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Bailouts and advertising

 
 
Reply Mon 5 Jan, 2009 09:12 am
This is not something I have noticed myself but a letter to the editor pointed out that while watching the college bowl games that there was a lot of advertising for companies that have been recieved taxpayer money in the bailouts.

I believe in the power of advertising. I know it works (even though sometimes I can't figure out how or why it works). I don't deny that companies need to advertise their products.

But if their advertising had been effective would these companies be struggling so much?

Should companies recieving government money be allowed to continue advertising products that nobody seems to want?

I don't really know. I thought it was an interesting observation though and I was wondering what you think about it.

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Type: Question • Score: 3 • Views: 1,239 • Replies: 10
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tycoon
 
  1  
Reply Mon 5 Jan, 2009 09:30 am
@boomerang,
Advertising does work, so it would seem as though it's a defensible strategy.

What I cannot understand--and I hope I'm not highjacking your thread--is the newspaper ads Chrysler took out in major dailies nationwide thanking the taxpayers for the bailout. (!) These full-page ads cost nearly a quarter million each.

http://www.autoobserver.com/2008/12/chryslers-thank-you-ads-not-the-best-idea.html

The reaction was vicious, in reading some of the responses generated by fuming taxpayers to Chrysler CEO Nardelli. As one writer correctly pointed out, the taxpayers had nothing to do with it (except pay for it), and if they had been given a voice none of the automakers would have received a thin dime.

http://blog.chryslerllc.com/blog.do?id=564&p=entry#comments

This is shake-your-head-in-disbelief incompetance on the part of Chrysler. Shame on them.
Robert Gentel
 
  1  
Reply Mon 5 Jan, 2009 04:38 pm
@tycoon,
Are you sure taxpayers paid for it? What I'd read was that the CEO paid out of pocket.
roger
 
  1  
Reply Mon 5 Jan, 2009 06:24 pm
@Robert Gentel,
Where you read that at?
boomerang
 
  1  
Reply Mon 5 Jan, 2009 06:58 pm
Either way.... if the CEO has millions of dollars to spend out of pocket on running ads perhaps handing them taxpayer money isn't the best idea.

I know that for these companies that a few million dollars is chicken feed but to regular people, like me, it just seems insane.
Robert Gentel
 
  1  
Reply Mon 5 Jan, 2009 08:08 pm
@roger,
I read it on a comment on reddit, which is why I'm asking for more info (I don't have a solid source).
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Robert Gentel
 
  1  
Reply Mon 5 Jan, 2009 08:10 pm
@boomerang,
boomerang wrote:
Either way.... if the CEO has millions of dollars to spend out of pocket on running ads perhaps handing them taxpayer money isn't the best idea.


He offered to reduce his pay to $1/year if they accept bailout funds. Hell if it was his own money and he's spending it on trying to bolster the company's image I actually respect that.

Quote:
I know that for these companies that a few million dollars is chicken feed but to regular people, like me, it just seems insane.


I don't like the "thank you America" ad, but if it has the desired result it's money well spent. Advertising often seems wasteful until you stop doing it.
boomerang
 
  1  
Reply Tue 6 Jan, 2009 09:55 am
@Robert Gentel,
Agreed.

He offered to reduce his pay to $1? Has he done it?
Butrflynet
 
  1  
Reply Tue 6 Jan, 2009 10:28 am
According to the blog on Chrysler's website, there is no mention of it being paid out of pocket by Nardelli. If it were the case, they probably would have said so considering how much heat they are getting.

http://blog.chryslerllc.com/blog.do?id=566&p=entry

Quote:

December 31, 2008 3:08 PM

Response to Thank You America Ad

Lori McTavish - Executive Director - Communications Comments (19)

We appreciate the strong interest and wide diversity of opinion regarding the government loans for our Company to continue its transformation, as well as our one time advertisement thanking the American people.

Chrysler felt it is important to let consumers know we're in business for the long haul, committed to building great vehicles.
Chrysler believes it is a good business practice to thank your stakeholders, including our customers, and now the American people.
Chrysler feels it is important to tell the American people about our commitment to America. With quality products now and exciting vehicle launches to come in the future, we consider ourselves the most American car company in the United States by virtue of the fact that the far majority of our business (employees, manufacturing, dealers) is conducted domestically.

Thank you for your interest in our Company.


Lori McTavish



The ad copy is here if anyone did not see it originally.

http://blog.chryslerllc.com/blog.do?id=564&p=entry

0 Replies
 
Robert Gentel
 
  1  
Reply Tue 6 Jan, 2009 11:13 am
@boomerang,
boomerang wrote:
He offered to reduce his pay to $1? Has he done it?


I looked it up, he was already on a $1 salary when he offered it, but I'm not sure what other compensation he's receiving.
0 Replies
 
tycoon
 
  1  
Reply Tue 6 Jan, 2009 01:03 pm
I have been unable to find any source that even hints that Nardelli spent his own money on these ads. It is very unlikely he did so. Certainly that fact would have been trumpeted by now in their closely-monitored company blog.

Chrysler is owned by Cerberus, a private equity firm sitting on 24 billion dollars of capital. Cerberus has declined to loan any money to the automaker, explaining in a terse statement that they have obligations to their investors. This lack of confidence should have been enough of a signal to the Bush Administration to let the company file for bankruptcy.

Instead, we taxpayers now have a vested interest to keep them afloat, and should expect to continue providing them with bridge-to-nowhere loans.

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