Adbrands Weekly Update 27th August 2009
A weekly round up of key news about 
leading advertisers, agencies and mediaowners
 
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Our favourite ads this week: 

Softbank "Dining"
by Dentsu

Sony Playstation "Playface"
by Wieden & Kennedy Tokyo

Citroen "Anniversary" 
by H Paris

IOC "All Together Now"
by Cole & Weber United

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Every one knows that, in Japan, normal rules don't apply. Nowhere is this more true, perhaps, than in advertising. For some reason, the world's biggest movie stars think nothing of making an appearance in Japanese ads, but would not dream of considering such a lowly assignment in any other country. In fact, most stars have a clause inserted into the contract which expressly prohibits the airing of the resulting spots elsewhere. Somehow, starring in a Japanese ad burnishes rather than tarnishes their megastar status. (The high salary usually attached helps as well). The latest Hollywood icon to succumb to the lure of the yen is Brad Pitt, who stars in a new campaign for Softbank mobile - not even the #1 or #2 wireless service in Japan - alongside an even bigger megastar, locally at least, the sumo wrestler Musashimaru. Dentsu is the agency; Spike Jonze the director. There's another spot here.

We probably don't choose enough Japanese campaigns for Ads of the Week. Here's a another, by the Tokyo office of Wieden & Kennedy for the revamped Sony Playstation 3. The ads revolve around the concept of "Playface", the term for the expressions you pull when caught up in a particularly engrossing PS3 game. 

French car marque Citroen celebrates its 90th anniversary with this extended spot by H Paris, which collates newsreel footage with clips from past ads in the brand's native market. 

And finally, a nice bit of animation to celebrate the spirit of the Olympic Games, in the run-up to next year's Winter Games in Vancouver. The ad made its debut in the US last week and will be rolled out around the world. Cole & Weber United was responsible for the spot. 


In the news this past week: Advertisers

The drawn-out negotiations regarding the sale of General Motors' European operations appear to have collapsed this week, after the GM board refused to sign off on an improved offer from Canadian car parts Magna and Russia's Sberbank. GM is understood to be nervous about handing over control of its vehicle designs and technology in Europe, effectively creating a rival manufacturer from scratch for next to no financial reward. Non-executive board members are thought to favour the rival offer from RHJ International, a Brussels-based private equity group, but GM's senior executives are reported to be arguing the case for a third option: abandoning the sale altogether, and keeping control of the business with financial support from governments in the UK, Germany and Spain. The main concern, though, is how quickly such an arrangement could be resolved before Opel and Vauxhall use up their remaining cash lifeline.

The GM Europe saga drags on, but the Volkswagen-Porsche negotiations finally reached a conclusion after agonising months of talks and tiffs between members of the Porsche and Piech families. Under the deal now drafted, VW will pay E3.3bn for a 42% stake in Porsche's automobile manufacturing division, and will assume effective management control of that business. It will also acquire the Porsche Holding company's auto distribution business, the largest in Europe. Separately, the national investment fund of the Emirate of Qatar will acquire an additional 10% of Porsche, as well as options over a large chunk of Volkswagen's equity. The latter shares are currently held by Porsche, acquired as part of its ill-fated takeover of the larger company. 

Shortly after the announcement of this deal, the German financial regulator said it had begun an investigation into the actions of former Porsche CEO Wendelin Wiedeking and CFO Holger Haerter whose ambitious takeover plan, widely celebrated at the time, led to the sportscar manufacturer's current predicament as it struggled under the weight of accumulated debts of more than E10bn. Allegations of market manipulation and trafficking in insider information have been levelled at the two ousted executives.

US home improvement retailer Lowe's agreed to establish a joint venture in Australia with local giant Woolworths. The partners envisage the rollout of 150 large-format stores over the next five years. The plan will open a new front in Woolworths' war with long-established rival Coles, now part of the Wesfarmers' conglomerate which also owns Australia's leading DIY store Bunnings.

As had been anticipated, Procter & Gamble agreed a deal to sell its pharmaceuticals division, which manufactures a small portfolio of prescription-only drugs led by bone-health blockbuster Actonel. The buyer is Irish-based competitor Warner Chilcott, which agreed to acquire the business for around $3.1bn in debt. Once completed, the deal will triple Warner's sales from around $935m last year to more than $3bn.  

The lines between mobile phones and computers are becoming increasingly blurred. Nokia is to move into the computer market with the launch of a mini-laptop, or netbook.  The Booklet 3G will use a Windows operating system and comes with various Nokia-controlled applications pre-installed, including the Nokia Music Store and Ovi maps and GPS system. Meanwhile Dell confirmed plans to launch its own smartphone, initially for launch in China through local operator China Mobile. Separately, as part of a broadbased push into services, Nokia also said it was entering the mobile payments market with a service that will allow handset owners to make purchases and transfer money using their phones.

Levi's appointed Jaime Cohen Szulc as its first ever global chief marketing officer. Szulc comes from outside the fashion industry, having spent almost a decade at Eastman Kodak, latterly as COO of that company's consumer digital group.

Bernard Balderston, P&G's long-serving media director for the UK, has retired after more than 40 years with the company. Most of his duties have been inherited by his deputy Mary McGovern, previously media manager.


