Adbrands Weekly Update 2nd September 2010
A weekly round up of key news about 
leading advertisers, agencies and mediaowners
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Procter and Gamble

Starcom MediaVest

Coca Cola

Young and Rubicam



Kraft Foods








Johnson and Johnson


McCann Erickson
Bartle Bogle Hegarty


Ogilvy and Mather

Ford Motors




Four of our favourite ads this week: 

Volkswagen "Phobias"
by DDB Barcelona

Orange "Matteo The Online Romancer"
Saatchi & Saatchi Switzerland

Quaker Oats "Wake Up"
by Juniper Park

Mini "Flow"
BSUR Amsterdam

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Four more great ads this week, from Spain, Switzerland, the US and Amsterdam. The DDB network continues to excel for Volkswagen with this new spot from DDB Barcelona. Not just entertaining but informative as well. I wonder if there is a term for a phobia for bad advertising...? Or perhaps for Simon Cowell?

Saatchi & Saatchi Switzerland is the unexpected source of three interesting new spots for mobile service Orange. It's not clear whether these ads are just for Orange Switzerland, despite being in English, or if they will also be rolled out in Orange's other markets. A nice concept. This is the best of the three, but the other two are worth a look (here)

Omnicom-owned boutique Juniper Park is behind this beautifully shot and inspirational new call-to-arms for PepsiCo's Quaker Oats, a traditional product that is making a surprise comeback in the US.

And finally, awesome CG in this new viral from BSUR Amsterdam on behalf of the Mini Countryman. Way cool.

In the news this past week: Brands & Advertisers

The battle between arch-rivals Dell and HP to acquire data storage company 3Par became even more intense, with both groups raising their offers repeatedly. Dell's first offer of $18 per 3Par share on Aug 16th was trumped on the 23rd by HP's bid of $24. Dell responded with $24.30 on the 26th, only to be countered the same day by $27 from HP. Dell then matched that offer, only to have HP raise theirs to $30 last Friday. The ball is now in Dell's court, and it must either raise its price to around twice the original offer or accept defeat and walk away. The Financial Times' Lex column called the bidding war "madness" and "almost impossible to rationalise". "Few things inspire a loss of rationality quite so much as the fear of missing out," it said. "The phenomenon is apparent around buffet tables, in one-day sales, and now in the pursuit of 3Par". Separately, HP agreed to pay $55m to the US Justice Department to settle allegations that it paid "influencer" fees to intermediaries working for government departments in return for recommendations that their clients purchase HP products. Meanwhile, in its second big deal in a month, Intel agreed to pay $1.4bn for the wireless chip division of German company Infineon. That deal will give Intel a sizeable presence in the smartphone sector: Infineon supplies chips for the Apple iPhone among other devices.

Meanwhile, drug giant Sanofi-Aventis went public with an $18.5bn "bear hug" bid for US biotech developer Genzyme. The French company has been trying for several months to engage Genzyme in friendly private negotiations for an agreed takeover. However Genzyme CEO Henri Termeer has so far refused to meet his counterpart at Sanofi, Chris Viehbacher, although he did sanction low-level discussions between both companies' advisers. As a result of this stonewalling, Viehbacher's strategy has shifted to the "bear hug" approach, making a more threatening statement of the offer in an attempt to influence Genzyme's board to begin talks. In his public letter, Viehbacher warns that he is "prepared to consider all alternatives to successfully complete this transaction", suggesting that Sanofi's next step will be to go hostile by appealing directly to Genzyme's shareholders. That might well be necessary, because Viehbacher's letter was met once again with a refusal. Termeer's public response was "The Genzyme board is not prepared to engage in merger negotiations with Sanofi based upon an opportunistic proposal with an unrealistic starting price that dramatically undervalues our company." Viehbacher was quick to hit back, telling Termeer via the media, "You may not like the price, you might want a higher price, but it is not realistic to call the price unrealistic." Sanofi-Aventis is urgently seeking to strengthen its drug pipeline with a collection of hard-to-copy biotech products before its top-selling traditional products, much more easily replicated by generic manufacturers, lose their patents.

Pernod-Ricard reported results for the year to June 2010. The French drinks group scraped a modest 1% improvement in net profits to €978m on net revenues down 2% to €7.1bn as a result of currency fluctuation. Organic sales excluding currency changes were up 2%. There was mixed performance within the portfolio. Absolut reported a welcome 6% increase in volumes to 10.4m cases sold worldwide, and there was also good single-digit growth for Jameson, Martell and The Glenlivet. However, #2 brand Ballantine's slipped 4% in volume, and there was a worrying 10% fall for the group's leading wine Jacob's Creek. Sales of Mumm champagne were also hard hit, falling 9% by volume.

