Agencies Scramble as Martin Exits VW

LOS ANGELES The fast lane ended last week for Kerri Martin after 20 months at Volkswagen of America when the director of brand innovation hit the road.

The abrupt departure of the former BMW executive—who moved the $350 million account from longtime agency Arnold to Crispin Porter + Bogusky in September 2005 without a review—sent agencies scrambling to line up for a shot at the business.

However, a VW representative said there are no plans to change its U.S. agency. “We’re in the midst of a three-year contract, and anticipate no change,” said Keith Price, public relations manager for products and technology at VW in Auburn Hills, Mich.

Adrian Hallmark, an evp that sources said often clashed with Martin during her tenure, is temporarily absorbing her responsibilities. “At this point it is undetermined whether she will be replaced or if the group will be restructured in the long term,” said Price.

Martin left the company after last week’s resignation of VW brand chairman Wolfgang Bernhard, who sources describe as one of her strongest champions within the company. Price said Martin’s departure had “nothing to do” with Bernhard’s actions.

For Martin, who has held marketing positions at Harley-Davidson, BMW Motorcycles and BMW Mini Cooper, it was a fast and furious ride at VW. Just five months after joining the company in April 2005, Martin moved the account to Crispin, the agency she hired in 2001 to introduce the Mini in America.

Crispin has created many controversial campaigns for Volkswagen in its first year on the business: ads featuring frenetic drivers embracing their “Fast”; imploring GTI riders to “un-pimp” their rides; relaunching the Rabbit with over-reproductive innuendo; offering guitar giveaways for turning cars into mobile amplifiers; and producing shock spots for rubberneckers with on-screen Jetta accidents (“Safe Happens”).

“[Martin] did push some intelligent ideas,” said Todd Turner, principal analyst at Car Concepts, Thousand Oaks, Calif., “like changing the name from Golf to Rabbit. It took someone coming from the outside to recognize the relationship of sales to the name.”

Now all eyes are on the replacement for Martin and the account. “[CP+B] lost its strongest advocate with Kerri leaving,” said one source. “Martin’s real problem was the perception/reality that the agency was managing her, not the other way around.” In fact, VW’s Price confirmed that the idea to change the name of the Golf “bubbled up from the agency. Then Kerri ran with it. And Bernhard made it happen with lightning speed.” Crispin declined comment, and calls to Martin were not returned by press time.

Volkswagen works with multiple agencies around the world and last week they were eagerly waiting to hear about Martin’s replacement and calculating their chances at expanding their business with the automaker.

DDB handles VW in Europe, New Zealand and Singapore. DDB’s legacy with the brand in the U.S. stretches back to 1960, when the agency introduced the Beetle with attention-grabbing headlines such as “Think Small” and “Lemon.” The agency lost the U.S. business in 1994 when then-CMO Steve Wilhite fired Berlin Wright Cameron, a DDB spin-off created to handle the account.

Whether DDB may again work for VW in the U.S. “depends on whether the Germans are making the appointment [for Martin’s replacement] or if it’s going to be the U.S.,” said a source. DDB currently handles Subaru out of its New York office.

The Omnicom shop isn’t the only agency closely watching VW. Others that work with the company overseas include Fallon, which handles advertising in Asia-Pacific and Japan, CreativeOndemanD, which handles Latin America, and Grey, which handles Seat in more than a dozen countries in Europe and the Middle East and Passat in China. Grey’s MediaCom handles the bulk of VW’s media buying.

Arnold, which handled VW’s account for a decade and fashioned the carmaker’s iconic “Drivers wanted” campaign, is hungry for a car account and last week emerged as one of seven semifinalists for Volvo’s $150 million global creative business.

Sources said Arnold is committed to pursuing Volvo and has had no conversations with VW in the wake of Martin’s departure. VW sales in North America slipped during the last few years Arnold handled the business, a fact that soured senior management in Germany on the agency. Even so, Arnold retains close ties to many VW execs in Auburn Hills who were disenchanted with Martin’s quick move to bring in Crispin without a review five months after her arrival, sources said.

Dan Gorrell, principal analyst with the Gorrell Group consultancy, Tustin, Calif., said the turmoil in VW’s marketing department does not bode well for the company. “Given the current complexity of the U.S. market and the problems VW faces, it is unfortunate that the organization is still trying to sort out personnel issues,” he said. “They need an integrated team, one with vision and leadership, that is in place for awhile.”

Analysts said despite the fact that VW has reversed its slip in sales-the brand was up 5 percent in 2006 to 235,000 units-recent sales goals have not been met and longer sales trends paint a darker picture. According to the automaker’s figures, sales jumped 59 percent in 1998 to 220,000 units and 44 percent in 1999 (largely due to the reintroduced Beetle and new Passat) but peaked in 2001 at 356,000 units. Sales have steadily declined since then. VW was down 5 percent in 2002, and followed that with successive annual declines of 11 percent, 15 percent and 13 percent.

“Now they’re practically back to 1998,” said Car Concepts’ Turner. “They lost all of the momentum Beetle provided by focusing on cars that didn’t resonate with the VW brand—Phaeton and Toureg, for example.” Turner added that the brand might never recover the profitability of its peak sales year, 1970, when VW sold 583,000 units, the equivalent of 1 million units in today’s market. “You can see how far off they are,” Turner said.

In 2006, Jetta led sales, which fell 1 percent from 2005 to 103,000 units, per Car Concepts. The Golf (Rabbit) was up 83 percent to 29,000 units. Passat sales rose 10 percent to 54,000 units. Beetle sales declined 3 percent to 35,000 units, and Toureg, VW’s only SUV, declined 44 percent to 10,000 units.

—with Andrew McMains and David Gianatasio