Adbrands Weekly Update 8th April 2010
A weekly round up of key news about 
leading advertisers, agencies and mediaowners
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Please note: Adbrands takes a Spring break next week. Normal service resumes on April 22nd.

Four of our favourite ads this week: 

Nike "Fresh Air"
by Nike/Paul Shearer at Arnold

Nicorette "Films"

Movistar "Connected"
by Y&R Peru

Continental "Nicknames"
by Ogilvy Australia

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

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It was generally a good year for viral April Fool pranks, and several companies got into the spirit of things in a big way. Google's release of a new Translate for Animals app for Android handsets was particularly memorable (here). It has been followed by the release by Motorola of a clutch of virals which purport to reveal secret unlock codes that will allow owners of Android handsets to use their device for a variety of tasks ranging from lining up especially tricky shots in pool to remote-changing traffic lights and calculating girls' bra sizes or whether they're wearing underwear. (See them all here). However, arguably the most lavish was this effort by Nike, working with Arnold London creative director Paul Shearer and production company Great Guns, in which the sportswear giant recruited several of its top endorsement partners to contribute to a film demonstrating where the air in Nike Air trainers comes from.

AMV BBDO is responsible for this clever new spot for GSK's Nicorette inhalers, which reimagines classic movies with the cigarettes replaced. It's nicely done, but ultimately self-defeating we think, because the ad only seems to emphasize the fact that the inhaler version of the classic movie isn't as good as the real thing, even if it's better for you. 

I'm not sure we've ever featured an ad from Peru in Ads of the Week, so a big hand please everyone for Y&R Lima, for this new spot for Telefonica's local Movistar mobile service. Great use of a split screen and also of Peru's distinctive cultural and racial mix.

And finally, an almost archetypically blunt-but-funny Ozzie ad for Unilever's Continental Cup-a-Soup brand, courtesy of Ogilvy Australia. It's hard to imagine any other country where vaguely derogatory nicknames could supply the platform for an entertaining mainstream advertising campaign. Here in the UK or in the US, the Political Correctness police would be down on this ad like a ton of bricks. Enjoy. While you still can!

In the news this past week: Brands & Advertisers

Apple launched the iPad in the US to generally ecstatic reviews from technology journalists and delight among early buyers. More than 300,000 devices were sold on the first day on-sale, although that figure was lower than some expectations and there were no reports of a sell-out. Reviewers were especially impressed with the iPad's ease of use, which they said allowed them to forget entirely about the technology working behind the scenes and simply enjoy the experience of using the device. There were caveats: several journalists commented that the touch-screen keyboard was fine for small amounts of text entry, but impractical for their own needs, which required a plug-in traditional keyboard, sold separately. Another familiar bugbear is that the iPad, like the iPhone, doesn't support Adobe Flash content with the result that Flash-enabled web pages fail to display properly. That shortcoming is more noticeable on the larger device, but Apple hopes to get around it with iPad-specific software Apps. There were also complaints from buyers that the device's wi-fi signal was sometimes patchy. Nevertheless, in most other areas, users were unanimous in their praise. "Apple's iPad has landed," rhapsodised the Financial Times, "and computing might never be quite the same again. In fact, we might have to think of another name for it." Analysts predicted another hit for Apple, but, said one, "not of the scale and scope of the iPhone".

British Airways and Iberia of Spain signed their planned merger agreement. Under the terms of the deal, due to complete at the end of 2010, the BA and Iberia brands will continue to operate separately, but will both be owned by newly created parent International Airlines. BA chief executive Willie Walsh is to lead the enlarged business, which will operate a fleet of 408 aircraft, carrying 58m passengers a year. The deal remains subject to BA being able to resolve the yawning deficit in its pension fund. Iberia retains the right to walk away from the merger if it is not satisfied with the actions taken by BA to plug the gap. Meanwhile, negotiations resumed between BA and the Unite union to avoid further industrial action by cabin crew following two recent walk-outs. In Germany, Lufthansa pilots called off a strike planned for next week. Separately, there were reports that United Airlines and US Airways have reopened talks which could lead to the creation of the country's second-largest carrier. Previous negotiations were abandoned in 2000 as a result of opposition from unions and regulators, and United has also in the past discussed merger with Continental Airlines. The latest talks are regarded by some in the industry as a tactic on the part of United to prompt Continental to return to the table.

