Adbrands Weekly Update 29th 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: 

Stella Artois "Names"
by Mother London

Sky Sports "Whatever Happens"
Brothers & Sisters

Panasonic "Black"
by The Campaign Palace Australia

Axe/Lynx "Rise Up"
Buzzman Paris

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

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A quick round-up of this week's best spots. Mother London presents its latest for Stella Artois. Having pretty much exhausted the faux-French concept, the agency is trying a new angle here with another beautifully shot retro piece. Satellite TV operator Sky is promoting its Sky Sports offering with this clever spot from Brothers & Sisters in which former football star Eric Cantona walks us through a few extraordinary sporting encounters of the past. Australia's The Campaign Palace has a nicely animated new spot for Panasonic's Viera flat screen TVs. And finally, French viral agency Buzzman demonstrates what you might be missing in your own home if you don't use Axe deodorants... I knew there was something odd about my bathroom tiles.

In the news this past week: Brands & Advertisers

Telefonica was cleared to take full control of Brazilian mobile phone operator Vivo after the Portuguese government withdrew its objections to the sale of Portugal Telecom's share in the business. Lisbon had faced a possible court battle after taking a controversial decision to block the sale of the shares, against the wishes of a majority of Portugal Telecom shareholders. Telefonica assisted in that change of heart by sweetening its offer further to €7.5bn. Portugal Telecom said it would invest some of the proceeds from the sale to acquire a holding in a rival Brazilian service Oi. 

In an extraordinary about-face, a US appeals court overturned a prior decision in which Mattel, makers of Barbie, was awarded ownership of the rights to Bratz, the rival brand marketed by MGA Entertainment. That decision, handed down last year, was based on Mattel's claims that the original designs for Bratz dolls were made while their creator Carter Bryant was still a Mattel employee. Under standard employment contract laws, any such designs would remain the copyright of the employer not the employee. However the appeals court now says that the original verdict was flawed, and should probably be retried. In the mean time, MGA was granted permission to start marketing Bratz again. The company immediately announced plans to launch a new line of Bratz dolls in time for Christmas. Chief Judge Alex Kosinski commented in his ruling "America thrives on competition; Barbie, the all-American girl, will too." Mattel vowed to fight the new ruling.

BP confirmed that CEO Tony Hayward would step down from his role, and will be replaced in October by Bob Dudley, an American and former head of the group's North American operations. Hayward's position had become increasingly untenable as a result of what is perceived to be his poor handling of the Gulf of Mexico oil spill. The embattled group also reported its 2Q results, which included a mammoth $32bn provision for costs relating to the oil spill and its clean-up. It said it would pay for the damage with $30bn of asset disposals over the next 18 months.

Microsoft released strong overall results for its most recent fiscal year, to June 2010. Underlining the general resurgence in the technology industry, Microsoft's revenues rose 6% to a record $62.5bn, and net income jumped 29% to almost $18.8bn. The strongest growth by far was shown by the company's Windows & Windows Live division, where sales climbed 23% on the back of strong demand for new PCs and for the Windows 7 operating system. There was also a marked increase in the Server & Tools unit. Other divisions showed only minimal top line improvement, and operating losses for Microsoft's online services unit continued to rise, climbing to a deficit of almost $2.4bn, more even that the business generated in sales.

Luxury giant LVMH also reported strong results for the first half of 2010. Revenues rose 17% (to €9.1bn) and profits by 53% (to almost €1.1bn). All divisions from perfume to wine posted double digit sales growth, well ahead of analysts' expectations.

Procter & Gamble expanded its sports sponsorship arrangements significantly with a ten-year deal with the International Olympics Committee. As a result it will become one of the lead sponsors of the next three Summer and two Winter Olympics, alongside Coca-Cola, Visa and McDonalds. However it is the first sponsor granted rights to promote its support of the Olympics across multiple brands. All P&G's numerous products will be able to promote their new role as an official Olympics partner. It follows P&G's very successful sponsorship of the US national team at the Vancouver 2010 Winter Games. 

