Volkswagen to rev up marketing efficiency by 30%, bets big on digital
By 2020, digital share of media mix to grow to almost 50 percent as it looks to enhance marketing efficiency by about 30 percent with the media budget remaining stable at €1.5 billion.
The Volkswagen brand plans to improve its marketing efficiency by about 30 percent by 2020 while keeping its marketing budget approximately stable at €1.5 billion (Rs 12,019 crore). Importantly, the digital share of the media mix is to grow to almost 50 percent by 2020.
Volkswagen claims that in 2015, the digital share was about 25 percent against the backdrop of an increasingly personalised way of addressing customers and now the number of campaign elements such as films or advertisements will increase about fivefold. In future, the Volkswagen brand will reduce its global network of about 40 agencies to three lead agencies. The Omnicom Group is to be responsible for Europe and South America, and WPP for North America, while Cheil will continue to be active for the Volkswagen brand in China.
From 2019, Volkswagen is to pool its marketing activities in these regions in four new powerhouses, which are to be established in Berlin, New York, Sao Paulo and Beijing. According to Jurgen Stackmann, Board Member responsible for sales of the Volkswagen brand: “The brand is to be managed in a leaner, more centralised way. With the new partnerships, we will reach an unprecedented level of innovative power in marketing. Thanks to our more focused agency landscape and the expansion of our digital activities, we will become significantly more efficient. The far-reaching transformation of Volkswagen, which will also become evident to our customers next year with the world premiere of our ID., will fundamentally change our marketing.“
Jochen Sengpiehl, chief marketing officer (CMO) of the Volkswagen Passenger Cars brand, said: “Thanks to our new sales model, we will be in a position to communicate directly with the customer in the future. In the past, direct contacts were largely a matter for the dealers. In future, we will personalise our offering to a far greater extent than has previously been the case.”
In the Volkswagen powerhouse, campaigns and content will be developed in a unique fully-integrated, cross-functional approach and then distributed using all the channels available in a highly individual way adapted to the specific target group.
Volkswagen has revealed that 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. In addition, Volkswagen intends to set up new ‘digital platforms’ such as the new online sales platform for the digital ‘We’ services such as the digital delivery service ‘We Deliver’. Volkswagen and diconium are developing a sales platform where customers will be able to purchase and manage on-demand functions for the connected vehicle in the future. The brand expects about 360 million visitors to its global website in 2020 alone, 70 percent more than in 2015.
Volkswagen further reveals that new ‘brand platforms’ such as partnership with DFB and UEFA will also call for new approaches in marketing and the new ‘brand design’, which is to rejuvenate and modernise the presentation of the brand next year will probably be presented in the spring.
Volkswagen intends to accomplish these tasks mainly with the new powerhouse approach. The four powerhouses will bring their most creative people together under one roof. 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.
In the future, direct communications between Volkswagen and customers will be managed via a personal customer ID which is to be introduced with the new brand sales system from 2020 onwards. The company reports that this will also allow the creation of a holistic, individualised customer experience via all points of contact with Volkswagen, in marketing too.
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