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First up this week is a charming spot for Brazilian airline Gol, which manages a nice blend of old-fashioned cartoon animation and stop motion. (Incidentally, it marks the second week in a row we've featured Brazilian agency Almap BBDO). This film made us think about jumping on a plane to somewhere until we remembered that the plunging value of the British pound means we can't now afford to go anywhere in the world except here.

Saatchi & Saatchi Frankfurt is responsible for an endearing and nicely judged ad for P&G's Ariel detergent, now airing in various European markets. It's further proof of P&G's willingness to try a less in-your-face approach for even its most straightforward products. (No offence intended, but imagine the ad if it had been made for Reckitt Benckiser by Euro RSCG...)

It's Halloween tomorrow (as every parent must surely be aware). Someone at agency RPM3Beechwood had a lot of fun putting together this ad for HMV. Just imagine the hours of research you'd need to ask for to pick just exactly the right bits. We at Adbrands had almost as much fun identifying the clips, and are now planning to ask for tomorrow off so we can do some research to make sure we were right...

And finally, a really great public service message from Scholz & Friends of Germany for Amnesty International. Brilliant idea and seamlessly combined. If only that's what politicians did do with their spare time.

Just room for one more. It's not really an ad as such, but provides a neat follow-on from that "Leaders" spot. We've avoided any coverage of the political advertising mounted by US presidential candidates Barack Obama and John McCain, but we can't resist the new viral film issued by filmmaker Charles R Stone III, best known as the guy from the Whassup ad campaign for Budweiser back in 2000. He and his buddies have put together a terrific update on those spots in support of, well, you can imagine who. See the film here.

In the news this past week: Advertisers

Among companies reporting 3Q financial results, it was once again the turn of consumer staples manufacturers to demonstrate their resilience to the current turmoil. Kellogg's, Kraft, Reckitt Benckiser, P&G, Colgate-Palmolive and even long-suffering Unilever were among the strong performers, with revenues and earnings on or above target. The oil companies also reported spectacular profits - we still have to fuel the cars we already have, after all, even if we're not buying new ones - but these are likely to take a knock from the fall in oil prices during the current quarter. There was black news, however, among Asian consumer electronics companies with Sony, Toshiba and Samsung all posting steep declines. Sony's net profit fell by more than 70% in the quarter. A key factor here was the volatility of currency exchange rates, but that was even before the latest surges by the Dollar and Yen during October. Their strength is going to create serious continuing problems for companies which export from the US and Japan. P&G, a bellwether for international trade in consumer goods, warned this week that developing markets are likely to be hardest hit. Referring to the recent collapse of currencies such as the Russian rouble and Mexican peso (and even the British pound), P&G CFO Clayt Daley warned that “the devaluation across the emerging markets we are witnessing is unprecedented in its depth, breadth and speed,” and is likely to result in equally steep price hikes. 

If you were looking for volatility this week, there was no better place to find it than in Germany, where Europe's leading car maker briefly became the world's biggest company after its share price jumped almost 500% in the space of just 48 hours. The cause was a crafty financial strategy executed by Porsche, the sports car manufacturer which has been engaged for the past three years in a slow but steady takeover of its considerably bigger countrymate Volkswagen. During September, Porsche announced that its steady accumulation of shares had reached 35% of Volkswagen, and indicated that it was considering an increase to around 50% by year end. Last Sunday, however, it suddenly disclosed that it had in fact just pounced, secretly acquiring derivative options which took its effective stake in VW not to 50% but as high as 74%. 

This surprise triggered wholesale panic among hedge funds, many of whom had been betting that the Volkswagen share price would fall once Porsche began buying shares. The problem facing the funds was not only that there was no dramatic fall in price but, far more seriously, that the pool of available shares on which they had based their short positions had now evaporated, with only 6% of Volkswagen's shares left in free circulation, roughly half as many as the funds had between them short-sold. As a result, they scrambled to cover their positions, chasing any available stock and causing the VW share price to soar from E210 on Friday last week to a high of E1,005 by Tuesday morning, briefly establishing Volkswagen as the world's most valuable company by market capitalisation. The price then halved again on Wednesday to around E520 after Porsche agreed to sell back around 5% of its increased holding to calm the market. 