Auto giants Daimler, Renault and Nissan agreed a new global partnership, designed primarily to strengthen their respective operations in the small car segment and in light commercial vehicles. Among the various projects covered by the alliance are the development of a shared platform for the next generation of Renault Twingo and a new line of Smart four-seater cars. The companies will also jointly develop components, engines and powertrain technologies for light trucks and electric vehicles, and may also share manufacturing facilities, especially in the US. For example, Daimler could begin production of Nissan's Infiniti luxury range at its US factory. Currently the cars are imported from Japan. The partnership is secured with small equity positions. Daimler acquired 3% shareholdings in both Renault and Nissan, which in return acquired just over 3% of the German group.

Toyota's US sales appear to be rebounding after a plunge in buyer confidence in the first quarter because of the "sticky pedal" recall crisis. However, US regulators don't want the company to get off too lightly, and are pushing for the Japanese manufacturer to pay the maximum fine they can impose for allegedly hiding known faults in the braking system. Currently though the largest possible fine allowed under current law is $16.4m, certainly a significant sum, but a mere fraction of the $1bn or so that the recall is believed to have cost Toyota or the $2.3bn fine levied by the Department of Justice last year on drug company Pfizer to settle charges of fraudulent marketing. GM meanwhile is seeking to make further capital from Toyota's experience, vowing to install an override system in new cars that would cut power to the engine in case of similar brake failures.

Richard Branson sold a 21% shareholding in his Virgin Money financial services subsidiary to US billionaire Wilbur Ross to fund a bid for the network of around 320 bank branch outlets being sold off by Royal Bank of Scotland. The disposal of that network, grouped under the defunct Williams & Glyn's bank brand, was ordered by EU regulators to reduce state-owned RBS's competitive advantage over banks that didn't need to be bailed out with government aid. Wilbur Ross has shareholdings in several US financial services businesses and also backed Virgin’s failed bid for Northern Rock in 2008. He is reported to have paid £100m for the initial shares in Virgin Money, and promised to increase that sum to "whatever amount of money Virgin needs" in order to clinch the deal. Branson hopes to launch a high street presence for Virgin Money, but he faces stiff competition for these outlets from other bidders, not least Santander, which would use the additional branches to expand its already sizeable UK presence. Other companies bidding are Santander's Spanish rival BBVA; National Australia Bank, which owns Clydesdale Bank in the UK; and private equity firm JC Flowers. A decision is expected in May, but not before the UK's general election. RBS is also selling off its global merchant services division which processes credit card payments under the WorldPay and Streamline brands, and that business is understood to have received as many as a dozen separate bids this week.

Two of America's biggest advertisers, PepsiCo and Anheuser-Busch InBev, have pooled their domestic advertising budgets, which totalled almost $1.2bn last year, in order to negotiate bulk savings from mediaowners. According to AdAge, the landmark deal has evolved from a joint purchasing agreement signed last year, which was designed to reduce expenditure on areas such as travel and office supplies. A PepsiCo spokesman told AdAge, "It's a way to allow both companies to purchase media more effectively and efficiently and reinvest savings in our businesses." An AB InBev spokesman told the magazine that the individual companies would continue to handle their media planning separately but, after that, "a team of executives from each company will review plans and priorities, focus on common areas of spending and negotiate purchases on behalf of both companies." PepsiCo and AB InBev are both aligned mainly with Omnicom Group companies, although AB currently manages most of its media-buying inhouse.

In new appointments, MasterCard named Alfredo Gangotena as its new global chief marketing officer, replacing Larry Flanagan who is retiring. Gangotena was previously head of products & solutions at MasterCard Europe. Gill Barr was named as head of marketing for MasterCard UK, reporting to regional marketing chief Rita Broe. GlaxoSmithKline appointed Emma Walmsley as president, consumer healthcare Europe, and said she would replace John Clarke within the next two years as head of the global consumer healthcare business. Walmsley was previously the highly regarded head of L'Oreal's operations in China. 

Outgoing Unilever CMO Simon Clift gave a final interview to the Financial Times, in which he warned of the difficulties facing advertisers in adapting to a fast-changing marketing environment quickly being dominated by social media. There is he said "a lost generation" of marketers who have no innate understanding of social networks. "If you are 25 or 20, you know this stuff – you are brought up with Facebook and YouTube. If you are 50, you see your kids do it." But the generation which currently manages most global brands falls between those two stools: people aged between 30 and 45 who "grew up after it and haven't seen their kids doing it". They need to be taught the meaning of social media, almost from scratch. "We are all learning," says Clift. "Unilever is ahead of much of the competition but behind consumers, which for marketers is not a comfortable place to be."

