Volkswagen slashes 90 per cent of ad agencies to drive down costs
Volkswagen is cutting the number of advertising agencies it works with by more than 90 per cent in a bid to improve marketing efficiency.
The German car manufacturer has said it will reduce its pool of 40 agencies to just three, while keeping its marketing budget stable at roughly €1.5bn (£1.3bn).
Omnicon will be responsible for Europe and South America, while WPP will cover North America. Cheil will continue to oversee the brand’s marketing in China.
Volkswagen said it expects marketing efficiency to improve by roughly 30 per cent by 2020.
“The brand is to be managed in a leaner, more centralised way,” said Jürgen Stackmann, the board member responsible for Volkswagen sales.
“With the new partnerships, we will reach an unprecedented level of innovative power in marketing,” he added.
The brand said it is aiming for a fivefold increase in the number of campaigns it runs, while developing a customer ID as it pushes for more personalised marketing.
Volkswagen also plans to increase its digital share of media to almost 50 per cent by 2020, up from roughly 25 per cent in 2015.
The streamlining comes after a series of scandals for the car manufacturer. The company sold nearly 55,000 cars with faulty seat belts, according to consumer group Which. Earlier this year Volkswagen was hit by a €1bn fine for cheating emissions tests.
The company’s operating profit was down six per cent in the nine months to September compared to the same period last year.