How Volkswagen and Ford Are Carrying Out Global Creative Agency Reviews
It’s very easy to get comfortable with the status quo. Whether it’s something small like a brand of coffee, or something integral to your business like the marketing agency you procure advertising services from, the temptation to adopt an “If it ain’t broke don’t fix it” mentality is strong.
However, no matter how satisfied you are with the results you get from one product or service, it never hurts to shop around every once in a while, and explore different avenues. You may not find anything better than the service you are presently receiving, but at least you can be confident you are spending your marketing budget in the most effective manner possible.
If you still aren’t convinced of the benefits of periodically shopping around, it may interest you to learn that two of the world’s biggest car brands conducted creative reviews this year.
For many years, Ford’s advertising agency of contract has been the world-famous WPP Global Team Blue. There are those who describe WPP as being to advertising what Detroit is to American car manufacturing, and a big part of that reputation comes from its long-standing relationship with the famous motor vehicle brand.
However, Ford has recently been undergoing a company-wide initiative to restructure its budgetary commitments. So far, this has included a $14 billion reduction in materials and engineering spending over the next five years, and the next step is putting their advertising out to tender once again.
“Ford is going to place some portions of our advertising business up for bid with other agencies, including WPP, beginning in the coming weeks,” said the company in a statement. “No decisions have been made and we are committed to driving greater marketing efficiency, effectiveness and customer insight, leveraging the latest tools and technology."
The Ford marketing account is no small thing. The manufacturer is America’s ninth largest advertiser, end spends approximately $2.3 billion on promotion per year. When you widen the parameters out to global ad spending, the figure grows to $4.3 billion, or 2.8% of total revenue.
WPP has had exclusive access to this spend since it first partnered with Ford back in 1943, so it is no small thing to be looking at losing the contract. However, WPP has the same chance as everyone else to now reassess its offering and see if it can come up with a more competitive bid than its peers.
"WPP will have an opportunity to compete with other firms to retain these portions of the business and will remain Ford's agency of record in some other key areas," said Global Team Blue President and CEO, Satish Korde. "We will be enthusiastically responding to Ford's request for review in the days ahead and have every confidence we will retain a substantial proportion, if not all, of the business under review."
Behind Toyota, Volkswagen is the world’s second largest auto brand by international market share (9%), and has a reputation for its anti-establishment approach to advertising and classic copy lines.
However, now it too is looking to possibly move away from long-term marketing partner, Interpublic's Deutsch, and, like Ford, is carrying out its own creative review. A major contender for the tender is likely to be Omnicom, which already handles large sections of the VW marketing in Europe and Canada.
Volkswagen wants to form a single agency hub which encompasses five separate regions – North America, Europe, Asia, South America, and “Others” – and is courting bids from several large advertising brands including Omnicom, WPP, Publicis, Interpublic, Havas and Dentsu. However, Volkswagen has also expressed an interest in keeping 30% of the budget earmarked for something it calls “local heroes”, which could involve smaller marketing agencies.
The hub will enable all agencies – even those from competing providers – to work together towards the common goals of the Volkswagen brand.
"The idea is to bundle all creative services we need to develop and to execute excellent work and everything which you need to do that should be handled in this hub," said Global Chief Marketing Officer for Volkswagen AG, Jochen Sengpiehl. “I can point to Omnicom's dedicated McDonald's U.S. agency as a model. The Chicago-based group uses Omnicom personnel for a lion's share of the account, but outside groups including The Marketing Store (which handles in-store marketing) and The New York Times' T Brand Studio all pitch in.”
A creative review can be a great way to get fresh ideas and perspectives on how your marketing budget is assigned. It doesn’t necessarily mean abandoning your current provider either, as, like Volkswagen, you can bring the best of several agencies together to produce great results.
Evaluating, sourcing, and choosing suppliers are set to be hot topics at ProcureCon Marketing 2019, taking place in June at the Twickenham Stadium, London. Download the agenda today for more information and insights.