We're keeping the intro short this week, because there's a fair bit of news. Here's another great ad from TBWA\London for the Nissan Qashqai, a suitably extravagant follow-up to last year's "Skateboard". The latest spot, "Urbanproof" takes a similarly surreal approach to urban driving. We also love the elegant new Johnnie Walker ad by Bartle Bogle Hegarty. This drops the futuristic angle of last year's Android in favour of something more historical but no less inspirational. 

You probably have to be English (and to have grown up in the 1970s) to understand the cultural role played by Cadbury's Flake ads. Here's the latest incarnation, from Publicis London, which does away with a long tradition of suggestive imagery in favour of celebrity endorsement. Singer Joss Stone demonstrates that she hasn't dispensed entirely with her English roots in her move Stateside, and the new ad works quite nicely. Much better in fact than the horrendous tie-up between Madonna and Sunsilk shampoo, also out this week. Madge's new album threatens to be overwhelmed by several cash-grabbing commercial deals. The first of them is this deal with Unilever in the US. The style-less new Sunsilk ad by French design agency Desgrippes Gobé is a montage of Madonna's past re-inventions and apparently "premieres" the new single, Four Minutes. Zzzz. See it here. Cheer yourself up with some classic Cadbury's Flake ads from yesteryear. This one from 1969 is just downright rude.  

Finally, "Singing Dog", a delightful ad for the Volkswagen Polo by DDB London which manages to be sweet and sad and funny and very clever all at the same time. Just look at how that tag-line anchors the whole spot. Classy stuff. In case you're wondering, the track is I'm A Man by the Spencer Davis Group.

In the news this past week: Advertisers

Financial news has dominated the headlines this week. Confidence in the global banking sector fell to new lows, fed by further falls in the value of mortgage-backed securities, and therefore another wave of likely writedowns in the value of investment banks' assets. As many observers have noted, although it was initially triggered by the financial hardship endured by debt-heavy homeowners in the US, the current banking crisis is being fed not by a lack of liquidity among financial institutions but by a spiral of mounting fear. As the perceived value of mortgage-backed bonds and similar derivatives plunges, investors holding them are forced to sell or mark down their total assets, prompting a further fall in the value of the bonds... and so the vicious circle continues. The absurdity of the situation is that the securities at the heart of the crisis are now, arguably, priced far too cheaply, well below their real market value. A wave of buying would restore confidence in the sector as a whole, but the big banks are concerned that any move on their part to start buying would lead to further panic-selling, and therefore promote another collapse in values.

The latest fuel for the fire was the near bankruptcy of prestigious US investment house Bear Stearns last weekend. That bank had established itself as a specialist in mortgage-backed bonds, but two of its funds were forced to close last summer in the first wave of the current crisis. Nervous of its continuing exposure to the subprime sector, a few institutional clients began withdrawing their cash from Bear Stearns last week. As was the case in the UK with Northern Rock, word spread, quickly turning into panic as other clients rushed to follow suit. By Thursday, Bear Stearns was faced with the possibility that it would run short of cash, and made a plea for help to JP Morgan Chase, its main settlement partner. Initially Morgan Chase extended a credit line underwritten by the Federal Bank of New York. By the end of the weekend, however, it had agreed to buy out Bear Stearns in full at a price of $2 per share, or a total of just $236m. Just one week earlier Bear Sterns' stock had been priced at $64 per share. There are numerous potential obstacles to negotiate before the deal is concluded, including litigation from Bear Stearns shareholders, opposition from management and further liabilities from its investments. However, the Federal Reserve agreed to provide up to $30bn of additional credit to underwrite Bear Stearns' balance sheet and help JPM close the deal safely. By mid-week, a measure of confidence had returned to the US financial sector after better than expected 1Q results from Goldman Sachs and Lehman Brothers and a spectacularly successful IPO for Visa. As a result, investors have been bidding up Bear Stearns' share price again on speculation that a rival bid might emerge for the business. 

It is precisely this level of frenzied speculation that is making the markets so unstable. Bear Stearns shareholders lost a fortune in the bank's takeover, but several short-selling hedge funds have profited immensely from the collapse. The practise of short-selling involves borrowing rather than buying shares and selling them at market rate, while gambling that they can be replaced at a later date at a lower price. The difference in the price between sale of the borrowed share and its later replacement is pure profit. The WSJ reported that several funds had held short positions in Bear Stearns since last summer, at which point its stock was valued at $150. In theory, those firms have booked a profit of as much as $148 per share as a result of the JPM takeover. Inspired by this situation, unscrupulous traders in the UK attempted this week to engineer a similar collapse for the local mortgage market leader HBOS. On Wednesday morning, false rumours began to spread of that bank's imminent collapse, causing its share price to plummet by more than 17% in just 20 minutes. The Bank of England was forced to intervene, announcing that neither HBOS nor any other British bank was in need of emergency funding, and HBOS's shares stabilized, recovering some but not all of their losses. This illegal rumour-mongering is widely practised in some parts of the investment community and even has a name - trash n' cash. Financial regulators have vowed to keep a strict watch on such activity in future.

