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I'm feeling spoilt for choice this week. There are so many interesting new ads to pick. Let's start with the new Fallon London ad for Sony, Foam City. I highlighted this last week as a probable new masterpiece, but I'm sorry to say it's actually proved to be a disappointment, coming hot on the heels of the equally underwhelming Trucks for Cadbury. Spectacular, sure, but it falls far short of Balls or Paint or even the last campaign for Sony cameras (featured in this spot last December - see it here). Like Trucks, this feels to me like a big idea that wasn't fully thought through. Maybe there just wasn't enough time before the next client meeting. That's the problem with being creative top dog, I guess. Hmm. Fallon London's presiding genius Juan Cabral and the rest of his team may need a little downtime to recharge their creative batteries  

No such troubles at DDB London by the look of it. This new spot for the VW Golf is great. Lovely concept, terrific editing and music (by ex-Orbital muso Phil Hartnoll).

Apologies to our international subscribers, but this next ad is also created here in London. Leo Burnett's local office is the agency behind this initiative for the government's Learning & Skills Department. This is an ad that is somehow both very simple and very complicated at the same time. Also very memorable and effective.

And finally, for our humorous pay-off, I can't decide between another ad from JWT New York for Huggies, or a beer ad from Argentina. What the hell, let's go for the Spanish language spot. Huggies next week if there's space. This ad doesn't have subtitles but I'm sure you'll get the idea anyway. Some guys hanging out with a few Schneider beers discover that something strange happens whenever any of them says the word "esplendio" - or "splendid" in English. The agency is La Comunidad of Buenos Aires. What is it with Argentinean ads at the moment? There must be something special in the water there.

In the news this past week: Advertisers

As had been expected, US airlines Delta and Northwest confirmed plans to merge to create the world's biggest carrier, with annual sales of more than $35bn, a fleet of almost 800 planes and around 75,000 employees. Effectively, Delta will acquire Northwest for around $3.6bn. The combined company will retain the Delta name and will keep its HQ in Delta’s hometown of Atlanta. The fit is quite neat. There is comparatively little overlap between their respective route maps and they have complementary strengths and weaknesses: Delta is strongest in the US Southeast and across the Atlantic; Northwest's core market is the upper Midwest and it also has a strong presence in the Pacific region. 

However, the merger is expected to face a rough ride from regulators and especially from labour unions at Northwest. Terms were more or less agreed several weeks ago but were delayed as a result of opposition from Northwest's pilots, who fear a disparity in pay and seniority compared to their counterparts at Delta. In the end however, Northwest's board took the decision to press ahead, even without the agreement of their pilots, because of the continuing rise in oil prices and slowing travel expenditure by businesses and consumers. The Northwest pilots reaffirmed their determination to fight the merger, but Delta CEO Richard Anderson, who will run the conjoined business, says he is sure they can be convinced of the deal's value. 

Assuming it goes through in one form or another - and completion is not expected before the end of 2008 or even early 2009 - the deal is likely to spark off further consolidation within the US industry. United has already made several approaches to Continental, so far rebuffed. American is also considered to be a potential suitor for Continental or even a rival bidder for Northwest. However, many observers are sceptical that such consolidation will solve the fundamental flaws affecting the five major US airlines: too many unprofitable routes, outdated aircraft, and abysmal customer service, especially compared to smaller regional carriers. John Gapper, writing in the FT, commented: "It does not help to be big if you do not make money. In fact, the bigger you are, the faster you can lose it. The imperative for US airlines is to improve margins in order to be able to invest in aircraft and raise service standards. If they do not, customers will keep moving to domestic low-cost carriers."

Video rental giant Blockbuster unveiled a $1bn bid to acquire struggling electronics chain Circuit City. Both businesses are facing off significant challenges. Blockbuster has competition from online rental firms such as Netflix, but has begun to show progress since last year. Circuit City's troubles are more serious. Twice Blockbuster's size by revenues, it has been fighting for years to gain traction against main rival Best Buy, as well as discounters such as Wal-Mart. So far it has had little success, and its share price has fallen by more than 80% in the last year alone. But this deal is no sure thing. Apparently Blockbuster and Circuit City have been holding private talks for several months but those discussions stalled because the electronics chain has so far refused to open its books to its smaller suitor. Blockbuster hopes this public offer will encourage investors to put pressure on Circuit City. Yet most institutional investors also reacted badly to the merger. One analyst, from Wedbush Morgan Securities, issued a research note which said that Blockbuster's bid "borders on being reckless" given that Circuit City "appears to be in the middle of a death spiral". However, Blockbuster's bid did have the support of activist investors Carl Icahn and Mark Wattles, who are among the biggest individual shareholders in Blockbuster and Circuit City respectively. 

Interbrand published a ranking of Europe's 25 most valuable retail brands. It placed H&M as the region's single most valuable brand by quite some margin, estimating a value of E10.3bn, almost E4bn ahead of second-placed Carrefour, valued at E6.6bn. Rounding out the Top Ten were Ikea, Tesco, Marks & Spencer, Zara, Aldi, Boots, El Corte Ingles and Auchan. Access the full report here.

In the US, retailers reported the worst March sales figures since 1995, according to the trade group International Council of Shopping Centers. A variety of factors contributed, including the slowing economy, continuing rises in gas prices and the earliest, coldest Easter holiday in 95 years. Specialty clothing retailers and department stores were hardest hit, with many suffering double-digit falls in same-store sales compared to last year. Gap's March same-store sales plunged by 18%, and rivals Abercrombie & Fitch and American Eagle were also down, by 12% and 10% respectively. Among the department stores, Kohl's was down almost 16% and JC Penney by more than 12%. Even Target felt the pinch, reporting a 4% drop. Virtually the only large chains not reporting a drop were Wal-Mart, which reported a 0.7% increase, lower than it had expected, and wholesale warehouse clubs Costco and BJ's, who broke the mould with 5% and 6% increases respectively. Some smaller chains also did well, with teen clothing stores Aeropostale and Buckle both claiming double-digit increases.

