Adbrands Weekly Update 11th November 2010
A weekly round up of key news about 
leading advertisers, agencies and mediaowners
 
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RECENTLY ADDED PROFILES

Procter and Gamble

Starcom MediaVest

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MediaEdge:CIA

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ZenithOptimedia

Come and see us on Facebook! You don't have to wait until Thursday for our Ads of the Week. We now post all our favourite ads, not just the top four, on Facebook on a daily basis, as well as a selection of interesting news stories from other media. Come and have a look.

Four of our favourite ads this week: 

Planters' Nuts "Naturally Remarkable"
by Being New York

Volkswagen "Last Tango"
by DDB London

Land Rover "Claynation"
by RKCR/Y&R London

American Express "Curtains"
by Ogilvy New York

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

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.

Robert Downey Jr adds a new super-hero role to his fast-expanding list. Iron-man. Sherlock Holmes. And now perhaps the greatest hero of all: Planters' Mr Peanut. Here's a great seasonal ad from TBWA satellite agency Being New York, working with animation house Laika (best known for the movie Coraline). You have to watch this a few times to catch all the intricate detailing of the background animation. Wonderful stuff. 

Superstar commercials director Jonathan Glazer returns to the fold at DDB London to helm this stunning spot for Volkswagen. The ad features world Tango champion Gasper Godoy and his partner Manuella Rossi, also the world #2. The music is 'Don't Stop' by Roc C.

Another week, another ad of the week from RKCR/Y&R, who seem to be churning out one great ad after another at the moment. Their new spot for Land Rover offers an almost hallucinatory world of pleasure constructed from clay. How about that bit where the guy morphs into a moose? Lovely, but also just a little scary.... 

And finally, US talkshow host Conan O'Brien launched his new cable chat show this week (for more on this see below). Just one of things he's been up to over the past nine months off-air is making this great ad, another in the long-running series from Ogilvy New York, in which celebrities are persuaded to play up to or against expectations to illustrate the advantages of being an American Express cardholder. Enjoy! 

A few other ads just missed the final cut, including McCann Madrid's festive global spot for Coca-Cola, a witty print campaign from Grabarz & Co for Ikea in Germany, DDB Canada's high-speed flickbook for Subaru, Publicis Mojo's celebration of male primitivism for Speight's beer, and a charming spot from McCann Paris to launch Nestle's Special.T tea-making system in France. Come and see them here on our Facebook page.


In the news this past week: Brands & Advertisers

The UK Government is considering plans to replace the state-controlled marketing body COI with a private organisation along similar lines to the US Ad Council. According to Brand Republic, this is one of a number of options under review in order to reduce the cost burden on British taxpayers from government advertising. Another is a switch from commission-based payments to agencies to a performance-related system. COI's marketing budget has already been slashed dramatically by the new administration. Although the US Government still funds advertising in areas such as defense, drug control and security, most other public service messages are coordinated by the Ad Council, an independent not-for-profit company, on behalf of other charitable bodies. Unlike the UK, where this sort of advertising is still generally paid for with hard cash, American advertising agencies customarily donate their time "pro bono" and airtime is provided free of charge by mediaowners. A move in this direction would no doubt be welcomed by British charities who, like the Government, also currently pay for much of their advertising, albeit often at discounted rates. By contrast, much of the US marketing for causes such as children's issues, homelessness, preventative health and disability awareness - all of which have to be paid for in the UK - is also donated and coordinated by the Ad Council.

Starbucks and Kraft clashed swords after the coffee bar giant announced its intention to terminate their longstanding partnership. For more than a decade, Kraft has held the license to sell Starbucks-branded packaged coffee through North American grocery retail channels. Buoyed up by the apparent success of its Via instant product (which is distributed by a different and very much smaller partner), Starbucks now wants to take back control of the main packaged coffee business as well. Kraft issued a frosty public statement reminding its erstwhile pal that the distribution contract is "perpetual" and that it would expect to receive payment of "the fair market value of the business plus... a premium" should Seattle choose to pursue a dissolution. Kraft told analysts the business was currently worth around $500m a year. Starbucks' decision followed a strong improvement in performance after a couple of dismal years. Total revenues for the year ended September 2010 rose almost 10% to a record $10.7bn, helped along by a 7% increase in comparable US store sales. (That compared to a 6% decline during 2009). The final quarter delivered a particularly impressive 15% lift in US sales, and 21% from international outlets. Net income for the year leapt 142% to $946m.

