Automaker puts Hollywood pacts on hold

On paper it sounded perfect: In 2005, Volkswagen agreed to pony up around $40 million annually over three years to place its cars and familiar logo in Universal’s movies, at the studio’s premieres, on its DVDs and inside theme parks.

The German automaker would use Hollywood to put a spotlight on its vehicles at a time when sales were sluggish. In return, the studio would gain a powerful marketing partner to promote its pics worldwide when marketing costs are revving up.

Over time, the pact could have been worth as much as $200 million, and extended for another two years if both sides were happy.

They’re hardly happy.

The deal went into litigation and recently settled out of court, making it the latest major pact — following McDonald’s long-term deal with Disney — to run out of gas and signal that overall partnerships between Hollywood and Madison Avenue may sound good, but never work as planned.

“It all comes down to knowing what you want out of the deal,” says one marketing exec close to both sides. “Then comes the hard part, taking full advantage of the opportunities.”

That’s not necessarily what Volkswagen did.

Plans called for VW to have first look at films it could place its vehicles in before U could move on to another automaker.

In the first two years, more than 21 VW cars and SUVs appeared in 17 Universal, Focus and Rogue movies, including “Knocked Up,” “The Fast and Furious: Tokyo Drift” and “Mr. Bean’s Holiday.” An animated truck even appeared in “Curious George.”

Despite the placements, VW spent its own marketing dollars around only two — “King Kong,” in which its vehicles don’t appear, and “The Bourne Ultimatum.”

VW did sponsor most of Universal’s premieres, with its logo on display on invites and at the red carpet.

Vehicles were also parked at U’s theme parks; an SUV was wrapped in bandages in front of the “Revenge of the Mummy” ride, for example.

But more was on the table.

The plan to make VW the “preferred auto partner” of USA Network didn’t make the final deal — a missed opportunity, given shows could have showed off VWs weekly.

U also offered to co-produce “mini movies” for VW to screen online, TV, DVD or in theaters. Other original DVD-based content also was suggested to drive consumers to dealerships.

And a CityWalk VW Experience Center was proposed, as was a Touareg off-road driving course on the lot.

VW ultimately opted for mostly product placement and theme park displays, given that they were cheaper to pull off.

U wound up receiving $15 million in cash each year, with VW spending another $25 million on movie and theme park marketing annually over the three-year period.

“For three years, NBC Universal and Volkswagen successfully executed many mutually beneficial marketing campaigns in over 40 countries, reflecting the growing importance of international markets for both the automotive and the entertainment industries,” Stephanie Sperber, executive VP of Universal Studios Partnerships, says.

So what went wrong?

Like most brands that deal with Hollywood, VW had a different impression of how studios operate.

It thought Universal would force producers to plug its products in certain projects and even rewrite scripts to fit in certain models.

But at a filmmaker-friendly studio like Universal, talent has more creative control. If directors didn’t want to use the cars, they didn’t have to.

“The influence of the studios today is not what it was 20 years ago, and we’re somewhat disappointed by the lack of influence the studios have in the filmmaking process,” said Martin Biswurm, international entertainment marketing manager at VW last year.

The automaker still gravitated toward “The Bourne Ultimatum,” and while its Touareg 2 SUV and Golf hatchback were prominently featured in the actioner, it had wanted producers to rework the script to have Matt Damon drive a VW-branded police car through New York City in a key chase sequence.

Producers passed, saying that wasn’t realistic.

“I believe in product placement as long as it doesn’t violate the integrity of the movie,” says one high-profile producer on the pic. “You can’t jam a product into a movie.”

VW also wanted Damon to appear in ads to promote its tie-in with the movie or shoot extra scenes for the DVD.

That also wasn’t possible, considering Damon — make that most major stars — usually don’t appear in ads for promo partners. Extra shots would have boosted the pic’s budget and extended its already tight schedule.

A disgruntled VW still launched a U.S. ad campaign with original footage featuring Edgar Ramirez, one of the pic’s villains.

Overseas, however, it wound up pulling a separate spot, focused on the Golf, after execs found out the car would appear a second or two less on screen than they had expected.

U estimates that the last-minute move cost it up to $10 million in marketing support.

“There was a lot of naivete and inexperience in how all of this really works,” says one producer who worked closely with VW. “They think this is easy and you have a lot of time. It’s not. You don’t.”

There were other frustrations. Whereas other automakers have garages of cars from which to choose, VW had only a handful of vehicles on the Universal lot to offer productions. Of those, none were sports or luxury models that filmmakers typically lean toward.

Because the deal wasn’t brokered with Volkswagen of America, but rather its corporate offices in Germany, company reps were based overseas, making quick divisions difficult for producers.

On top of that, a corporate regime change shifted how involved VW wanted to be in Hollywood over time.

At the end of the day, VW may have expected too much.

It wanted a slate of bigger tentpoles to place its vehicles in, not necessarily Judd Apatow laffers. Basically, it wanted a VW to be the next Batmobile.

It never got that major tentpole. But before the deal with U, VW had little presence in Hollywood.

Its cars rarely appeared in movies or TV shows, outside of 2005’s “Herbie: Fully Loaded.” It did have a rep who placed vehicles with celebrities. That no longer happens.

Despite some headaches, VW still is pleased with its exposure — at least officially.

“Our experience with NBC Universal clearly demonstrated how the entertainment industry continues to develop as a versatile, global and visible stage for Volkswagen’s brand development,” says Lutz Kothe, VW’s global head of non-traditional marketing.

Both companies say they will continue working together on a non-exclusive, project-by-project basis.

“We hope to identify future projects for integration with NBC Universal,” Kothe says.

But VW’s presence in town is likely to disappear again.

Says one marketing exec close to the deal, “Volkswagen didn’t exist in Hollywood until the Universal deal, and now that it’s over, it won’t have a presence here anytime soon.”

Follow @Variety on Twitter for breaking news, reviews and more