Nestle lived up to its responsibilities as the world's biggest coffee processor by pledging to invest almost $500m in an ambitious new five-year programme to train independent farmers to adopt more efficient methods of managing and developing their coffee bean crops. One key initiative will be to distribute 220m new coffee plantlets to thousands of farmers to replace their existing, ageing and increasingly low-yield stocks. The company also vowed to double the quantity of beans it buys directly from farmers rather than from brokers and exchanges. Because of the global popularity of its Nescafe instant coffee brand, Nestle is by far the world's biggest coffee producer with almost 22% share of the global market. Second-placed Kraft has 14%, while no other company has more than 6%.

Burger King was reported to be in talks with private equity funds over a possible buyout of the group. The business was acquired in 2002 from Diageo by a trio of funds including Bain and TBG. It was floated again in 2006, although the funds retained a combined holding of around a third of equity. Unlike arch-rival McDonalds, however, the fast-feeder has had difficulty weathering the recession, with performance flat for the past two years. A deal now looks increasingly likely with New York-based hedge fund 3G Capital, which represents the interests of the three Brazilian billionaires who engineered the rapid expansion of what is now Anheuser-Busch InBev by taking control of the former Interbrew business via their own AmBev company.

Santander expanded its footprint in the US, where it owns local lender Sovereign Bank, by acquiring from HSBC a portfolio of auto finance loans with a combined value of around $4.3bn. The group's rapid global expansion comes at a price though. New figures released in the UK this week showed that the British arm of Santander, which now incorporates the former Abbey, Bradford & Bingley and Alliance & Leicester chains, fielded more customer complaints in 2010 than any other bank. The Spanish-owned bank received 216,158 new complaints in the first six months of this year, equivalent to around one every minute of the working day. Santander's average ratio of 8 complaints for every 1,000 accounts was higher than any other bank. Barclays was the next highest offender with 5 complaints for per 1,000 accounts. The new transparency from British banks comes at the insistence of the FSA regulator which ordered all UK lenders to make full disclosure of complaint levels.

Japanese brewer Asahi has continued to expand its presence in the Australian market by acquiring the country's third-largest soft drinks company, P&N Beverages, for A$364m. That company produces a number of local branded mineral and fruit-based drinks as well as private label products for supermarkets. It had been privately owned by managing director Robert Peter Brookes. P&N joins Schweppes Australia and Cottee's in the Asahi portfolio. Although the Japanese company is best known for its beer it also has an extensive non-alcoholic beverages business.

French retail giant Carrefour put its stores in Thailand, Malaysia and Singapore up for auction, attracting bids from Tesco of the UK, as well as other retailers in Asia, private equity groups and also domestic rival Casino. Carrefour aims to achieve a valuation of between $800m and $1bn for the 61 stores. The group's strategy is to exit territories where it ranks behind other retailers, and instead focus its attention on countries where it can establish or build upon a leading presence.

Nike-owned sportswear manufacturer Umbro renewed its sponsorship partnership with England's Football Association until 2018. It will continue to supply kit to the FA's Premier member clubs and will have rights to sell replica apparel to the public.

Sears Holdings, parent to the Sears and Kmart retail chains, named David Frieden as group SVP, marketing. Frieden joins from digital agency Razorfish, where he was most recently president, Americas. Also in the US, BMW's VP marketing North America, Jack Pitney, was killed in a tragic gardening accident. UK telecoms group BT confirmed David James as marketing director for consumer retail. He was previously the company's director of customer insight and intelligence, and replaces Matthew Dearden, who left BT last month. Ben Pearman, marketing director for UK & Ireland at Birds Eye Iglo, is leaving to join General Mills as marketing director for the EMEA region.

Shock new development! Mac, from those Mac vs PC ads from Apple, secretly wanted to be a PC instead! Actor Justin Long, who played Mac in the long-running ad series opposite nerdy Jon Hodgman as PC, gave an interview to Time magazine to promote his new movie. Time's Techland blog published some outtakes from the interview this week (see here) in which he talks about his other work, and the most surprising revelation was that Long actually envied his opposite number on the Apple ads. "I revere John Hodgman," Long told Time. "He's far smarter and funnier than I could ever hope to be. That's why the point of those commercials were a little lost on me. I'm actually jealous of things he got to do. I preferred the role of the PC Guy because he got to do all the fun underdog stuff. The big choice I had to make was when do I take my hands out of my pockets and how do I gesture or roll my eyes."

