Adbrands Weekly Update 21st May 2009
A weekly round up of key news about 
leading advertisers, agencies and mediaowners
 
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Dear ${token1} ${token1},

Two bits of Adbrands news. First, a heads-up that we've been working on a completely new format for Account Assignments searches, which we think you'll find much easier to use, clearer and more informative. We're hoping to roll this out in a couple of weeks, and will let you know more in due course. However, if you're a current subscriber, and you'd like to try out the new look, please email me and we'll set you up. Also, be advised that the Weekly Update will be taking a short break next week, back on 4th June. In the meantime...

Our favourite ads this week: 

Mini "Minimalism"
by Plantage

Spa Barisart "Bar Fight" 
by Duval Guillaume

13th Street "Water" 
by Jung von Matt

McDonalds "No Fry Left Behind"
by DDB Chicago

Please note: If you are attempting to view these ads shortly after receiving this mailout on a Thursday, you may find that the video streams run slowly because of heavy simultaneous demand from other Adbrands subscribers who have also just received the same email. Please wait for the ads to load before pressing play, or try again later. Apologies for any inconvenience.

We like this new film for Mini, which is (we think) by German agency Plantage. It's a clever idea, nicely animated, and provides an interesting counterpoint to the current campaign by GSD&M Idea City for big sister BMW's Z4 roadster (see here). What shall we drive today? Fine-line or marker? 

Belgian agency Duval Guillaume has produced two clever spots for locally sourced Spa mineral water. Both filmed underwater, they must have been quite a challenge - but lots of fun - to make. We like the bar fight best; but see also Kung Fu here.

German cable channel 13th Street specialises in scary movies. Two promos from local agency Jung von Matt demonstrate the channel's understanding of "the art of frightening". Actually, to be honest, we think that bathroom was pretty scary even before the weird camera guy turned up. Here's the other.

And finally, a surreal classic from DDB Chicago on behalf of McDonald's fries, for anyone who's ever wondered about the internal workings of the modern automobile. Now you know. 


In the news this past week: Advertisers

The fallout from the collapse of Chrysler and General Motors spread this week as the two groups began closing unproductive dealerships. Chrysler identified the first 789 retail outlets that are to close, equivalent to almost a quarter of its US network. Almost half of those stores sold fewer than 100 new cars last year, compared to the company's national average of around 300 vehicles per store. The size of those figures, or lack thereof, illustrate the wasteful economics of Detroit's motor industry. Even before the cutbacks, Toyota, which has a much bigger market share than Chrysler, had less than half as many outlets as Chrysler and each one sold an average of 1,300 new cars last year. GM also named the first 1,100 of its dealers to close, and another 1,000 or so will go with the sale or closure of Pontiac, Hummer, Saturn and Saab. Along similar lines, the GM outlets being dropped represent 18% of the company's 5,970 outlets, but accounted only 7% of last year's sales. Almost half of them sold fewer than 35 new GM vehicles in 2008. Meanwhile at Chrysler, Robert Kidder, a former CEO of Duracell and Borden Chemical was named as the company's new executive chairman, replacing Bob Nardelli.

Last week's sharp words from Volkswagen chairman Ferdinand Piech regarding his cousin's company Porsche were the prelude to a suspension in talks regarding the merger of the two companies. Over the weekend, Volkswagen accused Porsche of not being committed to the process. "Before we can take up talks again," sniped a VW spokesman, "it is necessary that Porsche adopts a clearly constructive attitude toward them." Porsche of course played innocent, sending out its own spokesman to say "The negotiations that were begun last week will continue as planned." Somewhere behind the scenes, other parties were involved in placating the two sides, with the result that talks were said to have resumed once again on Tuesday. Nevertheless, the latest spat between cousins Ferdinand Piech and Wolfgang Porsche doesn't bode well for the future of any integrated group in which both men seek a role. As if to reinforce VW's view of Porsche's lack of commitment, there were reports in the media that the smaller company's CEO Wendelin Wiedeking has also been talking to Middle Eastern investors about a large minority shareholding in Porsche. Such an arrangement might allow Porsche to walk away from a deal with Volkswagen. In a separate development, rival auto giant Daimler acquired a 10% stake in US company Tesla (no relation, sadly, to this writer), known for its electric-powered luxury sports cars. 

British bank Lloyds remained under pressure from shareholders for the decision to acquire struggling rival HBOS. Like Bank of America and Merrill Lynch, Lloyds TSB knew HBOS was in trouble when it agreed to take the business over, but didn't realise just how bad the situation really was. As a result, in its latest quarterly trading update, Lloyds was forced to admit that it expects impairment charges on corporate loans made by HBOS to rise by another 50% during 2009, creating an overall loss for the year. Chairman Sir Victor Blank has been singled out by small shareholders as the principal target for their ire. He gave in to pressure this week, agreeing to step down at the end of the year. The group also faces a reprimand from European regulators, which may force it to sell assets in order to reduce the competitive advantage it gained from receiving state aid.

Retail giant Metro called on the German government to broker a merger of its own department store division Galleria Kaufhof with rival Karstadt, owned by the Arcandor conglomerate, also parent to travel group Thomas Cook. Arcandor is struggling to raise funds to pay off debts which fall due next month and has asked the government for financial assistance. Metro's CEO Eckhard Cordes wants the state to reject those requests and instead engineer a commercial solution that would create a free-standing national department store group with almost 250 outlets. Metro and Karstadt are expected to meet to discuss a merger next week.

