Why Volkswagen Group stuck with Omnicom’s PHD and how data ownership played a role

When Omnicom’s PHD won Volkswagen Group’s global media account in 2016 from WPP’s Mediacom in a surprise victory, it gave the agency a jolt of momentum and marked the biggest win in its history. But as the account came up for review again in 2021, PHD and Omnicom execs could not rest on their laurels. They had to fend off competition from other holding companies while coming up with solutions in a vastly changed automotive and media marketplace that looks nothing like it did when PHD first won the account eight years ago. The review took many twists and turns, including being paused midway through before Volkswagen Group restarted it last year. But PHD came out on top as reported by Ad Age last month, earning a three-year contract with the automaker that begins next year. Volkswagen Group in 2023 spent $2.2 billion on global media in 2023 across brands including VW, Audi and Škoda, according to COMvergence estimates. Volkswagen Group ranks as the world’s 17th largest advertiser, according to the latest Ad Age Datacenter ranking, as the automaker spent $1.8 billion on measured media worldwide in 2022. Agency Review Tracker Stay up to date with the latest account reviews Click here In interviews this week, executives at Volkswagen Group and Omnicom detailed why the automaker and holding company are sticking together, while offering insights into how Volkswagen Group is changing its media operations model, including taking greater ownership of data. “We never thought of this as an account retention,” Omnicom Media Group CEO Florian Adamski said during a joint interview with Hildegard Wortmann, a member of the extended executive committee of Volkswagen Group for sales who played a key role in the review. “We almost always thought of it as a transformation of our partnership—and a completely different role that an agency group such as Omnicom Media Group would need to play.” Ad Age guide: How to retain accounts See all of the Global Automotive Marketing Awards winners here Back in 2016, media agencies were looked at for scale, to “obtain the best rates, highest possible discounts, and making the media budget stretch as much as possible, and that is what we did for VW group in the early years,” Adamski said. But now, it’s all about formulating strategies to “make sure that data is being handled in a way that is accessible for each brand, to define the optimal brand strategy, to define target audiences … and activate media against these target audiences. And ultimately optimize against that.” Indeed, Volkswagen Group’s changing view of data was at the heart of the review. The automaker is developing an in-house platform to “make all available data and customer prospects available in a more targeted manner,” Wortmann said. “Currently, most of the media data is managed with agency walls and platforms. And that was really the intention to change that with the pitch.” Volkswagen’s decision validates Omnicom’s long-held philosophy of renting rather than owning data. It will collaborate with the automaker using its Omni operating system. The system will ingest consumer data from various sources, then define precise audiences for use in targeted marketing for VW Group’s multiple brands, which include Volkswagen, Volkswagen Commercial, Škoda, Seat, Cupra, Audi, Lamborghini, Bentley and Porsche. “We will in real-time define which audience, which single individual customer, has the highest likelihood to actually convert to a purchase. We will prioritize and optimize against that specific impression, and then activate against it at the best possible price,” Adamski said. But he stressed that Volkswagen Group “will have full access to the platform, and can always if they wanted to ... take the data out of the platform and transfer it into their own marketing environment.” “I think that some agencies have made a decision to compete with client’s technology, which is exactly the opposite of what we’re trying to do,” Adamski said, noting that clients have spent “millions and millions of dollars” on their own tech and “we’re trying not to compete with that really, but to support that and amplify that.” Check out the latest Ad Age events and award programs Wortmann described it as “a real collaboration,” adding the client and agency employees are “one working team” that is “trying to get the most efficiency and the best targeted media approach.” “It’s not like in former times—you used to have one agency briefing, and then here’s the next three months’ media budget, go ahead and do it,” she said. While PHD is the lead agency on the account, Omnicom will pull talent from across its network, using its “agency as a platform approach,” which keeps its individual agency brands intact but offers clients access to talent and capabilities across Omnicom as needed. The new contract comes as Volkswagen, like all automakers, is dealing with an increasingly complex market. While companies have plowed billions of dollars into electric vehicles, the EV market has cooled, especially in the U.S., meaning brands must adopt more flexible messaging touting gas-powered cars, EVs and hybrids all at once but reaching the right audience for each powertrain type. Volkswagen Group’s operating profit dropped 20% to 4.6 billion euros ($4.9 billion) during the first quarter, but the automaker kept its 2024 financial targets in place, anticipating momentum from the launch of more than 30 new models across all brands.

Why Volkswagen Group stuck with Omnicom’s PHD and how data ownership played a role

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