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Auto manufacturers' sales may be in freefall still, but obviously no one told their marketing departments, because virtually all the car companies continue to pump out a steady stream of new ads. We feature two this week (but we could easily have filled all four slots). The secret in ads for cars is to make some kind of emotional link with the viewer and you don't really get that from a commercial which merely depicts the vehicle as it speeds along a picturesque mountain road or cityscape. So here are two spots that don't even show the car until the last five seconds, and yet are instantly more memorable than just about 75% of all the other car ads currently on-air, certainly as far as the main audience of men is concerned. This is a brand, the ads say, that understands how you think. You may not remember the model, but you do remember the make. First up is the new spot from Agence V in Paris for Volkswagen, followed by German agency Jung von Matt's ad for Mercedes-Benz. Both great.

Orange unveiled another big push in France for its broadband TV offering. There are three new spots out this week, all from Publicis Conseil and all good, promoting the channel's movie on demand service. This is our favourite of the three, but see also Gladiators and Vampires.

And finally, the launch ads for Microsoft's new Bing search engine from JWT. There's more on this below, but we felt this spot merited an Ad of the Week position. It's less explanatory than the full launch ad (see here) but it's a cute idea and features nice performances, especially from the teenage daughter. Good luck Seattle.

In the news this past week: Advertisers

GM is dead, long live the new GM. As was already widely expected, General Motors filed for bankruptcy protection on Monday. Despite attempts to restructure without Chapter 11, there was never any real possibility that the liabilities of a business as complex as this could be resolved without court protection. GM will be stripped of its huge debts, as well as much of its inefficient North American dealer network and large chunks of its international operations. The US and Canadian government have stepped in to provide further funding and will in return end up with around 60% and 12% respectively of a slimmed down company. As a result, joked some media commentators, the initials GM now stand for Government Motors. The UAW labour union is likely to end up with around 17.5%, less than expected, in exchange for concessions on healthcare and pensions benefits. Bondholders get 10% and ordinary shareholders get zip. Turnaround expert Al Koch was named as GM's chief restructuring officer, and the process is expected to be quick and clean. Assuming all goes smoothly, the business could emerge from court protection by the end of the summer and may even be ready for a public equity offering by mid-2010. Deutsch went public with a new ad to promote GM's manifesto to the general public. (See it here). However WSJ blogger Evan Newmark was scathing about the chances of a turnaround for the new GM, and by extension Chrysler, even with the UAW union as a shareholder. His piece "New GM Old UAW" is definitely food for thought. (See it here). Even at the new GM, union members will be allowed six unexcused absences from work before they can be fired. Elsewhere in the US, Chrysler could leave Chapter 11 as soon as tomorrow following court approval of its proposed deal with Fiat. In the mean time, US car parts manufacturer Visteon also filed for bankruptcy. Previously a division of Ford, it hasn't made a profit since being spun off in 2000. 

One crucial part of the GM restructuring was the spin-off of its European operations. The Opel and Vauxhall businesses are to be sold, although GM will retain a minority stake. The German government brokered a deal to transfer a 55% shareholding to a consortium led by Canadian car parts manufacturer Magna with backing from Russia's state-owned lender Sberbank. Earlier talks with Fiat stalled, partly because of fears that Fiat would cut more jobs than Magna, but mainly because the Italian company refused to provide an immediate E300m of emergency cash Opel needed to settle a host of bills which fell due this week. Berlin will provide another E1.5bn of emergency funding to Opel to keep it going until the deal can be formally completed. The new arrangement poses considerable additional risks for Opel. Although Magna already operates in Europe, assembling vehicles under contract for other manufacturers, it has no experience as a volume carmaker, and OAO GAZ has significant debt problems of its own to resolve. Perhaps the biggest risk is to the future of Vauxhall's manufacturing operations in the UK, and indeed to the long-term future of the Vauxhall brand.

British Airways reported its worst financial performance in more than two decades as it plunged from record profits in 2008 to a record loss of £401m for the year to March 2009. The airline blamed reduced passenger numbers as well as a sharp rise in fuel prices during the summer of 2008. Revenues edged up 3% to just under £9.0bn. This week, the airline also began moves to push through a new set of what are likely to prove controversial staffing terms, designed to reduce costs. CEO Willie Walsh told employees that the airline is "fighting for survival". Gloating over its arch-rival's misfortune, Virgin Atlantic rushed out its own results, which appeared to paint a very different picture. According to that bulletin, pretax profits for the year ending February 2009 almost doubled to £68m on an 8% increase in sales to £2.6bn. However, several commentators were quick to point out that, as a private company, the Branson airline follows different accounting standards from larger operators such as BA or even Virgin's part-owner Singapore Airlines. The fine detail of Singapore Airlines' results for the year to March 2009 suggest that, on a comparative basis to BA, Virgin Atlantic effectively broke even for that period, with a sizeable profit for the first nine months offset by a large loss in the final quarter.