The German government did agree to provide a E1.5bn bridge loan to Opel, the struggling local subsidiary of GM, while it seeks a new owner. Three companies have now formally submitted bids GM Europe, which includes UK manufacturer Vauxhall. Fiat and Canadian car parts group Magna were already on the media radar. The third bidder is Brussels-based investment group RHJ International. However the sale process is likely to take months rather than weeks, and will be complicated by the anticipated bankruptcy filing by the main GM business in just over a week's time.

Air France-KLM and Delta-Northwest, the two biggest airline groups in Europe and North America respectively, agreed to pool their transatlantic operations in a joint venture, which is set to become the dominant force in the region. The combined business will operate separately from the partners' other regional or international services, and is expected to have revenues of over $12bn. The agreement is still subject to approval by regulators. Similar partnerships are being negotiated by Lufthansa, United Airlines and Continental; and by British Airways, American Airlines and Iberia. Once again, though, Air France-KLM has taken the lead in the global consolidation of the industry.

In the UK, four years of steady progress were wiped out at Marks & Spencer, which reported a 37% plunge in pretax profits to £706m. Sales edged up to £9.1bn as strong international growth offset a 2% fall in the UK. Like-for-like sales fell by 6%.

Sony Ericsson is to drop the Walkman and Cybershot sub-branding on its multi-function mobile phones in developed markets such as the UK. When first used in 2005, that co-branding was well-received by consumers, causing a surge in Sony Ericsson's sales. More recently though it has been superseded by technological advances from other handset manufacturers, and the Sony sub-brands have come to be perceived as merely old-fashioned. Instead, Sony Ericsson is to market all its music and video-enabled handsets under the shared banner of Entertainment Unlimited. The group is set to launch the Idou handset, its first touch screen smartphone, next week.


In the news this past week: Agencies

There was more bad news for leading US independent Doner, following last week's revelation that the agency is being sued by former creative partner John DeCerchio over his retirement payout. In a separate development, Doner is also being sued by its former CMO for full disclosure of the details of his pension plan. After an internal investigation, Doner CEO Alan Kalter was forced to announce this week that the company's pension fund doesn't appear to comply fully with all relevant regulations, a development that could lead to further lawsuits. Soon afterwards, it was announced that Doner's CFO Barry Levine had retired from the agency.

Aegis announced a reshuffle of several senior management positions. Sarah Fay, chief executive of Aegis Media North America, is leaving the company "by mutual agreement". She had been commuting to New York from her home and family in Boston since taking up the role just over a year ago. She will be replaced by Nigel Morris, who will in turn be succeeded as head of digital network Isobar by Mark Cranmer. 

Eager to maintain its relationship with General Motors in whatever form its emerges from its current travails, Interpublic appointed long-serving GM executive Martin Walsh to a new corporate position as group SVP and "president of the GM relationship". Reporting directly to IPG chairman-CEO Michael Roth, Walsh will be responsible for aligning the efforts of the various IPG agencies that work on GM business, and providing a central point of contact to ensure maximum effectiveness. Walsh has spent the past 33 years at GM, most recently as general manager of the Hummer brand.

Euro RSCG is facing competition for part of its massive global Reckitt Benckiser account. According to Brand Republic, Reckitt's contract allows it to put two pieces of business up for open pitch each year. This has not really been an issue in the three years since Euro RSCG won the consolidated business, but the incumbent is now pitching against Bartle Bogle Hegarty on a creative project for Reckitt's Air Wick brand. It will be interesting to see how this turns out. BBH is renowned for its creative ideas, not seemingly a commodity that has been much in demand on Reckitt Benckiser's business to-date, if Euro RSCG's blunt but apparently effective work has been anything to go by. BBH is also a past-master at getting a toehold in an account and then steadily building its share of the business at the expense of the incumbent agency. JWT was the last network to suffer this stealth takeover when chunks of its Unilever business were steadily prised out of its hands in 2005.

In other assignments, German insurer Allianz called a review of its global creative and media, handled mostly by local agencies but coordinated by BBDO and OMD. Australian dairy and fruit juice leader National Foods consolidated media with Starcom. European theme park operator Merlin Entertainment (Madame Tussauds, London Eye etc) also called a media review, out of MG OMD; as did UK dairy company Dairy Crest, currently served by John Ayling & Associates. Candy maker Haribo shifted German media to Mindshare, who also picked up global media for insurer Zurich. For all other appointments, subscribers can access the full Adbrands Account Assignments database here


In the news this past week: Media

News Corporation announced plans to change the name of its German pay-TV channel Premiere to Sky Deutschland, bringing it in line with its satellite broadcasting services in the UK and Italy. News acquired an initial 15% stake in Premiere early last year, and has steadily purchased further shares to a current total of around 30.5%. The business currently makes losses, but News plans to launch a number of new services to coincide with a big new relaunch in the summer. Recently appointed CEO Mark Williams, a News Corp insider, said he expects to return to profit by 2011.

Former Sky chief Tony Ball looks like the front runner to replace Michael Grade as the head of UK terrestrial broadcaster ITV. Although numerous other names have been bandied around within media circles, Ball is though to be the first choice of several of ITV's biggest institutional shareholders. Grade had hoped to stay on as non-executive chairman of ITV, but those plans may be vetoed by investors in favour of a fresh pair of hands.

This year's Upfront ad sales presentations from America's big broadcast networks, currently underway in New York, may not go as badly as some onlookers had forecast. Last week we reported on doom-and-gloom predictions from investment analysts that ad sales could be as much as 20% below last year. However, a new study out this week from research firm Advertiser Perceptions suggests that many marketers are actually thinking about increasing not reducing their expenditure. According to the survey, around 37% of high-level marketing decision makers interviewed by Advertiser Perceptions said they were planning to increase Upfront spend over last year, while 39% said they would stick at the same level. 

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Simon Tesler
Publisher, Adbrands


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