…. and the fact is that government feels that advertising isn’t a priority, payroll is.
You think this is bad, wait until the banks that have taken TARP money want to review their advertising budgets… because you are smoking crack if you think this is the last time this will happen.
Enjoy the new reality.
Chrysler owes Ad Agency BBDO $58 million.
April 30, 2009
BREAKING : Ad Agency BBDO Detroit owned by Omnicom Group is owed $58 million in the bankruptcy document, that you can read here
It’s worth noting, when your second largest creditor is your ad agency, exactly what was Chrysler spending their money on… seriously… like this company spent everything they had on advertising… and nothing on R&D …. no wonder they are where they are… in bankruptcy.
They even listed Peter Arnell’s Peapod in the bankruptcy documents…. the POS golf cart… that will never get off the ground… especially now..
It is unlikely that advertising agency BBDO will receive the complete funds, if any, and to make matters worse it appears that BBDO might even lose the account as per the rumors on the street.
$58 million dollars… it’s enough cash to force all sorts of layoffs…. and those layoffs most likely will be expected. We are unsure if that is just their billable fees, or if that is hard dollars allocated out of the ad agency for media spends, as BBDO Detroit has not gotten back to us prior to this publishing. If it’s hard dollars allocated out of the agency, then the chances are the layoffs will be far more severe… and it’s our speculation that that is exactly what the bulk of the money is.. leaving BBDO holding the bag for Chrysler’s bankruptcy.
We actually expect Omnicom to go into the bailout line after this one.
BBDO Minus Chrysler leaves very little
April 30, 2009
EDIT: There is a part 2 to this, as Chrysler owes Ad Agency BBDO $58 million as per bankruptcy documents.
Since Chrysler will file for Chapter 11 bankruptcy and the company will shut down production on Monday. Under bankruptcy, Chrysler would still sell cars and the government would back its auto warranties when it resumes operation under bankruptcy protection, but all this leaves a big open question regarding their Advertising Agency of record, BBDO owned by Omnicom Group.
The rumor on the street is that this relationship will not continue in it’s current form the second the bankruptcy judge looks at that billing sheet. In fact, advertising in general from the company will be reduced to pennies as compared to recent history.
Chrysler spent $1.2 billion on advertising in 2007, much of that going to BBDO, now the advertising budget is expected to be a tiny fraction of that, with whatever of it is left mostly allocated to online. Something BBDO arguably isn’t prepared for.
“I don’t have a freaking clue what they are going to spend on Advertising with this mess. We have the government, the bankruptcy judge, and Fiat all going to have their say.” said a Chrysler employed source, and based on the Fiat Press Release (Included below) it appears that Fiat has zero intention of allocating cash to this venture. The last sentence of the release spells it all. That means Fiat has a say on what is spent, but doesn’t have to put a penny into it.
Another individual puts this into historical perspective. “The Chrysler owned Jeep was designed to fight the Germans and Italians in World War II, now Italy owns it…. who knows how they are going to treat that line”
Interesting time, but one thing is clear, BBDO is going to be seeing some headache level issues coming from the company.
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FIAT GROUP AND CHRYSLER ENTER INTO A GLOBAL STRATEGIC ALLIANCE
Fiat S.p.A. and Chrysler LLC announced today they have signed the agreements to establish a global strategic alliance. The Alliance comprises two elements: Fiat contributing to Chrysler rights in various platforms, technologies, and models, management services and cooperation and assistance in key areas of Chrysler’s business, such as procurement and international distribution, and Fiat’s acquisition of a shareholding in Chrysler.
1.Statement from the CEO of Fiat Group, Sergio Marchionne
“This transaction represents a constructive and important solution to the problems that have plagued not just Chrysler in recent years, but the global automotive industry as a whole. Bringing together Fiat’s world-class technology, platforms and power-trains for small and medium sized cars, and its extensive distribution network in Latin America and Europe with Chrysler’s rich heritage, strong North American presence and talented and dedicated workforce will create a powerful new automotive company, while helping preserve jobs and a manufacturing industry that is critically important to the U.S. and Canadian economies,” the CEO of Fiat Group, Sergio Marchionne, said.
Our goal since we first entered discussions with Chrysler nearly a year ago was to leverage the strengths of both companies to yield the scale, efficiencies and cost savings necessary to create two stronger automakers able to compete more effectively on a global scale. This transaction is an important step toward achieving this objective.
