Adbrands Weekly Update 4th February 2010
A weekly round up of key news about 
leading advertisers, agencies and mediaowners
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Welcome to the first premium-only edition of the Adbrands Weekly Update. The Weekly Update is now sent only to active subscribers to Adbrands premium services, but your own subscription gives you the right to forward this email to up to ten of your colleagues at no additional cost. Important: please note that you will stop receiving your copy of the Weekly Update if and when your paid subscription expires. As always, if you have any questions, please don't hesitate to contact me.

Four of our favourite ads this week: 

Pepsi "One People"
by TBWA\Chiat\Day

Sussex Safer Roads "Embrace Life"
by Daniel Cox/Rockutainment

Pedigree "Doggy Dentures"
by TBWA\Chiat\Day

Knorr "Mask"
by DDB Toronto

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.

Pepsi's new Refresh Everything campaign is turning out to be very interesting indeed, although the real test will lie in the quality of the projects submitted for funding. We'll have to wait and see, but for now the concept has certainly captured our attention, not least with this extremely cool, rather uplifting new spot. People power indeed. Top marks as always to agency TBWA\Chiat\Day.

Writer-director Daniel Cox, working with producer Sarah Alexander, is responsible for this stunning PSA for Sussex Safer Roads, a local government unit promoting road safety in the British county of Sussex. It's beautifully conceived and created, and richly deserves the wider international acclaim it's beginning to attract. Great music too.

TBWA\Chiat\Day again, with an endearingly goofy spot for Pedigree's Dentastix chews. We have no sensible critical comments to make of this ad, only that it makes us grin like one of those dogs every time we see it.

And finally, yes, a curtain call for Knorr's adorable Canadian mascot Salty. This little guy is rapidly developing a life all of his own, in a brand new spot which follows hot on the heels of last week's ad. Is this becoming a series? I suspect that DDB Toronto and Unilever will have to call a halt quite soon, since the actual product - Knorr's low-salt side dishes - has become almost entirely incidental to the ad. Enjoy it while you can.

In the news this past week: Brands & Advertisers

The infection from Toyota's disastrous product recall worsened and also spread to other companies. Two other manufacturers suspended production or issued recalls after they became aware they too were using the same accelerator pedals which have become the focus of Toyota's current crisis. Ford stopped production of full-size commercial vehicles in China while it looks into the problem, and PSA Peugeot Citroen recalled around 100,000 European Peugeot 107 and Citroen C1 models made at a factory in the Czech Republic jointly owned with Toyota. Meanwhile the beleaguered Japanese manufacturer confirmed that it would recall as many as 1.8m vehicles across Europe, and a similar process has also begun in Mexico and the Middle East.

In the US, Toyota started repairing those cars already recalled by fixing a steel bar beneath the accelerator pedal to reduce the friction that seems to cause the pedals to stick. It said the cost of the recall could be as high as $2bn, but that sum will rise quickly unless the company can get on top the problem fast. It is likely to be deluged with lawsuits from angry customers, and Toyota's position now threatens to get even worse following a round of customer complaints over apparent braking problems on new versions of its flagship Prius model. That development promoted intervention by Japan's transport ministry as well as US transportation secretary Ray LaHood. On Wednesday, LaHood was reported to have called for owners of at-risk Toyota and Lexus vehicles to "stop driving" their cars altogether. This caused something close to mass hysteria among Toyota dealers and their customers, and LaHood subsequently retracted his comment, claiming he had been misquoted.

New figures for January show that Toyota's US sales slumped by 16% as buyers shied away from the brand in favour of domestic suppliers Ford, up 25%, and GM, up 14%. According to a study by auto shopping guide Kelley Blue Book, more than 20% of consumers who said they were considering a Toyota for their next vehicle before the recall have now dropped the brand from their list. Senior managers at Honda and Mitsubishi also expressed their concern that the current crisis at Toyota could impact on the reputation of all Japanese manufacturers.

Ford cheered the markets by reporting its first annual profit since 2005. The company registered a $2.7bn surplus, equivalent to a $17.5bn swing from last year's near $15bn loss. Good news, yes, although the bottom line figure was helped considerably by accounting adjustments. The group's automotive operations still made a $1bn-plus operating loss, but that deficit was offset by stronger performance from the group's financial services division. Excluding adjustments, net operating profit scraped in at $454m. Meanwhile revenues fell by 20% to $118.3bn, and unit sales dropped 11% to a total of 4,817,000 vehicles  "While we still face significant business environment challenges ahead," said president & CEO Alan Mulally, "2009 was a pivotal year for Ford and the strongest proof yet that our One Ford plan is working and that we are forging a path toward profitable growth by working together as one team, leveraging our global scale."

