Adbrands Weekly Update 5th August 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: 

Heineken "The Tube"
by TBWA Neboko

K-Swiss "Get Championy"
72andSunny LA

DieHard "vs Gary Numan"
by Y&R New York

DirecTV "Opulence. I Has It"
BBDO New York

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A quick round-up of this week's best spots. TBWA Neboko in the Netherlands unveil the latest mod con in this follow-up to the classic Walk-In Fridge spot for Heineken. Lovely. Me, I'm getting one of these.

Tubes of a different kind with 72andSunny's campaign for K-Swiss sports shoes. Comedian Danny McBride lends his idiotic Kenny Powers persona (from HBO's Eastbound & Down show). If you can't match Nike and Adidas for celebrity endorsements, you can at least make lucrative fun of them. 

We love the concept behind this viral spot promoting Sears' DieHard car batteries. Y&R is responsible for the campaign but it was actually director James Frost who came up with the idea of getting 80s electronica hero Gary Numan (has he not aged at all in 30 years?) to play Cars on Cars. Cool.

And finally, a great new spot by BBDO New York for US satellite broadcaster DirecTV. This Russian billionaire has everything, like a gold remote and a tiny giraffe. Keep your eyes peeled if you want to catch all the incidental details, like those poker-playing dogs at the start. This is an ad you need to watch more than once. Enjoy!

In the news this past week: Brands & Advertisers

Procter & Gamble reported resilient full year figures for the 12 months ending June 2010. Total revenues edged up a comparable 3% to $78.9bn. (In reported terms, the figure was down slightly. Last year's reported total of $79.0bn included P&G Pharmaceuticals, sold during the year). Net earnings slipped 5% to $12.7bn, but only because the prior year included a $2bn lift from the sale of Folgers. Another significant detail was the $1bn year-on-year increase in advertising expenditure to $8.6bn. Performance was generally even across P&G's different operating businesses, with all units delivering modest increases in sales of between 1% and 3%. Fabric & Home Care remains the biggest business with annual sales of $23.8bn. Beauty was not too far behind with $19.5bn. All divisions also reported an increase in operating profits, ranging from 1% (Healthcare) to 16% for Baby & Family Care and an impressive 29% for Snacks & Pet Care.

Unilever also delivered decent figures for the first half of 2010. Reported revenues climbed almost 10% to €21.9bn, their best performance for some time (partly as a result of favourable exchange rates), while net profits jumped by 35% to €2.2bn. The group's most important regional group is now clearly its emerging markets business in Asia, Africa, Central & Eastern Europe. That unit accounted for almost 40% of revenues, well ahead of the Americas and Western Europe regional groups. The strongest growth has been in personal care products, with underlying sales growth (excluding exchange rate changes) of almost 8% for the half.

Troubled handset giant Motorola unveiled a spectacular surge in profits for its 2Q results, largely as a result of strong sales from its Droid smartphones, widely seen as one of the strongest challengers to iPhone. Motorola has been struggling for years with poor performance after several ill-fated attempts to find a worthy successor to its Razr series, a popular design five years ago. In the mean time, the once world-beating company's share of the global market has fallen to single digits. Droid, though, powered by Google's Android operating system and sold through Verizon, is looking like it could finally be the device to help Motorola turn the corner. 2Q profits soared to $162m, from $26m this time in 2009. Nevertheless overall revenues slipped by 2% - and by 6% in the mobile phone division alone - to $5.4bn as traditional non-smartphone operations continued to slide. In another promising development, the company was revealed to be prepping launch of a digital tablet to take on iPad. The new device is likely to offer mobile TV via Verizon's FiOS pay-TV service, a key selling point that would give it a significant edge over the iPad. Unlike iPad, it will also support Adobe Flash, making it a better choice for online video watching. Launch of the new device could come in time for the winter 2010 holiday season.

The biggest of Britain's banks, HSBC, kicked off the local sector's reporting season with a strong set of results that were well above analysts' expectations. Pretax profits from the first six months doubled to $11.1bn. That half-year result was higher even that HSBC's full year profits for both 2008 and 2009, although it was still well behind the near-$20bn profit reported for 2007. Lloyds Banking Group also reported better-than-expected figures, with half year profits of GBP 1.6bn, compared to a GBP 3.9bn loss for the same period last year. Barclays came in this morning with a 44% surge in half year profits to GBP 3.9bn. The key factor for all three banks was a steep fall in impairment losses relating to bad loans. Yet despite the brightening economic picture, many banks are still widely perceived by politicians and indeed their own customers to remain cautious about making new loans, especially in the small business sector. Lloyds and Barclays both denied this. Lloyds chief exec Eric Daniels said that Lloyds had approved 80% of new loan applications received during the half, but that in general demand for new borrowings remained subdued. "It is not a case of us being mean and turning people away," he said. Those comments were echoed by Barclays' John Varley. "There has been much comment about the banks not lending," he said, "but the facts we are seeing point to a different picture. What we are seeing is loan applications falling steadily."