Our work is just beginning, but together with our new partners at Chrysler we look forward to delivering on the vast potential this alliance holds and reintroducing to North American customers of some of our most popular brands, including Alfa Romeo and the award-winning Cinquecento.
We would not be here to announce this agreement were it not for the tireless dedication, focus and creativity of the US Automotive Task Force and their Canadian colleagues. As we worked our way through the myriad of obstacles and issues that arise in transactions such as these, they never lost faith in the project. Through this transaction, they have created the conditions for the reestablishment of Chrysler as a viable long-term participant in the automotive market.
Organized labor unions on both sides of the border have also made significant contributions in accepting reductions in benefits and equity in satisfaction of some of their claims. I would like to thank the leadership of both the United Auto Workers and the Canadian Auto Workers unions for all they have done and for constructively participating in our shared challenge of recreating a great Chrysler.
Over the coming weeks and months, I will be spending a great deal of time meeting with Chrysler employees and touring its facilities. While our agreement must necessarily go through the U.S. legal system for a few weeks, we will be preparing ourselves to reemerge quickly as a reliable and competitive automaker. I believe Chrysler can meet the challenges posed by today’s difficult market conditions by tapping back into its innovative spirit, by focusing on quality as a cornerstone of its product offering and by listening to its customers and delivering the cars they want. It is a model we have strictly adhered to in the past few years at Fiat, and one I believe we can adapt here to write the next chapter in Chrysler’s legacy.
The transaction which we have just finalized represents an historic moment for both Fiat and Italian industry. It is a significant step toward building a new and solid foundation for the future.
Today is also a day of great satisfaction for all women and men at Fiat. The fact that Fiat’s know-how has been appreciated at the most senior levels of the US and Canadian administration – to whom I express gratitude on behalf of our Group’s entire management team – is a source of significant motivation for the work ahead of us.
We are certain that a stronger and more international Fiat will emerge from this alliance, with an even greater capacity to compete in markets worldwide,” the CEO of Fiat Group, Sergio Marchionne, said.
2.The transaction
The transaction will be implemented through an expedited sale of substantially all the assets of Chrysler to a NewCo pursuant to certain provisions of the US Bankruptcy Code. After intense consultations with the US Treasury and all the other constituencies, including, the government of Canada, the United Auto Workers (UAW) and the Canadian Auto Workers (CAW), Chrysler elected such route as the most effective to restructure its debt. As a consequence, today Chrysler will request the bankruptcy court in New York to approve the sale of Chrysler’s business to a NewCo. Subject to the approval of the regulatory authorities, if the Court will approve the Transaction it will require the parties to complete the transaction as soon as possible.
Pending this approval, the current Chrysler will continue its normal business operations and the US Treasury and the Canadian government will provide the company with financing in order to allow the performance of all its obligations towards the employees and to fund its on-going needs.
From the beginning of May Chrysler will benefit of new wholesale financing arrangements entered into with GMAC which will also offer retail financing.
At closing of the Transaction, NewCo will assume the corporate name of Chrysler and become the owner of substantially all the Chrysler’s business without certain debts and liabilities.
At closing NewCo will issue in favor of Fiat an equity interest equal to 20% (by vote and value) on a fully diluted basis and Fiat will enter into certain industrial agreements with Chrysler.
Similarly, at closing the Voluntary Employee Benefit Association (VEBA) will be issued an equity interest equal to approximately 55% on a fully diluted basis of Chrysler. Such equity interest will be administered by the U.S. Treasury. UST and the Canadian Government will collectively hold the remaining 10% equity interest (on a fully diluted basis).
The new Chrysler will also benefit from the recently agreed new collective bargaining agreements with UAW and CAW and of a facility of the U.S. Treasury of approximately US $ 6.5 bn.
The new Chrysler will be managed by a board of directors consisting of nine directors: three directors will be appointed by Fiat. One of Fiat’s appointees must satisfy the criteria for independence under the New York Stock Exchange listing rules. VEBA and the Government of Canada will have the right to appoint one Director respectively. U.S. Treasury will have the right to make the initial appointment of four directors (three of whom must be independent).
Fiat will have right to receive up to an additional 15% equity interest (by vote and value) on a fully diluted basis. This stake can be obtained in three tranches of 5% each subject to the achievement of predetermined targets, in particular, achievement of regulatory approvals to produce the FIRE family of engines in the USA; achievement of sales of Chrysler vehicles outside NAFTA, and achievement of regulatory approval to produce a Chrysler model based on Fiat technology. Upon obtainment of such additional 15% interest, Fiat will also have the right to appoint another director of Chrysler.
