NEW YORK (AdAge.com) -- It's easier to explain why Volkswagen split with U.S. agency of record Crispin Porter & Bogusky after a four-year run than it is to guess what will replace the Black Beetle sitting in the lobby of the agency's Boulder, Colo., offices.
Sure, the timing is unusual and the move looks like a classic case of a major marketer failing to appreciate an agency that's done a pretty good job for it. (Through July, VW's share rose to 2% from 1.6%, according to Automotive News. And although VW sales fell 13.5%, that was a relatively soft landing compared with a 32% plunge for automotive overall.)
|VW's bumps in the road over the years.|
Stir in persistent business problems at VW, a major acquisition and a recent round of marketing-department musical chairs, and you have a classic recipe for a review.
The carmaker just won a long-running takeover battle for Porsche and recently installed former Fiat marketing chief Luca De Meo as its new global marketing chief. Reliability continues to plague the brand, with VW just last week recalling 13,500 vehicles, including Jetta, GTI and other models due to transmission issues.
Still, it's one review -- in a year of cost-driven agency shootouts -- in which it probably comes down to the work. Well, sort of. Mr. Ellis, VW's U.S. head of marketing of two years, has been vocal about wanting a unified marketing message for all the company's brands, rather than the disparate approaches initiated under its long-gone director of brand innovation, Kerri Martin, who sought word-of-mouth for the brand by hiring Crispin without a review back in 2005. At the time, its sales were sliding, and Ms. Martin said VW needed the "strong grasp of pop culture and ... nontraditional approach to branding" the agency is known for.
What resulted was a slew of brassy taglines, such as "Unpimp mein auto," "Find your fast" and "Low-ego emissions," that departed from VW's heritage of tasteful wit and accessible but lauded campaigns such as DDB's "Think small" and Arnold's "Drivers wanted."
While Crispin's work for Volkswagen was attention-getting and breakthrough for the category, some of it verged on the bizarre and got too quirky for some of VW's 600 independent dealers' liking. There were characters such as lab-coat-clad Helga and a soccer-mom-mocking Brooke Shields viral push for the Routan minivan. More-recent ads featured a vintage VW Bug with a heavy Teutonic accent hosting a late-night-style talk show.
But now VW's needs seemingly have changed, driven in no small part by its German parent's ambitions. "Crispin was very good at getting that edge, which VW wants," said one executive close to the company. But it also "wants to be relevant to a big-enough market to achieve its growth objectives. Sales are well behind where Germany wants them to be."
To reach its goal of triple U.S. volume, VW is building a $1 billion factory in Chattanooga, Tenn., that will produce new compact and midsize sedans.
"The work that Crispin did was memorable and award-winning, but they have to sell cars," said one marketing consultant. "They're not going to leave any stone unturned."
Where it hurts
For Crispin -- one of the most sought-after agencies around -- being dumped by a cult brand like VW is more of a blow to the ego than to the bottom line. On the aftern
Crispin characteristically rebuffed VW's invitation to defend the account, the spending on which dwindled to about $200 million in U.S. measured media last year from about $335 million four years ago, according to TNS Media Intelligence.
Dan Salmon, analyst at BMO Capital Markets, estimated in a research note last week that Volkswagen accounts for between 2% to 3% of revenue at Crispin's holding company, MDC Partners, or between $11 million and $17 million. VW is also estimated to account for less than 10% of Crispin's revenue.
That's because the agency has reeled in new business worth more than $500 million in billings, most notably monster Microsoft and retailers Old Navy and the Gap, which more than offsets the VW loss. Major layoffs are unlikely, as most staffers will shift to new accounts after the agency ends its tenure with VW at the end of the year.
Which shops look likely to win the accountAdland is buzzing about which agency will drive away with Volkswagen of America's account at the end of one of the most closely watched reviews of 2009.
To manage the pitch, VW brought aboard Roth Associates, which has worked with VW's top North American marketer, Tim Ellis, in the past. The consultancy declined to comment for this story, but industry execs say the review is progressing at a fast clip; the automaker expects to sign a contract with a new shop in less than two months.
Agency executives widely suspect that Omnicom Group shops DDB Worldwide and Goodby Silverstein & Partners are the ones to beat.
VW tapped DDB 40 years ago to handle its U.S. ad account, and the iconic work it created under Bill Bernbach—most notably the "Think small" ads—still ranks among the cream of creative campaigns. DDB lost the account in the 1990s but continues to handle VW's advertising elsewhere in the world, save for Mexico and a few other markets. Meanwhile, Omnicom creative darling Goodby in San Francisco boasts highly respected creative campaigns and a sound track record in the category, where it happens to have an opening now that Hyundai has taken its account in-house.
Other likely contenders: Publicis Groupe's Fallon Worldwide, which won acclaim for its innovative BMW work and has long been in the hunt for a car account; Interpublic Group of Cos.' Martin Agency, which previously worked for Saab; and Raleigh, N.C.-based independent McKinney, Audi's former agency of 13 years. All not only have auto experience, they've also got the scale to provide VW with the marketing support it wants and, importantly, creative chops.
It will be interesting to watch what the review will mean for roster agencies such as WPP's MediaCom. The shop handles media duties—which are not part of this review—so it's plausible that holding-company chief Martin Sorrell might make a play to get one of his creative agencies in the running.
One agency that won't be in the mix: former VW shop Arnold. Despite the agency's ties to Mr. Ellis from his days leading Volvo's global advertising and its love affair with the Volkswagen brand (many insiders still consider that divorce one of VW's biggest marketing mistakes), industry executives predict the shop will stick by Volvo, which hired it 18 months after the VW split. Arnold is helping it expand into new global markets.