Business

DETROIT’S WOES HIT MADISON AVE.

Although General Motors and Chrysler got a $17.4 billion government lifeline, ad agencies and media companies with ties to the troubled automakers know there’s more pain ahead.

Detroit has pledged to make tough concessions, such as shedding brands and closing dealerships. A merger between GM and Chrysler – the subject of on-again, off-again talks – would drastically reduce advertising for the entire category and lead to consolidation among ad agencies.

Yesterday, the same day the White House announced the rescue package, Chrysler unveiled a restructuring of its sales and marketing team that eliminated the chief marketer position.

Deborah Wahl Meyer, Chrysler’s chief marketing officer, said she would leave immediately. Meyer, a respected auto veteran after stints at Toyota and Ford, arrived at Chrysler with much fanfare in August 2007.

Chrysler’s move shows the extent to which the carmakers will have to curtail their ad budgets and restructure their marketing organizations to survive. Even if the car companies stay afloat and continue to hawk their cars on TV and in print, their status as major advertisers will be diminished.

In its media and entertainment outlook for next year, Fitch ratings service said “the auto industry is enduring structural changes that will permanently reduce local and national auto advertising and that the supply of available advertising units will need to contract as a result.”

In the first nine months of the year, the Big Three cut their combined ad spending nearly 19 percent, according to ad tracker TNS Media Intelligence. General Motors is the lone car company to make the list of top 10 advertisers. Ford now ranks No. 12, while Chrysler dropped out of the top 20 months ago.

The carmakers are cutting back in other areas of marketing and promotion, such as sports sponsorships and auto shows. Chrysler plans to slash by more than 30 percent next season’s Nascar budget to promote its Dodge cars, while GM ended a long-running endorsement deal with top golfer Tiger Woods to boost Buick.

The effects are hitting home on Madison Avenue. Chrysler’s ad agency, Omnicom’s BBDO, cut 145 jobs, or 22 percent of its workforce in November as a result of the automaker’s reduced spending.

More recently, Interpublic gutted ad agency Campbell-Ewald, which handles GM’s Chevrolet account.

holly.sanders@nypost.com