Pernod-Ricard made some changes to its operating structure, launching a new Premium Wine Brands group to take over international management of the Jacob's Creek, Montana/Brancott and Campo Viejo wine businesses. Jean-Christophe Coutures was named as divisional chief executive. At the same time, responsibility for other international vodkas, including Wyborowa, was transferred into its Absolut Company subsidiary, which already manages Kahlua and Malibu as well as Absolut. Separately, Anheuser-Busch InBev appointed James Watson as the new marketing director for the Stella Artois brand in Europe. He was previously regional marketing director for Budweiser.

General Motors moved back into consumer finance with a deal to acquire independent auto finance company AmeriCredit for $3.5bn. GM has been the only one of the major manufacturers without an inhouse consumer finance unit since it sold control of former subsidiary GMAC in 2008. Like other lenders and GM itself, GMAC required emergency funding from the US government last year, becoming majority-owned by the US Treasury Department. Reflecting its change of ownership, the company renamed itself Ally Financial earlier this year. GM's newly acquired AmeriCredit brings with it a portfolio of around 800,000 existing borrowers with $9bn of outstanding loans. 

Nestle is preparing to launch a 'wellbeing' drink in France under the name Nesfluid. Packaged as a single-serving beverage in a similar format to Danone's Actimel, Nesfluid will combine coconut water and whey with fruit juices, green tea, minerals and vitamins. It will be available in six varieties, each with a different formula to suit the nutritional needs of different consumer groups, for example, children or senior citizens. Separately, US dairy group Dean Foods agreed to sell UK subsidiary Rachel's Organic to Lactalis of France for an undisclosed sum.

Theo Albrecht, one of the secretive German brothers who founded the Aldi supermarket empire, has died at the age of 88. Theo and Karl Albrecht launched the business in 1961 and retired from day-to-day management of the business in 2003. The Aldi empire was split between the two brothers. Theo's half of the business is known as Aldi Nord, controlling the Aldi brand in northern Germany, France, Spain and the Netherlands, among other markets, and also owns Trader Joe's groceries in the US. His two sons have senior management roles in the business. Karl passed the other half of the business, Aldi Sud, which operates in southern Germany and the UK and US as well as other markets to professional managers.

In the news this past week: Agencies

Aegis has this morning announced a deal to acquire Mitchell & Partners, the family-controlled company that is the biggest media buyer by far in Australia. The Aegis offer of A$363m (about US $325m) in cash and shares has been accepted by the Mitchells board. Under the proposed arrangement, Mitchell & Partners and Carat Australia will merge. Founder Harold Mitchell will become chairman of Aegis Media Asia Pacific, as well as the second largest shareholder in Aegis after Vincent Bolloré of Havas. His son Stuart is also expected to take a senior role in the combined business. Mitchells is already the country's dominant media buyer, with billings of over A$900m last year. Second-placed OMD bills under A$700m, and local #3 MediaCom A$620m. Carat Australia had billings of A$280m in 2009. The deal also throws up another intriguing link between Aegis and Havas. Mitchells also currently runs the Australian arm of MPG so this deal could also lead to the effective merger of the local Carat and MPG businesses. A full global merger of Aegis and Havas has been widely anticipated for several years.

Publicis Groupe unveiled impressive 2Q and first half results. Revenues jumped 21% in 2Q, helped by exchange rates and acquisitions. Organic growth for the quarter was 7.1%, levelling out at 5.3% for the half. Total revenues for the first half totaled over €2.5bn (or almost $3.4bn in US dollars), while net income leapt nearly 28% to €213m. The strongest organic growth came from Latin America (+10.6%), but North America wasn't too far behind at 6.6%, ahead even of Asia Pacific. Europe still lagged at 3.1%. CEO Maurice Levy was typically upbeat about the group's performance: "The challenges our clients face demand from us greater inventiveness, creativity and innovation, and relentless operational efforts to ensure that they win whatever the circumstances. I would like to thank them for their confidence, and to pay tribute to the hard work of all our teams who have performed wonders within the constraints of strict cost controls, enabling Publicis Groupe to emerge stronger than ever from the crisis." He added, "Without lapsing into the euphoria that these half year results for our Groupe might warrant, I remain firmly convinced that Publicis Groupe will succeed in outperforming the market in terms of both growth and margin."

There was also a marked improvement at Interpublic, as 2Q revenues improved by 8.5% organic, levelling to 3.1% for the half. Revenues for the first six months of the year were just under $3.0bn. Net income for the first half was $33.8m, compared to a net loss for 1H 2009.

