Volkswagen brand will streamline its marketing operations to become 30 percent more efficient by 2020, relying more heavily on cheaper digital advertising than traditional print or television channels.
By increasing its spending on digital marketing to 50 percent of its media mix from 25 percent in 2015, VW expects to maintain a flat annual budget of 1.5 billion euros ($1.7 billion) for developing consumer-related content while increasing output five-fold.
"The brand is to be managed in a leaner, more centralized way," said VW brand sales and marketing chief Juergen Stackmann in a statement.
VW forecasts that by 2020 the number of people visiting its global website will rise 70 percent to 360 million compared with 2015.
To create VW films or other types of consumer-related media, the automaker is restructuring its advertising operations.
The number of contracted agencies will be reduced to three worldwide from about 40 now. These will be Omnicom for the European and South American region, WPP for North America and Korea's Cheil for China. About 100 to 200 people at each company will work on campaigns for VW.
Europe accounts for roughly 70 percent of VW's global measured media spending, according to the Ad Age Datacenter, meaning Omnicom avoided losing a significant source of revenue.
National agencies such as Hamburg-based Grabarz & Partner, which has worked for VW for over 20 years, will not play a role in the future.
One of the core jobs for the three lead agencies will be to develop content attractive enough for consumers to spend their time exploring a virtual VW-related world.
Data-driven campaigns
"Campaigns will be developed globally and be data-driven," Jochen Sengpiehl, VW brand's chief marketing officer, said on a media call on Monday. "For the first time we now have the capability to run global campaigns
The brand will personalize its offerings to a far greater extent than before, Sengpiehl said. "Thanks to our new sales model, we will be in a position to communicate direct with the customer in the future. In the past, direct contacts were largely a matter for the dealers," he said.
In future, direct communications between VW and customers will be managed via a personal customer ID which is to be introduced with a new brand sales system in 2020. "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," VW said.
The strategy will be accompanied with a rejuvenated brand logo. It will be rolled out with the eighth-generation Golf next year and expanded with the I.D. full-electric car due to go on sale in 2020.
VW hopes to introduce new digital services marketed via its cloud-based "We" platform, and has taken a stake in Germany's Diconium, which will develop a method to purchase and manage on-demand functions for connected vehicles.
E.J. Schultz Advertising Age contributed to this report
