Adbrands Weekly Update 22nd July 2010
A weekly round up of key news about 
leading advertisers, agencies and mediaowners
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Procter and Gamble

Starcom MediaVest

Coca Cola

Young and Rubicam



Kraft Foods








Johnson and Johnson


McCann Erickson
Bartle Bogle Hegarty


Ogilvy and Mather

Ford Motors




Four of our favourite ads this week: 

Commonwealth Bank "Call You Back"
by Goodby Silverstein

Coca-Cola/Burn "Ride"
Publicis Mojo Australia

Levi's "To Work"
by Wieden & Kennedy

Maynards "Glide"
Fallon London

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

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Our first two spots this week cross all international boundaries. First up, an ad by an American agency for an Australian bank by a French director. In a slightly unlikely partnership, Goodby Silverstein continues to manage the creative account for Australia's Commonwealth Bank from its US office. Here Goodby presents the latest in its campaign, a typically elegant film shot by Jean-Pierre Jeunet (Amelie, Alien Resurrection). Once again, the ad is built around a post-modern self-referential concept in which it explicitly acknowledges its own "ad-ness". You either like that idea or you don't. Personally, we're not too keen, but the style of the spot makes up for its arch knowingness.

Next up, an Australian agency makes an ad for an American company in Europe. Publicis Mojo Sydney is responsible for this impressive spot for Coke's Burn energy drink, in a campaign which launches this summer throughout Europe. Cool! and hot! both at the same time.

Wieden & Kennedy unveils the second spot in its "inspirational" campaign for Levi's jeans. Unlike the last spot, which featured a Walt Whitman poem and scratchy monochrome, this slowburning film aims to uplift viewers with a message about urban regeneration in the rundown town of Braddock, Pennsylvania. Beautifully made, and very worthy, but not we think an ad that will get you rushing out to but a pair of jeans any time soon...

And finally, one of two surreal new spots by Fallon London for Kraft/Cadbury's Maynards wine gums, revealing the psychotropic properties of those confectionery delights. See the other ad here. Weeeeeird! Though personally I still retain a soft spot for that old "dancing Scotsman" ad from the early 1990s. Hoots mon! There's juice loose aboot this hoose!

In the news this past week: Brands & Advertisers

Reckitt Benckiser added to its healthcare portfolio this week, launching a GBP 2.5bn offer to acquire SSL International, the maker of Durex condoms and Scholl footcare products outside the US. (Merck owns rights to the Dr Scholl brand in North America). Such an acquisition had been widely anticipated, and RB has conducted preliminary talks with SSL on several occasions in the past. Once the deal is completed, it will increase RB's revenues from OTC healthcare to almost GBP 3bn annually, overtaking even GlaxoSmithKline. SSL also owns a sizeable collection of other-the-counter healthcare products in the UK, including Resolve, Meltus, Full Marks, Wasp-Eze, as well as the Sauber and Mister Baby product ranges in Italy.

Sir Stelios Haji-Ioannou, founder of low-cost airline easyJet, has issued that company with a formal warning that it must improve the punctuality of its flights or stop using the "easy" brand in its name. Sir Stelios is engaged in a long-running battle with the airline, which he no longer controls although he retains a large minority shareholding. However the "easy" brand is still controlled by his easyGroup holding company and used by the airline under license. Sir Stelios opened this latest skirmish with a public statement in which he claimed "I have been receiving many unsolicited complaints from members of the public and even easyJet pilots about the degree that the airline is short of crew to operate the flights it sold to its customers." Earlier this year, rival low cost carrier Ryanair also knocked easyJet's punctuality in a series of print ads which referred to Sir Stelios as "Mr Late Again". Last week, it was forced to issue an apology and a retraction after a complaint from Sir Stelios, and acknowledged that he was "not in any way responsible for easyJet's management's continuing failure to publish weekly details of their on-time stats." Stelios has now issued a formal warning that easyJet must improve that situation within 90 days or have its brand license terminated. Most observers believe that the ultimate goal of his campaign is to win back control of the business, which he surrendered when it floated ten years ago. He has already announced preliminary plans to launch a rival travel service under the easyHolidays name, and recently registered web domains for easyFlights and easyAirtours. Earlier this year, he resigned as a director of easyJet in protest over its expansion plans, and is also involved in a separate lawsuit over the way it accounts for its revenues. He claims the airline is in breach of a rule that states it must generate at least 75% of revenues from its core business of passenger transport. Instead Sir Stelios says EasyJet is trying to "squeeze whatever revenue it can from its customers" with additional charges.  

