VW U.S. MEDIA BUYING ACCOUNT GOES TO MEDIACOM

Work Valued at $430 Million

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WOLFSBURG, Germany (AdAge.com) -- Volkswagen of America today will announce it is consolidating U.S. media-buying responsibilities with Grey Global Group's MediaCom, according to executives familiar with the matter.
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AdAge.com first reported on Dec. 22 that Volkswagen of America parent Volkswagen AG decided in MediaCom's favor and a decision was expected this month.

U.S. incumbent MPG
The decision ends a review, which began in September, of a $430 million U.S. account that pitted MediaCom, VW's media buyer in most parts of the world outside of the U.S., against Havas' MPG, the U.S. incumbent for nearly a decade.

With the win, MediaCom controls most of VW's $800 million global account. MediaCom will handle media buying and planning for VW, and will buy media for sibling brand Audi of America. Planning duties, as well as creative, will remain with Havas' McKinney & Silver, Raleigh, N.C.

Calls to MediaCom were not returned at press time. An MPG spokesman confirmed the account loss.

Volkswagen would not comment.

German operations
The decision also puts to rest an often-contentious tug-of-war between the automaker's U.S. and German operations. Sources familiar with the car manufacturer said that Volkswagen's U.S. employees backed MPG, while in Germany sentiment favored MediaCom.

Going all out to win the account, MediaCom late last year brought to New York Joerg Bursee, who is managing director of MediaCom in Germany and plays a key role in the agency's Volkswagen business in Europe. Mr. Bursee works out of MediaCom's New York office.

Head-to-head competition
The U.S. review is not the first time MPG and MediaCom have gone head-to-head over the automaker's media business. A year ago, Volkswagen in Spain moved the $83 million media-buying account for all its car brands -- Volkswagen, Audi and Seat -- to Arena Media Communications, Barcelona, a unit of MPG. Arena pitched against MediaCom and Publicis Groupe's ZenithOptimedia and Starcom Mediavest. The incumbent, Interpublic Group of Cos.' Initiative Media, did not participate.

Latest blow to MPG
The loss is another serious blow to MPG, which earlier this month exited the $300 million global review for another long-term client, Intel. MPG sibling Euro RSCG, Intel's creative agency for over a decade, announced it would not compete to retain the account, which is currently being pursued by agencies owned by WPP Group, Omnicom Group and Interpublic.

Last summer, MPG lost one of its high-profile clients, Procter & Gamble Co., when the marketer split its communications planning business between Starcom MediaVest Group and Aegis Group's Carat. MPG participated in the review but did not retain its accounts.

MPG is currently without a CEO for its U.S. operations. Jim Rose, CEO since May 2002, left in November to join Dallas-based Mosaic Sales Solution Corp., a field-marketing firm. A successor has not yet been named.

Laurel Wentz contributed to this report.

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