Adbrands Weekly Update 14th October 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: 

Windows Phone 7 "Really"
by Crispin Porter & Bogusky

Costa Coffee "Monkeys & Typewriters"
by
Karmarama

Ikea "Kitchen Party"
by Mother

Stella Artois "Apartomatic"
by
Mother

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

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Microsoft has launched what it calls "the biggest TV marketing campaign in the history of the mobile business" to promote its new Windows Phone 7 operating system, which will debut next month on more than 60 new handsets from multiple different manufacturers. Crispin Porter & Bogusky produced the two launch ads. Both are great, and quite different from each other. See the other here. According to Todd Peters, corporate VP for Microsoft's Mobile Communications Marketing Group, "the campaign is built on a consumer insight that we believe will really resonate with people: as a society we're spending more time heads-down with our phones than we are interacting with the people we're sitting right in front of. When people see the ads for the first time, it's amazing how much self-recognition there is - that sense of 'I have totally done that.'" Very true, but it will be interesting to see just how Microsoft plan to make money out of a phone system people don't want to use all the time...

Hello Karmarama, and welcome to Ads of the Week. This London indie shop is going from strength to strength, and the new spot for leading UK coffee chain Costa is, we think, their best ad to-date. Nice idea, and great execution. And that baboon is a star! 

I never thought much of Jona Lewie's rather mawkish hit singles back in the 80s - yes, I'm that old - but 'You'll Always Find Me In The Kitchen At Parties' is just perfect for this new spot by Mother for Ikea, in a new version by mockney boy band Man Like Me. That beardie on the keyboards - oldest bloke at the party in fact - is none other than Lewie himself. Ah, bless.

And finally, another elegantly retro spot for Stella Artois by... yes Mother again. We don't normally like to feature two ads by the same agency in a single week, but frankly, in this case, how could we not? Adding to the lustre on this particular spot is the fact that it's co-directed by cult faves Wes 'Rushmore' Anderson and Roman 'son of Francis' Coppola.


In the news this past week: Brands & Advertisers

Proving yet again the power of social media in modern marketing, clothing giant Gap was forced to scrap its new logo after a substantial backlash from online customers. The new Gap logo, designed by the store's creative agency Laird & Partners, received a soft launch online last week on the Gap.com website. Instead of the familiar serif typeface inside a blue box, the new design was more modern-looking sans-serif Helvetica, black on a white background, but with a small blue box overlaid in the corner. The reaction across cyberspace was swift and almost entirely negative. Gap attempted at first to backtrack, telling its Facebook followers that this was in fact only the first stage in a new crowd-sourcing exercise in which Gap customers would be invited to design the new logo. However most followers were quite clear that they weren't interested in a contest, just getting back the old design. Marka Hansen, the brand's North America president, conceded defeat mid-week. "We've been listening to and watching all of the comments this past week," she said. "We heard [customers] say over and over again they are passionate about our blue box logo, and they want it back. So we've made the decision to do just that - we will bring it back across all channels." She also acknowledged that the company had failed to take the "opportunity to engage with the online community" when it introduced the new design. "There may be a time to evolve our logo," she said, "but if and when that time comes, we'll handle it in a different way."

Nike has inflicted a devastating blow to struggling sportswear rival Reebok, owned by Adidas, by poaching the contract to become official uniform supplier to the US National Football League from 2012. Reebok has held the NFL contract for the past ten years. However, Nike reportedly upped its bid from the $25m a year paid by Reebok to around $35m. In return it secured rights to supply all on-field apparel, as well as sideline personnel apparel and fan gear. Adidas had already said that the potential loss of the contract wouldn't "make or break" the business. However Citigroup analyst Kate McShane estimated in an investor's note that sales of NFL-related apparel account for as much as $350m of Reebok's $565m in US apparel revenues.

Easyjet settled its acrimonious three-year battle with estranged founder Sir Stelios Haji-Ioannou by agreeing to pay a royalty for use of the "easy" brand. The payout is expected to be just under GBP 4m next year and almost GBP 5m in 2012. In return Sir Stelios accepted a revision of his original agreement with the airline, allowing it to derive more of its revenues from activities not directly related to air travel, such as hotel bookings and car hire.

Drugs giant Pfizer went shopping again, agreeing to acquire King Pharmaceuticals, a specialist company which makes high-strength opioid painkillers, for $3.6bn. Meanwhile, according to new forecasts from researcher IMS Health, China will overtake Germany this year to become the world's third largest prescription drug market, with sales of $42bn. Unlike other developing markets such as India and Brazil, the Chinese government has encouraged pharmaceutical companies to maintain higher Western-style pricing for drugs, because it is more likely to foster the growth of local producers. Meanwhile, Germany is expected to register sales of $38.7bn. Both countries lag far behind the global #2 Japan (at $93.2bn) and the clear leader, the US, with sales forecast at $301.3bn. Rounding out the top ten by sales are France at $37.8bn, followed by Italy, Canada, Brazil, Spain and, in a lowly 10th place, the UK.

