VW Euro threat to Carat

Carat’s grip on Volkswagen’s European media buying – one of its biggest accounts – has been weakened with the 170m German business moving to Grey Advertising’s MediaCom.

The move – a significant blow for Carat – leaves a question mark over other key VW markets where the network handles media buying, particularly the UK, Spain, France and Italy.

In 1994, the German arm of VW split its media buying from its creative business and shifted media from the DDB network (BMP DDB in the UK) to Carat. Other European markets were forced to follow.

An inside source suggests that on this occasion each market may be allowed to choose whether they wish to shift agencies and, if so, where they wish to move to.

VW UK’s media buying is handled by the Carat affiliated BBJ Media Services. VW communications manager Nigel Brotherton will not comment in detail, but says: “We are happy with the current arrangements in the UK. There will be no chance of a review [in the next four months]. Even if the Germans do prevail on us, we will look at a timescale of well over 12 months on that.”

MediaCom in Dsseldorf won the German account pitching against Carat Wiesbaden and Hamburg-based Initiative Media. It is unclear what prompted the review but Carat was audited as part of the process.

It is thought the German account was worth between $2m and $3m (1.2m – 1.8m) in revenue for Carat, a profit estimated by one City analyst at about $500,000 (303,000). He adds: “It’s often these huge accounts that provide the backbone for these businesses.”

VW is thought to spend about $900m (545m) on advertising outside the US.

Jerry Buhlmann, managing director of BBJ, says: “My understanding of the review is that it is entirely a matter for Germany. There is going to be no review in the UK. There is no single contract for Europe. VW Group developed the business on a market-by-market basis.”