Adbrands Weekly Update 1st April 2010
A weekly round up of key news about 
leading advertisers, agencies and mediaowners
 
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Four of our favourite ads this week: 

Lipton Ice Tea "Tokyo Dancing Hotel"
by DDB Paris

Warburton's "Take Off"
by RKCR/Y&R London

Magners "Straight"
by The Red Brick Road

Toyota "Everyday Amazing"
by Saatchi & Saatchi Australia

Update only subscribers: click here to view Ads of the Week

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Poor old Hugh Jackman. A little more than a year ago at the 2009 Oscars he unveiled a completely new set of talents as an extremely accomplished song and dance man*, delivering the awards show's stunning opening musical number with considerable skill and charm. Presumably, he then went home and waited for the offers to come flooding in. "Broadway, here I come..." It was not to be. Producers, it seems, prefer to see Jackman Wolverined up with foot-long talons not jazz hands. Or smouldering romantically on the back of horse not tripping the light fantastic. Judging by the visible result, no one called. Until Lipton Ice Tea, that is, who have finally given our Australian hoofer manque the chance to reprise his hot shoe chops. And a great job he does of it too, in this charming ad from DDB Paris.

We love the style and tone of the new Warburton's ad from RKCR/Y&R London. It's a great pastiche of old-school heroic dramas about the valiant pilots who protect Britain's shores from the invading hun. The stirring soundtrack is especially effective. Very nicely done but, we feel, let down by a flat tag line. "We care because our name's on it" doesn't really do justice to the theme of the ad.

The Red Brick Road have conjured up an eccentric cast of fictitious characters to populate Clonmel, the real town in Ireland where the Magners cider brewery is located, in a series of ads for the tipple. It's a beautifully conceived and executed ad, with top-notch production values throughout and great casting. This idea could run and run.

And finally, the new feel-good spot from Saatchi Australia for the Toyota Camry hybrid. Uplifting. Have a great Easter break.

* Don't write in, we're just kidding. Actually, Hugh Jackman started his career as a dancer. But he rarely gets a chance to show off his skills in film. He does still do a bit of musical theatre though. And not just when he's glugging Lipton...


In the news this past week: Brands & Advertisers

Ford Motors finally agreed the terms of a deal to sell its Volvo division to Zhejiang Geely Holding Group of China. The two companies have been in exclusive negotiations for almost a year. Geely will acquire Volvo for $1.8bn and has committed to provide a further $900m to refinance the business. Geely's founder and chairman Li Shufu vowed to preserve Volvo's brand identity and Swedish roots, although the group will also begin building Volvo cars in China as well. He promised further global expansion of the business. "I think Volvo is a tiger," he said. "To liberate the tiger, we need to think on how to uncover the value in Volvo." The deal is expected to complete towards the end of the year.

EMI's fortune took (yet another) turn for the worse as urgent talks with Universal Music and Sony about licensing its music in North America ended yesterday without agreement. As had been anticipated, EMI's owner Terra Firma is now technically in default of the solvency covenants it signed on the 3bn loan it took out from Citigroup to acquire EMI in 2007. It has until mid-June to raise at least 120m to strengthen EMI's balance sheet; otherwise Citigroup will have the right to seize control of the business, and likely break it up and sell it on. EMI had been talking to Universal and Sony about assigning North American distribution rights to its artists' output for five years. That would have raised a significant cash sum and also allowed the company to reduce costs by eliminating its own American operations. In the end, neither Universal nor Sony were willing to come to terms, although talks with Universal were more promising. One major complication is the separate lawsuit Terra Firma has issued against Citigroup, alleging that the bank deceived it in the run-up to the purchase of EMI. Universal and Sony fear that the legal row will block any deal they might agree now for distribution rights. Warner Music, the last remaining major, was not involved in the licensing discussions. It is thought by many to be waiting in the wings for Terra Firma to default so that it can negotiate with Citigroup to buy out EMI in its entirety.

Camelot, the company which operates the UK's National Lottery and is one of the country's biggest advertisers, is to be acquired by a Canadian investment fund for 389m. Currently, the business is jointly owned by five companies: Cadbury, Thales, De La Rue, Fujitsu and Royal Mail. They announced their wish to sell their shares last year, effectively putting the business up for sale. Subject to regulatory approval, the winning bidder is the Ontario Teachers' Pension Plan. Camelot has a license to run the lottery until 2019, with an option to extend to 2024.

