Working Out the Bugs

LOS ANGELES In the U.S., age gets no respect, and Volkswagen, here since 1955, is no exception. Even though the brand has enjoyed one of the most celebrated creative reputations in the ad business with classics from Doyle Dane Bernbach’s “Lemon” in the ’60s to Arnold’s “Milky Way” spot featuring the music of Nick Drake in 1999, the rise of Japanese (and Korean) automakers has crowded the market and helped push VW off its perch as the economy car to beat.

Back in 1970, its peak year, the Auburn Hills, Mich.-based automaker sold 583,000 VWs, equivalent to 1 million units in today’s market. For a variety of reasons, including late-to-the-game introductions (such as its Touareg SUV) and new competition, it’s been up and down since. Reintroducing the Beetle and launching Passat revitalized VW in 2001, its best recent year, when sales shot up to 356,000 units, but a mostly downward spiral followed.

Despite flirting with a luxury model that turned into a flop (Phaeton, nicknamed “Satan” within VW ranks, still being sold but no longer in production), the brand has always been marketed as fun to drive and sporting affordable German engineering.

“VW is always its own worst enemy in terms of its strategy,” says Todd Turner, principal analyst with Car Concepts in Thousand Oaks, Calif. “They no longer foster the strengths of their brand. They’re always trying to be something else—and lately that something means ‘more.’ They’re not satisfied being a mass-market brand and competing with the masses’ share of mind—but that’s where the money is and where the brand identity is rooted.”


According to Steve Witten, executive director of automotive research at J.D. Power & Associates, VWs have gone from being seen as dirt cheap (Beetles cost a bargain $2,000 in the 1960s) to being seen as “too expensive, too small and too expensive to maintain,” relative to other compact cars.

Irrespective of market perceptions, VW has been steadily spending less on advertising overall and selling fewer cars since 2004, when it spent $345 million on marketing but unit sales dipped to 256,000 units (-16 percent); in 2005, $335 million was spent, and sales were down 13 percent to 224,000 units. In 2006, VW relaunched three vehicles—the Rabbit (actually, a renaming of the Golf), GTI and the Passat wagon, and launched the EOS in the U.S. Its ad budget, however, dropped 13 percent to $295 million, per Nielsen Monitor-Plus, the first time since 1999 the company spent less than $300 million—unheard of in big launch years. VW says it is spending less on television, more on the Web.

In May 2005, VW shook up its marketing department by hiring then-BMW Mini Cooper marketer Kerri Martin as director of brand innovation. Four months later, she fired 10-year incumbent Havas shop Arnold in Boston and hired, without a review, MDC Partners’ Crispin, Porter + Bogusky in Miami, which had created the award-winning Mini U.S. launch work for her on a shoestring budget.

Then, last winter, Martin Winterkorn, who was at Audi, replaced VW CEO Bernd Pischetsrieder, and brand chairman Wolfgang Bernhard resigned. A week after Bernhard left—the company claims the events were unrelated—Martin and VW parted ways. That promoted Adrian Hallmark into the evp job in charge of marketing. Turner says Hallmark is perceived as being overly responsive to VW’s board in Wolfsburg, Germany, which is “micromanaging” U.S. marketing.


Crispin took the creative reins of VW in September 2005. It was charged with launching no less than four vehicles. In the end, perhaps its most important decision was to lobby VW to have the Golf renamed Rabbit. VW took some time to agree—in fact, vehicles had to be rebadged on the docks awaiting delivery.

In general, “a lot of the work was driven by the notion of dispelling barriers to sales,” said VW’s gm of creative content, Kurt Schneider, meaning that V-dubs (as VW cars are known) have been considered expensive to buy and maintain. Another issue: VW has been seen as too “feminine,” according to J.D. Powers and others.

Andrew Keller, vp and ecd at Crispin’s Boulder, Colo., office, says the creative strategy was to find something essential about each vehicle that could then lead to a larger insight into the marque, with a branding campaign to launch in summer or fall of 2007. For instance, GTI would demonstrate VW performance engineering; Rabbit would emphasize its economic price; Beetle would reflect the brand’s optimism; Jetta and Passat, safety and the brand’s honest values and youthful appeal.


