Volkswagen divulged the winners in its global ad agency review Monday, confirming that it is reducing its global network of about 40 agencies to three lead agencies.
WPP will be responsible for North America (Deutsch had been the incumbent), Omnicom will handle Europe and South America and Cheil will continue to service the brand in China.
The auto giant announced the news as part of a marketing overhaul, under which it plans to improve marketing efficiency by 30% over the next two years, while keeping its marketing budget “stable” at €1.5 billion (approximately $1.7 billion).
The company said the digital share of its media mix would climb to almost 50% by 2020, compared to 25% three years ago. At the same time, the amount of content (films, ads and other elements) is expected to rise fivefold.
As part of the overhaul, the company will refocus its internal marketing activities at four hubs around the world: Berlin, New York, São Paulo and Beijing.
Jürgen Stackmann, board member responsible for sales of the Volkswagen brand, stated: “The brand is to be managed in a leaner, more centralized way. With the new partnerships, we will reach an unprecedented level of innovative power in marketing. Thanks to our more focused agency landscape and the expansion of our digital activities, we will become significantly more efficient.
"The far-reaching transformation of Volkswagen, which will also become evident to our customers next year with the world premiere of our [new electric car] ID, will fundamentally change our marketing.”
The news is particularly good for WPP, which lost the Ford creative assignment two months ago, while retaining media and other marketing components of the account.
Omnicom’s PHD retains the brand’s global media assignment, which was not part of the review.