Adbrands Weekly Update 6th May 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: 

Bavaria 0.0% "Mickey Rourke"
by Selmore -- (Bad Language Alert!)

Warburtons "Burnt Offering"
by RKC&R/Y&R London

Campofrio "Tmoty"
by McCann Madrid

Cadbury "Puttin On The Ritz"
by Saatchi & Saatchi New Zealand

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

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Can't spend too much time on the preamble - we have to go and vote for a prime minister. First up, the ravaged charisma of Mickey Rourke on behalf of no-alcohol beer. We never fail to be surprised by the choices made by Hollywood celebrities over which products they are or are not prepared to endorse outside their home country. Although his stock has risen considerably in recent years, not least since last year's Oscar, Rourke here happily parodies himself on behalf of Dutch brewer Bavaria. The Netherlands! Now that really is the land of the free. Where else would you get a TV ad in which the main character demands, "Give me a f*cking beer!". Although we note that the local translation omits the expletive and has Rourke demand merely "ein bier". The agency is local independent Selmore.

RKCR/Y&R's latest ad for British breadmaker Warburtons is another beautifully executed small-scale epic, with the emotional pitch once again ramped up to maximum-plus. Another demonstration of the power of fabulous music to give unrivalled emphasis to visual images. (This of course is Barber's modern classic Adagio for Strings). Try watching it again with the sound turned down to see the difference.

McCann Erickson Madrid is responsible for this charming fantasy on behalf of Spanish cold meats brand Campofrio. For some mysterious reason, this ad was made in Spain in English and then dubbed for local use in Campofrio's various European markets. Odd, but all the more satisfying for you and me.

And finally, a new instalment in Cadbury's Glass And A Half Productions series. Not a gorilla, not airport trucks, not dancing eyebrows or Ghanaian cocoa farmers or even a chocolate charmer. No, this time it's a... Oh well, you'll see... Saatchi New Zealand is the agency. Enjoy.


In the news this past week: Brands & Advertisers

US airlines United and Continental agreed the terms of their merger to create the world's largest carrier, with access to an unparalleled global network serving 370 destinations around the world. Between them the two airlines will carry slightly fewer passengers per year than current #1 Delta, but will be bigger by the number of passenger miles travelled. Delta is predominantly a domestic carrier, with a much smaller international profile. Although the deal is being presented as a merger of equals, United is acquiring Continental for the equivalent of around $3.2bn in stock. United shareholders will own approximately 55% of the equity of the combined company, which will be known as United Continental Holdings. The two separate fleets will be combined under the United Airlines brand, but United's current logo will be be adapted to incorporate Continental's livery and colours. The company's slogan will be "Let's Fly Together". United chairman & CEO Glenn Tilton becomes non-executive chairman of the merged group; Continental's Jim Smisek is CEO, and will succeed Tilton as chairman at the end of 2012.

Apple announced that it hit the 1m mark in sales of the iPad tablet last Friday, the same day that it launched the higher-spec 3G version of the device, which connects to the internet via the AT&T network. "One million iPads in 28 days," said Apple CEO Steve Jobs. "That's less than half of the 74 days it took to achieve this milestone with iPhone."

WPP's Millward Brown Optimor subsidiary published its updated BrandZ ranking of the world's most valuable brands. The impact of recession on performance and valuation was comparatively slight and the overall value of the Top 100 actually increased by 4% year-on-year. "Many brand leaders", observes the report, "understood and adjusted to new consumer priorities despite the challenging economy." However, some brands did suffer from the downturn, notably financial institutions and automobile manufacturers. But their declines were offset by improvements among technology, beer and fast food brands. The biggest climb was registered by Samsung, whose brand value increased by 80%. Other big risers were Chinese search engine Baidu, credit card companies MasterCard and Visa, British retailer Next, HP, Verizon, Apple, IBM and Sony. Google held onto the top spot with a brand value of over $114bn. See here for the full report.

Oil giant BP is struggling to repair its reputation as well as the catastrophic oil leak that is currently gushing millions of gallons of crude into the Gulf of Mexico, with a huge impact on a massive stretch of the US coastline. A particular target for criticism has been the company's "Beyond Petroleum" marketing campaign. Several commentators have savaged the company for spending too much time and effort on massaging its public image with claims to be the "greenest" of the oil giants and not enough on managing safety. Ever since the launch of that brand message, the company has been castigated for its hypocrisy: it devotes only a minuscule proportion of its operational budget on clean energy resources, compared to the vast sums spent on traditional oil. But BP's record on safety and containment is worryingly shaky. This latest catastrophe comes just five years after the massive explosion at a Texas refinery which killed 15 employees and injured another 200. This time around, say its critics, BP initially gave the impression of being more concerned with limiting the risk of damages lawsuits from fishermen and trying to shift the burden of stopping the leak to the government and other oil companies than it was with communicating openly with the public and the media about the implications from this disastrous spill.