The situation has led to fresh calls for tough regulation of the derivatives markets, where Porsche was able to manipulate loopholes in legislation to seize control of one of Germany's biggest companies without anyone knowing. In the short term, there was a pleasing irony to the way in which Porsche successfully outwitted the short sellers who have contributed so significantly to the current collapse in global stock markets. Unfortunately, however, the results of Porsche's move are likely to be even more dramatic. The hedge funds are estimated to have made combined losses of as much as E30bn on this deal alone, and many are likely to be forced into bankruptcy. As the financial press observed, comparatively few tears will be shed over that fact. But the knock-on effect from such a collapse on the banks and investors with whose money they have been trading will only add to the current crisis. 

There's also another hurricane gathering momentum out at sea. Insurance giant AIG has already been allocated two emergency bailouts by the US government, totalling $123bn. The terrifying news, reported by the New York Times this week, is that AIG seems already to have spent - in the space of a single month - $90bn of that fund, and is likely to need more, possibly much much more to prevent a complete collapse.

General Motors and investment fund Cerberus were said to be racing to finalise terms for the sale of the latter's controlling stake in #3 US auto maker Chrysler to GM. Some press reports suggested an announcement could come as soon as the weekend. Both sides hope to seal a deal before next week's presidential election. GM is lobbying the government to help clinch an agreement with up to $10bn of emergency funding. If the merger goes ahead, several brands are likely to be cut loose, with Chrysler itself a key contender for disposal. 

Also this week, US regulators gave their approval for the merger of Delta and Northwest to create the world's biggest airline group. In Europe, UK carrier BMI, a key rival to British Airways at London's Heathrow airport, agreed to transfer majority control to Lufthansa. The German company already held a 30% stake in BMI, and is now acquiring the 50% holding controlled by chairman Sir Michael Bishop. The remaining 20% is owned by SAS Scandinavian Airlines, which is also expected to sell its holding to Lufthansa.

US soft drinks company Dr Pepper Snapple Group (DPSG) is preparing for a huge surge in volumes for its Dr Pepper brand next month as a result of a half-serious pledge it made earlier this year. Sadly it won't be making any money from the experience. In March, the company joked that it would give out a free Dr Pepper to "everyone in America" if the rock band Guns 'n Roses managed to release its album Chinese Democracy - on which it has been working for no less than 17 years - before the end of 2008. Against all the odds, that challenge seems to have persuaded remaining band member Axl Rose to get down to business, and the record is now slated for release on November 23rd. Honourably, DPSG have stuck to their word, and promise to send a free can to any US resident who registers on that day only at the Dr Pepper website for a coupon. Meanwhile, elsewhere in the soft drinks industry, Danone continued the gradual refocusing of its brand portfolio, agreeing this week to sell its Australasian energy and fruit drink subsidiary Frucor to Suntory of Japan for E600m. 

Pharmaceutical group Sanofi-Aventis was ordered by European regulators to withdraw its weight loss drug Acomplia. Sanofi originally launched the drug in 2006 with hopes of establishing it as a worldwide blockbuster. However, although Acomplia received a green light in several European markets, the FDA denied permission to launch in the US, and the new EU ruling comes on the back of more research studies which indicate an increase in negative psychiatric side-effects among patients. Also this week, rival GlaxoSmithKline was granted approval to introduce its own slimming product Alli in Europe. A lower-strength over-the-counter version of Roche's prescription drug Xenical, Alli has already been successfully launched in the US.

In marketing appointments, Alan Bishop announced his resignation as chief executive of COI, the organisation responsible for commissioning marketing on behalf of the UK government. He is leaving at the end of this year to become head of London's South Bank Centre, the arts body which runs the Royal Festival Hall and Hayward Gallery. His successor will be appointed in due course. Also in the UK, Marketing magazine reported the resignation of  Katherine Whitton, currently the most senior marketer at British Airways. Several other senior BA marketers have also stepped down, choosing to accept the voluntary redundancy offered as part of the airline's cost-cutting programme. Whitton will be replaced by her deputy Abigail Comber. BA is already seeking a replacement for departmental head Tiffany Hall, who left during the summer. Tom Flocco, CEO of spirits and wine group Beam Global, is also moving on. He will not be directly replaced. Instead senior managers within Beam Global will report directly to Bruce Carbonari, CEO of parent company Fortune Brands.

