Volkswagen should be focusing on effectiveness not efficiency
The German car marque is aiming to boost marketing efficiency by 30% over the next two years but it should watch that a drive to cut costs doesn’t impact the quality and success of its work.
Volkswagen (VW) is about to begin what it says is the most drastic change for its brand in its 81-year history: it is “transforming” its marketing communications to support its transition to the “New Volkswagen”.
Drastic indeed. As well as plans for a new logo in the spring, this week the German car marque revealed it will be culling its agency roster from 40 to three in a bid to drive marketing efficiency by “around 30%” over the next two years, without increasing its €1.5bn (£1.3bn) media spend.
VW believes giving WPP, Omnicom and Cheil sole control over four “global powerhouses” will help it reach an “unprecedented level of innovative power in marketing” and allow it to be managed in a “leaner, more centralised way”.
In a non-corporate nutshell: it needs to cut costs having just been walloped with a €1bn (£900m) fine. But hey, when you get found out for trying to cheat diesel emissions tests there are going to be some “drastic” consequences.
READ MORE: Volkswagen brand on road to recovery as it launches first campaign since emissions scandal
Part of this transformation also includes growing its digital media share to 50% by 2020, double what it was in 2015, and increasing its campaign output by “about five-fold” as it looks to have a more “direct” and “personalised” relationship with its customers. All of this without dipping its hand any deeper into its media wallet.
The big question here is whether VW is right to go on a big efficiency drive when surely it needs to be doing better, more effective, marketing and rebuilding its brand.
According to YouGov’s BrandIndex, its Index score (a measure of a range of metrics including impression, value, quality and recommendation) VW has a score of 17.4. While this is a significant improvement on the low of -1.6 it reached in 2015 when the emissions scandal broke, it is nowhere near the 29.3 it was in 2014.
For a struggling business with poor brand image (even if sales are on the up), it feels like a stronger focus on spending money wisely rather than driving efficiency is more likely to win back customers.
There are questions around these magic numbers VW is aiming for too.
What does being 30% more marketing efficient actually look like? How will it be measured? ‘Efficient’ can easily be equated to ‘cheaper’, so will this impact the quality of the creative or the media it buys?
Then there’s the 50% digital share in the overall media mix. Not only has VW seemingly plucked this number out of nowhere, it goes completely against media neutrality and is based on the assumption this will be the best (cheapest) way to communicate with its customers in two years’ time.
But what if the 360 million visitors VW expects to have on its website by 2020 is nowhere near that estimate or is more? What if TV or out-of-home advertising results in more sales or turns out to be the best way to retain/acquire customers? What if digital has the best ROI for VW now and it should actually be moving spend online faster?
It is all well and good that VW wants to have a more direct relationship with its customers. The concern with focusing on efficiency too much is that it will come at the expense of effectiveness – a risky move for any brand, especially one with as big a brand transformation job on its hands as Volkswagen.