Finalists remaining in the review include the incumbent, Havas' McKinney, Raleigh, N.C.; Publicis-backed Bartle Bogle Hegarty, New York; and independent Venables, Bell & Partners, San Francisco. Bartle Bogle's London office handles the account in the U.K.
The Audi spokesman termed Fallon's pullout a "mutual decision." A spokeswoman for Fallon, which is a Publicis Groupe agency, confirmed the parting.
Last week, following presentations, the Audi spokesman said a decision was expected in late November or early December.
Scott Keogh, who arrived in May as Audi of America's first chief marketing officer from Mercedes-Benz USA, is orchestrating the review and has said he is seeking fresh ideas for the brand. Media buying, at MediaCom, is not part of the review.
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Jeremy Mullman contributed to this report.