Spanish banking group Santander confirmed plans to phase out its three subsidiary brands in the UK by the end of 2010. The group has owned Abbey since 2004, and acquired struggling mortgage lenders Alliance & Leicester and Bradford & Bingley amidst the chaos of last year's banking crisis. All three names will be replaced by the unified Santander brand in a process similar to HSBC's rebranding of Midland Bank in the UK at the end of the 1990s. 

America's biggest specialist toys retailer Toys R Us completed its acquisition of upscale rival FAO Schwarz after a three-year courtship. The iconic Schwarz brand, best known outside the US for its cameo appearance in 1980s Tom Hanks comedy Big, will continue to operate as a separate business. No price was disclosed for the deal.

Molson Coors acquired the controlling stake in a new joint venture which has rescued Indian-style Cobra Beer from the administrators. The business is a joint venture with Cobra's founder, Anglo-Indian entrepreneur Lord Bilimoria.

Stella David, the long-serving chief marketing officer for Bacardi is to leave the company in July after 15 years. Her successor has yet to be announced.

In the news this past week: Agencies

As had been expected, GM's bankruptcy will leave a sizeable hole in the financial results of Publicis and Interpublic, the two groups responsible for its marketing. According to the list of creditors submitted with the filing, Publicis-owned Starcom MediaVest is GM's 6th biggest creditor, owed around $121m in media costs and fees. The group is also owed around $25m for advertising and other marketing services, handled mainly by Leo Burnett. Interpublic's agencies appear to have got off more lightly, with only around $20m of outstanding bills mentioned in the filing. Both groups are expected to stay with the new GM through the bankruptcy restructuring, but sharp cuts are expected in media expenditure. 

Meanwhile WPP warned of continuing weakness in the global marketing services industry, announcing that like-for-like revenues had fallen by almost 7% during the first four months of the year. Nevertheless, Sir Martin Sorrell succeeded in getting the backing of shareholders for renewal of the group's controversial pay scheme that offers large rewards for senior executives who reinvest up to 100% of their remuneration into WPP shares. If the company performs well, they are entitled to a payout of as much as five times the amount they invested. In Sorrell's own case that could lead to a bonus worth as much as $95m. Some shareholder bodies had advised against approval of the plan, but in the end investors chose to back the group's management team.

Ogilvy & Mather launched a new practise group within its Ogilvy PR division this week to specialise in environmental communications such as sustainability. Originally launched in Australia, Ogilvy Earth will be rolled out to another 30 countries. The group has already delivered a number of well-received green-themed marketing campaigns on behalf of clients such as BP and IBM.

Adweek reports today that Michael Wall, one of the founders of Fallon London, has been offered the job of global CEO of Lowe. According to the story, he has yet to agree terms.

DDB and Y&R were assigned to a major new corporate rebranding exercise being rolled out in Europe and Latin America by Spanish telecoms giant Telefonica, owner of the O2 mobile business in the UK, Germany and Eastern Europe, and of Movistar in Spain and Latin America. In a process similar to that already undertaken by France Telecom's Orange, which has grown from a mobile-only service into a fully integrated offering, Telefonica wants to establish Movistar as the name of its main fixed line service in Spain and Latin America as well, and O2 as the dominate brand in its existing European markets. The Telefonica name will be gradually phased out as anything other than a corporate umbrella. The process will be managed in three stages. DDB and design agency Interbrand were charged with developing the first two stages of brand strategy and visual identity. Y&R, working with design agency Lambie Nairn, will be responsible for the third stage of brand implementation. Overall, the process is scheduled for completion within two years. It's not yet clear where this leaves long-standing O2 advertising agency VCCP, which also pitched for the rebranding exercise but was passed over.

Two other big account shakeups were launched by Reckitt Benckiser and Danone, both of whom are reviewing their global media assignments. The Reckitt business is currently split country-by-country between MPG, OMD and ZenithOptimedia; Danone's is managed by Mediaedge:cia, MPG, Carat and OMD. In other assignments, GlaxoSmithKline transferred several accounts out of Arnold Worldwide. Its anti-smoking products, including Nicorette in the US, NiQuitin and NicoDerm worldwide, as well as weight loss product Alli, were transferred to TBWA; Grey takes over a collection of gastro brands including Tums. PNC Bank of the US shifted its account from struggling indie Doner into Deutsch. Heineken called a creative review of its flagship brand in the US, out of Wieden & Kennedy, and warned that only agencies with a New York office should apply for the account. Lowe New York picked up healthcare remedy Zicam. Universal McCann took US media for BMW's North American dealer network, and in one of the most important shifts in Germany this year, BMW assigned independent Serviceplan to manage local creative, and appointed Belgian company BSUR to supervise Mini. For all other appointments, subscribers can access the full Adbrands Account Assignments database here. 