Continuing a process of consolidation among the portfolio of agencies owned by MDC Partners, creative agency Kirshenbaum Bond Senecal & Partners absorbed smaller Hispanic agency Adrenalina, also based in New York. That shop is best-known for its work on Heineken's Tecate imported beer. 

In an intriguing development which could yet be replicated elsewhere in the network, DDB has merged its advertising operations in Germany and Austria with those of digital subsidiary Tribal DDB to form a single integrated agency under the name DDB Tribal Group. Alina Kessel was recruited from Grey to become CEO of the merged entity, reporting to local group head Tonio Kroeger. At the same time, Jason Lusty, CEO of DDB's partner agency Heye & Partner was promoted to a new role overseeing DDB's global Volkswagen account. 

Struggling Australian marketing services group Photon was reported to be still struggling to renegotiate contracts with senior managers at a handful of the numerous agencies it acquired in a mammoth spending spree over the past ten years. The group acquired more than 50 agencies during that period, of which the best known is the communications planning network Naked. However the economic problems of the past couple of years have caused significant problems for Photon because of the mountain of debt it accumulated. The group is currently attempting to raise A$100m of new capital, but this is thought to conditional on persuading the principals of agencies it acquired to accept new earn-out terms, including a reduction of the cash element in their potential payouts. According to local media reports, executives at several smaller agencies have so far declined the offer. However, managers at key subsidiaries Naked, BMF and BWM have apparently now accepted the revised terms.

In account assignments, Diageo called a review of US media, held by MediaCom. H&R Block shifted its creative account to Fallon from DDB New York without a review. Alberto Culver reappointed Carat to its international media business, but placed the US portion with WPP's Maxus. StrawberryFrog was awarded the global creative account for Dubai's Emirates Airlines. Australian department store chain David Jones, one of the country's biggest advertisers, transferred its business from Saatchi & Saatchi to M&C Saatchi. For all appointments, subscribers can access the full Adbrands Account Assignments database here

In the news this past week: Media

Walt Disney expanded its interactive gaming division by agreeing to acquire Playdom, a company that develops "social media" games, for an astounding $763m. More than $560m is to be paid in cash, with another $200m payable in two years depending on performance. Playdom is one of three companies which have come to dominate this new sector of free-to-use games on networks such as Facebook and MySpace. Its games include Mobsters, Sorority Life and Poker Palace. The other two are Playfish, which was acquired by EA Games last year; and Zynga, makers of Farmville, which is expected to announce details of a partnership with Google in the next week or two. The search giant is thought to have recently acquired a $200m shareholding in Zynga as part of a plan to launch its own social media network, possibly under the name Google Me. In the mean time, as a result of the deal with Disney, Playdom is expected to launch a host of new games on Facebook featuring Disney's extensive library of characters ranging from Mickey Mouse to Ironman.

Richard Desmond secured ownership of UK TV broadcaster Five over the weekend, with an offer of GBP 104m. He took immediate possession of the business, which he plans to relaunch under the name Channel Five. Dawn Airey remains as chief executive of the beleaguered broadcaster, at least for the time being. Desmond is the owner and executive chairman of Northern & Shell, the media group which owns Express Newspapers and OK magazine, as well as a small collection of adult cable channels. 

Conde Nast signed a landmark joint venture deal with Brazil's largest publisher Globo to publish local editions of titles including Vogue, G&Q and Glamour. Brazilian law prohibits foreign companies from owning newspapers or magazines in the country. Until now, Conde Nast's titles have been available in Brazil mainly as generic Latin American editions produced in Mexico. A Brazilian edition of Vogue was published under license by local company Carta, but that arrangement has now been suspended pending launch of a Globo/Conde Nast version.

Disgraced media tycoon Conrad Black was released from jail on $2m bail after serving two years of a six-&-a-half-year sentence for defrauding shareholders of his former Hollinger International group. At its peak that company owned the Chicago Sun-Times, The Daily Telegraph of London, The Jerusalem Post and hundreds of local newspapers across the US and Canada. Black has launched an appeal against his conviction, and a US federal court allowed him to be freed from jail while it consider the original verdict.

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Simon Tesler
Publisher, Adbrands