Adbrands Weekly Update 21st October 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

Coca Cola

Young and Rubicam

Unilever

MediaEdge:CIA

Kraft Foods

BBDO

LOreal
DDB

OMD

Nike

TBWA

Sony

JWT

Johnson and Johnson

Carat

McCann Erickson
Apple
Bartle Bogle Hegarty

Diageo

Ogilvy and Mather

Ford Motors

Mindshare

Verizon

ZenithOptimedia

Come and see us on Facebook! 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: 

The Cosmopolitan "Right Amount of Wrong"
by Fallon

Smirnoff "Stampede"
by
JWT New York

Volkswagen "Milk Run"
by DDB New Zealand

BC Hydro "PowerSmart Month"
by
DDB Vancouver

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

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No classics this week, but four good ads nonetheless. Fallon Minneapolis launches the debut spot for Las Vegas "ultimate luxury" resort The Cosmopolitan. Wild times, my friend. 

JWT New York has a new film for Smirnoff vodka. It's dramatic, epic and very cool, to be sure, but stretches that purity analogy about as far as it can possibly go without breaking. Personally, I like a bit of wolf in my vodka.

Next up, a nice slice-of-life tale from DDB New Zealand for Volkswagen. We've all been there, haven't we. But does it really matter which make of car you use for the early morning milk run?

And finally, thought-provoking exaggeration from DDB Vancouver in Canada for utilities provider BC Hydro. Certainly makes you think twice about wastage.


In the news this past week: Brands & Advertisers

The future of COI, the civil service body which coordinates British government advertising, could be in doubt as a result of drastic cutbacks in expenditure announced this week by the new Coalition administration. A new report released by the government containing details on almost 200 other bodies which are to be closed or merged comments that the future of the COI is "under consideration pending a review of government advertising to be finalised by the end of November". The organisation is already in the process of executing a 40% reduction in its workforce, as a result of the freeze on all non-essential government marketing. The Central Office of Information was originally formed after the Second World War to replace the old Ministry of Information. Its power and influence gradually increased over the following 60 years, reaching a peak under the Blair and Brown Labour Governments, when it became one of the country's biggest advertisers, rivaling even Procter & Gamble.

Apple reported another set of extraordinary financial results, demonstrating seemingly unstoppable growth from consumer devices such as the iPhone and iPad. For its 4th fiscal quarter, the company reported record revenues of $20.3bn, up 67% on the year before, and profits of $4.3bn, up 72%. The latter figure overtook even IBM's profits for the quarter, a first for Apple. Announcing the result, CEO Steve Jobs also took the opportunity to goad its main rival in smartphones, pointing out that sales of iPhone had overtaken BlackBerry for the first time, hitting 19m units, compared to BlackBerry's 12m. Apple's full year revenues hit $65.2bn and net income jumped 71% to $14.0bn. Impressive though those figures were, investors were worried by a slip in gross profit margins, and lower-than-hoped sales of iPad. Tablet volumes of 4.2m units for the quarter were lower than the 5m expected by some analysts. As a result, they marked down Apple's share price by as much as 6% after the markets closed. 

Apple's sales are likely to get another boost over the next two quarters as it broadens the profile of its wireless devices in the US beyond AT&T, until now the exclusive supplier of iPhone. Arch-rival Verizon will start selling the iPad, complete with a wireless contract, from next week, and is likely to begin retailing the iPhone as well from early next year. There's no official news on that launch yet, but the rumour mill suggests that a Verizon version is in final testing stages right now.

Advertising Age selected Ford as its Marketer of the Year, citing the auto giant's strong comeback over the past two years. Apple was named Marketer of the Decade, and other companies commended were Southwest Airlines, PepsiCo and restaurant chains Domino's and Chick-fil-A. Interestingly, when AdAge readers were polled for their own opinion, they placed Southwest in the #1 slot, with 24% of the vote followed by Chick-fil-A with 21%. 

Procter & Gamble promoted Greg Ross, its long-serving head of North American media, to a new role as director of global media innovation, with responsibility for worldwide media as well as sponsorships including the 2012 Olympics. Those duties are currently overseen by Dina Howell, VP, global media & operations. However, she was reported recently to be planning a move over to the CEO role at one of P&G's agency partners, shopper marketing network Saatchi & Saatchi X. Ross has been replaced as director of North American media, marketing & shopper marketing by Julie Eddleman. She reports to Kirk Perry, VP US operations & marketing.

French retail and luxury group PPR announced the creation of a new sport & lifestyle division built around sportswear brand Puma, which it acquired in 2007. Puma CEO Jochen Zeitz was named as CEO of the new division, as well as chief sustainability officer for the PPR group. A new CEO of Puma will be appointed in due course and further acquisitions by PPR could follow.