Despite the bleak headlines, many companies are continuing to do well. Nestlé, for example, cheered the markets by forecasting unexpectedly strong performance for the current year. It said it was experiencing "very strong organic growth" in 1Q 2008. Another food group, General Mills, the maker of Cheerios cereal, Yoplait and Pillsbury, reported a 61% increase in 3Q earnings despite higher ingredient costs and the slowing economy.

US market-watcher Beverage Digest released top line figures for the carbonated soft drinks market in 2007. The steady decline of volumes picked up speed. Last year, the figure fell by 2.3%, compared to 0.6% and 0.2% respectively in the two previous periods. Coca-Cola and PepsiCo's volumes both fell by 2.7%. Total shipments were around 9.9bn cases, the lowest level since the late 1990s. However price hikes and the introduction of several premium products resulted in a near-3% rise in overall retail value to $72bn. As has been the case for several years, volumes for the major companies edged downwards, while niche players, mainly in the energy segment, demonstrated spectacular growth albeit from a very low base. Hansen Natural and Rockstar, for example, experienced volume jumps of 35% and 39% respectively, but still only account for a minuscule proportion of the overall market: 0.8% for Hansen and 0.4% for Rockstar. For more see here for the Beverage Digest summary.

Air France-KLM took another step towards becoming the national air carrier for Europe after its conditional takeover offer for struggling Italian airline Alitalia was accepted by the latter's board. The offer values Alitalia at just E139m, although Air France-KLM has agreed to spend a further E610m to pay off bonds and E1bn to refinance the business. The deal is dependent on a satisfactory arrangement with Alitalia's hostile labour unions as well as the approval of EU regulators. However even the fiercely nationalistic Italian government has agreed that, unless another offer materialises, the only real alternative for Alitalia would be bankruptcy. Air France-KLM said it would preserve the Italian identity of the airline, but it is expected to refocus the carrier on its main hub in Rome, and terminate operations from Malpensa airport in Milan, widely regarded as one of the world's worst airports. Earlier this year, Air France-KLM also snapped up struggling Belgian carrier VLM. Meanwhile British Airways, which had also attempted to acquire VLM, added to its shareholding in Spanish carrier Iberia, now 13%, and said it would consider raising the stake further.

There were also signs of a move towards consolidation in the European telecoms industry. In the wake of the deal agreed last year whereby Telefonica of Spain became the largest individual shareholder in Telecom Italia, Deutsche Telekom has agreed to purchase a 20% controlling stake in Greece's dominant phone group OTE, for around E2.5bn. In addition to its dominant presence in the Greek fixed line, mobile and broadband markets, OTE also has interests in six other countries in Southern and Eastern Europe including Romania, Bulgaria and Serbia. 

The war between Nestlé and Danone over the global baby foods sector could be about to hot up even further. Both companies have added to their businesses in recent months, with the acquisition of Gerber and Royal Numico respectively. Now, there are reports that Bristol Myers-Squibb has been quietly approaching potential buyers regarding its Mead Johnson infant nutrition business, whose main brand is Enfamil. That unit is being valued at between $7bn and $9bn. In the hotel business, UK leisure group Whitbread is in talks to merge its Premier Inn budget hotel chain with arch-rival Travelodge. Any such deal would create a local giant with around 850 hotels. 

Unilever and top people's store Harrods have teamed up to produce a limited edition version of the FMCG group's Pot Noodle instant snack. The luxury Harrods Poulet et Champignon Pot Noodle comes in a limited-edition case with a fork and napkin. Harrods recommends the use of filtered mineral water to "rehydrate the dish". The product is priced at £29.95, and all proceeds go to Action Against Hunger. 

InBev's Stella Artois brand is to end its 30-year sponsorship of the annual tennis championships in London which serve as a warm-up for the Wimbledon tournament. Last year the event changed its name from the Stella Artois Tennis Tournament to the Artois Championships to reflect the expanded range of Artois beers. However this year's event will be the last under that name. The Lawn Tennis Association has begun moves to find a new sponsor who will support a broader range of activities than this one event. The original deal was largely engineered by adman and tennis fan Frank Lowe, then at CDP, which handled the Stella account. What chance then of the event now becoming the Tesco Tennis Tournament, after Sir Frank's current #1 client, or even The Red Brick Road Championships? Or more likely perhaps, the Heineken Tennis Tournament after one of Frank Lowe's other major clients.

