Chrysler Owes Omnicom’s BBDO Detroit $58.1MM

Chrysler filed for bankruptcy last week; in its filing, it listed Omnicom’s BBDO Detroit as its second-largest unsecured creditor.

Chrysler, which posted a 29% decline in total ad spend in 2008 from the previous year, owes BBDO Detroit $58.1 million, though it is believed that the majority of that money is owed not to the agency itself but to the media for purchases made on Chrysler’s behalf. Most of the money is believed to be owed to local TV stations, AdAge reports.

BBDO is working on an educational campaign for the automaker to inform consumers that despite the bankruptcy, Chrysler is still in business.

If BBDO qualifies as what the government calls a “critical vendor,” it will be eligible to collect about a third of the money it is owed.

Earlier this year, PHD - the agency that handles Chrysler’s media duties - laid off 30 staffers at its Detroit office. As Chrysler business has declined, the agency has gone on the offensive, seeking and winning approximately $500 million in new business, writes Adweek.

Chrysler is expected to participate in the upfront, though it plans to spend lightly, instead holding onto its cash for tactical spending. GM plans to participate, as well, but perhaps on a cash-only basis. Sellers may require GM and Chrysler to pay in advance for the time they commit to, rather allowing them to pay for their upfront orders later in the year.

Omnicom claims to be in good shape, even if Chrysler ultimately self-destructs. “If Chrysler were to go into liquidation, which we don’t expect, it would mean the disappearance of the Detroit office and that billings would go down,” a senior executive is quoted as saying. “But it wouldn’t change the status of the network in any structural or significant way.”

Omnicom posted a 14% decline in revenue in the first quarter of 2009.

Meanwhile, GM has another month before it hits its deadlines to satisfy creditors or declare bankruptcy. A GM spokesperson said that bankruptcy is almost certain if it fails in its efforts to reorganize outside of court. If that happens, Publicis and IPG could be out a combined $250 million.

In 2008, ad spending was down 10% across all automakers, to $8.2 million, per Nielsen. For the first two months of 2009, spending plunged another 25%, to $938 million.