TWA throttles back on spending

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Even before the TWA brand melts away after 71 years, the airline has scaled back its ad spending to near-skeletal levels - nearly a quarter of what was spent before financial troubles forced the carrier into bankruptcy and to the brink of being overtaken by American Airlines.

"What we don't have to be doing, we're not doing," said Steve Schlachter, managing director of marketing programs at TWA. "The fact is the TWA brand is going away."

After the American arrangement was announced along with the bankruptcy filing in January, TWA scrapped its marketing plan for 2001 and began to spend on an ad hoc basis on targeted or sale messages. The airline's TV efforts - with the catchy "Simple Gifts" jingle centered on messages such as new planes and first-class upgrades - are off the air and no new ones are in development.

Mr. Schlachter estimated spending is down 75% from levels of past years, where TWA spent an estimated $30 million in the U.S. and an additional $20 million overseas.

Though it is not surprising that a moribund brand would cease receiving support, the TWA example may be a microcosm of what could happen to the airline advertising category if the imminent round of airline consolidation takes off. The category could see a drop-off in spending and agencies that handle the accounts, valued almost more for their prestige than billings, could feel the side effects.

TWA's agency D'Arcy, Masius Benton & Bowles, St. Louis, is expected to be out of the airline business if the American deal goes through (the deal could be completed by March, though other bidders for the carrier could still emerge). However, the Bcom3 Group unit's knowledge of TWA marketing, particularly in the St. Louis area, could be used on a project basis. American is said to have a rock-solid relationship with True North Communications' Temerlin McClain, Dallas.

Ron Crooks, managing director and chief creative officer at DMB&B in St. Louis, said in a statement: "We have not had and don't anticipate any impact on D'Arcy staff." Other clients there include M&M/Mars, Sprint and the Coca-Cola Co.

It is unclear whether American will keep spending at the combined level of TWA plus American or slash spending. Mergers are often followed by attempts to achieve cost savings. But the new American will likely have to spend to reintroduce itself both in the St. Louis hub market, where TWA spends an estimated $6 million a year, and perhaps nationally as well. An American spokesman said no decisions have been made.

Other potential mergers include the pending United-US Airways marriage, while a mating dance goes on between Delta Air Lines and Continental Airlines. The United situation likely means Interpublic Group of Cos.' McCann-Erickson Worldwide, New York, will be out of the airline business since United's account is at Publicis Groupe's Fallon, Minneapolis. A US Airways spokesman said the company continues "business as usual" on the ad front, but declined comment on whether spending has slowed.

TWA and American are already beginning to cooperate on advertising, a process that will accelerate as aspects of the merger are approved by the government. A newspaper ad last week plugging the new synergies between the two carrier's frequent flier programs was developed by TWA and DMB&B, but then American-ized as it took on the look and feel of an Amercian ad.

TWA and DMB&B had been on a three-year push to remake TWA from a staggering, aging carrier to a brand with a new feel. Even as TWA struggled, the company continued to find outlays for marketing. "There was an understanding, even among senior leadership who are not marketing-driven, that you can't not spend," Mr. Schlachter said.

Unlike with Pan Am, where the brand has resurfaced on a small, fledgling New Hampshire-based airline unconnected to the original company, the TWA brand isn't going to resurface under a new owner. American plans to get and retain the rights to the name.

Contributing: Laura Q. Hughes

Copyright February 2001, Crain Communications Inc.

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