A Better Idea?

Chrysler gets a Ford agency

Chrysler President Lee Iacocca repeatedly denies that he has been pirating former colleagues away from Ford, which sacked him in July. In fact, he makes his denials with all the sincere innocence of Captain Kidd. Last week, smiling broadly, he announced that the Kenyon & Eckhardt ad agency was quitting Ford after 34 years to take on the $120 million Chrysler account. It was the largest account switch in U.S. history.

So secret were the negotiations between Iacocca and K & E Chief Leo Kelmenson that Ford executives got the news less than an hour before the public did. K&E hand-delivered a letter resigning the $75 million account, which was roughly like kicking Ford out the door at 55 m.p.h. Meanwhile, Iacocca telephoned Chrysler's previous ad agencies--Young & Rubicam, BBDO and Ross Roy--to tell their bosses that they had had it.

The seeds of the deal germinated last month over a dinner that Iacocca had with his longtime friend Kelmenson. By the time Kelmenson reached for the check, Iacocca had dangled before him a 26% increase in domestic billings and a five-year no-cut contract instead of the standard 90-day termination agreement.

In addition, K&E got the right to put some of its employees on Chrysler's planning and marketing committees--an unusual coup for an ad agency. Except for some relatively minor scraps, K&E will handle all of Chrysler's advertising, a departure from the usual auto industry practice of having different agencies for different product lines. Says Kelmenson: "It's my dream of total involvement."

K&E had created Ford's "Better idea" and "Ford wants to be your car company" slogans, along with the famous "Sign of the cat" for Lincoln-Mercury. The theme at Chrysler will be engineering, and Astronaut Neil Armstrong will apparently remain as the corporate spokesman. Whether K&E will be able to improve the fading Chrysler quality image is a major question. Says a Detroit ad agency chief: "Iacocca could not quickly change the company's cars, so he changed what he could--the advertising."

Clearly, Chrysler needs a lift. It lost $204.6 million in 1978, even though it earned $43 million in the fourth quarter, entirely from nonautomotive businesses. All automakers except General Motors plan a series of temporary plant closings this month to reduce bulging dealer inventories, but Chrysler's is by far the largest shutdown. Four of its five domestic auto plants and one that makes trucks and vans will close for at least a week, idling about 20,000 workers. Says Iacocca of the switches amid shutdowns: "We have to get profitable, we have to carve out a niche in the market. And that's what this is all about."

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