Unilever agreed to sell its last remaining frozen foods business, Findus Italy, to Birds Eye Iglo, which it sold to private equity fund Permira in 2006. That deal reunites the old Unilever frozen foods portfolio at the expense of rival bidder Findus Group, which owns the Findus brand in other European markets, as well as Young's Seafood in the UK. Birds Eye Iglo is paying a handsome €800m in debt and equity to acquire the business. 

Several other food businesses could also be coming up for sale, with a number of brandowners reported to be investigating the possibility of disposals. Private equity groups Blackstone and PAI Partners met this week to discuss plans for an auction later in the year of snack company United Biscuits, owner of McVities, Hula Hoops and Penguin biscuits. PAI is also preparing to offer up its 50% shareholding in the French Yoplait yoghurt business. Meanwhile in the US, Sara Lee was reported to have appointed bankers to manage the sale of its substantial North American bakery business, and Canadian gourmet coffee company Van Houtte is also said to be close to announcing a new owner. On the other side of the world, San Miguel Corporation of the Philippines has put up for sale a 49% shareholding in its Pure Foods subsidiary, the country's biggest food group.

Ford announced several senior management changes. Volvo Cars CEO Stephen Odell was appointed as CEO of Ford of Europe in anticipation of completion of the sale of Volvo to Geely in the next few months. He is accompanied by Stuart Rawley, previously Volvo CFO, who takes up the same role at Ford Europe. Brian Myers, acting CFO of Ford Europe, returns to his previous role as that company's controller of marketing, sales & service. Meanwhile Jim Farley, currently Ford's group VP, global marketing, had his brief widened to cover global sales & service as well. There were also reports of a management reshuffle at IBM, although so far this has yet to be confirmed directly by the company. Among the changes, Ginny Rometty, currently SVP, sales & distribution had her role widened to include marketing and strategy, and software chief Steve Mills was also given responsibility for the group's systems & technology division.

Goldman Sachs agreed to settle a lawsuit brought by the SEC for misleading its clients over a subprime mortgage bond that generated huge losses for participating investors. It agreed to pay a record $550m penalty, one of the largest ever imposed in Wall Street history. As part of that arrangement, Goldman neither admitted nor denied the charges, but did acknowledge it had made a "mistake" by not disclosing the involvement of hedge fund Paulson & Co, which was actively betting on a fall in market values, in suggesting some of the securities covered by the product. The inclusion of that $550m charge, plus an additional $600m provision for a proposed UK tax on employee bonuses caused Goldman's 2Q profits to plunge by more than 80%. Performance for most of the big banks suffered during the quarter from an unexpected dip in stock markets prompted by fears for a double-dip recession. However, more diversified lenders enjoyed a welcome boost from a long-awaited improvement in consumer banking.

Barclays named Nina Bibby, a former InterContinental Hotels Group executive, as the new global chief marketing officer for its Barclaycard credit card division. Michelle Bottomley, who had been filling in as global SMO, returns to her role as chief marketing officer for Barclays' North American cards division.

Amazon announced that sales of e-books for its Kindle device have now overtaken those of traditional hardbacks. In June it sold 180 Kindle books for every 100 hardcover titles. That announcement seemed to be timed to coincide with Apple's latest earnings release, which was nothing short of spectacular. Revenues for 2Q - which ended just before the launch of iPhone 4 - jumped by 61% compared to the same period last year, reaching $15.7bn, around $1bn higher than analysts had forecast. Earnings leapt by an even higher 77% to $3.25bn. Key drivers were the iPad, which sold almost 3.3m units during the quarter and accounted for revenues of $2bn, and the iPhone, unit sales of which soared by more than 60% to 8.4m handsets. Even the Mac computer range achieved record sales of almost 3.5m units. The group forecast combined revenues of $18bn for the next quarter and CEO Steve Jobs also offered the promise of even better to come. "IPad is off to a terrific start," he told investors, "more people are buying Macs than ever before, and we have amazing new products still to come this year."

Nokia launched a search for a new CEO who might be better able to fight off the growing challenge from Apple's iPhone and other new generation devices. Current incumbent Olli-Pekka Kallasvuo will step down as soon as a successor can be found. According to unconfirmed press reports, the company has already been turned down by one potential CEO currently based in the US because of the requirement that he relocate to Finland. Separately, Nokia Siemens Networks, the company's telecoms infrastructure joint venture agreed to acquire Motorola's network business for $1.2bn. That deal will give Nokia Siemens a stronger presence in the US and also expand its relationship with existing customers including China Mobile, Verizon and Sprint.

Not even Giorgio Armani, widely considered the fashion industry's most astute businessman, was immune from the effects of last year's economic downturn. Group revenues slipped 6% to €1.52bn, while earnings before depreciation, interests etc fell from €303m to €218m. Spectacular growth in China, where sales jumped by almost a third, failed to offset sharp declines in the group's key markets of the US, Europe and Japan.