Elsewhere in the food industry, Nestle is one of several potential buyers said to be evaluating the purchase of a 50% stake in global dairy brand Yoplait. Currently the business is jointly owned by French dairy cooperative Sodiaal and private equity group PAI Partners, and then licensed out to local producers around the globe. PAI is expected to put its shares up for auction later this month. Nestle is considered one of the favourites to bid, largely because it is sitting on a massive cash pile generated by its sale of Alcon earlier in the year. Other potential buyers include General Mills, the US licenseholder for Yoplait, and French group Lactalis. All three companies are already connected: Nestle and General Mills have a worldwide joint venture to market cereals; while Nestle and Lactalis are partners in a chilled dairy joint venture in Europe.

The Wall Street Journal reported on early stage discussions between Danone and Japanese beverage group Kirin over the possible transfer of the French group's global bottled water business. Kirin is already Danone's local partner in Japan for distribution of Evian and Volvic and is keen to broaden its international coverage. Its rivals Asahi Breweries and Suntory are also known to be hungry for international assets than would expand their worldwide presence. However Danone is unlikely to part with the water business unless offered an exceptional deal. 

A US court rejected the claim by private equity group Terra Firma that it had been duped by Citigroup over negotiations to acquire struggling music major EMI. Terra Firma's principal Guy Hands claims that Citi falsely encouraged him to believe that a rival fund was negotiating to buy the business, with the result that he paid a higher price than necessary for EMI. Since then, the record company's performance has slumped - largely as a result of a badly managed restructuring which alienated many of its most important artists - and it is poised on the precipice of a default on the money it borrowed from Citi to fund the deal, a sum now approaching $5bn. Default would allow Citi to seize control of EMI and sell it on, most probably to another client, Warner Music. This year, Hands was able to persuade his investors to cough up another GBP 100m of capital to ward off that threat. The court's ruling, however, will make it much harder for Terra Firma to repeat that trick next March, when another potential default looms. As the Financial Times commented, "Mr Hands' error in going to court extended beyond the fact that his case was thin, for it also made him look incompetent. Investors had placed money with him to make his own judgments on which companies to buy, and at what price, not to depend on getting information about rival bidders."

Unilever reported strong quarterly results, with 3Q revenues jumping by 13.2% to E11.5bn on strong growth in emerging markets. The organic increase, stripping out currency fluctuation and acquisitions, held firm at 3.6%, the same as the previous quarter. However profits for the quarter jumped 24% to E1.75bn, as a result of pricing increases and cost-cutting. The improvement in sales was in line with other packaged goods groups. P&G reported a similar organic increase in revenues for the quarter, but only a 2% rise in like-for-like earnings because of rising commodity costs.

Adidas announced a bold set of targets for future growth. Encouraged by a 20% increase in 3Q reported revenues (10% excluding currency fluctuation) in the wake of the 2010 World Cup, the company vowed to increase annual  revenues by up to 50% over the next five years, reaching E17bn by 2015. Group sales for full year 2010 are expected to weigh in a t around E11.5bn. Adidas also set itself the goal of establishing its secondary brand Reebok as the leading name in fitness and training. That task would have seemed all but impossible two years ago, but Reebok's performance has improved dramatically as a result of its launch of EasyTone firming trainers. 

The slow but steady breakup of packaged foods conglomerate Sara Lee Corporation continued. This week, the group announced plans to sell its substantial fresh bakery business in North America to Mexicos' Grupo Bimbo. The sale includes more than 40 bakery plants spread across the country, as well as a license to market fresh bread under the Sara Lee name. The company will keep hold of the heritage frozen cheesecake and poundcake unit from which its name originates. Price tag on the sale is $959m. Sara Lee Fresh Bakery generated sales of $2.1bn in its most recent financial year. 