In the news this past week: Agencies

Publicis Groupe succeeded in clinching the deal to acquire highly regarded digital agency Razorfish from Microsoft, with an offer of $530m in cash and shares. Microsoft will end up with around 3% of Publicis Groupe equity, and as part of the deal, Publicis also made a commitment to buy a significant quantity of ad space on Microsoft's digital networks at discounted prices. The acquisition is expected to close by the end of 2009, at which point Publicis Groupe will generate around a quarter of its total revenues from digital. It already owns Digitas, currently Razorfish's most significant global rival. Both companies will retain separate branding within Publicis. The deal will also secure the French marketing services giant a place as the world's third largest agency group by revenues, overtaking Interpublic.

WPP disappointed the financial markets with a weak set of half-year results. Pretax profits almost halved, while like-for-like revenues, excluding the effects of acquisitions and currency fluctuation, fell more than 8%. Reported revenues, including the contribution from recently acquired research giant TNS, rose 28% to £4.3bn. The group said that the impact of the global economic contraction intensified during the second quarter, especially in the US and UK. 

Separately, WPP announced plans to merge the print buying units of Mindshare, MediaCom, Mediaedge:cia and Maxus as a single entity in the US, operating under the existing GroupM umbrella. The resulting business will be known as GroupM Print. To avoid client conflicts it will operate as two entirely separate planning and buying teams. Scott Kruse and George Janson will lead the twin divisions, reporting to Jeanne Tassaro, COO of GroupM Implementation. GroupM already operates a centralised search marketing unit in the US. Although there are no immediate plans to roll out the consolidated entity in other markets, such a move will be inevitable if the system works in the US.

Also announcing results this week, PR group Chime Communications, which is part-owned by WPP, delivered a 4% increase in half-year profits on turnover which rose 19% to £138m. Commenting on Chime's generally strong performance compared to global giants WPP, IPG and Omnicom, chairman Lord Bell said, "Big is not as beautiful or as safe as it once was. It appears that this year being a one stop shop, integrated and diversified, channel neutral and low cost is the new black."

In Australia, independently owned Mitchell Communication Group maintained its position as the country's biggest media buyer, with annual revenues to June up 20% to A$225m on billings of almost A$1.2bn. Traditional media services account for around 90% of total billings, placing Mitchells some A$200m ahead of closest rival OMD.

There were changes among senior leaders at McCann Erickson. McCann NY president Lori Senecal and Asia Pacific regional director Kevin Ramsey both left the agency. They were replaced by Thom Gruhler and Michael McLaren respectively.

In account assignments, Vodafone announced the surprise appointment of little-known Argentinean agency Santo as its global creative agency. The mobile company will continue to use local agencies in larger markets, including BBH in the UK, but global creative for smaller territories will be developed by Santo, in which WPP has a minority stake. 

Volkswagen has parted from US creative agency Crispin Porter & Bogusky. According to press reports, the German automaker initially called a review of the account, but Crispin declined the opportunity to repitch for the business. Separately Interpublic's Deutsch agency resigned its place on the roster of Anheuser-Busch InBev, apparently at the request of rival brewer MillerCoors, most of whose advertising is handled by IPG stablemate Draftfcb. Publicis New York was appointed to handle AB InBev's Beck's brand worldwide. Creative boutique Droga5 joined the Unilever roster, picking up the account for US shampoo Suave. In the UK, Innocent smoothies appointed Fallon London, which also captured the global account for the Oxfam charity. BBH will develop global marketing strategy for fashion label Burberry, working with the designer's inhouse team. In Germany, indie agency Kolle Rebbe joined the rosters for Nike and Muller yogurts. For all other appointments, subscribers can access the full Adbrands Account Assignments database here


In the news this past week: Media

Iconic publisher Reader's Digest Association, owner of the world's biggest selling magazine, became the most high-profile victim to-date of the recession in print media. The group filed this week for Chapter 11 protection in order to restructure its debts. Following the model already successfully exploited by GM and Chrysler, this is a pre-packaged bankruptcy, with a plan already in place for the publisher's banks, led by JP Morgan Chase, to swap around three-quarters of the company's $2.2bn of debt for equity. Private equity fund Ripplewood, which loaded up that debt when it acquired the business in 2007, will have its investment wiped out. Reader's Digest has been keen to stress that its basic business model remains solid. It publishes 94 magazines and sells about 40m books, music and video products each year.

News Corp is canvassing for buyers for its Dow Jones stock indexing business, acquired with the Wall Street Journal last year. The Dow Jones Industrial Average is arguably the world's most widely watched share index. Bloomberg is one of several companies said to have expressed interest. Separately, News Corp's UK-based newspaper division pulled the plug on its free daily afternoon title, thelondonpaper. Launched in 2006 as a rival to the paid-for Evening Standard, its performance has declined steadily as a result of plunging advertising revenues. It had been accumulating losses of as much as £1m per month.

The major US broadcast networks finally wrapped up their upfront advertising sales. According to AdAge, the final tally is between $7.8bn and $8.1bn, well below last year's $9.2bn. One major factor was the reluctance of advertisers to accept the higher rates demanded by the networks. As a result, most of the big players are understood to have withdrawn some of the space on offer, preferring instead to gamble that they will achieve better spot prices once the season kicks off.  

Social networking rivals MySpace and Facebook each attempted to gain an advantage over one another through acquisitions. Facebook acquired Friendfeed, an application which allows people to share content and see what their friends are doing online. MySpace sealed a deal to buy iLike, a music recommendation service which scores highly with users of Facebook and Bebo. The prices paid were extraordinary considering that neither of the acquired businesses has significant revenues. Facebook paid an estimated $50m in its own shares for Friendfeed; MySpace forked out $20m for iLike.

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Simon Tesler
Publisher, Adbrands


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