DETROIT -- Afraid that dealer advertising in many local markets would go dark in the fourth quarter, Chrysler Group has assumed more control over the funding of its 72 dealer advertising associations.
Money raised from the ad assessment -- 1 percent of the factory wholesale price of a vehicle -- will go into a national pot that the automaker will distribute to the associations starting Tuesday, Sept. 1. Each association will receive sufficient money to buy a certain minimum amount of advertising.
Some dealers fear that the automaker will assume too much control over dealer advertising content and media spending.
Previously, the money was distributed directly to the associations, which meant that some associations had vastly more money to spend than others.
In another change, the 1 percent fee will not appear on the vehicle invoice, contrary to the current practice.
Jodi Tinson, a Chrysler spokeswoman, says many of the automaker's dealer ad associations ran out of money during the automaker's bankruptcy, when production stopped.
"The DAA budgets are based on shipments," Tinson says. "When you're not shipping any vehicles or producing any vehicles, there was no cash flow into the DAA ad budgets. Because of that loss of cash flow and the slow ramp-up, the DAAs did not have enough money to properly fund a required level of media in the fourth quarter."
Tinson says the new funding mechanism means advertising dollars will be spent more efficiently both among the dealer ad associations and among the three brands: Chrysler, Dodge and Jeep.
Chrysler will use the money to buy a minimum of 400 total rating points for each brand in each market. Total ratings points is a Nielsen Media Research measurement of share of a TV audience.
Under the old system, dealer advertising for the Chrysler brand was scheduled to suffer the most, based on shipments, Tinson says.
She acknowledges that funding the dealer ad associations is an "emotional issue" among dealers.
"The DAAs are not going away," Tinson says. "They will still be a valued part of dealer operations. The DAAs will still have input in creative. They will determine appropriate incentive tags."
Mickey Anderson, president of Performance Automotive Group, which has three dealerships in Nebraska, says the change will mean that some markets might lose some dealer ad money.
"I am one of the markets that will probably be receiving a little less of the total spend," says Anderson, a member of the national dealer council. "But I do not believe that will lead to lower sales. We think in some markets like mine, there are excessive marketing funds built up.
"We have lost control of the money, but I for one was not entirely convinced that the money was most prudently spent."