Tensions Spur Volvo Review

NEW YORK Tension over how best to develop an "over-arching concept" for the Volvo brand led the automaker to call a global review of the business last week, according to sources.The competition was spurred by disagreements about creative direction, with Volvo executives unable to agree on whether North American work or concepts created for overseas markets should be used worldwide, sources said.Volvo senior management in Goteborg, Sweden, wants a single global concept, and decided a review would best address that need.Tim Ellis, director of global advertising at Volvo in Goteborg, and Hans Krondahl, evp, marketing at Volvo in Irvine, Calif., said the process has more to do with finding the right approach for new product launches as Volvo prepares for a steep ad spending increase over the next two years. (Volvo's announced lineup includes the C70 introduction this year and the late 2007 releases of its C30 sporty hatchback S80 model.)Ellis downplayed the idea that tensions are driving the review: "In the past, we've had creative centers which had complete control over what they did in the U.S., London and Sweden. We then decided as a company that we wanted to leverage a power worldwide to come up with a more unified structure of working with a united idea."He added, "I'm not saying there aren't different views on the creative work that runs sometimes, especially when you have creative ownership over your creative center. But we've decided that we're going to take a more unified approach to have one strong message."Ellis said the winning agency must be able to provide "high creativity with strong planning insight," and have a distribution system to deliver work in all of its markets, including China in 2008.Ellis is leading the team of five other decision makers, whom he declined to identify, in the review being guided by consultancy Roth Associates in New York. Havas' Euro RSCG here has handled the account since 1991 and its work runs worldwide, except in a few markets including Scandinavia, Japan and Germany. The agency has said it is defending.The contest encompasses only creative chores, Ellis said. Media duties, handled by various agency partners and Volvo parent Ford Motor Co., are not affected. Neither is the interactive Volvo work handled by Euro RSCG 4D, Ellis said."This is not about Euro not delivering," he said, adding that as Volvo gets ready to launch several new models in 2007, it needs "a consistent thread of an idea around the world. It's an appropriate time to see how we can continue to move the brand forward."Ellis expects to have a short list of agencies by early January, with a decision in March. Volvo's global "For life" tagline will likely be retained.Krondahl said Volvo is striving to sell 600,000 units by the end of 2009 (currently the company sells around 450,000), with sales of 200,000 units in the U.S. alone. He said that in order to achieve that goal, Volvo plans to spend 20 percent more on advertising in 2007, then increase the budget an additional 40 percent in 2008.The company spent $75 million in domestic measured media in 2005 and $70 million through September 2006, per Nielsen Monitor-Plus. Sources estimated global media spending at $150 million. Neither Ellis nor Krondahl would comment on advertising expenditures. "We are turning a page in the history of the company," Krondahl said. "We are introducing a lot of new products." He said Internet spending would grow disproportionately in recognition of the fact that Volvo's customers use the Web in increasingly large numbers. Through November, Volvo is 6 percent down on the year, with unit sales of 108,000, according to Car Concepts, Thousand Oaks, Calif. The C70 (up 142 percent over last year at this time) and S60 (up 5 percent over 2006) have sold well for the company, but all other models are down, including the crucial XC90, off 7 percent.

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Tensions Spur Volvo Review

Kathleen Sampey

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