The GTI campaign, which broke in February 2006, gave a macho spin to VW with “Fast,” a speed-demon totem that spoke to young, male drivers, and “Unpimp my ride.” Hilariously sexist, in one spot “Fast” influenced the driver to tell his girlfriend to shut up so he can hear his engine purr over “all that yackin’.” “Unpimp my ride” starred a German engineer (actor Peter Stormare) cartoonishly trashing customized excesses in favor of “pre-tuned” GTIs.

Jetta’s “Safe happens,” which broke last April, showed casual conversations (e.g., a guy critiqued by his buddy for saying “like” too often) stopped short by graphic accidents. Car Concepts’ Turner says the ads spoke both to the youth demo and to parents buying cars for college-bound kids. The secondary effect attacks buyer avoidance points: VW is seen as more for the money (standard safety features), and a small car is seen as safe.

A Rabbit spot, aired last June, shows the car reproducing like a bunny. Others, tagged “Because the city’s expensive enough,” show young urban males being ripped off in various ways, highlighting the Rabbit as a relative bargain. A special buy in Playboy put the Rabbit icon on the back of a bunny’s behind, and city-specific outdoor creative stressed price.

Overall, print and collateral were largely out of the Mini playbook, with witty one-offs such as airline-style safety cards for Jetta and Passat, and Rabbit transit system maps with stops including a Whips & Chains outlet.

Analysts also say the viral and Web work for the VW brand is outstanding, particularly the retooled (a friendly, detailed site with a good deal of humor) and campaign-specific microsites such as the Compare-it-Tron module (for all the brands) that takes cars apart to demonstrate VW value.

Spots released this summer will depart from price positioning, a directive Turner contends had come directly from board members in Wolfsburg. The first spot, released at the end of May, shows a tow driver so wowed by an interior that he moves the VW to a legal space and introduces the tagline, “When you get into a Volkswagen, it gets into you.”

Still, Turner thinks the advertising exceeds the vehicles. “They have been doing a creative job, making a lot of noise in marketing and promoting a brand that has become incapable of promoting itself with its product,” he says.


Crispin’s work launched in February 2006, and after nearly a full year the brand was up 5 percent over a poor-performing 2005, when sales were down 13 percent. The latest figures from Car Concepts show the brand down 4 percent from January 2007 through May 2007 to 92,000 units.

The agency gets credit for VW’s only unqualified recent success, the Rabbit: Its sales are up 72 percent May 2006 vs. May 2005. In contrast, Beetle is down 20 percent during the same period, Passat, down 30 percent, and Jetta, VW’s volume car at 40,000 units so far, down 10 percent, according to Car Concepts.

According to J.D. Power’s annual “Avoider” study (which asks car buyers why they rejected other brands in the same class), some ads worked against VW’s perception problems. Using Stormare, who had a heavy German accent, as the engineer ready to “un-pimp” rides, the spots renewed the Germanness of the brand. The perception is that “European [cars] equals high maintenance,” says Witten.

Three months after the ads began airing, “avoiders,” who consider VWs too expensive, rose from 22 percent (above the category average of 15 percent) to 32 percent (above a 20 percent average), according to Witten. Those who consider VWs too expensive to maintain rose from 13 percent (5 percent average) to 16 percent (8 percent average).

“We’re clearly getting the feedback that VW is nice, but too expensive,” says Lincoln Merrihew, senior vp at TNS Automotive in Boston. “There’s no way a dealer can fight that; consumers don’t even put you on the list.”

May 2007, according to the company, was the best month for the automaker since September 2006, based largely on the top sales month ever (1,500 units) for the EOS retractable hardtop, and the Rabbit. “I don’t want to call it now or never,” said Merrihew. “But it’s go time for VW. They’ve gone up market, down market, changed agencies, but now is the time they have to solidify who they are.”