Meanwhile, Santander continued its rapid expansion, agreeing to pay GBP 1.65m for an estate of 318 NatWest and Royal Bank of Scotland branches being sold by RBS, along with their customers and staff. All outlets will rebrand as Santander. The group is also close to a deal to acquire a $4bn portfolio of car loans from the US consumer finance division of HSBC, and is in preliminary talks to acquire another US lender, M&T Bank Corp of Buffalo, New York. Last month it acquired 173 new branch offices in Germany from Scandinavian bank SEB. Separately, Citibank is preparing to put up for sale Egg, its UK-based online banking subsidiary. It acquired the business from Prudential in 2007 for GBP 575m.

After months of protracted negotiation, Geely of China completed its acquisition of Sweden's Volvo Cars, and confirmed the appointment of Stefan Jacoby as CEO. The final price was around $1.5m, lower than the $1.8bn originally agreed. Announcing completion of the takeover, Geely's chairman and founder Li Shufu said he plans to strengthen Volvo's positioning as a luxury carmaker and wants to develop a top-of-the-range saloon to compete more directly with BMW's 7-series and Mercedes' S-class, especially in China. "In the Chinese market," he said, "people want luxury cars… luxury they see through their eyes and touch with their hands." He aims to double Volvo's sales over the next five years, with much of the growth coming from China.

Walt Disney signed off on a deal to sell Miramax, its once-mighty arthouse subsidiary, to investor group Filmyard Holdings. Founded by brothers Bob and Harvey Weinstein, Miramax was one of the powerhouses of the industry during the late 1980s and early 1990s, responsible for the crossover success of numerous independent movies and their directors. Miramax was, for example, almost singlehandedly responsible for establishing the career of Quentin Tarantino. Disney acquired Miramax in 1993, and the Bernsteins left around ten years later. By then, Miramax's star had waned somewhat, and its profile reduced further over the next few years as Disney concentrated on more clearly bankable hits. Miramax was put up for sale at the beginning of this year, and the Bernsteins were among several bidders for the business. However, they were outbid by Filmyard, a vehicle for several financiers and entrepreneurs not hitherto too closely involved in the movie business. Disney will continue to manage the Miramax back catalogue, including Pulp Fiction and The English Patient, for a year on behalf of the new owners. Meanwhile, in an unconnected development, Warner Bros named Lynne Frank as its new EVP, international marketing, reporting to worldwide marketing president Sue Kroll. Frank joins Warners from the EMEA arm of sports broadcaster ESPN.

French drug giant Sanofi-Aventis launched a friendly takeover bid for US biotech developer Genzyme Corp. The French group's opening salvo is a bid worth around $18.4bn. The two companies agreed to begin negotiations.

Struggling to gain traction in the fast-changing market and a slow but steady shift towards digital titles, America's largest bookseller Barnes & Noble has put itself up for sale. The chain said it is reviewing strategic alternatives. Company chairman Leonard Riggio, also the largest shareholder with around 30% of B&N's equity, said he is considering the creation of an investor group to take the company private.

Kellie Fernandez, formerly head of global marketing for Green & Black's, the organic chocolate maker now owned by Kraft, has left the company. She was replaced on an interim basis by Mark Palmer. Fernandez is the latest of a string of marketers to leave Cadbury since it was acquired by Kraft.

What is a nurdle, and to whom does it belong? That is the question raised by a new legal battle between Colgate-Palmolive and GlaxoSmithKline. A nurdle is widely understood within the oral care industry to be the given name of the squirt of toothpaste you apply to your toothbrush before use. More specifically in this case it describes the idealised version of that squirt which forms part of the logo of GSK's Aquafresh toothpaste, and which has suddenly started to appear on new packaging for Colgate's Total brand. GSK and Colgate finally came to blows this week over the device when Colgate issued a pre-emptive attack asking a court to defend its right to use nurdles on its wrapper. GSK responded with a suit which accuses Colgate of seeking to "trade off the commercial magnetism" of its own "highly distinctive" brand.

In the news this past week: Agencies

DDB replaced Eric Silver as chief creative officer of its New York office after little more than a year in the job. Silver stepped in last year following the departure of Lee Garfinkel. Now he will in turn be succeeded by Matt Eastman, previously CCO at DDB Australia, and a former executive creative director of M&C Saatchi in both London and New York. DDB has been wrestling with a series of account losses over the past couple of years. Last week, tax preparation giant H&R Block moved its $160m account out of the agency without a review. Silver is not leaving the network. Instead, he is said to be taking charge of creative responsibilities for the agency's US business development.

Aegis plans to use its recently announced acquisition of leading Australian media agency Mitchell & Partners as the springboard for an aggressive new business campaign in the surrounding region. It believes the combined resources of Carat in Asia and Michells in Australia will make a far more compelling proposition for potential customers. Nick Waters, chairman of Aegis Asia Pacific, told local trade paper B&T, "There are around 20 multinational companies that we work with elsewhere in the world that we can talk to [now in Australia]... Clients like the Kellogg company, J&J, Diageo, 20th Century Fox and Pernod Ricard. Neither Aegis nor Mitchells has those clients here."