In the news this past week: Agencies

It's been a busy week at the headquarters of Interpublic's Draftfcb network. Last Friday saw the sudden dismissal of three senior managers including Draftfcb's regional president for North America Mark Modesto. A 30-year veteran of the agency, Modesto was reportedly accompanied from the building at short notice along with Bob Mallers, CFO of the Chicago office which Modesto had run previously, and chief of staff Bill McCarthy, appointed by Modesto earlier this year. No explanation was given for their sudden removal, although there are no suggestions of any financial impropriety. Instead, their departure appears to result from a long-simmering personality clashes between the trio and top management at the network. An Adweek report described the three men as a "disruptive troika trying for a power-play" at the agency. George Parker's notoriously blunt Adscam blog claimed that the ousting was connected to the current Johnson & Johnson review and a clash between management and Modesto over the role of the network's Draftfcb Healthcare division and its CEO Dana Maiman. Indeed, immediately after Modesto's departure, Maiman was promoted to a larger role as a member of the main Draftfcb global council, with operating responsibility for the Draftfcb New York office as well as Draftfcb Healthcare. Modesto will not be directly replaced as regional president for North America. Instead Michael Fassnacht, previously Draftfcb's global strategy officer, was named as the new president of Draftfcb Chicago. Fassnacht and Maiman will report directly to network CEO Laurence Boschetto. Another rant from George Parker - as yet unconfirmed - claimed that Interpublic is also close to dropping the near-obsolete "fcb" suffix from Draftfcb, finally consigning that once mighty brand to the dustbin.

Separately, Interpublic announced the realignment of standalone unit Dailey & Associates as a satellite of Draftfcb. Both agencies work on Nestle accounts. In a statement, the group said "Interpublic Group saw an opportunity to strengthen its Dailey brand by aligning it more closely with Draftfcb. This move provides Dailey and its clients with access to Draftfcb's extensive tools and resources as well as a global network. While the two agencies will continue to operate independently, this alignment should immediately benefit Dailey's current clients and hopefully others down the road." At the same time Dailey's CCO Steve Rabosky departed the agency, and Tom Lehr is promoted to president.

Richard Glasson, chief executive of Anglo-American integrated marketing services agency GyroHSR, has resigned as chief executive, and was replaced by chief creative officer Christoph Becker. Glasson will remain as chairman for an interim period.

Aegis and Havas reported half year figures. Aegis, parent to the Carat and Vizeum media networks, unveiled an 8% increase in pretax profits to GBP 48.3m, on revenues up 4% to GBP 663.3m. On an organic basis, excluding the effects of currency, revenues were up 2.4%. Best growth came from Asia, up 25% reported, 18% organic. Performance at Havas was similar, with revenues also up 4% to €729m, although net profits jumped an impressive 22.5% to E49m. The organic increase in revenue was just under 2% for the first half, some way behind rival groups. For Havas, the strongest growth came from Latin America, up 25% compared to first half 2009. North America was also encouraging at 5%, and the UK was a lone bright spot in an otherwise depressed Western Europe. Havas's chairman and controlling shareholder Vincent Bollore suggested that the group's improved finances would allow him to begin considering acquisitions. "It doesn't mean we want to make one big shot but some different acquisitions in different countries."

Microsoft expanded its agency roster in the US and UK, moving briefs previously held by the JWT network. In the US, the software giant appointed Deutsch to develop the debut campaign for its Windows Azure cloud computing service, which rents out space on the company's vast array of servers to corporate customers. In the UK, VCCP and affiliated CRM unit Stephens Francis Whitson were awarded the account for Microsoft Business Solutions.

Interpublic-owned Carmichael Lynch resigned the business of iconic motorcycle manufacturer Harley-Davidson after a 31-year run. President Doug Spong told AdAge the agency wanted to focus its attention on new business it has picked up over the summer and said "we just feel like we've taken [the Harley-Davidson] brand as far as we can go".

  In other assignments, Red Bull called a review of US media, currently held by indie Siltanen & Partners. Footwear manufacturer Ecco appointed Universal McCann to global media. PepsiCo consolidated its media business in Australia with PHD. For all appointments, subscribers can access the full Adbrands Account Assignments database here

In the news this past week: Media

The content land-grab currently being undertaken by technology and telecoms companies continued apace. Google was reported to be in advanced negotiations with several major Hollywood studios to launch a global pay-per-view movie service through YouTube before the end of 2010. The service is expected to debut in the US, before rolling out in other markets during the course of 2011. Under the proposed arrangement, movies would become available online at the same time that they are released on video and to other streaming or download services. Amazon, which already offers a movie download service, is also in talks with TV content owners including Viacom and Time Warner about starting a broadband subscription television. Meanwhile, Apple relaunched its Apple TV streaming service, cutting the price of some ABC and Fox TV show rentals to 99 cents, and offering streamed movies from rental service Netflix. It also launched a new music-centred social network, Ping, which seems designed specifically to crush News Corp's MySpace. Simultaneously, Sony launched its own MusicUnlimited service which will offer streaming music to its own devices via a network of "cloud-computing" servers.

France's widely diversified Lagardere conglomerate vowed to press ahead with the floatation of its 20% shareholding in the country's dominant pay-TV operator Canal+ after failing to agree a price for the sale of those shares to Vivendi, which owns the other 80% of equity. Lagardere is asking €1.5bn for the stake, which is more than Vivendi is prepared to pay. The offering is not likely to happen before 2011; however Vivendi is confident that Lagardere will have difficulty achieving the price it expects and is waiting to mop up the outstanding shares at a discount.

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Simon Tesler
Publisher, Adbrands