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First, a word of explanation to all our international subscribers. As just about every resident of the UK knows, tomorrow is Red Nose Day, the annual event sponsored by the BBC and other organisations in aid of the charity Comic Relief. To raise money, celebrities take part in various televised comic stunts and we lesser mortals are asked to do our bit by buying comedy red noses, proceeds from which go towards various good causes. Fallon London has devised this promotional spot, "Brand Aid", in which the, ahem, "greatest minds in advertising" come together to decide what they can do to help. If you don't watch British telly, you may be hard-pressed to identify some of the brand mascots making an appearance here. Let me tell you that they include Monkey (PG Tips), Bertie Bassett, the Honey Monster (Quaker Oats Sugar Puffs), Captain Birdsye, a Smash Martian, Peperami, the Bounty drag queens, the 118 118 runners, the Cadbury's gorilla, the Admiral Insurance admiral and more.  

More ironic self-reference from RKCR/Y&R who are relaunching Boursin soft cheese on behalf of its new owner, Fromageries Bel. For decades, Boursin has been advertised with the slogan, "Du Pain, Du Vin, Du Boursin". RKCR/Y&R celebrate the brand's heritage with a suitably cheesy romantic interlude, before completely skewering it... Let us say no more, lest we ruin the surprise. 

Lastly two very different views of office life. The first is from Y&R New York, a mock PSA warning of the dangers of Information Overload Syndrome, on behalf of Xerox. A funny idea. Believe me, most of the staff at the Adbrands office already behave exactly like this.

Not me, of course. I'm more like the hero of this delightful 12-minute film by director John Hughes, Australian agency Publicis Mojo and production company @radicalmedia. The short is sponsored by Schweppes, although the brand makes a low key appearance in only two scenes. Stick with it, it's a wonderful and thoroughly charming little movie.

In the news this past week: Advertisers

The pace of consolidation in the global pharmaceutical sector is expected to increase further following the announcement of a takeover of Schering-Plough by its larger US rival Merck & Co in a cash and stock deal worth $41.1bn. It is the second large deal announced in recent weeks, following in the wake of Pfizer's acquisition of Wyeth. The alignment of Merck and Schering-Plough is a natural progression from the two groups' existing worldwide partnership to market the drugs Zetia and Vytorin (known internationally as Ezetrol and Inegy). Subject to shareholder and regulatory approval, the merger will create a new group, which will retain the Merck name, with sales in excess of $43bn. Separately, Roche of Switzerland this week finalised a deal to buy the shares it doesn't already hold in US biotech group Genentench. It has been negotiating with the board of the smaller company for more than eight months over an acceptable price. Genetech's directors have finally accepted a lavish bid of $46.8bn for the outstanding 44% stake.

Further combinations are likely as the international groups jostle for position in a market under intense pressure from regulatory restrictions and patent expiry. Potential targets include the smaller US companies Bristol-Myers Squibb, Amgen and Eli Lilly as well as the pharma arm of Procter & Gamble. Germany's Bayer and Boehringer-Ingelheim might also consider joining forces with each other or smaller domestic competitors to create a new national champion. Japanese company Takeda could seek to take advantage of the strong yen to strike a deal with a European or even US partner. (See a ranking of the current top 20 healthcare companies here) 

In a surprise announcement, the joint #2 executive at Procter & Gamble, president of global business units Susan Arnold, resigned from her role with immediate effect, although she will remain on special assignment with the company until September. A P&G lifer and previously head of its beauty division, Arnold had been considered a front-runner to succeed CEO AG Lafley. The company issued a statement claiming that it had "long been her intention to step down upon her 55th birthday", which she celebrated over the weekend. Arnold's departure leaves chief operating officer Bob Macdonald as heir apparent to Lafley. But that handover may not happen any time soon. Asked about retirement at a presentation to analysts last December, the 61-year-old Lafley quipped, "The rumours of my passing are greatly exaggerated. We're going to stay together, and we have a lot left to do." Also this week, former P&G chief marketing officer Jim Stengel, who retired last year, has joined consultancy MarketShare Partners in an advisory role. Separately,  Procter & Gamble announced plans to launch its first luxury cosmetics range in a partnership with Dolce & Gabbana. It already holds the license to produce fine fragrances for the Italian design duo. Dolce & Gabbana The Makeup will launch this summer.

