On Wednesday Volkswagen issued a release announcing record sales in August, with year-to-date sales up 6%. On Thursday, it was revealed VW is moving its advertising account from Red Urban to DDB after concluding an agency review earlier this year.
“Having been through a bunch of agency reviews, I would say nine times out or 10 they are usually sparked by a lag in the business. That wasn’t the trigger for us,” said Volkswagen director of marketing Peter Blackwell.
Rather, the review came as part of a global Volkswagen mandate to review processes and partnerships every five years. On top of that, Volkswagen Canada has a new five-year business plan with aggressive plans for growth.
“Our plan across the board is to become much more sophisticated, much more integrated,” he said.
To follow through on that plan, VW needed an agency partner that met four criteria: strength in strategic planning (“There’s not a lot of strategic planning inside agencies anymore,” said Blackwell), a record of creative work that generates results, an understanding of the regional differences across Canada (not just French and English) and, optimally, the ability to deliver all of that from one agency.
“We started with a very long list… and DDB kept coming up as the one we could go furthest down that list on,” he said.
“I think Red Urban would have had to change quite a bit in order to grow with us,” said Blackwell. “Red Urban is designed as a much more boutique shop and at the time we signed with them, we were content to be a niche player. Our plan is to be much more aggressive,” he said. That meant an agency with deeper capabilities already in-house rather than one that could grow them over time.
“While VW acknowledged our strengths in helping them grow significantly year over year — especially given the challenges in the comparable market south of the border — they needed the consolidation and the boots on the ground across the country. Without that, our business-building partnership wouldn’t suffice,” said Red Urban president Steve Carli. Through August, Volkswagen brand sales in the U.S. are down 13% on the year.
Carli said they learned VW was conducting a review in the first quarter. “It became clear, early on, that the agency couldn’t address a couple of the key requests of the review: namely, a national agency with offices in all key markets and French creative capabilities.”
Aside from a relatively strong sales performance for Volkswagen, the Red Urban work was also a popular choice of awards show judges winning a Silver Lion in Cannes for “Once More. The Story of VIN 903847.” The same work won a gold and a silver at the Marketing Awards, where “The Beetle 3-Track” work with Canadian band Walk Off The Earth also won a bronze.
Red Urban’s award-winning creative “certainly helped” bump sales, Blackwell said, but Volkswagen had also made other changes in the marketplace including at the dealership level and sales tactics, he said.
The win for DDB means it has resigned the Subaru account, which has also been enjoying a strong year — up nearly 16% through August. The Japanese brand remains outside the top 10 in Canada (11th), but was one of Marketing‘s top 10 marketers of the year in 2012.
“We also recognize that our business-building Volkswagen work has garnered a lot of attention, both locally and globally, and are excited about the prospects that will result from us partnering with new clients who are looking to leverage our talents,” said Carli, adding that he did not anticipate any layoffs at the agency as it ramps up its business with Porsche, which it won earlier this year, while also growing existing relationships with Labatt and Purina.