In addition, Fiat will be granted an option to acquire an additional 16% shareholding (exercisable from Jan 1, 2013 until June 30, 2016). The price of such incremental equity will be determined in accordance to certain market standards but in any event will not exceed the then Fiat market multiple. This option will not be exercisable while the US Treasury outstanding loan exceeds US$3 billion.
Fiat’s shareholding will be capped at 49% until Chrysler has repaid in full the loan granted by the U.S. Treasury.
3.Fiat’s contribution
Fiat will contribute key technology and other resources to Chrysler.
In summary, the Fiat Contributions will consist of the following: licenses enabling Chrysler to use all Fiat Group Automobiles car platforms (and subject to any restrictive agreement between Fiat and any third party) for the production of Chrysler vehicles in NAFTA; licenses enabling Chrysler to use certain of Fiat’s other key technology, such as engine technology; the on-going provision of management services in order to enable Chrysler to benefit from Fiat’s expertise in operational and industrial recovery; participation in Fiat’s purchasing and procurement programs; distribution of Chrysler vehicles outside NAFTA, in particular by giving Chrysler access to Fiat’s distribution network in countries in which Chrysler currently has a limited presence.
The alliance, a key element of Chrysler’s Integration Plan, would strengthen Chrysler viability for the long term with access to competitive, fuel-efficient vehicle platforms, powertrain, and components to be produced at Chrysler manufacturing sites.
The alliance would also allow Fiat Group and Chrysler to take advantage of each other’s distribution networks and to optimize fully their respective manufacturing footprint and global supplier base. The alliance does not contemplate that Fiat would make a cash investment in Chrysler or commit to funding Chrysler in the future.
Turin, April 30, 2009
Foxnews blames Obama for Chrysler Bankruptcy
April 23, 2009
This is the screenshot of the century… Notice how everyone else says “US” … but of course Foxnews says “Obama” … regarding the Chrysler Bankruptcy of course… because Chrysler was in tip top shape 100 days ago when it was flying into Washington asking for a bailout.
Chrysler to declare Chapter 11 bankruptcy - BREAKING
April 23, 2009
The New York Times is reporting that The Treasury Department is preparing a Chapter 11 bankruptcy filing for Chrysler that may show up as early as Tuesday…. and this may have dire results for Omnicom Group Inc
Already many other manufacturers are looking for other suppliers to get off those suppliers that have a large share of their business from Chrysler… fearing a wave of bankruptcies. “I can’t trust some of my suppliers, 40% of their business comes from Chrysler.. if it folds, so do a bunch of my suppliers” said one unnamed source.
Last we understood BBDO, owned by Omnicom Group Inc was their advertising of record, we can only state that this will be bad for both BBDO and Omnicom Group Inc if Chrysler will go into Chapter 11 bankruptcy. At one point in December Chrysler owed Omnicom 80 million dollars, and a bankruptcy will further expand those problems.
Would you put a year long salary into this?
15 companies might fold in 2009
February 9, 2009
US News and World report has issued a hit list of companies that have a good chance of failing in the next 8-9 months. We took it a step further and outlined who their advertising agencies are, because of the client goes bankrupt, the chances are great that the Advertising Agency will take a big hit as well. We took a sample of some of that hit list and added their agency of record. If there is any “bugs” in the listing please let us know.
Rite Aid - MARC USA (press release lists them as a client in 2008)
Chrysler - Omnicom - (Article dated 2007)
Dollar Thrifty Automotive Group - Icrossing (digital)- (Current Article on Icrossing.Com)
Realogy Corp - Havas’ McKinney - Article Dated 2007
Six Flags - Zimmerman - Article dated 2006
Blockbuster - Unknown today — but we do know that Doner fired them as a client in 2007
Below is the full list of companies that they are reporting might go under… enjoy the research.
Rite Aid, Claire’s Stores,Chrysler,Dollar Thrifty Automotive Group,Realogy Corp.,Station Casinos.,Loehmann’s Capital Corp.,Sbarro. ,Six Flags.,Blockbuster,Krispy Kreme. ,Landry’s Restaurants. ,Sirius Satellite Radio.,Trump Entertainment Resorts Holdings.,BearingPoint.
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