In one of the more surprising changes to come out of the UK soft drinks markets in several years, Pepsi actually overtook Coke for the first time in "on-trade" sales through pubs, bars and restaurants during 2009. Britvic's Soft Drinks Report 2010, compiled from Nielsen ScanTrack figures, showed that on-trade sales of Pepsi rose by 10% to 475m, while Coke's slipped 1% to 446m. However the bigger brand still comfortably dominated the take-home sector, with total sales of 1.0bn in 2009, equivalent to 75% of the cola market and 16% of the total soft drinks sector. Pepsi's take-home sales were 271m. GlaxoSmithKline remains the UK's #3 soft drinks company with the Lucozade and Ribena brands. Meanwhile in the US, industry monitor Beverage Digest reported a further decline in sales of carbonated soft drinks in 2009, with volumes falling back to just above 1996 levels. Coca-Cola and PepsiCo both lost market share, down by 4% and 5% respectively, while 3rd-placed Dr Pepper Snapple rose by 5%. The biggest gainers, albeit from a very low base, were Hansen Natural and Big Red, both of whom scored double-digit volume increases. Each has less than 1% overall share, though, compared to Coca-Cola's 41.9%, PepsiCo's 29.9% and Dr Pepper Snapple's 16.4%.

Spirits giant Diageo plans to launch a new beer in the UK and some other markets global markets this Spring. Windhoek lager is currently produced by Namibia Breweries of Africa, in which Diageo has a minority stake. Last year, the group negotiated rights to produce and market the brand in other territories. It has already secured UK distribution through Tesco and other retailers, as well as on-trade sale through "prestige bars" in major cities. Beer is a sector in which Diageo is largely underrepresented. Its only significant international brand is Guinness stout.

Sara Lee, the US group which owns the worldwide Douwe Egberts coffee business and co-produces Senseo coffee machines with Philips, announced the launch of a new line of espresso coffee capsules that will be compatible with Nestle's market-leading Nespresso device. The capsules will debut next week in France under the name L'Or Espresso, and will be priced at 10% to 20% below Nestle's own product. Another French manufacturer, Ethical Coffee Co, run by a former head of Nespresso, is also launching its own capsules, to be sold through Casino and Monoprix supermarkets from May. Nespresso CEO Richard Giradot said that the company would defend its patents on the capsules vigorously, but acknowledged in an email to Business Week, "Nespresso fully expects others to seek to share our success. Nespresso offers a unique experience which consumers won't find, and don't look for, on supermarket shelves." Ethical and Sara Lee deny that their designs infringe Nestle's patents.

Helped by the absence of former rival Circuit City, which closed at the end of 2008, US electronics superstore Best Buy reported strong performance for its most recent financial year. Revenues for the period to February 2010 rose 10% to a best-ever $49.7bn, of which around $2bn was generated from online sales. Net earnings rose 31% to $1.3bn, though they are still below 2007's record $1.4bn. Around 75% of revenues, and almost all operating profits, were generated in the US. The remainder comes from the group's fast-expanding operations in Canada, China and Europe, where it co-owns the Carphone Warehouse retail chain. There was also a marked improvement at Europe's biggest home improvement retailer Kingfisher, with net profit almost doubling after several years of steady decline. Exchange rates provided some of the lift, but so did a marked improvement in profits at the company's UK chain B&Q. The group's French business, which trades as Castorama and Brico Depot, remains it most profitable. Combined sales rose 5% to 10.5bn. Fashion retailer Next also impressed with record sales of 3.4bn and best-ever pretax profits of 505m.

Danone agreed a new joint venture with Chiquita Brands to take over management of that company's Just Fruit In A Bottle range of fruit smoothies in Europe and to develop other fruit-based beverages. Chiquita already markets its smoothies in 12 European markets including Germany.

British supermarket group Waitrose, part of the John Lewis Partnership, is in early talks to acquire sandwich and coffee chain Eat for up to 100m. Waitrose is keen to enter the convenience food market, and has set itself an ambitious target of doubling sales by 2020.

Citigroup added to its cash reserves by issuing an IPO in Primerica, its door-to-door insurance and loans operation. The group wants to reduce its own stake to below 50%, a move which would allow it to remove up to $5bn of risky assets from its balance sheet.

Luxury group Richemont is to increase its shareholding in online fashion retailer Net-a-Porter.com from 29% to majority control, a deal that will earn founder Natalie Massenet an estimated 50m payout. She has pledged to reinvest part of her windfall in the business, and will remain executive chairman.