Ray Ozzie, the technology engineer hand-picked by Bill Gates in 2005 to be his successor as Microsoft's "chief software architect", is to leave the company at the end of the year and will not be replaced. After a strong start, when he pushed Microsoft towards developing online versions of its main software products, Ozzie's visible contribution to the company's development has become increasingly limited. Most recently he has led Microsoft's development of cloud computing services, but progress in this area has been slow compared to rival companies.

Disney sealed a deal with Paramount Pictures to buy back rights to the next Iron-Man movie as well as another Marvel spin-off, The Avengers. Those films were due to be developed under a distribution agreement signed five years ago by Marvel and Paramount, which has already scored considerable success with the first two Iron-Man films. However, all the Marvel characters, including Iron-Man, are now owned by Disney, and the House of Mouse is attempting to unravel prior marketing partnerships. Disney agreed to pay Paramount $115m to buy back the properties.

eBay named Richelle Parham as its chief marketing officer for North America, filling a position that has been empty since Mike Linton left the company in 2009. Parham was previously head of global marketing innovation and initiatives at Visa.

Video subscription service Netflix vowed to take its first steps beyond North America in a bid to establish itself as a global broadband entertainment supplier. The company is already changing its positioning in its domestic market with a growing emphasis on on-demand streaming of movies via the internet instead of its heritage business of mail order DVD rental. In its latest quarterly results, the company reported a 26% jump in net earnings and 31% increase in revenues. It now expects to finish the year with between 19m and 19.7m subscribers, well ahead of earlier targets.

The conflicts within L'Oreal's controlling family reached a new level this week when the 88-year-old Liliane Bettencourt, sole heir of founder Eugene Schueller, issued a lawsuit against her only child Francoise Bettencourt-Meyers, also a director of the company. The elderly billionairess accuses her daughter of harassment through the media. This is the latest development in a long-running saga known in France as "L'affaire Bettencourt", prompted by the relationship between the elderly Bettencourt and society photographer Francois-Marie Banier. Bettencourt-Myers issued a lawsuit against Banier three years ago, accusing him of exploiting what she called her mother's mental weakness to obtain paintings and other gifts with a combined value of almost E1bn. She has also demanded that an independent legal guardian be assigned to oversee her mother's business affairs. The case has been widely covered in the media, resulting in the publication of intimate details of Bettencourt's life. There was even the threat of political scandal after tape recordings made secretly by Bettencourt's butler were uncovered which appeared to suggest she had made secret cash payments to leading French politicians. In her own lawsuit, the elderly Bettencourt demands an end to what she believes is her daughter's victimisation of her. "The successive and fierce legal complaints, the totally indecent exposure of her private life and her smallest health details in the press are repeated attacks on her tranquility," said her representative.


In the news this past week: Agencies

Japanese giant Dentsu was reported to have pulled out of talks to acquire digital agency AKQA after developing "cold feet" over the quoted price tag of $600m. AKQA could now move forward with an IPO, thought to be the preferred option of the management team. 

The Q3 reporting season kicked off with strong results from Havas, Omnicom and Publicis. Havas was first out of the gate with reported revenues up almost 13% in the third quarter, averaging out to almost 7% for the year-to-date. On an organic basis, stripping out the effects of currency or acquisitions, the Q3 increase was 5.3%, averaging out to 2.9% YTD. Total revenues for the first nine months were just under E1.1bn. The UK led European markets with an organic increase of 7.5% for Q3, well ahead of France at 5.2%. Other European markets remained weak, though, and overall revenues for the region are still negative for YTD. North America delivered 5.5% for the quarter, but the best performance by far was from Latin America, with Q3 revenues up an astonishing 38% organic, on top of 24% and 26% respectively for Q1 and Q2.

Omnicom reported a 5.5% increase in reported revenues for 3Q (or 6.7% on a like-for-like basis), and a 5.4% lift in net income. Total revenues for the first nine months totaled just under $9.0bn, up almost 6% on the same period in 2009. In a conference call with investors, Omnicom CEO John Wren said "In the US, every client I speak to seems to have a renewed focus on top-line growth. While improvements in the economy are inconsistent from region to region, we have been pleasantly surprised by the recovery in the US and renewed strength in Western Europe." He added that every major category of advertiser was spending more than last year, with the exception of travel and entertainment.

Publicis Groupe topped both its rivals with an impressive 26% jump in 3Q reported revenues, equivalent to 9.2% organic. Total YTD revenues were almost E3.9bn, up 7% on last year on an organic basis. Perhaps the most striking aspect of the quarter's results was a 12% organic increase in revenues from North America, supported by 10% increases in Asia and Latin America. Europe continued to lag behind (+5.0%), as another quarter of negative performance in Germany offset good growth in France (+12.6%) and the UK (+9.3%). Publicis highlighted the strength of its digital subsidiaries, which together contributed over 44% of North American revenues and almost 29% of global sales during the quarter.

