Volkswagen bugged about NBC Universal deal
EmptyNEW YORK -- Volkswagen's new Touareg 2 might steal the show near the end of Universal Pictures' upcoming "The Bourne Ultimatum" -- it figures in a major chase scene -- but some Volkswagen executives are disappointed with the overall marketing alliance that the carmaker struck with NBC Universal in May 2005.
While "Bourne," which bows Aug. 3, represents the 11th film placement for the car manufacturer, according to company sources, it is only the second that has met VW's expectations. The only other placement that has drawn applause from VW appeared in Universal's recent comedy "Knocked Up," which hit theaters June 1.
The VW sources said that all the other placements VW has had in Universal films have not been sufficiently memorable or significant.
"The placements we've had so far are not up to the standard we had expected when getting into this deal," said Martin Biswurm, international entertainment marketing manager at Volkswagen.
In response, Universal said that it is "proud" to have "successfully placed" 21 VW-brand vehicles in 17 Universal, Focus and Rogue films totaling $990 million in global boxoffice in the first two years of the companies' alliance.
"VW has been integrated into 56 Universal premieres and events and has had a brand presence on nearly 40 million Universal, Focus and Rogue DVDs globally," Universal said in a statement. "Universal has facilitated many successful collaborations between VW and filmmakers, resulting most recently in significant integration into 'The Bourne Ultimatum.'
"In the first two years of the relationship, VW has leveraged 'King Kong' and 'The Bourne Ultimatum' to create significant global marketing campaigns. An average of one global campaign a year, especially at the beginning of such a large alliance, is, in our opinion, a fantastic track record."
When the deal was announced in January 2005, reports placed the cost to VW as $200 million over five years, but that figure appears to have been exaggerated.
According to sources inside the company, VW expects to spend about $40 million over the three-year term of the deal, with the option to extend its contract for another two years. Most of that $40 million is being spent on cross-promotional marketing campaigns, an expenditure typical for advertisers tying into films. Fees being paid to Universal as part of the deal constitute a portion but not the majority of the estimated $40 million, the sources said. And some of those fees are used by Universal for VW promotional activities like theme-park displays.
So while it is disappointed with the results of the deal, VW at least believes it didn't overpay for what it has received so far from the pact. Universal declined comment on financial terms of the deal.
"What we've spent so far is commensurate with what we've received and what we expect to receive based on films in the pipeline," Biswurm said. "Until recently, the placements have been marginal. That weakness is a cause for our disappointment. We're still waiting for the big films to be able to activate around."
The main reason for the discrepancy in the numbers appears to be a contract stipulation that requires VW to spend marketing dollars only when Universal delivers a certain number and quality of placements. The widely reported $200 million figure is based on a hypothetical sum VW would have had to spend over five years if Universal delivered the maximum number and quality of placements set in the contract. But even in that best-case scenario, the number still is too high, VW sources said. Another factor contributing to the inflated figure is that it was reported before the final deal was signed in May and all the terms were fleshed out, the sources said.
Among the Universal films in which VW vehicles have appeared so far are "Curious George," "The Fast and Furious: Tokyo Drift," "Knocked Up," "Inside Man," "Hot Fuzz," "Something New," "Accepted" and "Mr. Bean's Holiday." VW's largest marketing expenditure to date under the NBC Uni deal was for Peter Jackson's "King Kong," the one film in which it had no placement at all. At this point, it expects to have placements in five additional films in production, but sources said that VW is not committed to spend promotional dollars against any of them.
Biswurm attributed the lackluster placements not only to Universal but to all of the studios' inability to persuade filmmakers to integrate brands in a big way.
"The influence of the studios today is not what it was 20 years ago, and we're somewhat disappointed by the lack of influence that the studios have in the filmmaking process," he said.
Indeed, it does appear that having a filmmaker on board often is the key to blockbuster roles for brands. In "Transformers," from Paramount Pictures and DreamWorks, director Michael Bay orchestrated starring roles for four GM vehicles as Autobot heroes after he spotted a Chevy Camaro concept car at an auto show and wanted it for the leading role of Bumblebee.
Despite the disappointment, Biswurm said that the Universal deal did put VW on the map in Hollywood. "Before we got into this deal, we were never active in film except for the occasional 'Herbie' film that would come along," he said. "But since we started this particular deal with Universal, we've had 10 placements of various lengths."
Based on "industry best practices" on valuing film placements, he said the integrations VW had in seven Universal films in 2006 were valued at significantly more than what the automaker expects to pay over the three years of the deal.
VW also has its vehicles in six displays or attractions at Universal's theme parks in Hollywood and Orlando as part of the deal. It is able to use the theme parks for events and to offer free tickets as part of its international sweepstakes offerings. Another bonus is getting its vehicles placed at Universal premieres and receiving access to screenings for its employees and customers.
The deal, however, has not covered placements on TV series on NBC or its sister cable networks as initially reported. Although VW did have placements on USA Network's "Monk," it was not officially part of the deal.
Biswurm said that VW has not decided whether it will exercise its option to extend the contract for a full five years. "That decision hasn't been made yet," he said. "I think the problem is a systemic studio weakness, and Universal has done a number of things recently to address those weaknesses. Top management has recently become much more engaged on Volkswagen's behalf.
"Some of the films discussed in the second year of the contract are still being produced, and Year 3 is still ahead of us, so we really only have the first contract year to make our judgments on at the moment," Biswurm added. "It's unreasonable for either side to judge the efficiency and effectiveness of the agreement based on one year's results."
As for "Ultimatum," VW is basing the U.S. launch of its updated Touareg 2 model on the film, with a multimillion-dollar campaign including TV ads, print and online components. With a minor role for the VW Rabbit in the film, a number of European countries will be making that vehicle (known as the Golf everywhere except the U.S. and Canada) the focus of their cross-promotional campaigns. There also will be Touareg or Golf campaigns in South America and Asia.