VOLKSWAGEN TO EVALUATE GLOBAL MEDIA ACCOUNT

Cites Financial Concerns; WPP Buy of Grey Causes Account Conflict

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DETROIT (AdAge.com) -- German automaker Volkswagen AG is evaluating its estimated $800 million global media services account, including consolidating the business at a single agency, a spokesman for the automaker's U.S. division said.

Global purchasing
The carmaker's global purchasing division has become more involved in marketing matters and is examining all long-term and expiring contracts, said Steve Keyes, director of corporate communications at Volkswagen of America.

The marketer's financial situation has declined in the past year. VW established a program called ForMotion a few months ago to analyze all global activities based on stringent economic criteria. VW AG in an interim report released in August of first-half results said operating profit for the period slid by 30% vs. the year-ago period and vehicle deliveries to the U.S. fell by nearly 12% compared with 2003.

ForMotion's mission, according to VW AG's release, is to consolidate similar operations in shared services, such as information technology.

Media agencies
Havas' Media Planning Group has VW of America's media account. MediaCom handles the automaker in most parts of the world outside the U.S. But MediaCom's parent, Grey Global Group, will soon be acquired by WPP Group. Ford Motor Co. is WPP's largest client globally, but apparently it's VW's financial concerns, and not account conflict issues, that sparked its consideration to evaluate media buying.

Still, there's evidence VW is sensitive to WPP and its relationship with Ford. Last December, with concerns over avoiding agency conflicts with Ford, VW's Seat brand moved its $83 million international account from Bates Worldwide in Barcelona, to Grey Worldwide's office there. The move came in the wake of WPP's 2003 acquisition of Bates' parent, Cordiant Communications Group.

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