Publicis Groupe strengthened the global network of digital subsidiary Publicis Modem by acquiring Brazilian agency AG2. That shop is merging with the local Modem office to form AG2 Publicis Modem, under the management control of the newly acquired agency's leader Orlando Marques.

Fallon London has been tasked by Kraft's Cadbury division with designing a new chocolate bar to promote its sponsorship of the 2012 London Olympics. According to Brand Republic, the Spots v Stripes Challenge Bar, comes in three milk and white chocolate segments, one marked with white chocolate spots, one with stripes and the middle section with stars. The concept of the bar is to encourage friends to set each other a simple sporting challenge. Each competitor gets one of the end segments; but the winner of the game gets the middle segment as well. The bar is due to launch in the UK in early September.

Debt-burdened Australian group Photon - owner of Naked, BMF and BWM among others - said it had completed renegotiation of earn-out arrangements with all but a handful of staff. It has been attempting to persuade the former owners of agencies it acquired in a decade-long acquisition spree to accept reduced terms for their earn-out payments, which currently stand at a potential total of A$176m, a large chunk of which falls due for payment this year. The payouts will now be based on group performance, rather than that of individual subsidiary units, and executives will receive part of the sum in group shares rather than all cash. Completion of renegotiations will allow Photon to proceed with separate talks to raise A$100m of much-needed additional capital. Photon said that 99.7% of its executives had now accepted the new terms, which suggests that only one or two managers have so far failed to accept terms.

In account assignments, ZenithOptimedia had a great week, collecting consolidated media duties for mobile service O2 across Europe as well as Gucci Group's media in the UK, France and most of Asia. BBH was awarded pan-European creative for the Wonderbra brand. BBDO collected global duties for the Johnson & Johnson's babycare range. It will share US duties with DDB satellite Roberts & Langer. Also in the US, travel portal Orbitz placed media with Optimedia. Rival Travelocity called a review of media and creative out of OMD and McKinney. In Australia, PepsiCo called a review of local media currently managed by independent Eighty Ks. In Germany, Coca-Cola added local shops Plantage and KemperTrautmann to its roster to handle bottled waters Apollinaris and KiO respectively. For all appointments, subscribers can access the full Adbrands Account Assignments database here

In the news this past week: Media

The Washington Post agreed to sell its venerable Newsweek magazine to businessman Sidney Harman, formerly the founder of Harman International which makes JBL and Infinity audio equipment. It will be controlled and run by the Harman family. The terms of the deal were not announced. Reports suggest that Harman is paying only a nominal amount in cash but will assume "tens of millions of dollars" in financial obligations. Donald Graham, chairman & CEO of The Washington Post Company, said "In seeking a buyer for Newsweek, we wanted someone who feels as strongly as we do about the importance of quality journalism. We found that person in Sidney Harman. He has pledged not only to continue to produce a lively, compelling and first-rate news magazine, but also an equally dynamic - and he intends to keep a majority of Newsweek's very talented staff." However editor Jon Meacham announced that he would take the opportunity to leave following the handover of the title.

Meanwhile, Newsweek's longtime rival Time looks set to get a new chief. Jack Griffin resigned abruptly this week from Meredith Corp, where he headed the national media unit responsible for Better Homes & Gardens and Family Circle. Meredith is the #2 US consumer magazine publisher by circulation behind Time Inc. The rumour mill says Griffin is in final negotiations to succeed Time chief executive Ann Moore, who is expected to move up to a new role as chairman.

Satellite broadcaster Sky reported another year of strong growth. Revenues for the year ending June 2010 hit a new high of GBP 5.9bn, and pretax profits more than doubled to almost GBP 1.2bn. The group reported total subscriber numbers of almost 9.9m. Separately the group announced that it has acquired exclusive rights to all drama series created by US pay-TV giant HBO for the next five years, marking a notable step forward in its attempts to strengthen its programming content beyond sport and movies. The deal covers new shows including Martin Scorsese's forthcoming Boardwalk Empire, as well as back catalogue including Band of Brothers, The Wire and The Pacific. No surprise also that Sky plans to rename Virgin1, the digital strand it recently acquired with Living and others from Virgin Media. Virgin1 becomes Channel One next month.

Sky's part-parent News Corporation also reported strong results for the year, lifted by the spectacular success of the Avatar movie and exceptional performance from its cable division. Group revenues rose 8% to $32.8bn, and bottom line was back in the black at $2.5bn after a net loss of $3.4bn last year. The movie division reported one of its best ever years, reflecting the popularity not just of Avatar, but also Ice Age 3 - a huge worldwide success - and the latest instalments in the X-Men and Night At The Museum franchises. However strong growth at cable programming, and especially at the Fox News channel, looks set to establish that division as the group's biggest by revenues for the current year, for the first time. 

Meanwhile ITV's new chief executive Adam Crozier presented his first set of interim financial results, which showed an 18% improvement in first half advertising revenues, and said the network would launch paid-for HD versions of its ITV2, ITV3 and ITV4 digital channels later this year. Total first half revenues rose 9% to GBP 987m and the group reported a GBP 97m pretax profit, compared to a loss of GBP 105 for the same period last year.

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Simon Tesler
Publisher, Adbrands