Opinion: Perspective - How Chrysler's fall touches the entire ad industry

At the end of 2006, Chrysler Group's chief executive, Tom LaSorda, gave his ad agency a public kicking.

Apparently, LaSorda ordered BBDO executives to "put your nose to the grindstone" to make sure their ads comprehensively communicated all the brand and product messages.

Fair enough, but at the time LaSorda's outburst seemed a desperate lashing-out by a troubled company in search of places to apportion blame. For some observers, LaSorda need have looked no further than his own marketing department, where the roots of the rot were said to lie.

Now as Chrysler hurtles towards Chapter 11 administration, BBDO has been revealed as the car giant's second-largest unsecured creditor. When you consider all the other suppliers a motor manufacturer has, the notion that its ad agency could be its second-largest unsecured creditor is staggering, though it's the unsecured bit that is the definer - and the killer.

Chrysler owes BBDO a massive $58.1 million. It's an eye-watering amount even in boom time (though, probably, it would never be an issue in a boom). In the current climate, it's potentially disastrous. Though not necessarily for BBDO and its Omnicom parent.

Randall Weisenburger, Omnicom's financial chief, said last week that if Chrysler goes under, Omnicom's cash exposure would be "probably $25 to $30, $35 million" and Omnicom's share price barely stuttered. It's a dismal scenario, but not nearly as bad as it could be. If Chrysler goes into administration, Omnicom will apply to the US government's "critical vendors" emergency fund for compensation. And Omnicom has also sought to limit its exposure with "sequential liability" clauses in its negotiations with media owners. That's where the crunch will really come.

The majority of that $58 million is said to be owed to media, predominantly the local TV stations where spots have been booked on Chrysler's behalf. The principle of sequential liability means that if the agency does not get paid, then the agency's suppliers - in this case the media owners - will have to take a share of the hit.

You might remember when Omnicom shocked the production industry recently by trying to impose sequential liability on its terms of business with production companies. Same thing. As I said back then, don't imagine this issue will go away. The way the industry does business is changing fundamentally as a result of the current recession and some of the old contractual givens will disappear forever.

So, while Omnicom could take a significant hit from Chrysler's demise, the reverberations for the rest of the communications industry could be more dramatic. And long-lasting. Some suppliers could go out of business, many will be forced to rethink their models and restructure for a less predictable future.

And that's even before we consider what might happen if General Motors tips into administration too. Interpublic Group has already acknowledged that by the end of February, its exposure from GM, from work in progress and media booked, had reached $150 million. Again media accounts for the majority. And again, it's the media owners who are looking most vulnerable. Unfortunately, unlike the big global holding companies, so many of them are too small to do much about it other than suffer.

What do you make of the new T-Mobile ad then? Fifteen thousand people crammed into Trafalgar Square singing Hey Jude.

The core of the crowd was recruited from T-Mobile customers, social networking sites also drummed up interest ahead of the event and there was a fair amount of passing trade that got involved. The result is a two-minute extravaganza that launched in a break in last weekend's Britain's Got Talent, just 48 hours after the Trafalgar Square shoot.

The sheer scale of the achievement and the personal connections made are really impressive. The ad itself is so-so, but as so often these days, so what?