In the news this past week: Agencies

Springer & Jacoby, once Germany's most admired advertising agency, has closed its doors after struggling for months to avoid bankruptcy. The agency's reputation peaked at the end of the 1990s, largely as a result of its management of the global Mercedes account, and it sold a minority stake to Interpublic in 2000 to fund further expansion. However, performance went into slow but steady decline over the next few years as the agency's creative output weakened and key managers drifted away. This culminated with the loss of the Mercedes account in 2006. The business was eventually rescued by marketing entrepreneur Lutz Schaffhausen, but despite his best efforts and a substantial cash investment, the gradual erosion of the business continued, even threatening the other units of his Avantaxx marketing group. The closure of S&J finally draws a line under these problems. 

The Financial Times pondered the strategy of French investor Vincent Bolloré, who six years ago took the decision to diversify his holdings, then primarily in paper manufacturing and freight. Instead, he leapt into the media and advertising sector, spending substantial sums on the launch of cable and publishing interests and to become the largest shareholder and chairman of Havas, as well as the largest shareholder in Aegis. "Was it worth it?" asked the FT. Despite Bolloré's 30% stake in Aegis, he has consistently been denied board representation there, effectively blocking a merger with Havas, which was presumably his goal. "Compared with his other ventures, or indeed with rival media companies, [these] have not been productive investments," said the FT. "Havas's shares now change hands at about the same price they were when Mr Bolloré started buying in 2004. Since their peak in 2005, when he became chairman, they have shed almost 30% of their value. By contrast, shares in French rival Publicis rose 35% over the same period. Aegis has only performed slightly better: its shares are up 25% since Mr Bolloré bought his first chunk in 2005, but are about flat compared with his average entry price."

In a continuing consolidation of its Razorfish and Digitas global networks, Publicis Group folded the UK outpost of Razorfish-owned digital agency Duke into the local office of Digitas, to strengthen the latter agency.

Verizon is to shift creative for its wireless account to Dentsu-owned McGarryBowen and has also called a review of its Fios cable TV business. Both accounts are currently held by McCann New York. AdAge called the move "a devastating setback" for McCann. McGarryBowen lost the Verizon account to McCann a couple of years ago, but was called back last year to handle the launch of the wireless company's Droid phones, the success of which appears to have prompted the latest move. However other Interpublic units, including Hill Holliday, MRM and R/GA also hold large chunks of Verizon's account and these appear to be unaffected by the transfer of creative. A Verizon spokesman sought to play down the shift, telling Adweek "We are moving some of our advertising to McGarryBowen but McCann Erickson will continue to be one [of our roster shops]". In a research note, Deutsche Bank's Matt Chesler said "To be certain the account loss(es) stings, but the situation is far from 'devastating' as characterized by the trade press. The business in question is roughly 10-20% of the overall Verizon relationship [with Interpublic], with other IPG agencies continuing to do significant work for the client. In other words, IPG's relationship with Verizon is multi-faceted, there is no indication that other parts of the account are in jeopardy, and it is not out of the question that MRM and/or R/GA might simultaneously be growing their relationship with IPG, which could partially cushion the negative impact."

In other account assignments, Kraft is to move US creative for Planters Nuts from Draftfcb to TBWA\New York. The agency plans to establish a separate unit to handle the business to avoid conflict with mainstream client Mars. Struggling handset manufacturer Palm dropped indie agency Modernista and is seeking a new agency for its creative account. Valspar paints called a review out of Euro RSCG Chicago because of a conflict with Dulux paints, held worldwide by Euro RSCG London. US restaurant chain Boston Market shifted from Fallon to TBWA's Zimmerman & Partners. In the UK, Adam & Eve was awarded the creative account for Foster's lager, beating incumbent M&C Saatchi. For all other appointments, subscribers can access the full Adbrands Account Assignments database here

In the news this past week: Media

AOL said it is seeking a buyer for Bebo, the social networking service it acquired for a lavish $850m in 2008. After rapid growth during the mid-2000s, Bebo has seen its market position eclipsed over the past few years by the unstoppable growth of Facebook, with the result that AOL is unlikely to recoup more than a fraction of the inflated price it paid for the business. In a note to employees, AOL management admitted that "Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space. AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking." If no buyer can be found by the end of May, Bebo will be shut down. AOL is also divesting instant messaging service ICQ. That unit has attracted several bidders including internet companies from Russia and China.

Sports broadcaster ESPN expanded its presence in the UK by securing mobile phone rights for recorded highlights from all Premier League football matches for the next three seasons. It replaces satellite broadcaster Sky, which has held those rights for the past three years. ESPN entered the UK market last year when it picked up live TV rights for a selection of Premier League matches from failed broadcaster Setanta. It subsequently added to its offer with rights to broadcast rugby union's Guinness Premiership. At face value, the latest deal strengthens the competition between ESPN and Sky, but in fact the two companies maintain a friendly relationship. ESPN has tasked Sky's ad sales team with selling its advertising.

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Simon Tesler
Publisher, Adbrands