Coors Light surrendered its role as official beer of the US NFL after an eight-year run. In an announcement to wholesalers, MillerCoors said "NFL is a great partner, and we talked extensively with them about the future, but ultimately could not reach agreement about the value of the league sponsorship." Instead, MillerCoors was massively outbid for the next contract, which commences with the 2011 season, by Anheuser-Busch InBev. The global #1 is rumoured to be paying a massive $1bn, more than twice Coors Light's offer, to buy back the NFL badge for its Bud Light brand for a minimum six year contract. Bud Light was the official NFL beer for more than a decade before being replaced in 2002 by Coors Light. 

General Motors unveiled yet another shake-up of its management team, replacing marketing chief Susan Docherty after just six months in that role with Joel Ewanick, widely credited with masterminding the rapid expansion of Korean manufacturer Hyundai in the US during the 2000s. Ewanick left Hyundai in March and had spent the past six weeks as the newly appointed CMO at Nissan, but jumped ship in order to accept the GM offer. He will be the fourth person to hold the top marketing job at GM in the last 12 months. Docherty is being transferred to another, as yet unspecified role at GM.

In other personnel moves, Burger King appointed Natalia Franco as EVP & global chief marketing officer. The position has been vacant since the sudden departure of Russ Klein last year. Mike Kappitt was named last week as CMO for North America and will report to Franco, who was previously VP, marketing & innovation at Coca-Cola. Separately, WeightWatchers named Dave Burwick, formerly a senior marketer at PepsiCo, as its new president for North America.

Denim marketer Levi Strauss confirmed plans to launch a new global brand in China and other Asian markets this Autumn. According to local corporate affairs director Tod Gimbel, in a statement to trade magazine Media, "The [new] brand is designed to appeal to the rapidly growing market of upwardly mobile, youthful consumers. We'll be targeting an educated 18-28 year-olds who covet fashionable jeans, but may not be able to afford jeans in the high end of the market." No further information is available yet, but this will be the first time Levi's has launched a new brand outside its traditional core market of North America. Asia Pacific is, for now, one of the company's smaller regions, but has also been the most stable, unlike North America and Europe where sales have been under intense pressure for several years.

In a further escalation of the crisis facing the traditional video rental market, America's second largest chain Hollywood Video said it would close all of its 2,400 US stores. The company, which filed for bankruptcy in February for the second time in just over two years, had already confirmed the shuttering of half those outlets, which trade as Movie Gallery, Hollywood Video and Game Crazy. It hopes to keep hold of its 180 or so Canadian outlets. The closures may serve to ease a little of the pressure on the global #1 Blockbuster, which has itself threatened it might be forced to file for bankruptcy as a result of the collapse in traditional rentals as a result of competition from mail order company Netflix, automated kiosk service Redbox and on-demand services from cable and online suppliers.

Car rental company Dollar Thrifty looks set to be the centre of a bidding war between its two biggest rivals. Last week Hertz, the global #1, announced an agreement to acquire the smaller company for $1.27bn. This week, #2 player Avis Budget jumped into the fray, saying that it was prepared to make a "substantially higher" offer of its own.

The UK financial regulator FSA forced pensions and insurance specialist Prudential to postpone its massive $21bn rights offering, due this week, because of concerns about the company's underlying capital strength. The Pru needs to raise the money from investors to finance its hugely ambitious $35.5bn acquisition of AIA, the Asian insurance division of struggling US giant AIG. That deal is already considered highly controversial, pushed through by the Pru's inexperienced new chief executive. Its chances of success now look even less likely. If Prudential is forced to cancel its offer for AIA it will almost certainly become a bid target for another buyer.

Jean-Louis Dumas, the patriarch of French fashion group Hermes, has died at the age of 72. During the 1980s, Dumas was largely responsible for resurrecting the business originally founded by his great-great-great-grandfather in the 1830s. The company is still controlled by descendants of Thierry Hermes, and Mr Dumas' son Pierre-Alexis Dumas is artistic director.


In the news this past week: Agencies

UPDATED 7th May: The UK ad industry was left reeling in astonishment this week by the sudden and dramatic collapse of the widely admired digital media agency i-level. The agency had been struggling to cope with the loss of the consolidated digital media account for government advertising coordinator COI, which accounted for as much as 40% of its revenues and half of its profits. Yet few observers had expected i-level's collapse to be so complete. On Tuesday evening, the company's directors took the decision to call in administrators Zolfo Cooper to take over interim management of the business. The following day, i-level's standalone social unit Jam was sold to Engine Group. This morning, Zolfo Cooper made all the company's employees redundant and placed the business in liquidation. Media duties for i-level's remaining clients have been transferred for the time being to other companies, mainly within WPP. Most of the available cash in the business has already been claimed by its preferential creditor and controlling shareholder, the private equity fund ECI, with the result that mediaowners face the prospect of substantial losses on their outstanding bills.

