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And around the world we go. It's always a
good week if we can get to feature four ads from different countries (and believe me that doesn't happen as often as it
should). This week is one of those weeks, allowing us to make a brief stop on four different continents. First stop is
South Africa where Lowe Bull is the agency responsible for this charming tale for (Swedish) packaging giant Tetra
Pak. Not perhaps the sort of company from whom you'd expect a great ad, but like I said, it's one of those weeks.
Now Germany, where Leagas Delaney
Hamburg produced this impressive spot for (Czech) automobile manufacturer Skoda. No trickery involved
apparently; the piece was played live by glass musician Petr Spatina. Daily life at his house must be quite something.
Next stop America, and Ogilvy New York
brings us a series of moral tales on behalf of Capri-Sun, one of the smaller brands in the portfolio of (um, American)
drinks giant Coca-Cola. Yes, yes, it is a little reminiscent of TBWA's Skittles campaign, but we like it anyway.
And as an added bonus it offers a splendid eco-friendly message about what will happen to naughty children if they drop
litter. So two ads for the price of one.
And finally, Australia, for the latest
campaign for Toohey's from Saatchi & Saatchi. There are several spots in this series which calculates
the price in beers for doing various jobs for friends and family. Some wonderful observation of human nature. See the
other spots here. Those of you with a strong constitution should be
sure to watch the ad entitled "Nan".
In the news this past week:
Brands & Advertisers
More results for 2009 this week. Royal
Bank of Scotland unveiled another set of generally grim results. There has certainly been some progress in the right
direction, but no one expects the bank to escape government ownership any time soon, unlike America's banks. Impairment
losses almost doubled to £13.9bn wiping out much of the benefit from improved trading by the investment banking
division. However CEO Stephen Hester said "We tentatively think the worst is behind us in terms of bad debts."
The group reported losses reduced from almost £25bn last year to £3.6bn, slightly better than most analysts were
America's equivalent to RBS in the
governmental intensive care ward is insurance giant AIG. It reported a substantial reduction in annual losses
from 2008's vast $99bn to a still-weighty $10.9bn. However, the group followed that announcement with the equally
significant news that it had agreed to offload its extensive operations in Asia, grouped under the umbrella of AIA, to
the British insurer Prudential for $35.5bn, including $25bn in cash. That will allow it to pay down a sizeable
part of its debt to the US government. Yet the deal is by no means certain. The financial markets turned against
Prudential with a vengeance following the announcement, marking down its share price by as much as 20% in the first half
of the week, although it has since recovered some ground. The biggest concern among investors is that the Pru will need
to make the largest cash call in UK history to fund the lavishly priced deal. It's by no means clear whether or not
existing shareholders will support the proposal, although it is likely to get strong support from institutional
investors in Asia. The combined Pru-AIA would become a new giant in the Asia Pacific region, with well over 30m
customers. It would be the largest life insurer in seven Asian countries and the biggest overseas insurer
in India and China.
Britain's two other big
banks also reported figures for the year. HSBC continued to feel the pain from bad debts as new loan impairments
and other credit risk provisions rose to $26.5bn. As a result, profits fell by another 24% to $7.1bn. North America
continued to be the worst performing market, reporting another year of operating losses, although those halved to just
under $8bn. As with RBS, the weakness in personal financial services was partly offset by strong growth in the group's
investment banking division, whose profit contribution more than tripled. Lloyds Banking Group too pushed through
a huge increase in impairment charges relating to still-toxic commercial property loans inherited from HBOS. That figure
soared to £24bn, the highest provision from any of the UK's banks. As a result, the combined group reported a trading
loss of £6.3bn, only a slight improvement on 2008. However, as was the case last year, Lloyds' statutory results
benefit from an additional accounting adjustment to cover the actual book value of HBOS assets acquired at a heavily
discounted price. As a result, on paper at least, Lloyds was able to report statutory profits of just over £1.0bn.
There were signs of recovery at The
Gap. Group revenues for the clothing retailer continued to fall, slipping to $14.2bn, around the same level as in
2001. However net earnings have steadily risen, climbing back over the $1.0bn in 2009 for the first time in a decade.
That has prompted a cautious expansion of Gap's international network. It plans to open its first stores in both Italy
and China later this year, marking its first direct entrance into a new country for more than a decade. Also this year,
the group is to begin offering online shopping for the first time to customers in the UK and selected other European
Sportswear group Adidas
was not so lucky. Revenues slipped by 4% to €10.4bn, mainly as a result of inventory cutbacks by retailers. However the
full force of the downturn was felt on the bottom line as net profits plunged by 62% to €245m. "Without question,
2009 was the most difficult year since I became CEO of the group," said CEO Herbert Hainer. However, he promised
strong improvements for the current year. "We emerge from the challenges of 2009 with a very healthy financial
position and renewed optimism. And I am convinced that all our brands can capitalise on a rebounding consumer
environment in the current year. When I look around the marketplace today, I do not see any other company with a product
pipeline as compelling, original or technologically advanced as ours." One important bright spot in the latest
results was an improvement for Adidas's struggling Reebok brand, which in 4Q reported its first year-on-year quarterly
sales increase in North America since the business was acquired in 2005. Also in Germany, skincare specialist Beiersdorf,
makers of Nivea, reported sales down 4% to €5.7bn, mainly as a result of disposals and currency fluctuation, but a 46%
slide in after-tax profits to €380m.
