VW awards North American creative ad work to WPP

Advertising agency giant WPP has won Volkswagen's creative account in North America, following a seven-month global agency review.

The incumbent in the U.S. was Interpublic's Deutsch, which was eliminated in September after holding the account since 2009. Omnicom will handle Europe and South America, while Cheil will hold onto the business in China. DDB was the incumbent in the key European market.

The automaker announced the results of the review on Monday as part of a marketing overhaul that includes a heavy emphasis on keeping costs down. The review covered the automaker's flagship VW brand, not its other nameplates, which include Audi.

VW will says it will "improve its marketing efficiency by about 30 percent by 2020 at the same time as keeping its marketing budget approximately stable at 1.5 billion euros ($1.7 billion)," according to a press release.

The German automaker will centralize its marketing to be run from four main hubs that it calls "powerhouses." They are based in Berlin, New York, São Paulo and Beijing. VW previously used roughly 40 agencies globally.

The four new hubs will include 100 to 200 people in which creative professionals will work on campaigns using a "cross-functional" approach, VW stated in the press release. Omnicom's PHD remains Volkswagen's global media agency.

"Campaigns will be developed globally and be data-driven," Jochen Sengpiehl, chief marketing officer of the Volkswagen passenger cars brand, said on a media call on Monday. "For the first time we now have the capability to run global campaigns."

Jürgen Stackmann, the Volkswagen board member responsible for sales of the VW brand, stated in the press release that VW will be "managed in a leaner, more centralized way."

Volkswagen is the 61st-largest advertiser in the U.S. with $746 million in spending last year, according to the Ad Age Datacenter. That includes $415 million on the VW brand and $146 million on VW-owned Audi. Globally, the Volkswagen company ranks sixth, at $6.74 billion, according to the Ad Age Datacenter, whose latest global spending data is from 2016.

The agency decision means WPP will gain an automotive client nearly two months after it was demoted on the Ford account.

The holding company was replaced by Omnicom's BBDO as Ford's lead global creative agency, but held onto responsibilities including media planning and buying, shopper marketing and CRM. Ford is a much larger brand in the U.S. than VW. But the Volkswagen win gives WPP a crack at leading creative for a brand that has a history of making groundbreaking ads.

Europe accounts for roughly 70 percent of VW's global measured media spending, according to the Ad Age Datacenter, meaning Omnicom avoided losing a significant source of revenue. But the holding company lost a chance to make gains in North America.

It was the incumbent in Mexico and Canada, meaning it has lost those accounts. DDB Global CEO Wendy Clark was heavily involved in Omnicom's pitch, making multiple visits to VW's German headquarters. The holding company will handle VW via a new bespoke agency team called Voltage that will be led by DDB and include members of Omnicom's PR, CRM and data analytics groups.