General Motors reported its best quarterly results since all but imploding last year. For 3Q the recovering giant reported net profit of $2bn, bringing its total profit for the last nine months to $4.1bn. Revenues for the quarter hit $34.06bn, compared to $25.2bn last year. That's an impressive comeback, but the group still lags behind arch-rival Ford, which has earned $6.4bn in the year to-date. However, GM's most encouraging stat is the bounce in margins. The company made an average profit of $3,005 on every vehicle it made in North America during 3Q. That was well ahead of its main rivals. Ford averaged a profit of $2,710 per vehicle, while Chrysler made just $593.

Amazon continued it s push into new markets through acquisition, agreeing to pay $545m for Diapers.com, the largest US online retailer of diapers (or nappies), and other baby products. The price tag is equivalent to close to twice Diapers.com's forecast revenues this year. That deal follows the ecommerce giant's acquisition last year of shoe and accessories retailer Zappos for $1.1bn.

There was no pause in the soaring growth of UK discount clothing retailer Primark. Revenues for the year ending September 2010 jumped by 18% to GBP 2.7bn, while operating profits before exceptionals leapt almost 36% to GBP 352m, despite the steep rise in the price of cotton. The group is now the UK's biggest clothing retailer by volumes. 

Steve Easterbrook, the former head of McDonald's UK who transferred to a US-based role as chief global brand officer earlier this year, is on the move again. Following the resignation of McDonalds Europe head Denis Hennequin, Easterbrook is heading back across the Atlantic to become regional chief. 

General Motors' UK auto division Vauxhall was reported to be in exclusive talks to succeed Nationwide Building Society as the lead sponsor of the England football team. 

The Canadian media were in fine voice this week, celebrating the selection of their nation as the world's top country brand for the first time, in this year's Country Brand Index compiled by Interpublic's FutureBrand. Last year's #1, the US, was relegated to the #4 position behind past victor Australia, in 2nd place, and New Zealand at #3. Rounding out the top 10 were Switzerland, Japan, France, Finland, the UK and Sweden. Now in its 6th year, the CBI is compiled from a survey of around 3,400 business and leisure travellers across five continents. Individual countries are ranked in numerous different categories in areas such as tourism appeal, quality of life and value systems. Canada's rise to the top spot is largely the result of its extremely successful hosting of this year's Winter Olympics, while the fall from grace by the US was blamed by FutureBrand chief strategy officer Daniel Rosentreter on the backlash from last year's 'Obama Effect'". "What we've seen this year," he said, "is the shine may be off. Obama hasn't delivered what the world expected." 


In the news this past week: Agencies

Crispin Porter & Bogusky scored something of a coup this week by poaching TBWA's global strategy officer Suzanne Powers. She will take up the same role in a new CPB office in New York, and will be responsible for developing the fast-expanding agency's worldwide presence. In a statement she said, "In this role, I'm lucky enough to get to work with an extremely talented group of people to take one of the most iconic agency brands and help that brand travel in a way that will unleash creativity and ideas across borders."

Everyone's going to Brazil. Latest ad brand to carve out a corner in this fast-expanding market is Wieden & Kennedy, which has opened its newest outpost in Sao Paulo. W&K have poached Brazilian creative director Icaro Doria from Goodby Silverstein in San Francisco and Andre Gustavo Soares from the local Saatchi office to run the new shop.

It was a case of win-some, lose-some for Draftfcb. The German trade press announced a decision by Beiersdorf to consolidate global advertising for its flagship Nivea brand with the network. That business has been split for the past 20 years or so between Draftcb (and before that FCB) and TBWA. The latter is expected to remain on the Beiersdorf roster, but in a much smaller role. However, at the same time, Draftfcb also suffered the loss of  four more accounts from another key client, Kraft. Jello-O moves to Crispin Porter Bogusky, and Cool Whip to The Martin Agency. Steak sauces A1 and Bull's Eye are also leaving Draftfcb, but their new home has yet to be named. 