General Motors announced yet
another shake-up of its management team. Elderly vice chairman Bob Lutz, now 78, announced plans to retire in May. He
was brought out of retirement when GM emerged from Chapter 11 to head up the group's marketing and product development.
However his marketing brief was later transferred to Susan Docherty, who took up a role as VP, global, sales and
service. Now she too is changing duties, dropping responsibility for sales to focus solely on marketing. There were also
three new appointments of marketing heads for Chevrolet, Cadillac and Buick-GMC. That development was at least in part a
response to the news that General Motors had been overtaken during February by Ford Motors in vehicle sales for
the first time since 1998. Ford reported a 43% surge in combined sales of its four brands during the month, enough to
lift the long-time #2 into the top spot ahead of General Motors. Ford sold a total of 142,285 cars and light trucks in
the month, while GM managed a lift of just 12% to 141,951 vehicles across its portfolio. The biggest loser was Toyota,
whose sales slumped almost 9% to 100,027 as a result of concerns over vehicle safety. Chrysler was flat in 4th
place at 84,449 vehicles.
Elsewhere in the auto market, PSA
Peugeot Citroen and Mitsubishi Motors ended talks regarding a share swap after failing to agree financial
terms. However they will continue to cooperate closely on sales. PSA already sells Mitsubishi's Outlander model in some
European markets under the Peugeot and Citroen brands, and will begin selling the Japanese company's i-Miev electric
vehicle next year. However, the two groups had been considering a more binding financial arrangement similar to that
between Renault and Nissan, in which the two companies also have sizeable shareholdings in each other and indeed are led
by the same CEO, Carlos Ghosn. Volkswagen is currently involved in its own negotiations to form the same sort of
financial partnership with Suzuki.
European regulators approved the merger
of the UK operations of Orange and T-Mobile, on condition that the enlarged company also pools its network
infrastructure with that of Hutchison's 3, the smallest of what are now four main UK networks. The combined
Orange/T-Mobile will leapfrog O2 and Vodafone to become the UK's largest operator. It will maintain two separate brands
for the time being.
The Financial Times reports today that PVH,
the US clothing company which already owns the Calvin Klein brand worldwide, is in talks to acquire the Tommy
Hilfiger fashion business from its venture capital owners Apax. Price tag could be around $3bn.
Diamond Foods, best-known in the
US for its Emerald and Diamond bagged nuts and Pop Secret popcorn sealed a deal to acquire Kettle Chips for $615m
from private equity fund lion Capital. The acquisition includes Kettle's UK operations.
Drug giant Pfizer is reported to
be preparing a bid for German company Ratiopharm, a manufacturer of generic pharmaceuticals. Several other drug
companies have already moved into this sector as a way of countering the competition from third-party manufacturers when
their products' patents expire. The most notable of Pfizer's competitors already active in this sector is Novartis. Its
Sandoz subsidiary is the world's second-largest generic manufacturer. However, Pfizer is likely to face rival bids for
Ratiopharm from other pure-generic companies, such as Teva of Israel.
Virgin Group moved back into the
UK healthcare sector, paying £4m for a 75% shareholding in Assura Medical, which operates a number of general
healthcare clinics on behalf of the NHS as joint ventures with local doctors. Assura Medical co-owns 30 of these
practises, known as GPCos, representing around 1,500 GPs, and serving some 3m patients across the country.
In the news this past week:
Interpublic felt the pain of the
economic downturn in 2009, with group revenues falling by more than 13% to just over $6.0bn. Net income that more than
halved to $121m. Excluding the effects of exchange rates, the organic decline for the year was 10.8%, slowing to 8.2% in
the final quarter. That was worse than all the other big groups, but strong 4Q performance and IPG management's
generally confident tone encouraged most analysts that the group is a strong play for the future. Its share price rose
strongly on the results. However as expected, IPG slipped into 4th place among the world's marketing services groups,
ceding the #3 spot to Publicis. WPP is the last of the big marketing groups to report. Its figures are due out tomorrow.
Omnicom launched a new retail
marketing unit, Retail 3, which will offer a broad range of integrated marketing services for clients in the automotive,
restaurant, retail and financial services industries. Around half the new shop's staff have been drawn from the
now-shuttered BBDO Detroit unit, including new president Harold Kobakoff. The new agency is based in BBDO Detroit's old
hometown of Troy, Michigan.
