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Audi Shakedown: ‘Internal Review’ Has DDB on Hotseat By David Kiley and Jim Kir

Radio ads for Audi last year imitated news reports, called Audi Watch, telling listeners of Audi products and the cars’ performances

Audi dealers said last week that Gerd Klauss, who took charge of Volkswagen’s luxury division in the U.S. last September, has told them that he is ‘internally reviewing’ Audi’s estimated $25-30-million advertising account now at DDB Needham, which also handles the VW business. And sources at DDB’s Chicago office, which houses the account, said that Klaus is expected to meet with DDB executives there in the next two weeks, a meeting that two staffers called ‘decisive’ in whether the agency retains the business.
A phone call to Klauss was returned by Audi spokesperson Pat Fitzgerald, who said, ‘No comment,’ in reply to queries of discord between agency and client.
DDB Needham Worldwide chairman and chief executive officer Keith Reinhard was on vacation in Utah.
Audi ad spending has fluctuated in recent years. But in the first six months of last year, the division spent about $15 million on media, according to Leading National Advertisers. Audi also advertises via direct mail.
Klaus was named executive vp in charge of Audi last fall after a long tenure at Mercedes-Benz North America, where his last post was vp/marketing. Soon after Klauss arrived, Audi suspended TV and radio advertising. For the last few months, it has just been running retail advertising to support the dealers.
Despite dramatic upgrades in Audi quality, and several new models, sales have fallen from more than 40,000 units in 1987 to just over 12,000 last year. The company’s stated sales goal for 1992 was 20,000. One VW executive said the reason for the shortfall had a lot to do with VW’s refusal to fund an aggressive leasing program, which for some luxury marques accounts for 90% of sales.
There has been heavy speculation about Audi leaving the U.S. market, especially since false charges of unintended acceleration in the mid-’80s slaughtered the brand’s sales. But new VW AG chairman Ferdinand Piech, who came up through the Audi organization, has said he is committed to restoring the brand in the U.S.
Audi dealer council member Wayne Williams of Detroit said dealers have complained about the lack of advertising support, as well as the absence of support for leasing programs. ‘Klauss told us there would be something for us in the second quarter, but we don’t know what it is yet,’ said Williams.
Copyright Adweek L.P. (1993)