Omnicom also recorded one of its busiest ever weeks for acquisitions, with no less than four new companies joining the fold. In China, the group bolted on field marketing agency Unisono and instore promotions specialist Sales Power, previously a joint venture with a local partner working primarily on Unilever brands. In the Netherlands, Omnicom acquired medical communications agency Excerpta Medica, which will join the group's Adelphi network of health care marketing shops. And the group also added Russian PR agency Maslov, which becomes part of the Ketchum network under the new name Ketchum Maslov.

Also out shopping was Engine Group, parent to WCRS, Partners Andrews Aldridge and other agencies. It made its first significant acquisition in the US, snapping up New York-based digital shop Deep Focus. Further purchases are expected. Engine recently secured up to an additional $100m in credit from investment fund HIG.

Continuing the steady consolidation of its portfolio, MDC folded its Canadian subsidiary agency Allard Johnson into larger stablemate Kirshenbaum Bond Senencal & Partners, based in New York. As a result, KBSP gains its first outposts north of the border, with offices in both Toronto and Montreal. It already established a presence in Atlanta earlier this year with the absorption of another MDC subsidiary.

According to Brand Republic, the UK office of ZenithOptimedia is "believed to be heading for a dramatic split". Its sources suggested that Publicis Groupe is planning to establish the Zenith Media and Optimedia brands as two separate units once more, with Stephen Farquahar named as likely head of Zenith and Mark Howley as MD of Optimedia. Both men would report to current ZO chief executive Gerry Boyle. At the same time, the group may dispense with its two existing conflict units Zed Media and Equinox, each of which would be absorbed into the new entities. The Zenith and Optimedia brands were originally merged in 2003, following Publicis Groupe's acquisition of Zenith Media, previously the media network of Saatchi & Saatchi. Optimedia was at the time the media network spun out of Publicis Worldwide. However in several key territories, not least the US, China and Germany, the two brands were never merged, because of client conflicts, and still operate separately today.

Media agency MPG filled a hole in its North American management team, appointing Sasha Savic to a new position as chief commercial officer. He reports to Maria Luisa Francoli, MPG's global CEO, and current head of the agency's North American operations following the departure of Shaun Holliday earlier in the year. Savic was previously COO of PG2, the unit of Publicis Groupe which oversees its worldwide relationship with Procter & Gamble. In a separate development, Sandy Thompson is to join Y&R as global planning director, replacing John Gerzema, who is moving to a new role as president of the network's brand strategy arm Brand Asset Consulting.

In account assignments, Sanofi-Aventis reappointed ZenithOptimedia to its global media business following a review. Expedia called a review of creative in Europe, handled mainly out of London-based Meteorite. In the US, restaurant operator CKE, parent to the Hardee's and Carl's Jr chains, launched a review of creative, out of Mendelsohn Zien. In the UK, mobile operator 3 is said to be plotting a review of traditional creative, currently handled by digital shop Glue Isobar. Biscuit maker Burton's is also calling a review of creative. Neither of the incumbent agencies, Adam & Eve and Fallon London, are expected to take part. For all appointments, subscribers can access the full Adbrands Account Assignments database here


In the news this past week: Media

UK newspaper The Independent, now owned by Russian media tycoon Alexander Lebedev, announced the launch of a spin-off title, which claims to be the first quality daily newspaper launch for almost 25 years. Since the launch of the Independent itself in fact. The new title is named "i", and will in effect be a slimmed-down version of the main paper, priced at just 20p instead of the Independent's GBP 1 cover price. It is aimed at "readers and lapsed readers of quality newspapers, and those of all ages who want a comprehensive digest of the news in printed form... [It] will combine intelligence with brevity and depth with speed of reading, providing an essential daily briefing." Independent editor-in-chief Simon Kelner will supervise the new title. 

Facing pressure to cut costs, the BBC agreed to accept a freeze in the price of the license fee for the next six years. Despite the steady growth of its commercial operations, most of the BBC's revenues are generated by the license fee, an annual sum of GBP 145.50 payable under law by every owner of a television set in the UK, irrespective of which channels they watch. Currently, combined revenues from the license fee total around GBP 3.6bn a year. The BBC also agreed to fund the costs of running the BBC World Service, its international radio operations, out of its own pocket. Previously that bill had been met largely by the Foreign Office. In return for these sacrifices, however, the Government dropped its demands that the BBC broadcast public service advertising free of charge.

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Simon Tesler
Publisher, Adbrands