Executive Shifts Muddy Chrysler Review

NEW YORK Last week’s shake-up of top brand managers at Chrysler and Dodge added a new sense of confusion to Chrysler’s agency review for fourth-quarter creative assignments, a process that has already been described by sources as everything from “chaotic” to “dysfunctional.”

For incumbent lead agency BBDO, whose contract with the automaker is up at the end of January, its ongoing relationship with Chrysler may hinge as much on compensation issues as on creative, sources said. Chrysler’s new top executive, Sergio Marchionne, the CEO at Fiat, which took control of a 20 percent stake in Chrysler and control of the company in June when the latter emerged from bankruptcy, uses a commission-plus-bonus component to compensate agencies. Those amounts are believed to be less than 5 percent of revenue generated by the brand in each instance.

Marchionne is said to be pushing for concessions in the Omnicom Group agency’s more lucrative contract, without much luck, sources said.

“Sergio was blown away, absolutely shocked, by the amount of money being paid to BBDO,” said one observer.

BBDO declined to comment, referring calls to Chrysler, where a rep also declined to comment. Marchionne, whose Fiat took the Chrysler stake without making any cash investment in the Detroit company, recently said that “the level of cost consciousness at [Chrysler] is probably at a historical high.”

At the end of August, Chrysler implemented Fiat’s “jump-ball” approach to working with agencies. The auto marketer said it was reaching beyond BBDO for creative ideas for the fourth quarter.

In another sign of change among big automakers, GM on Friday hired an outside consultant to manage a review of creative duties on its $240 million Cadillac brand, with the incumbent, Modernista!, declining to participate.

Marchionne’s surprise replacement last week of the two top executives at Chrysler and Dodge-Peter Fong and Michael Accavitti, both appointed in June to the president/CEO positions at those brands-came after agencies had made their creative presentations.

While it’s still not clear to agencies who is making decisions about work that was shown, Fong is being replaced by Olivier Francois, who also continues in his role as head of Fiat’s Lancia brand; Ralph Gilles, Chrysler’s chief of design, is taking over the Dodge car brand; and Fred Diaz, the head of Chrysler’s Denver business center, was given top responsibility for Dodge Ram, spun off last week as a separate brand. The management shifts occurred just days after Chrysler reported a 42 percent drop in sales in September.

Ultimately, Marchionne is said to be calling the shots. “Marketing and brands are a great passion of Sergio’s,” said one source. “It’s one of the ways he’s turned around Fiat.”

He hasn’t been in initial agency meetings, sources said. Shops are pitching to their Chrysler clients, who then show the work to the Fiat chief. Marchionne has sat in on meetings, however, when it has come down to finalists competing for a Chrysler brand’s work.

The brands that may still be up for grabs, in the search for fourth-quarter creative, include Chrysler Town & Country and the Dodge Journey and Charger models. GlobalHue, a Detroit-area multicultural independent, picked up the next Jeep campaign, a brand it has previously worked on; Dallas independent The Richards Group won Dodge Ram and heavy trucks; and BBDO recently broke new work for the Chrysler 300 model.

It is thought that Chrysler is currently preparing an agency “request for qualifications” to determine future AOR assignments for Chrysler brands, excluding Dodge Ram, which is expected to stay with Richards.

BBDO remains a part of that consideration. Among the other agencies that have been involved in discussions with Chrysler are Publicis Groupe’s Publicis & Hal Riney and Fallon; Omnicom’s Cutwater; and MDC Partners’ Crispin Porter + Bogusky.

Chrysler has been under PR lockdown — participating agencies in the review process declined comment for this piece — although last week Marchionne publicly predicted that Chrysler could become profitable within 24 months.

On Nov. 4, he will outline his five-year survival plan for the company. Absent new models, marketing sleight of hand will be key in achieving Chrysler’s ambitious profit goals.

Whether or not BBDO remains with Chrysler during that time remains to be seen. The agency has enjoyed a dominant role with Chrysler since 2000, when Omnicom won global consolidation duties on what was then a $1.8 billion account. (Through July of this year, Chrysler spent $82 million in measured media, per Nielsen.) But BBDO’s Troy, Mich., office is down to 450 people from 2,000 at its peak. (That latter figure did include Chrysler media operations, since shifted to PHD.)

Marchionne’s dismantling of Chrysler’s lead-agency model now makes BBDO one vendor among many. And all of them may find themselves in constant pitch mode, only as secure in their AOR status as the last campaign they sold through to their Chrysler clients, who are now responsible for the profits and losses of their divisions. Sources say Fiat pays AOR compensation and a bonus kicks in only if work is sold; otherwise, that money goes to whichever agency sells through a solution.

See also: “Carmakers Change Rules of the Game”