Moving away from the auto sector but staying in Japan, in the fierce battle between Japan's big four brewers, Kirin claimed to have stolen back the #1 position from arch-rival Asahi during 2009 after a nine-year power struggle. According to figures for the year as a whole, Kirin's share of the total beer and associated beverages sector increased to 37.7%, while Asahi's slipped marginally to 37.5%. The sector is complicated considerably by the fact that, bizarrely, beer itself now accounts for less than half of what generally considered to be Japan's beer market. This has become dominated by so-called "beeralikes", drinks which look and taste like beer but have a lower malt content or even no malt at all. The fastest-growing part of the market, known as the "new genre" or third category, actually comprises drinks made from soy or pea protein. All four major brewers produce all three types: beer, low-malt "happoshu" and "new genre". Asahi Super Dry is the clear leader in the traditional beer segment, but Kirin has taken the lead with the #1 happoshu Kirin Tanrei and #1 new genre Nogodoshi Nama. Suntory remained in 3rd place in the overall market with 12.3% share and Sapporo languished at the bottom of the table with 11.7%.

It may feel like mobile phones rule the world now, but that's only because brutal competition has slashed margins and prices. Nokia and Motorola both reported grim results for 2009, although in Nokia's case at least there were clear signs of an improvement. The Finnish giant reported a €10bn slide in revenues to just under €41bn, while net profits plummeted from €3.9bn in 2008 to just €260m. Global market share remained stable at 39% by the final quarter, although for the year as a whole share slipped marginally to 38.3%. No such luck for Motorola though, which continued its depressing slide towards the brink. Not even its admired Droid phones for Verizon could protect its market share which slumped to just 3.7% worldwide by the final quarter (whole-year share was 4.9%). Motorola's handset sales plunged by 45% over the year to 55m units, beating even the equally troubled Sony Ericsson, whose global share had slipped to 4.5% by the last quarter according to researcher IDC. The winners? Well not just Blackberry and Apple, who still remain outside the top five for now, each with unit sales still under 40m. It was mainly the Koreans Samsung and LG, both of whom reported strong increases. The former consolidated its second place position with global share of 20.1% for the year and sales of 227m handsets; LG made the #3 spot its own with annual share of 10.5% and sales of 118m units. The total handset market slipped by 5% in volume terms compared to 2008.

Samsung Electronics also overtook HP as the world's biggest electronics company with full year sales of almost $118bn (compared to HP's $115bn). Among other big marketers, P&G, Colgate-Palmolive, Hyundai, Estee Lauder, Microsoft, H&M, Hershey and even Eastman Kodak all reported better than expected quarterly results, especially when compared to the dark days of 4Q 2008. AT&T's numbers were mixed. The group claimed dynamic performance in the final quarter from its wireless division, including its second-best-ever quarter of subscriber growth, but full year revenues slipped marginally from $124bn to $123bn, and net income fell 3% to $12.5bn. Nevertheless the company remained comfortably ahead of arch-rival Verizon in both sales and profits, although its still lags behind Verizon Wireless in subscriber numbers.

Amazon reported strong growth for 2009, buoyed up by record holiday period sales. As a result, the company was able to snatch back the #1 spot among online companies, unseating Google. Amazon's full-year revenues were $24.5bn, compared to $23.7bn for Google. There's no comparison though in profits. Amazon's bottom line continued to grow, but it still lags far behind other online businesses in profit margins. Net income for 2009 was $902m, a handsome 40% improvement on the year before, but no comparison to Google's whopping $6.5bn profit. Amazon's closest rival eBay manages to score almost three times Amazon's net income on just over a third of its revenues.

According to figures from trade monitor Beverage Digest, Coca-Cola finally pulled ahead of PepsiCo in the US fruit juice market during last year after years of intense rivalry. According to BD, Coca-Cola's Minute Maid and Simply brands seized just over 23% volume share of the sector, while PepsiCo's Tropicana and Dole slipped almost three points to just under 22% share. According to market researcher IRI, the Tropicana brand suffered an 11% decline in dollar sales over the year to $862m (excluding Walmart). Most observers blamed Tropicana's fall on the disastrous new packaging launched in January 2009 by Omnicom's Arnell Group. This proved so unpopular with consumers that it was dumped after only a month. That was enough to allow Coke's rivals a lead. However, Tropicana CMO Andy Horrow told AdAge it wasn't the fault of the packaging: "I attribute [the sales decline] first and foremost to the large supply of oranges that created a really big market for private label. Put that together with an economic downtown, and it's the No 1 factor. But let's be honest. We had a tough year last year coupled with the fact that we weren't very loud in talking about Tropicana."

Didier Lombard stepped down earlier than expected as CEO of France Telecom in an attempt to rebuild trust between the company and its employees, and indeed with the French public, after a wave of suicides by employees. France Telecom's union has blamed those self-inflicted deaths on low morale caused by intense restructuring, which often resulted in staff being obliged to transfer to new jobs in different cities. The suicides were widely reported, prompting intense debate in the French media, which culminated in the resignation of  France Telecom's head of domestic operations last year. Lombard will remain chairman but deputy Stephane Richard moves up to CEO and has pledged to fix any remaining concerns. In an interview this week, he acknowledged that the company's restructuring had caused "trauma, suffering and much worse".

