Carat underbid DDB Needham to win the $6 million in billings, but the win is a key step in the group's international expansion. Carat controls 11% of European media buying; Volkswagen was already its largest client.
DDB Needham confirmed that its top executives were informed last week of the loss in Asia, where the shop handled the carmaker in China, Hong Kong, Japan and Singapore. DDB Needham keeps creative in those markets, as well as a $6 million below-the-line Asian account.
The Asian shift is a further blow to DDB Needham and parent Omnicom Group's longstanding relationship with Volkswagen. Ironically, Omnicom owns 9% of Carat parent Aegis Group, and Omnicom President-CEO Bruce Crawford is on Carat's board.
OFFICE IN HONG KONG
Carat will open a one-person office in Hong Kong staffed by Kate Stephenson, who joins from media director at Leo Burnett China. Carat doesn't have any immediate plans to pitch for more business in Asia.
Still, the new Hong Kong office may provide a clue to Carat's international expansion strategy.
In the 1980s, Carat spent big to acquire Europe's largest independent media buying companies to develop the Carat network. Heavy debt, new French media buying rules and spendthrift managers led to a financial crisis and major restructuring in 1993.
A new management team, led by Aegis CEO Crispin Davis, a 20-year Procter & Gamble Co. veteran, is taking a cautious approach to international growth.
Last year, Carat opened a tiny New York office to cultivate U.S. multinationals doing business in Europe.
Carat swept the media buying reviews Volkswagen held across Europe from '93 to '95, grabbing close to $500 million in billings.
Carat executives were traveling and Volkswagen officials could not be reached for comment.
Contributing: Pat Sloan and Dagmar Mussey.