In the news this past week: Media

Microsoft unveiled the latest incarnation of its web search engine as it tries to claw back market share from Google and Yahoo. The new version of the service carries the standalone brand name of Bing.com. According to Microsoft, it's not a search engine but a "decision engine", which promises to deliver more immediate and intuitive answers to queries. (See more here, as well as some of the launch ads). Despite the big talk, however, the real differences between Bing and Google are comparatively minor. Microsoft has launched a massive $100m ad campaign to introduce the new brand, and claims to have no expectations for a sudden dramatic change. In an interview with WSJ's Walt Mossberg, CEO Steve Ballmer acknowledged the difficulties of dethroning a champion as powerful as Google, comparing his own company to another well-known challenger: "I think there are times in our history we felt a little bit like Rocky. You have to do Rocky I and Rocky II and Rocky III and I don’t know if there’s a Rocky VII or something like that at this stage. But it takes persistence in this stuff, and you don’t always get things right. We certainly flailed with Windows for a lot of years before we got it right." In a separate development, Yahoo's CEO Carol Bartz said that the latest round of talks with Microsoft to combine their search services had ended without agreement. Meanwhile Google unveiled plans to raise the stakes further with a new email and internet messaging service, Google Wave, to be launched later this year, and strongly influenced by the social networking phenomenon. "It's what e-mail would look like if it was invented today," said Lars Rasmussen, the creator of the Google Maps service, and lead developer on this new project.

At its annual meeting last week, Time Warner confirmed that it will proceed with the spin-off of AOL as a separate company by mid-year, bringing to an end a disastrous eight year merger. The original deal, in which AOL used its then sky-high stock price to acquire a media group five times its size but was unable to establish any meaningful synergies between the two businesses, is widely considered to be one of the worst corporate deals of all time. One irate shareholder took the floor at the annual meeting to declare that 11th Jan 2001, the day the AOL Time Warner deal completed, "is a date I believe will live in corporate and economic infamy". The AOL demerger follows the spin-off of Time Warner Cable earlier this year, allowing the slimmed down group to focus purely on content rather than networks. As previously reported, Time Warner is also pushing into the entertainment software market. It has reacquired rights to develop software based on the Lord Of The Rings movie franchise, and is one of the lead bidders for Midway Games, which owns the Mortal Kombat franchise. 

Rupert Murdoch named Chase Carey as the effective #2 at News Corporation, replacing Peter Chernin, who is set to depart the group at the end of the month. A longtime News Corp lieutenant, Carey's last role for Murdoch was as chairman-CEO of satellite broadcaster DirecTV, a job he retained following the satellite broadcaster's spin-off to Liberty Media. He will now rejoin News Corp at the end of the month in the role of deputy chairman and head of the US-based Fox division. His fulltime replacement at DirecTV has not yet been named, but Larry Hunter steps in on an interim basis.

Facebook raised a further $200m of cash by selling a 2% stake to Russian investor Digital Sky technologies (DST). The deal values Facebook at around $10bn. Almost two years ago, a similar investment from Microsoft valued the business at $15bn, but most observers feel that even $10bn is too generous. Despite its size - Facebook now has more than 200m registered users - the service has not found it easy to convert popularity into revenues. Income for 2008 is thought to have been around $265m, below expectations and a fraction of the almost $22bn generated by Google last year. DST is one of Russia's biggest internet investment companies, with holdings in around 30 businesses, mainly in its home country, including leading web portal Mail.ru. 

The American newspaper industry is suffering the worst downturn in modern history, according to statistics released by the Newspaper Association of America. In the first quarter of this year, combined print advertising sales plunged by almost 30% compared to the year-earlier period, and even online ad sales fell by more than 13%. The most shocking collapse was in employment classified advertising which plummeted by more than 67%. The total figure for classified, including real estate, automotive and personal, was down more than 42%. On the current basis combined ad sales for the full year could come to no more than $30bn, the lowest figure since 1987, and a startling plunge from the record high of $49.4bn recorded only three years ago in 2005. 

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Simon Tesler
Publisher, Adbrands

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