In the news this past week: Agencies

Young & Rubicam made several new appointments. Matthew Godfrey was named as its new regional president for Asia. He replaces Ambar Brahmachary, who is taking on an as yet unconfirmed role elsewhere in WPP. Godfrey was previously CEO of Publicis Asia. In the US, Jane Barratt was recruited from SapientNitro to become president of Y&R New York. Her predecessor Shelley Diamond switches to the role of global client leader.

Interpublic announced the acquisition of Cubocc, a digital agency based in Sao Paulo, Brazil. The new addition to the fold will support all IPG's agencies within the region. The acquisition is designed to strengthen the group's ties to Unilever, an important IPG client in Latin America. Cubocc has produced a number of digital projects for that group's Axe, Rexona and Knorr accounts in recent months, and has also done work for PepsiCo's snacks business and Google.

Mother promoted two senior managers at its London office to the role of partners, the first time that the agency's founding fivesome have added to their number. Dylan Williams and Stephen Butler become strategy partner and creative partner respectively.

In a move which is predicted to have worrying repercussions for the US multicultural advertising market, The Home Depot, one of the country's biggest ethnic advertisers, is moving its $37m Hispanic account out of independent specialist Vidal Partnership and into Richards/Lerma, a unit of its main above-the-line agency Richards Group. AdAge called the decision "a stunning upset for Hispanic ad agencies in general" and "the clearest example yet of general market agencies' growing attempts to persuade cost-conscious clients to consolidate their Hispanic accounts with their general market agency." This week, Home Depot kicked off a review of its African-American account, currently handled by WPP's UniWorld, which is defending the business.

In other account assignments, WCRS was reappointed to BMW's UK account, which it has handled since 1980. Sister agency Partners Andrews Aldridge was awarded direct marketing, and Dare is to keep digital. WCRS also picked up the Glenmorangie whisky account. O2 called a review of European media, held by ZenithOptimedia in the UK and Mindshare in Germany. Fallon London was handed a brief to launch a new high-end handset from Nokia. The main account is shared by Wieden & Kennedy London and JWT. General Motors added New York agency SS+K, which has developed a reputation as a specialist in social media, to the Buick and GMC accounts alongside mainline agencies Leo Burnett and Digitas. For all other appointments, subscribers can access the full Adbrands Account Assignments database here


In the news this past week: Media

As was already widely anticipated, Russian business Alexander Lebedev finalised the purchase of the British quality newspapers The Independent and Independent on Sunday, to complement his purchase a year ago of the London Evening Standard. As was the case with the Standard, Lebedev is paying a nominal 1 for the titles, but will relieve The Independent's former parent of its weighty future obligations on the papers, which reported losses of 12m a year. It would have cost parent IN&M, which also has newspapers in Ireland, New Zealand and South Africa, around 30m to close the papers down; instead it is in effect paying Lebedev just over 9m to take that problem off their hands. The Independent will continue to work out the offices it already shares with the Standard, and that paper's former owner The Daily Mail. The Independent is the only national daily broadsheet to have launched in the UK since the end of the 19th century. It was founded in 1986 as a newspaper to be run by journalists, without any particular political bias or an interfering proprietor. By the end of that decade sales had risen to a high of over 410,000 copies a day, but the 1990s proved a far more difficult period, and the paper was obliged to surrender its independence, selling shareholdings to the Mirror Group and Irish media owner Tony O'Reilly. Sales continued to slide over the course of that decade, picking up briefly when the paper relaunched in a smaller format in 2003. However, a new decline began in 2007, and circulation touched a new low of 185,000 copies in January this year, of which at least a quarter were heavily discounted or free bulk copies.

Meanwhile, News International confirmed that it will begin charging for access to the websites for The Times and Sunday Times from June. It becomes the first mainstream national newspaper publisher in the UK to charge for content. The cost has been set at 1 per day, or 2 per week.

Satellite broadcaster Sky was ordered by UK TV regulator Ofcom to cut the wholesale fee it charges cable competitors to relay its Sky Sports channels, which have a near-monopoly on live broadcast of Premier League football matches. Ofcom specified a new wholesale price for the Sky Sports 1 and Sky Sports 2 channels, at more than 20% below current levels. Sky responded immediately with a legal challenge to block the new ruling. Chief executive Jeremy Darroch said: "I think it's extraordinary that Ofcom is pushing ahead with its findings without any evidence of breach of competition law, without any evidence of excess profitability or prices and without any evidence of consumer dissatisfaction." Main rivals Virgin Media and BT welcomed the ruling but said it didn't go far enough, because a loophole remains which would allow Sky to shift premium content to other channels not covered by the Ofcom report.

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Simon Tesler
Publisher, Adbrands