German discount supermarket Aldi announced plans to pull out of Greece, putting its 38 stores there up for sale. It blamed fierce competition at the value end of the market. Retail analysts suggested that the group may also be considering an exit from Poland, another hard-fought market. It is the first time that Aldi has withdrawn from any country. Instead, the group said it would focus its attentions on its nine remaining territories, which include the US and UK, France and the Netherlands as well as Germany. 

In the news this past week: Agencies

Omnicom was the first of the marketing services giants to report 2Q results. Profits were better than expected at $243m, up 4%, while revenues rose 6% to $3.04bn. Performance was helped by new business gains including Goodby Silverstein's Chevrolet win, a clutch of Kraft accounts at TBWA and healthcare company Humana, won by Rapp. "Economic growth is improving, although slowly," said CEO John Wren. "An increasing number of our clients are now focused on growth, and we are starting to see increases in the scope of services they require." Publicis and Interpublic report next week; WPP not until late August.

Steve Harty, group chairman of the New York office of Bartle Bogle Hegarty, is leaving the agency. That move follows the recent loss of the Cadillac account. Harty spent five years at BBH.  

In other account assignments, Brand Republic reported that 180 Amsterdam had been dropped as the global agency of record for Adidas in favour of Sid Lee, the Canadian shop which has been developing its Adidas House Party promotions. In the US, Travelers insurance transferred media to MediaCom. Restaurant chain Denny's is reported to have parted from Goodby Silverstein. In the UK, Santander reappointed WCRS to its creative account after a review. In Australia, DIY retail giant Bunnings called a review of its A$40m media account currently held by Initiative. The incumbent is defending against rival shop Ikon. The signs don't look promising for Initiative. The pitch is being managed by Bunnings' creative shop The Brand Agency, which is a sister to Ikon. For all appointments, subscribers can access the full Adbrands Account Assignments database here

In the news this past week: Media

Google reported dynamic increases in 2Q revenues and profits, both up by around 24% to $6.8bn and $1.8bn respectively as a result of a significant rise in spending by corporate advertisers. The group also announced a two-year partnership agreement with Omnicom's OMD and PHD media networks to coordinate and improve the efficiency of those agencies' online media buying. It already has similar arrangements with WPP and Publicis. Even so, analysts were disappointed by the Google results, which came in slightly below expectations, causing Google's share price to slump. A key concern was a lower than expected rise in cost-per-click - the amount Google charges each time a user clicks on an advert. That figure rose only 4% in 2Q, compared with forecasts of between 6% and 8%. The shortfall was caused in part by the lower rates Google receives from mobile advertising, and from emerging markets.

Meanwhile, the unstoppable growth of Facebook continued. This week the company announced that user numbers had broken the 500m level for the first time, jumping by 100m users in just five months. Growth has been generated mostly by users from non-English-speaking countries. The company also said that individual users now spend an average of 23 hours and 20 minutes on the site each month; up from 20 hours and 50 minutes per month in February.

Richard Desmond, the former porn baron who now owns Express Newspapers and OK magazine, is understood to have become the "preferred bidder" in the auction of Five, the UK commercial broadcaster which has been put up for sale by Bertelsmann's RTL division. He has offered to pay as much as GBP 100m for the loss-making channel. 

News Corporation appears to be paying a steep price for its decision to introduce a paywall for access to the websites for its Times and Sunday Times newspapers in the UK. Research company Experian Hitwise reported a decline of at least two-thirds in average daily traffic. However those estimates include non-paying users who only visited the free-to-view home page. The number of paid subscribers who progress into the body of the site is understood to be very much lower. The Times has not said how many users have agreed to purchase subscriptions, but media columnist (and former Murdoch biographer) Michael Wolff, writing for Vanity Fair's blog, said "My sources say that not only is nobody subscribing to the website, but subscribers to the paper itself - who have free access to the site - are not going beyond the registration page. It's an empty world."

As expected, FriendFinder Networks trumped an offer made last week by Hugh Hefner to acquire full control of adult entertainment empire Playboy Enterprises. FriendFinder already owns rival brand Penthouse. Its offer valued Playboy at $210m, well above Hefner's $185m bid. FriendFinder has also promised to preserve the 84-year-old Hefner's editorial role at the company, and would also let him stay on at the Playboy mansion in Los Angeles. However the Hef, who still controls 70% of Playboy's voting stock, is unlikely to be swayed by that offer. He told his Twitter followers last week, "Playboy isn't in play. I'm buying, not selling."

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Simon Tesler
Publisher, Adbrands