CHRYSLER BALKS AT MAGAZINE AD RATE HIKES

By: Joe Nicholson Financially Strained Automaker May Refuse Newspaper's Rate Hikes





With the Chrysler Corp. refusing to pay magazine advertising rate increases and leaving open the possibility it also may balk at newspaper rate hikes, unfazed ad executives at large dailies said they have learned how to cope with that sort of headache.



Chrysler told magazine publishers it would consider only ad rates that remained flat from the previous year - and newspapers might not be far behind.



Newspaper ad executives said they have not heard anything from Chrysler, but said they would treat such a demand the same way they have similar demands in the past from big, financially stressed advertisers. In Chrysler's case, its ultimatum followed a third-quarter earnings drop of 78%, or $512 million.



Due to its financial difficulties, DaimlerChrysler AG at press time was expected to name a German executive to replace Chrysler CEO and President James P. Holden.



"I'm surprised [Chrysler] would send such a flat directive to the entire [magazine] industry," remarked Franchesca Lewis, national advertising manager at The Sacramento (Calif.) Bee.



Lewis and the vice president for advertising at another major metro daily, who asked to be unidentified, said they had not heard about Chrysler's decree, but both explained newspapers can be flexible to work out rate terms with a big advertiser undergoing financial distress.



The Bee has not received that sort of demand this year, but it has received similar demands in past years, said Lewis, whose major national ad categories include automotive, financial, and telecom.



In the past, Lewis said she has responded by pointing out that her newspaper has a growing circulation and offers better value to advertisers than other dailies in similar markets. In addition, she has suggested to such advertisers that they may be able to save money by signing a dollar volume contract.



As a last resort, Lewis said, she would consider other ways to accommodate a big advertiser undergoing financial stress.



The Bee's biggest automotive advertiser is General Motors, which, Lewis happily reported, signed a contract recently that sets ad rates through December 2001. She said more than 95% of GM ads are run-of-press (ROP) and that most are full-page. She cited Newspapers First, her New York-based rep firm, for doing a good job selling the Bee as a branding vehicle.



While Chrysler and Ford do much less advertising with the Bee than GM, Ford signed a contract this year that has led to at least 10 full-page ads designed to publicize Ford's position in the Firestone tire controversy.







Joe Nicholson (jnicholson@editorandpublisher.com) is an associate editor for E&P.







Copyright 2000, Editor & Publisher.