Swirling deal rumours have been keeping the financial markets busy in recent days. At the end of last week, Adobe, makers of the web application Flash as well as Photoshop and Acrobat, saw its share price surge by 11% following reports in the New York Times that the company had held informal takeover discussions with Microsoft. Adobe was until recently seen as a more likely potential partner for Apple than for Microsoft, but the two have fallen out this year as a result of Apple's decision not to support Flash on its iPhone and iPad devices. This week it was the turn of Avon, which rose by a more modest 3% on Tuesday, following publication of a story that L'Oreal is planning a $19bn bid for  the long-established direct-seller. The deal would make sense: Avon has a strong position in Latin America and Asia Pacific, two regions in which L'Oreal wants to bolster its presence. However some analysts voiced their doubts over whether such a tie-up would be wise. L'Oreal has no experience in direct sales, and is still having trouble digesting its acquisition of the Body Shop retail chain four years ago.

Travel operator Thomas Cook merged its high street retail business in the UK into a newly formed joint venture with The Co-operative Group to create a new travel agency giant with more than 1,200 stores and around 4.3m customers. The two chains will retain separate branding for now, but will be jointly owned, with Thomas Cook taking a majority 70% stake to The Co-op's 30%. Currently Thomas Cook has just over 800 stores to Co-op Travel's 400. The new venture doesn't include Thomas Cook's online or holiday tour operations.

Panasonic is to make a late entry into the videogame business, possibly in time for this holiday season, with the launch of a new handheld online gaming device named Jungle. A low-key teaser website (Welcome To The Jungle) has launched in the US, without Panasonic branding but promising a device with "a kick ass display, touch pad, keyboard and other gaming controls". Users are invited to sign up for further details, but no date is mentioned for launch. Panasonic's last venture into gaming was in the 1990s with its high-priced 3DO console system. That was quickly eclipsed by rivals Sega and Nintendo. This return, if its materialises, could prove even riskier, since competition in the handheld sector is fiercer than ever before.

Film and TV producer Lions Gate, best-known for Mad Men and the Saw movie series, has offered to take control of former studio giant MGM, which is balanced on the edge of bankruptcy as it struggles to refinance $4bn of debt. Under the proposal, Lions Gate would take over control of MGM, and the resulting business would be jointly owned by MGM's creditors and current Lions Gate investors. Carl Icahn, the activist shareholder who has stakes in both companies, gave his support to the deal. However, MGM's board prefers an alternative arrangement which would combine the studio with a rival production company, Spyglass Entertainment, that has a more established reputation for non-genre movies. Recent releases include Dinner For Schmucks and Get Him To The Greek.

Google's next big launch could be nothing at all to do with the internet. As reported in the New York Times last weekend (and it wasn't April 1st), the company is experimenting with cars that drive themselves without the need for any direct intervention by passengers. The vehicles use artificial intelligence software that is able to sense nearby objects and mimic the decisions made by a human driver. Seven test cars have so far driven 1,000 miles without any human intervention, and a total of 140,000 miles with only occasional assistance. "One even drove itself down Lombard Street in San Francisco," reports the NY Times, "one of the steepest and curviest streets in the nation." The biggest argument in favour of such a vehicle is of course safety. "Robot drivers react faster than humans, have 360-degree perception and do not get distracted, sleepy or intoxicated". This is not by any means Google's only non-traditional sideline. Also this week, it pledged to invest tens of millions of dollars in a new project to build wind energy turbines off the US East Coast, and also launched the first Google Price Index, which uses vast amounts of data compiled by its shopping comparison service to compile an index of inflation on everyday consumer items.


In the news this past week: Agencies

Red faces at Ogilvy New York this week, following the leaking to industry blog Agency Spy of an internal all-staff memo from Lars Bastholm, chief creative officer NY and chief digital officer North America. "I just checked out the recent digital launches from Ogilvy New York," wrote Bastholm. "Six websites in all. To be frank with everyone, it left me with a migraine and the beginnings of a depression. To be even more brutally frank, it's simply not good enough. I know that much of it is done for difficult clients, and I'm sure many great ideas died on the way from conception to reality. But when the level of quality across the board is downright disturbingly bad, then it is institutional and I have to attribute it to an internal lack of understanding of what makes for good digital work in 2010. This gives me cause for great concern." Among other things, he critiques "dull, boxy and uninspiring" design, the lack of "fun and rewarding" experiences that users will share and talk about, and technical errors. Bastholm doesn't identify the creative teams responsible for the bad work - "I'm sure you know who you are" he says - but finishes with a clear warning: "The status quo is not acceptable and will have to change. One way or another." Amazing how the strategic use of a full stop can be so menacing.

