Volkswagen Shakes Up Global Marketing Structure

Volkswagen will keep its marketing budget stable at about €1.5 billion ($1.7 billion) but in a global shakeup is targeting a 30% improvement in marketing efficiency by 2020.

The big change will see the digital share of the media mix grow to almost 50% by 2020 from 25% in 2015.

Against the backdrop of an increasingly personalized way of addressing customers, the number of campaign elements such as films or advertisements will increase fivefold.

At the same time, VW says it will reduce its global network of about 40 agencies to three:

Omnicom Group for Europe and South America, the multinational advertising and public relations company WPP for North America and Cheil, which continues in China.

VW says it will pool its marketing activities in these regions in 2019 in four new powerhouses to be established in Berlin, New York, São Paulo and Beijing.

In each case, between 100 and 200 employees will work on campaigns in an integrated, cross-functional approach and develop content from strategy through to implementation and distribution. For the first time, this approach will make global campaigns possible.

VW board member responsible for sales Jürgen Stackmann says the brand is to be managed in a leaner, more centralized way.

“Thanks to our more focused agency landscape and the expansion of our digital activities, we will become significantly more efficient,” he says in a statement.

Stackmann says the transformation of VW will become evident next year with the world premiere of the ID 5-door hatchback electric vehicle.

Jochen Sengpiehl, chief marketing officer-VW Passenger Cars, says the new sales model will position the automaker to communicate directly with customers.

“In the past, direct contacts were largely a matter for the dealers,” he says. “We will personalize our offering to a far greater extent than has previously been the case.”

The changes in marketing will focus on four main areas. In the product area, the key topics in 2019 will be the eighth-generation Golf and the ID. Both cars will be fully connected, also allowing direct digital services for the customers in the car.

VW intends to set up new digital platforms such as an online sales platform for the digital “We” services and the digital delivery service “We Deliver.”

VW and digital strategist Diconium are developing a sales platform where customers will be able to purchase and manage on-demand functions for the connected vehicle. The brand expects about 360 million visitors to its global website in 2020 – 70% more than in 2015.

Direct communications between VW and customers will be managed through a personal customer ID to be introduced with the new brand sales system from 2020. It will allow the creation of an individualized customer experience at all points of contact with VW.

The analysis and utilization of market and consumer data, as well as the deployment of highly advanced digital tools and artificial intelligence, will play a key role.