According a report in the UK's Daily Telegraph newspaper, Coca-Cola is considering the acquisition of a minority stake in admired smoothie and juice marketer Innocent Drinks. The smaller company is looking for capital to fund further expansion into Europe and other markets. It is also negotiating with several potential private equity partners. A tie-up with Coke would draw parallels with a similar David & Goliath deal agreed in 2001 between upscale sandwich firm Pret A Manger and McDonalds. That relationship, which supported Pret's move into the US and Asia, was largely unsuccessful. The Pret brand didn't travel as well as had been anticipated and the Big Mac shares were later sold on to private equity investor Bridgepoint, also one of the funds in talks with Innocent.

Meanwhile, the rivalry between Coke and Pepsi has taken on new intensity as a result of a US promotion for Coca-Cola's lemon-line brand Vault, an also-ran behind PepsiCo's top-selling Mtn Dew. In an unusually aggressive twist on the old Buy One Get One Free strategy, Coke is giving everyone who buys a bottle of Pepsi's Mtn Dew a voucher for a free equivalent-sized bottle of Vault. The promotion has launched under the banner name Don't Dew It. Said a Coke spokesman, "We believe that when Dew consumers are offered the opportunity they'll like Vault better."

The most likely buyer for Volvo, the Swedish car brand being sold off by Ford, is likely to come from China. According to press reports, three companies have expressed interest. Chang'an, which already produces Volvo models in China through a joint venture, has expressed preliminary interest in the business, as has larger DongFeng Motors. However, the favourite is still considered to be Geely, China's second largest privately owned auto group, despite a statement issued last week by the company's chairman that he was not interested. 

In the news this past week: Agencies

WPP has overtaken Omnicom to become the new #1 in global marketing services. The group reported a strong set of results for 2008, buoyed up by a two month contribution from newly acquired TNS, as well as the falling value of the Pound, which has inflated the value WPP's US revenues. Reported revenues jumped almost 21% to £7.5bn, or $13.6bn at equivalent monthly exchange rates. Omnicom has already reported 2008 revenues of $13.4bn. WPP's pretax profits improved by 4% to £747m ($1.4bn), also well above Omnicom. At constant exchange rates, however, WPP's profits would have slipped by around 7%. In a conference call with investment analysts, Sir Martin Sorrell was blunt about the parlous state of the economy. "I'd just like to say that in the 25, 30 years that I've been in the business, I have never seen anything quite like this." Yet the group has been through this sort of rough climate before. In the early 1990s recession, WPP, then only just digesting its first major purchases, came close to collapse. The current turmoil, Sorrel feels, is likely to accelerate the pace of consolidation among major groups. "It is almost an inevitability that Havas and Aegis will get together," he told analysts, "and indeed that [Interpublic] will get together with somebody at some point in time." 

Meanwhile Omnicom was dealt another check by Deutsche Bank which this week downgraded its stock from Hold to Sell. Despite the undisputed excellence of Omnicom's subsidiary agencies, DB analyst Matthew Chesler said the group's performance predictions for 2009, and especially its assumptions on cost-cutting, were "overly optimistic". He believes "Omnicom's ability to respond to declining marketing budgets is going to be less than the market thinks".

Smaller British marketing services group Chime Communications also delivered a strong set of results for the year. Operating income broke the £100m barrier for the first time to hit £112m, and pretax profits rose 19%. Chime's subsidiaries include UK PR giant Bell Pottinger and ad agency VCCP. Chime noted that, despite the economic downturn that took hold mid way through 2008, its PR division had an especially strong second half. With marketing budgets in general under pressure, clients are likely to look to PR as one of the more cost-efficient promotional disciplines. 

In fact, this week's two biggest account assignment developments were both in the PR sector. Omnicom announced the creation of a new dedicated public relations agency, One Voice, to handle all worldwide communications for Philips, already an advertising client of DDB. The new entity will draw upon the expertise of a collection of Omnicom's existing agencies including Fleishmann-Hillard, Ketchum and its healthcare marketing group. Philips PR was previously managed by Publicis-owned Manning Selvage & Lee. Meanwhile Wal-Mart kicked off a review of its own public relations account. Currently, independent Edelman is the lead agency, handling more or less all the retail giant's communications. Now, according to the WSJ, Wal-Mart plans a roster of five separate agencies who will be kept on a low retainer but expected to bid for individual projects on an ad hoc basis. For all other appointments, subscribers can access the full Adbrands Account Assignments database here. 

As always, if you haven't already done so, please confirm your subscription to the free Adbrands Weekly Update by clicking here or on the link at the foot of this email. Thank you for your assistance! 

Simon Tesler
Publisher, Adbrands

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