In the news this past week: Agencies

Publicis Groupe, Interpublic and WPP all released 3Q figures this week. Publicis Groupe, which releases only topline quarterlies, said reported revenues for the quarter had fallen by 1.5% to E1.1bn because of currency fluctuation. At constant exchange rates, sales would have risen by 5.1%. The organic increase, also excluding acquisitions and disposals, was 3.9%.  Weakness in the UK, Spain and Germany was offset by good performance in France, and especially in Central & Eastern Europe and Russia, where organic growth exceeded 21%. Group CEO Maurice Levy said the performance was "better than we might have feared, given the turmoil in the world-wide financial system". He added that it was hard to predict "the intensity or the duration" of the current turbulence. "In this context, we believe our industry will face a difficult end of 2008 and a marked slowdown in 2009." However, he said that Publicis was confident of rising out the storm because of its recent strategy of investing in digital services and emerging markets, both of which are expected to show continuing growth in 2009. 

Interpublic's figures were even stronger. Reported revenues for the quarter rose by 11.5% to $1.7bn, helped along considerably by the turning tide of exchange rates. Even organic growth was better than had been expected, almost twice the Publicis figure at 7.6% for the quarter. In the UK, exchange rates helped combined revenues from local subsidiaries to surge almost 18%. The group posted net income of almost $46m, compared to a net loss in 3Q 2007 of $22m. "For the third quarter and the year to date, we continued to post very strong performance," said chairman-CEO Michael Roth. "Our rate of organic revenue growth shows that IPG's agencies are increasingly competitive in the marketplace. Once again, it bears mention that all of our major operating units are showing improvement in their performance thus far this year. That said, during the past few weeks, it has become clear that the global financial situation has begun to weigh on marketers' spending plans for both the fourth quarter and 2009."

WPP's performance was pitched somewhere between Interpublic and Publicis. Superficially at least it had the best numbers to report, with a 16% jump in 3Q revenues to £1.7bn. Yet most of that lift came from the plunging value of the pound. At constant rates, the uplift was 6% and just 3% - below Publicis - with acquisitions stripped out. Revenues from North America were flat in dollar terms, compared to the same period in 2007, but rose 7% in reported figures because of exchange rate changes. The best overall performance came from the combined Asia, Latin America, Africa & the Middle East region, where revenues grew 29% in reported terms and by 16.5% at constant exchange rates. Sir Martin Sorrell acknowledged that the decline in corporate and consumer confidence will make 2009 "a very tough year" but it was unlikely to turn out to be "the Armageddon currently predicted by the fall in stock prices". 

There was further upheaval at the troubled UK outpost of Draftfcb. Enda McCarthy, appointed as chief executive earlier this year, announced his departure to join the local office of Agency.com as managing director. His departure follows the resignation last month of creative director Logan Wilmont, and of company president Nick Jones at the start of the year.

In account assignments, O2 was said to be preparing for a review of its UK media business in early 2009. The account is currently held by ZenithOptimedia. Fashion brand Burberry announced it was seeking a traditional agency to take over global advertising, previously handled inhouse. Nokia's high-end Vertu line is also looking for a new global partner. BBDO was said to be negotiating to pick up creative duties for the Starbucks chain. Diageo consolidated its global marketing for Tanqueray Gin into Wieden & Kennedy. Goodby Silverstein was awarded creative for PepsiCo's Quaker cereals portfolio. Bayer moved media for its UK consumer healthcare brands into Mindshare. For all other appointments, subscribers can access the full Adbrands Account Assignments database here.

In the news this past week: Media

In a deal which could revolutionise the book publishing industry, Google agreed a $125m settlement to end the class action lawsuit brought by authors and book publishers. That suit had accused Google of copyright infringement on a grand scale because of its Google Books service which digitised the content of thousands of out-of-print titles for online browsing. The multi-million dollar settlement will now fund the creation of a Book Rights Registry based on the model of ASCAP, the copyright clearing house for the music industry. In return, Google will offer paid access to its digitised books, and will pass on 63% of the fees it generates to the book registry to distribute among copyright holders. Google plans to offer reduced rate subscriptions to the service to US colleges, as well as free access for US public libraries. Paul Aiken, executive director of the Author's Guild, which represented authors and publishers, called the settlement the “biggest book deal in US publishing history”. For now, the agreement will cover only out-of-print, hard-to-find or academic texts, rather than bestsellers, but will nonetheless prove a significant new revenue stream for the struggling book industry (as well of course for Google).

Meanwhile, it was a dreadful week for workers in the US magazine and newspaper publishing industry, with a string of layoffs. Among the various job cuts were a further 600 positions at Time Inc; a 10% resizing at newspaper publisher Gannett, which is likely to lead to 3,000 job losses; and the cancellation of the weekday edition of the Christian Science Monitor after 100 years of publication.

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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