Untying The Knot At VW Berlin Is Victim Of Client Turmoil

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Two decades into its post-Beetle identity crisis, Volkswagen of America is looking for a new agency to engineer a North American comeback.

The German importer decided last week to sever its ties to Berlin Cameron Doyle, New York, only 16 months after DDB Needham Worldwide spun off the agency to serve VW. Doyle Dane Bernbach, a DDB Needham predecessor, began handling the U.S. account in 1959.

Plenty of agencies will seek a shot at reviving the VW name, including DDB Needham, still VW's agency in 30 countries. DDB Needham is expected to emerge on a shortlist of three shops that will be named early next year and is likely to include Minneapolis' Fallon McElligott and Carmichael Lynch. Jones-Lundin Associates, Chicago, is overseeing the review.

Even if DDB Needham doesn't win creative, it may have a shot at keeping media, where it has been helping Berlin.

The auto marketer is spending about $90 million on the VW brand this year, a figure expected to be reduced in 1995 because of financial struggles on the part of German parent Volkswagen AG.

Coming only a month after Berlin was given VW's Canadian business in a consolidation, the agency firing indicates disarray at a company in the midst of reducing its North American white-collar staff by 43%. Berlin's firing is said to have had more to do with internal politics and power struggles at VW and personality conflicts between the agency and client than with the advertising Berlin created. Tom Shaver, the Volkswagen VP who brought in the agency, is leaving at the end of the month as part of the company's downsizing.

"This is a no-blame situation," said Clive Warrilow, president-CEO of VW's North American unit, in a statement. A VW spokeswoman compared it with dissolution of a bad marriage.

The move came three weeks after Steve Wilhite was appointed head of sales and marketing, from general sales manager. He and Dieter Dahlhoff, marketing manager of VW AG who's responsible for the global VW brand, influenced Mr. Warrilow's decision and will play a role in picking a new agency.

Also factoring into the firing were reports, attributed to anonymous DDB Needham executives, that the agency was looking for another U.S. car account. That is said to have been the final straw for VW; as part of the agency-client agreement, DDB Needham, a minority owner in Berlin, was excluded from another U.S. car account.

VW sold 90,974 units in the first 11 months of 1994, double the year-ago period when the company suffered from product unavailability. That was still far below the 569,182 units VW sold at the peak of the Beetle's popularity in 1970, but it at least represented an upturn after years of steady decline.

Berlin has provided irreverent creative, such as a recent spot in which a car circles inside a loft apartment.

"VW is running commercials that refer to the delights of zippy handling, but the cars look dated so the juxtaposition between product and message is jarring," said John Bulcroft, president of the Advisory Group, a Cresskill, N.J., auto consultancy. Mr. Bulcroft blamed 20 years of client vacillation about whether its identity is rooted in German engineering and heritage, a fun personality or economical reliability.

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