Universal McCann Poised to Win Chrysler's Media Business

Account Was Valued Last Year at $1 Billion, but Troubled Automaker Has Cut Spending

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NEW YORK (AdAge.com) -- Chrysler is poised to hand its media-planning and -buying account to Interpublic Group of Cos.' Universal McCann, two executives with knowledge of the situation said, providing contract terms are reached.

This is the second major win in the auto category in the last eight months for the agency, which snared national and regional planning-and-buying duties for BMW's dealer groups in May. The announcement comes days after Ad Age first reported the automaker tapped Publicis Groupe's Fallon for creative work for its Chrysler brand, handled for years by Omnicom Group's BBDO.

Universal McCann referred calls to the client. The automaker had no comment, calling the report a "rumor."

From start to finish the media review took only about a month, with Universal McCann beating out Aegis' Carat; independent Horizon Media; and an Omnicom unit created specifically for this pitch. Omnicom's PHD previously served as media agency of record for all three of Chrysler's major brands, Chrysler, Jeep and Dodge.

The account will be a challenge for Universal McCann, though, as the automaker tries to emerge from bankruptcy and is reshuffling its staff and agency relationships. One insider put it this way: Taking on Chrysler at this point is the "equivalent of tying an albatross around one's neck."

Chrysler's U.S. media spending was estimated at up to $1 billion last year, but the automaker has trimmed spending this year. According to TNS Media Intelligence, the automaker laid out $255 million in measured media for the first nine months of 2009.

Earlier this year, Chrysler aligned with Italian automaker Fiat. That move prompted a series of changes in the marketing department (most recently, Olivier Francois being named as head of global marketing) and the dissolution of the relationship between Omnicom and Chrysler.

Sergio Marchionne
Sergio Marchionne
The boss of the new Chrysler, Fiat head Sergio Marchionne, is said to have felt the automaker was overpaying BBDO. Others close to the situation believe the source of the strain goes back to when Chrysler filed for Chapter 11 and BBDO sought the money it was owed. But whatever the reason, the relationship between BBDO and Chrysler became rockier over the summer and into the fall, and PHD's future with the automaker became unclear. Things took a turn for the worse earlier this month when BBDO signaled the end of its long relationship with the troubled automaker by shutting down its Detroit office.

Scott Hagedorn, U.S. CEO of PHD, said the agency had already planned for the possibility of losing its biggest account. In July, Mr. Hagedorn told Ad Age that the agency had forecast the "Chrysler going away scenario" into its 2010 plans so that if the worse-case scenario did actually play itself out the agency wouldn't get caught with a huge chunk of income missing. That's not to say that Chrysler hasn't already affected PHD's business over the last 18 months. As the automaker problems worsened last December, causing it to significantly cut its ad spending, PHD closed its Atlanta office and let 30 employees go.

The shift of media duties to Universal McCann means another agency change on Chrysler's roster. Earlier last month, Chrysler held a meeting in Detroit where it unveiled a five-year plan for the company, and also broke new TV campaigns for its car brands. Work was doled out to new agencies, such as Richards Group, responsible for a new Dodge Ram campaign;, GlobalHue, Southfield, Mich., also got some Jeep work.

As for Universal McCann, this wraps an incredibly strong year in the new-business category. In October the shop picked up Mini's national and spot TV- and radio-buying business; in September, Applebee's, as part of a consolidation move, moved its $150 million-plus media planning and buying account from Publicis' Starcom to Universal McCann.

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Jean Halliday contributed to this report.

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