$400 Mil. VW Shifts to CP+B

BOSTON Volkswagen said it has named MDC Partners’ Crispin Porter + Bogusky to handle its creative chores in the U.S. and Canada.

Havas’ Arnold in Boston had fashioned VW campaigns for the past 10 years.

There was no review.

The client spent $345 million on U.S. ads last year and $175 million through the first seven months of 2005, per Nielsen Monitor-Plus. (Annual Canadian ad spending is likely another $50 million, sources said.)

Miami-based CP+B’s appointment is effective Dec. 5. The agency will also work on VW media planning.

“Volkswagen needs to take bold steps to turn this business around in the U.S. and Canada,” said Len Hunt, VW’s executive vice president of marketing, in a statement. “We’re reviewing all aspects of our operations and with the addition of CP+B on our team, we’ll now be equipped to maximize our marketing efforts. U.S. and Canadian consumers have always had a special relationship with this brand and today they want more from it—more interesting products which we now have and more captivating communications which CP+B will help develop.”

Ed Eskandarian, CEO of Arnold, said, “With the business soft and everybody trying to find ways to bolster the business, we weren’t sitting here thinking everything was just fine. But we were surprised when we got the [dismissal] call” early Tuesday morning from Hunt.

Eskandarian said layoffs at Arnold are forthcoming, though he declined to elaborate. (The agency did win RadioShack’s $250 million account in May, though it has declined to defend Goodyear, now in review, which is worth more than $40 million in billings.)

Sources said VW accounted for about 10 percent of Arnold’s estimated 2004 overall revenue of $227 million.

CP+B has handled ads for BMW’s Mini Cooper, a potential conflict with VW.

CP+B said it resigned the Mini this morning, but declined further comment on that situation. (BMW spends about $25 million annually on ads for the Mini Cooper.)

BMW executives could not immediately be reached.

Sources said three key factors drove VW’s decision.

Lagging U.S. sales (down 15 percent in 2004 compared to the previous year and off 20 percent during the first five months of 2005), as well as the belief among some client executives that the quality of creative had fallen, were strong motivations for change, according to sources.

The arrival in March of former BMW Mini Cooper marketing communications manager Kerri Martin at VW as director of brand innovation sealed the move to CP+B, sources said.

VW plans to introduce several new and redesigned models in the next two years and needed an agency with a proven record for doing that, such as CP+B did for Mini, Martin said. “VW needs much more than just ads in North America,” she said.

As for the selection without a review, Martin said, “A lengthy review process was not in our best interest or the best interest of our dealer network.”

CP+B did not present any work to VW to win the account, said agency CEO and president Jeff Hicks. “We had been talking with them about some of the possibilities of the brand for awhile,” Hicks said. He declined to comment on Martin’s role in the process. “The decision involved their entire management team,” Hicks said.

CP+B will have to hire some staffers to handle VW, but the agency will be able to use employees who were assigned to the Gateway account, which CP+B resigned in July, Hicks said.

The strategy for VW has not been determined, though Hicks expects the shop will use many of the tactics devised for the Mini Cooper (such as a strong Internet presence, as well as innovative print ads and billboards.) “It’s a chance to redefine a brand,” he said.

Arnold’s ads for the brand have long been tagged “Drivers wanted,” a positioning Eskandarian praised as helping to revive VW’s sales in the late 1990s.

The change to CP+B has no effect on the automaker’s Audi brand, which is handled by Havas’ McKinney + Silver in Durham, N.C., Martin said. The agency did not return calls.

VW in January following a review consolidated its media buying business at WPP Group’s MediaCom, moving the work from Havas’ Media Planning Group.

CP+B and Arnold share the American Legacy Foundation’s national anti-smoking account.

—with David Gianatasio