Not to be wholly eclipsed by Publicis Groupe's swoop on Brazilian agency Talent last week, WPP announced its own new venture in that country. It has signed up soon-to-retire Brazilian soccer legend Ronaldo as its partner in a new sports marketing venture to be named 9ine. Though headquartered in Sao Paulo, 9ine is expected to develop a global reach and will offer services including branded events, activation, public relations and other marketing and communications activities.

Interpublic announced a significant additional investment in Huge, the New York digital agency in which it acquired a controlling stake two years ago. That will fund the launch of new offices in Brazil, China, Singapore and Japan, to join recently established outposts in London and Stockholm. At the same time, though, founder and CEO David Skorna is leaving the shop, along with head of technology Sasha Kirovski. Aaron Shapiro steps up to become CEO in Skorna's place. Huge is rapidly becoming one of Interpublic's most highly regarded digital subsidiaries, developing a global reputation to match sister digital agency R\GA.

Engine Group, the UK marketing services group behind WCRS and Partners Andrews Aldridge, has sealed a deal with private equity firm HIG Capital to fund expansion into the US, Brazil and China. Engine has secured an initial investment of GBP 32.5m, with an option to draw down an additional GBP 30m at a later date. In return, HIG will acquire a holding of up to 40% in the business. The investment also allows existing Engine investors, including around 200 employees, to cash in part of their own stakes. "We are hungry for capital, we have some really interesting development plans internally," said Engine chairman Peter Scott. "HIG joining us means we can hit the accelerator on our plans to take this group international."

Frank Dopheide, chairman of Grey Group in Germany, is to leave the agency at the end of the year and join independent group Commarco, parent to Scholz & Friends and Lowe Deutschland. Dopheide will lead the launch of a new unit within Commarco, under the name Deutschen Markenarbeit.

According to Ad Age, ExxonMobil is gearing up for a full review of global creative and media for its corporate, fuels and lubricants accounts. The business is currently split three ways between Interpublic's McCann and UM, Omnicom's DDB and OMD and Havas's Euro RSCG and MPG. In the US, Yahoo named MediaVest as its new media agency, replacing Mindshare. No news yet on who will win Yahoo's international media, though it's probably a safe bet to assume it will be StarcomMediaVest. Major League Baseball appointed Hill Holliday to manage creative. In the UK, it was a case of another week, another win for VCCP, which picked up Coors Light beer. Lloyds TSB bank called a review of direct marketing, out of Rapier. Innocent appointed RKCR/Y&R to handle advertising for its smoothies; Fallon London keeps hold of veg pots and orange juice. In Australia, brewery giant Lion Nathan cut its creative roster in half, dropping Saatchi & Saatchi and Host from the list and consolidating its brands, which include Toohey's, Hahn and XXXX, with BMF and Publicis Mojo. For all appointments, subscribers can access the full Adbrands Account Assignments database here


In the news this past week: Media

The Wall Street Journal reports today that AOL and private equity funds Blackstone and Silver Lake have held preliminary discussions about joining forces to buy Yahoo. That story caused a late surge in Yahoo's share price last night, despite the fact that the talks are still at a very early stage and may not result in a formal approach, let alone a deal. AOL and Yahoo are both struggling to find a new niche in an internet environment that has changed significantly since their heyday. Yahoo, in particular, is seen as the weaker of the two brands. Despite improvements in profitability under new CEO Carol Bartz, the company has lagged behind its rivals in advertising growth, and was recently hit by a new wave of senior management departures.

Under pressure to cut costs, the BBC announced the departure of several senior executives, including its effective #2, deputy director general Mark Byford and director of marketing Sharon Bayley. Creative director Alan Yentob is also expected to leave. Meanwhile, News International, the UK newspaper publisher arm of News Corp, appointed Katie Vanneck-Smith as its first group chief marketing officer. She was previously head of the group's customer direct division. Separately, Microsoft Advertising, the division of the software giant which supervises its advertising sales, has appointed Marc Bresseel as its first VP, global marketing. He will be responsible for developing partner relationships across all properties, but especially Bing, Xbox and Windows Phone 7. He reports to Carolyn Everson, corporate VP for global ad sales and strategy.

Toymaker Hasbro finally launched its US cable channel The Hub last weekend, with programming aimed at boys aged 6 to 12, the demographic which already makes up the company's largest customer group. The new venture is a joint venture with Discovery Networks, replacing their Discovery Kids channel, which has distribution to around 60m US homes. The new channel offers shows based on key Hasbro brands such as GI Joe, Transformers and Family Game Night, as well as original content. Although best-known for its toys and games, Hasbro is no stranger to TV production: it owned Romper Room, arguably one of the first children's shows, from the late 60s until the early 90s.

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Simon Tesler
Publisher, Adbrands