In another end of an era move, Marketing magazine reported that PepsiCo is planning to drop footballer turned sports presenter Gary Lineker as the public face of its Walkers Crisps business. Lineker has featured in Walkers ads since 1995, initially in a twist on his reputation as one of the sport's best-known "nice guys". Lineker will continue his association with the brand for the rest of 2008, but agency AMV BBDO has been briefed to come up with a new concept for 2009. 

Apple was reported to be in discussions with the major music companies about a new "all you can eat" business model that would give customers unlimited access to the entire iTunes music library in exchange for a new premium pricing for its iPod and iPhone devices. Such an arrangement would mirror a deal already struck between Universal Music and Nokia, which now offers a new "comes with music" service on selected models. Nokia is thought to have secured that deal by offering the music companies a fee of $80 per handset, divided up according to each company's share of the market. So far, Apple is said to have made an offer of $20 per handset, using as leverage its near-70% share of the sector.

In the news this past week: Agencies

Aegis, parent of the Carat and Vizeum media networks and Synovate market research, won more room for manoeuvre in its battle to avoid a takeover bid from Havas with a strong set of results for 2007. Organic revenue growth was twice the industry average at 9.8%, and outperformed both Havas and Omnicom, which each reported 7.1%.  Revenues broke the £1bn level for the first time, rising 11% to £1.1bn. Pretax profits were up almost 20% to £133.5m. Aegis had, presumably, hoped to be able to coincide release of their annual results with the announcement of a deal to acquire interactive media buyer i-level. According to Campaign, the two companies had already agreed a price for the sale of i-level and completed due diligence. However, Aegis is said to have then reduced its offer by a third, citing the current economic outlook. As a result, talks ended.

WFCA Integrated, the regional UK agency which made its debut among the country's Top 30 agencies in the latest Campaign/Nielsen Media Research rankings, has taken advantage of its new status, agreeing to merge with another regional shop, Ekay, to create a new group which claims to be the "the largest London agency outside London". Combined billings for the business will be almost £70m, a figure which would have placed the business above rivals such as Wieden & Kennedy and DraftFCB in 2007 rankings. According to Nielsen, Tunbridge Wells-based WFCA's billings jumped by almost 36% in 2007 as a result of work for clients such as Bathstore, Axa Insurance and Carpetright. Ekay, located in Gravesend in Kent, works for Ocean Finance, Lakeside Shopping Centre and Dagenham Motors. WFCA's Michael Richards is to be chief executive of the enlarged agency; Ekay's Eddie Powell is managing director.

McDonalds is to consolidate its UK advertising with main agency Leo Burnett. Part of the account had been shared with TBWA\London. However TBWA will retain its position on McDonalds's global roster, handling the fast feeder's "trust" business, which is designed to promote the nutritional content of its meals. In other assignments, McGarryBowen won a place on the HP roster; and Hertz appointed Iris Worldwide to its pan-European account. For all other appointments, subscribers can access the full Adbrands Account Assignments database here.

In the news this past week: Media

European media giant Bertelsmann reported what it called "stable" performance for 2007. However the figures were disappointing compared to strong results the year before. Revenues for 2007 declined almost 3% to E18.8bn, reflecting the weakness of the US dollar as well as the sale of the BMG music publishing division. Net income plunged from a record E2.4bn in 2006 to E405m. The previous year's figure was boosted by proceeds from disposals, whereas the 2007 figure was impacted by higher interest charges, significant restructuring and impairment charges, and several special items. These included a payment of E245m to other music companies to settle a long-running lawsuit relating to Bertelsmann's support of the original pirate Napster service and a E96m regulatory fine imposed on a subsidiary of RTL for price-fixing. At an accompanying press conference new group CEO Hartmut Ostrowski acknowledged unsatisfactory performance at the DirectGroup book and music clubs division, and indicated that Bertelsmann was looking for a buyer of its US clubs, which include Columbia House, Bookspan and Book-of-the-Month. 

Satellite broadcaster Sky strengthened its hold on broadcast soccer in the UK, securing TV, mobile and online rights to the majority of UEFA Champions League games from 2009 to 2012 with an offer reported to be around £240m. However a small number of Wednesday night games are still up for auction. Sky recently lost the next contract to show FA Cup games to Setanta and ITV.

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Simon Tesler
Publisher, Adbrands