The determining factor in the collapse of i-level appears to be the deal struck two years ago with ECI, which acquired a 60% shareholding in the business, but part-funded that deal by loading i-level with debts of 32m, most of which carried a fixed interest coupon of 12%. As a result, according to Brand Republic's financial consultant Bob Willott, i-level was placed in a position in which it was obliged to earn at least 3m in pretax profits simply to cover its interest obligations. The loss of COI made such a proposition virtually impossible. "The collapse of i-level," comments Willott, "provides a stark warning to all those who believe that selling out to private equity investors at top dollar will provide both a chunky sum of cash to the vendors and a prosperous future for the business they have sold."

WPP was the last of the major marketing groups to report 1Q figures. On a reported basis, revenues fell 1.8% to 2.08bn, slightly above expectations. On a like-for-like basis, excluding currency fluctuations and acquisitions or disposals, performance was flat. Calculated in US Dollars, 1Q revenues were $3.2bn. The biggest rebound, compared to the same quarter last year, was in North America, where revenues rose by 3%. Profit figures were not released. (See last week for figures from the other majors).

The North American arm of media network MPG was left leaderless as a result of the departure of regional CEO Shaun Holliday after just a year in the job. Global CEO Maria Luisa Francoli will take over Holliday's duties until a new chief executive can be found. Meanwhile Marie-Laure Sauty de Chalon, currently regional chief executive for Aegis Media Southern Europe, is leaving the group to take charge of French web portal AuFeminin.com. Her duties at Aegis will be assumed by Nigel Sharrocks, who becomes chief executive for Western Europe. Previously he was responsible for Northern European markets. Separately, Y&R began the search for a new chief executive for its EMEA region. Current head Massimo Costa has announced his wish to give up the role in order to focus on his other role as head of Y&R Italy. Simon Clift, who resigned earlier this year as chief marketing officer of Unilever, has been appointed as a non-executive director of marketing group Engine, parent to WCRS and Partners Andrews Aldridge. Clift also sits on the board of the BBC's commercial arm, BBC Worldwide.

Kraft kicked off a review of its media business in the UK following completion of the takeover of Cadbury. The review is a shoot-out between Kraft's incumbent Starcom MediaVest and Cadbury's agency PHD. Starcom arguably has a slight edge in the contest, since it also used to handle Cadbury until the transfer to PHD two years ago. A review of creative and other agency assignments is likely to follow later in the year.

In other account assignments, Johnson & Johnson called a review of creative for its Johnson's Baby product range, currently held by the Lowe worldwide network and Deutsch. Health insurer Humana appointed Omnicom's Rapp and PHD agencies to take on creative and media respectively in the US. JetBlue Airways appointed Mullen for creative and media. Independent Horizon Media captured the WeightWatchers media account. In the UK, cable giant Virgin Media appointed DDB London and Rapp to take over creative and direct duties from RKC&R/Y&R and Rapier respectively. Dyson called a review of UK media out of Walker Media. For all other appointments, subscribers can access the full Adbrands Account Assignments database here


In the news this past week: Media

According to a new report from investment analysts at Barclays Capital, the big four US broadcast networks are likely to see a 20% increase in upfront commitments on prime-time advertising this year, but the total figure will still lag well behind 2008 levels. Traditionally, in May and June each year the networks pitch their schedules for the forthcoming Fall/Winter season in order to secure advance promises of ad spend from leading clients. That annual ritual, known as the upfront, forms the bedrock for each network's advertising sales, accounting for around three-quarters of inventory. BarCap predicts a total pool of $8.26bn in upfront sales this year, up from last year's dismal $6.88bn, but still below 2008's $8.8bn. CBS is expected to lead with a total of around $2.43bn, followed by ABC with $2.21bn. Fox is the only network likely to beat 2008, with $1.96bn, just marginally above the $1.95bn it took two years ago. NBC is still struggling in 4th place with a forecast of $1.65bn. One significant challenge for all four major networks is keeping the interest of major packaged goods manufacturers such as Unilever, Procter & Gamble and Reckitt Benckiser. Although these three companies have long been regarded as giants of TV advertising, they have become increasingly drawn to non-traditional channels, including digital and branded content or sponsorship.

Time Warner's UK magazine division IPC Media announced a strategic review of its portfolio of specialist magazines, such as Decanter and Cage & Aviary Birds. IPC chief executive Evelyn Webster said "While print remains the engine that drives our business, we are increasingly focussing on accelerating the development of our multi-platform offerings to our consumers. As a result we need to review whether it is desirable for IPC to continue to publish the full range of brands that we currently own. This review may lead us to conclude that we sell some of our smaller titles to publishers where they would have a stronger strategic fit and will therefore benefit from a greater focus."

A similar process has begun at the Washington Post, which put its venerable Newsweek magazine up for sale as a result of falling sales and circulation. The company has suggested that it "might be a better fit elsewhere". The Washington Post has owned the title since 1961, but the magazine has been losing money steadily for the past few years. The sale price is widely anticipated to be nominal, most likely around the same level that Bloomberg recently paid for BusinessWeek: one dollar. However a buyer will need deep pockets to manage Newsweek's debts and running costs.

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Simon Tesler
Publisher, Adbrands