AdAge this week took a long hard look at DDB's
performance in the US, and asked "Is DDB losing its touch?". Longtime client Anheuser-Busch recently turned
down all of DDB's Bud Light's ads for the Super Bowl, using instead a motley collection created by promotions agency
Cannonball. Another cornerstone client, State Farm, recently took the decision to shift around a third of its
advertising business to Draftfcb; and since its acquisition by Mars, Wrigley's advertising has been steadily transferred
to Omnicom stablemates BBDO and TBWA. "And then there's the question of new clients," continued AdAge.
"The network has struggled in major new-business pitches, most notably losing out on US creative duties for
Volkswagen, despite handling the brand literally everywhere else on the globe. Bids for Tylenol, Radio Shack, CDW and
Cadillac turned out no better." AdAge concluded that DDB has been the slowest of the big agencies to adapt to the
changing marketplace, and cited as proof its insistence on maintaining digital arm Tribal DDB as a separate unit from
the main advertising network. DDB's North American network president Dick Rogers disagreed with AdAage's argument. Said
the magazine, "Mr Rogers acknowledged the formidable pile of issues the agency faces, but said the picture inside
the agency is rosier than what that series of public setbacks suggests. Asked why anyone should hire DDB over its
big-network rivals, Mr. Rogers said that the network's point of difference is its ability to customize its offering for
individual clients, while at the same time delivering 'talk-value creative'. The consistent success of McDonald's, he
said, is evidence that the agency's creative is effective."
The Wall St Journal reported last week on
the rapid behind-the-scenes development of Meredith Integrated Marketing, a subsidiary of the US magazine
publisher which owns titles including Better Homes & Gardens and Ladies Home Journal. Through a string of
acquisitions of independent marketing agencies such as New Media Strategies and Big Communications, Meredith has created
an increasingly comprehensive full-service offering, which covers digital and social media and multicultural as well as
more traditional areas of direct marketing and custom publishing. Last year, the company poached former Publicis
Modem/Dialog chief Martin Reidy to head up the business, and this has helped it to capture the business of several
significant advertisers, not least Chrysler and Mitsubishi Motors, whose direct marketing accounts it captured last
According to Adweek, automobile company Mazda
has called a review of its US advertising account, held since 1997 by independent agency Doner. That account is
generally believed to be the biggest by far in Doner's portfolio, and its loss could be disastrous for the firm, which
has already been hit hard by the loss of a string of other accounts over the past couple of years.
In other account assignments, Diageo
called a review of global creative for its Bailey's liqueur, currently held by JWT. Heineken appointed Lowe
to manage the pan-European launch of its Strongbow cider. St Luke's will keep UK creative. The Martin Agency
collected yet another trophy for its cabinet with the capture of Morgan Stanley's US business. And in Australia,
department store David Jones, one of the country's biggest spenders, called a creative review out of Saatchi
& Saatchi. For all other appointments, subscribers can access the full Adbrands Account Assignments database here.
In the news this past
British commercial broadcaster ITV
reported a modest profit of £25m for 2009, compared to the £2.7bn loss it made in 2008. However the turnaround was
generated not by an increase in revenues but by sharp cuts in expenses. Group revenues slipped 7% to a little under £1.9bn,
mainly as a result of a 9% decline in advertising to £1.3bn. However, the company said that ad sales had begun to
recover during 2010, with 1Q sales expected to come in around 7% above last year, and by as much as 15% above 2008 for
2Q. The group also announced a start-date for newly appointed chief executive Adam Crozier. He will take up his role at
the end of April.
The BBC published the results of a
wide-ranging strategic review, its first for five years. The organisation said it would reduce the budget for its online
operations by a quarter, and would cut spending on niche radio services, imported television content and sports rights,
as well as on fees paid to talent. Instead it will channel the anticipated £600m of savings into core areas including
international news, homegrown drama and culture and children's programming. One of the most significant changes that
could follow from the review would be the sale of the company's substantial magazine publishing division. This currently
falls under the remit of the corporation's commercial arm, BBC Worldwide, which is currently finalising its own
strategic review, with results due for publication next month. However as part of the BBC's overall review, director
general Mark Thompson, highlighted some of the changes that could ensue. "In the future," he said, "BBC
Worldwide will focus in particular on international, as opposed to UK, business development, on evolution rather than
merger and acquisition, and over time will move away from exploitation in physical media like magazines."
Streaming TV service Hulu.com has
lost rights to show two of its most-watched programs, Comedy Central's The Daily Show and The Colbert Report after
failing to agree terms with owner Viacom for an extension of the current deal. Viacom, of course, has close links to the
CBS network, whereas Hulu is jointly owned by ABC, NBC and Fox. Although Hulu's arrangement with Comedy Central was only
short-term, it was significant as far as the audience was concerned. Both shows were among Hulu's top 10 streams. They
will be pulled from the service next week.
Russian media tycoon Alexander Lebedev is
close to finalising a deal to acquire UK's national quality newspaper The Independent following several months of
negotiations. Lebedev is already the owner of London's afternoon daily The Evening Standard.
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