In other account assignments, Mindshare was reappointed as the global media agency for German airline Lufthansa after a review; Nestle charged Publicis with launching its Maggi culinary brand in the UK; and Fallon London resigned its place on the Innocent roster after being more or less sidelined to the smoothie manufacturer's fruit juice and veg pot business. The main smoothie account was recently awarded to RKCR/Y&R. For all appointments, subscribers can access the full Adbrands Account Assignments database here


In the news this past week: Media

Perhaps acknowledging the scale of the task ahead if it remains independent, AOL has formally appointed financial advisors to explore strategic options, the phrase often employed when a business puts itself up for sale. High on the list of these opportunities will be a potential merger with - or more likely sale to - that other dinosaur from the first internet boom, Yahoo. However, these days, there's quite a difference between the two companies, at least financially. Based on closing share prices last Friday, AOL has a current market capitalisation of around $2.7bn, while Yahoo's - even after all its own well-publicised troubles - is almost ten times higher at almost $21.9bn. Research from ComScore suggests a similar imbalance between the two sites' users. In simple terms, most AOL users are already regular users of Yahoo (but not vice versa). ComScore estimated that, on the basis of September 2010 figures, the bolt-on of AOL's users would only increase Yahoo's audience by about 10%, a very modest figure. That leaves Yahoo with very little incentive to do any sort of big financial deal for AOL.

Talkshow host Conan O'Brien made a triumphant return to American TV screens this week with the launch of his long-awaited show on Time Warner's TBS cable channel. O'Brien was very publicly ousted from NBC's flagship Late Show at the beginning of the year after a row with the network over scheduling conflicts with his predecessor and stablemate Jay Leno. One condition of his departure from NBC was that he was barred from launching a new vehicle until now, and his new show poked plenty of fun at how he has filled his time over the past nine months as well as his supposed demotion from network TV to the "wastelands" of cable. A long and entertaining opening sketch portrayed him as accepting an offer from basic cable only after he has lost interim jobs as a children's entertainer and as a server in Burger King. "I've dreamed of being a talk-show host on basic cable ever since I was 46," he joked on-air. In truth of course, the once-derided world of cable TV is rapidly developing a reputation - and even sometimes an audience - to match the main networks. O'Brien's debut on Monday night actually attracted more viewers than either his former sparring partner Jay Leno, now back in the Late Show seat at NBC, or CBS rival David Letterman. O'Brien won around 4.2m viewers, compared to 3.5m for Leno and 3.4m for Letterman. He also crucified cable competitors Jon Stewart and Stephen Colbert, whose ratings on Comedy Central dropped by 20% to 1.3m and 1m respectively.

Web-based video-on-demand service Hulu released some preliminary financial details as the prelude to an IPO, expected early next year. Addressing a media conference, CEO Jason Kilar revealed that Hulu's revenues for 2010 were likely to hit $240m, up from $108m last year, and that the service attracted 30m users during October and served 800m video ads. Hulu's main rival YouTube is expected to generate around $500m in revenues this year, and has an audience of around 140m users a month.

Cathleen Black, former president of Hearst Magazines, is to leave the industry to take up a new role as chancellor of New York City Schools, reporting to Mayor Michael Bloomberg. Black stepped down from the president's role at Hearst earlier this year, becoming chairwoman. In her new role she is once again setting precedent, becoming the first woman to head the nation's largest school system. Previously, she was the first woman to lead Hearst Corporation's magazine division in and in 1979 was the first female publisher of a weekly consumer magazine, when she took the helm at New York. Her predecessor as schools chancellor, the attorney Joel Klein, is joining News Corporation as EVP and special advisor to Rupert Murdoch.

Satellite broadcaster Sky has hit its January 2011 target of 10m subscribers almost two months ahead of schedule. It originally set itself that goal in August 2004 when it had only 7.4m subscribers. At the same time, Vince Cable, the UK Government's secretary for business, has intervened in News Corporation's proposed full takeover of Sky, referring the deal to the country's broadcast regulator for investigation. That could delay News Corp's plans by as long as a year at best, or block them altogether.

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Simon Tesler
Publisher, Adbrands