In the news this past week: Agencies

WPP's Sir Martin Sorrell warned against over-confidence when considering what appear to be better financial results from marketers and mediaowners, especially in 4Q 2009. In an interview with Bloomberg from the Davos Economic Forum, he said "I'm not so sure that we're seeing that much of a recovery. We describe it as being less worse." He suggested that mediaowners were among the most at fault. "We hear [them] celebrating the fact that instead of being minus 30% or minus 25% in terms of top-line like-for-like sales they're down 10% or 5% and [yet] they're declaring victory." Comparing 4Q 2009 results against figures from 4Q 2008, which arguably marked the economy's lowest point in many years, was he suggested misleading. "We're cycling easier comparatives. Politicians always leap on easier comparatives or better comparatives... but you can't declare victory until you see consistent gains year to year."

New York creative boutique Toy announced plans to shut its doors next month. Partners Anne Bologna and Ari Merkin launched the shop in 2004 after jumping ship from what was then Fallon New York. However, after a strong start, progress has been slow. Now the pair say they want new challenges. Bologna told AdAge "Though we're still profitable, together we realized that we still haven't reached the scale we'd hoped for, four years into the business. We started, ran and are now closing Toy on our own terms, which, despite its outcome, is something we are deeply proud of."

Watch out America, the British are coming. No, not really, but in two significant transatlantic personnel moves, Fallon London's managing director Karina Wilsher is moving to New York to take up a new role as president of Anomaly New York; and Iain Tait, one of the four founding partners of UK digital shop Poke as well as one of the country's most influential digital gurus, is to join Wieden & Kennedy in Portland in an as yet unspecified role.

Havas launched a new cross-group entity with the creation of Havas Design+, which will provide an umbrella for various group-owned subsidiaries involved in branding or product design. The new unit will be led by a leadership committee drawn from each of the agencies, under the supervision of Havas Worldwide & Euro RSCG chief David Jones. Agencies involved include W&Cie and BETC Design in Paris, Conran Design Group in London, and local offices of Euro RSCG in New York, Mumbai, Lisbon, Sao Paulo, Dubai and Lisbon.

Brand Republic announced today that COI had awarded the UK government's consolidated media account to WPP's GroupM. It is one of the country's largest media contracts, worth around 250m in billings. Dedicated unit M4C, which consists of specialists drawn from MediaCom, Mindshare and Mediaedge:cia, will manage the business, which is currently split by medium between six different companies. GroupM take over the account from April.

In other account assignments, Time Warner's Turner Broadcasting System placed US media with MediaVest; Alberto Culver called a worldwide review of creative and media for brands including Tresemme, VO5 and Nexxus, handled by a mix of agencies including Wieden & Kennedy and Carat; Arnold Worldwide picked up Panasonic and Mike's Hard Lemonade; Jim Beam named StrawberryFrog; UK fashion chain French Connection appointed Fallon London; Pepsi shifted digital for Gatorade to WPP's VML; and Wrigley's Extra transferred from DDB to BBDO. For all other appointments, subscribers can access the full Adbrands Account Assignments database here

In the news this past week: Media

It's Super Bowl Sunday this weekend. CBS, which hosts the game this year, said it sold out its last ad slots for the game at the end of last week. It was targeting a price per 30-second slot of between $2.5m and $3.0m, and said it expects to show between 60 and 70 ads in total during the broadcast. This year's sell-in has been more troubled than most, with several big-name regulars abandoning the game for cost reasons. PepsiCo is one of the most notable drop-outs. The biggest single sponsor last year, it said it would only be promoting snacks this year not beverages. Another long-time regular, Anheuser-Busch InBev, said it would drop the famous Clydesdale horses from its own line-up for only the third time in 15 years. It subsequently changed its mind, and a Clydesdale spot is now expected to run. Most notable by their absence will be GM and Ford, neither of whom are expected to make an appearance, leaving Chrysler as the only domestic manufacturer supporting the game.

The slimmed-down Time Warner, now stripped of both AOL and Time Warner Cable, reported a full-year profit of $2.5bn, a welcome improvement on last year's mammoth $13bn loss. Cable networks Turner and HBO remained the powerhouse of the business. AOL reported its first annual figures since 2000 as a standalone business. Revenues continued to slide, falling 22% to $3.3bn for the year. Ad sales fell 22% to $1.7bn as the company felt the brunt of the economic downturn, and the loss of major client University of Phoenix. Subscription revenues plunged 28% to $1.4bn. But there was some good news. After a whopping $1.5bn loss in 2008 the company was back in the black with net income of $249m. CEO Tim Armstrong declared that the turnaround was under way. Meanwhile News Corporation reported strong results for its second quarter, and raised full year forecasts to reflect what it expects to be substantial benefits from the huge success of Avatar, already the most successful movie ever made after just seven weeks on release. There was also strong growth for cable giant Comcast, whose annual net income leapt by 43% to $3.6bn on sales of $35.8bn.

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Simon Tesler
Publisher, Adbrands