By on May 11, 2009

Remember the whole “we do not want to run the automakers” routine? Cue up the laugh track. President Obama’s PTFOA has intervened to halve Chrysler’s ad budget during its taxpayer-funded bankruptcy, reports Automotive News [sub]. Chrysler had requested $134 million  for advertising during its alleged nine-week bankruptcy. That request was halved by the PTFOA because that body “believed that it was not feasible to not spend anything on marketing and advertising for fear of eroding the image of the brand,” says Chrysler Chapter 11 consultant, Robert Manzo, in court documents. We knew Chrysler’s DIP budget was being drawn up “in consultation with the Treasury,” but this is the first glimpse of a struggle between Chrysler management and its government paymasters.

According to Manzo’s testimony, the issue was “hotly discussed.” Judge Arthur Gonzalez apparently didn’t understand Chryco management’s burning desire to run its second “New Day”-style ad campaign in as many years, especially on the taxpayer’s dime. He asked Manzo: “idle plants; why market?”

“The belief on all sides was that it was essential for Chrysler not to lose its brand image in the marketplace . . . 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.”

And so they have $67 million with which to proclaim their bright future of dawning glory. Because that’s the appropriate amount to spend selling a bad idea to your new taxpaying non-customers. Meanwhile, with GM cutting $300 million from its Q1 ad budget, AN [sub] Publisher, Keith Crain, is suddenly asking “Who can forget British Leyland?” That’s right, Detroit’s biggest cheerleader during the rush to bailout is now Cassandra-ing on about the dangers of “government ownership—or direction.” Because taxpayers should be expected to pay Crain’s (and TTAC’s) ad revenue (thanks to the ineffective profligacy of the Detroit midlemen) without second thought or condition? Please. Government intervention is never pretty, but accepting bailout bucks means accepting a certain amount of intrusion. After all, even foolish investments have to be protected. And Chrysler’s “I feel so brand new” moment proves that Auburn Hills still need to be saved from itself.

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14 Comments on “PTFOA Halves Chrysler Ad Budget...”


  • avatar
    threeer

    Can the Reliant/K-car be far behind? Maybe they could dust off the (long paid-for) tooling and begin cranking these puppies out again and “sell” them to the government! Brilliant!

  • avatar
    JG

    There’s that “going forward” thing again.

    Into what? Can someone really quick let me know who is going to run “New Chrysler” now? Who is going to be the CEO? From what location is the company going to be managed? What autos are they going to sell? When?

    Maybe some ads are a good idea. Just cut out the crap and let’s see what’s actually in store.

  • avatar
    jkross22

    That’s still enough money to see some ‘Thank you’ notes in the WSJ and the Gray Lady. Maybe they’ll even throw in an official Nardelli dart board we can cut out and hang in our Chrysler-less garages.

  • avatar
    Paul Niedermeyer

    “The belief on all sides was that it was essential for Chrysler not to lose its brand image in the marketplace”

    The “not” in that statement needs to not be there.

  • avatar
    Jimal

    Its the same old story; when revenue goes down the first thing cut is the marketing/PR budget. Nevermind the fact that it is when sales are DOWN that you really need to get your message out. Chrysler needs to be out there, for better or worse, in front of its target audience during this C11 fiasco. What? The news says your bankrupt and your doing nothing to say otherwise?

    It is the great Chinese finger puzzle of business.

  • avatar
    mel23

    I don’t agree that Chrysler needs to be “out there”. Every time their name pops into the conscious, the word bankrupt does as well. And images of failure, bad investment, etc. Better to let things progress until some positives can be associated with the name even if it’s bogus spin.

  • avatar
    Old Guy Ben

    Instead of two fools saying “that thing got a Hemi?” we’ll only get one? Sounds good to me!

  • avatar
    Conslaw

    I’m sure the Treasury Department would prefer to not have to make decisions about Chrysler’s ad budget. The problem is that so far Chrysler has been really irresponsible with the money, funding advertisements that are ridiculous because they show cars that aren’t available and never will be.

  • avatar
    jpcavanaugh

    The judge gets it. There is no reason to market this company because this company is a goner. New Chrysler that buys its favorite assets out of the bankrupt carcass – IT needs to market, but it can’t because it isn’t a car company yet. And if it looks too much like a car company, it may increase the amount it has to pay for the assets. So, New Chrysler wants Old Chrysler to pay for image ads that can only benefit New Chrysler, which will eat up a finite amount of cash that will be available to pay Old Chrysler’s creditors (like warranties).

  • avatar
    Kevin

    Just chalk it up as bailout bucks for creative agencies and ad-supported media! They need jobs too.

    In a sense the PTFOA has an easy job. Just apply a variant of the George Costanza principle: Whatever the Detroit executive propose, do the opposite! Sounds like a winner to me.

  • avatar
    tced2

    Was this just an arbitrary “cut it in half” or is there a plan?
    Of course, the Treasury doesn’t have any clue about marketing and advertising. You don’t have to market or advertise anything if you’re in charge. It’s not like I can consider the “other” Treasury department if I don’t like this one. Or maybe I can switch to the “other” Fed.

  • avatar
    dzwax

    You don’t have to market and advertise as much if you have a quality, durable, reliable product that people want.

  • avatar
    cynder

    We can’t have it both ways: demanding the leadership of Chrysler to exempt themselves from operations of the company and still complain when the government takes action.

  • avatar
    charly

    It is good PR for the Treasury Department to cut the PR budget in half. It is really good PR for Chrysler to being “forced” to cut the PR budget in half as people will think that the company will be run efficiently.

    So we end up in a situation in which the PR person says that the planned PR budget has been cut in half. Thank god PR persons always tell the truth.

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