British retail sales also fell in March, their first decline in more than two years. The British Retail Consortium said that same-store retail sales in March were down 1.6% from the same month last year, the largest drop since July 2005. (However total sales, including new store openings, showed a modest increase of 1.1%). Auto sales were also bleak. The European Automobile Manufacturers’ Association said that new passenger car registrations fell by nearly 10% across the region in March, after an increase in the previous two months. For the whole quarter, sales were down by just under 2%. Overall Toyota was hardest hit, with registrations down by 17% for the quarter, followed by Hyundai, down 15%. 

The 1Q reporting season kicked off with a string of financial results that were lacklustre or worse. Most US investment banks are having to make further significant writedowns against their subprime bond investments - Merrill Lynch has now written off more than $30bn since October and posted three consecutive quarterly losses, the worst run in its entire 94-year history. Wachovia, the #4 US bank by assets, also reported an unexpected 1Q loss as a result of a huge provision for credit losses, mostly relating to Golden West Financial, the mortgage lender it acquired in 2006. Even General Electric, widely regarded as the bellwether of the economy showed itself not to be immune, with earnings which fell below last year because of a fall in profits at its financial units, as well as in its industrial and healthcare businesses. Philips, which is GE's main competitor in the healthcare segment, reported an even sharper fall in profitability, but this was generated not by the healthcare division - which performed strongly - but poor performance by its consumer electronics business, especially in the US. 

Yet it wasn't all bad news by any means. Johnson & Johnson announced a 40% uplift in 1Q earnings, IBM was up 26%, Ebay improved by 22% and Danone reported a 12% increase. LG delivered record profits on soaring demand for its handsets and flat-panel TVs (compared to a loss for the same period last year). Even Coca-Cola delivered one of its best performances in recent years with a 19% earnings boost. UK supermarket giant Tesco also reported yet another year of stunning performance, with sales for the 12 months to February breaking the £50bn mark at £51.8bn, and underlying profit up almost 12% to £2.85bn. Trading profits in the group's international arm rose 24% to £700m on sales up 25% to almost £14bn.

Chrysler and Nissan announced a significant expansion of the manufacturing alliance they tentatively agreed at the beginning of the year. In January, Nissan agreed to produce a vehicle based on its own Versa sedan for Chrysler to sell in some Latin American markets from 2009 onwards. Now the two companies have ramped up this cooperation with a broader reciprocal arrangement. Chrysler will draw up the spec for a new small car to be built by Nissan in Japan, and sold by the American company in the US and Europe from 2010. In return, Chrysler will make space in its Mexican factory to produce a new pickup for Nissan, for delivery in 2011. Although the arrangement is being presented by both companies as purely a manufacturing agreement for now, it brings Chrysler another step closer to becoming a third partner in Renault and Nissan's existing worldwide alliance. 

There were also rumours of impending consolidation in the telecoms sector. France Telecom is said to be in the early stages of negotiating a bid for TeliaSonera, the national operator for Sweden and Finland. Also several British companies are in discussions over the possible break-up of European broadband supplier Tiscali. Vodafone, BSkyB and Carphone Warehouse are among the interested partiers.

In the news this past week: Agencies

Media network MindShare announced a complete overhaul of its global structure. It will integrate all its existing operations to form a single unit which offers a full range of marketing services, including creative. The architects of the new design are chief strategy officer Nick Emery and head of communications planning Marco Rimini. Under the new plan, they claim, "we will move to more integrated client teams with less focus on departments and more focus on teams sitting and working together... Our new focus will be on building client teams with positions and skills that go beyond the current media planning group structure." 

Currently, MindShare's main offices have around 12 different service departments. All these will be disbanded and instead absorbed into one of four new units. Client Leadership will offer the main point of contact with clients, lead strategy and be responsible for overall profitability and performance. Business Planning will combine existing strategic and analytical units to "to focus in on solving real business issues for the marketing director and CEO; business planning rather than simply communications plan development". Invention will develop media-neutral creative plans, absorbing existing sponsorship, branded entertainment and content units. Finally, The Exchange will be responsible for all digital and non-digital trading. The group's current team of media planners will be split up between departments, with some transferring to Business Planning to focus on strategy, some to The Exchange to handle tactical planning; and others to Client Leadership. 

It's an interesting idea, which throws out most existing ideas of how a media network is structured. How well it works in practise remains to be seen. Coincidentally, this week has also seen renewed attention in the trade media to developments at DaVinci, the global agency being created from scratch at WPP to serve the needs of Dell. The latest chatter has come in response to an article in Advertising Age last week, which raised concerns over progress at DaVinci. Although WPP initially set a deadline of March 1st for launch of the new agency, more than six weeks later it still has no appointed CEO, no confirmed name (DaVinci is just the working title), and only around 500 of its anticipated 1,000 employees. 

M&C Saatchi's Walker Media subsidiary was named as the new UK partner within Columbus Media International, the network which unites leading independent media agencies in 19 markets. Walker replaced previous member BLM, who dropped out earlier this year following acquisition by Havas. Other members of Columbus include Horizon Media in the US, Cossette in Canada, Mediaplus in Germany, Armando Testa's Media Italia and Cospirit in France.

UK-based digital agency Profero is to open its first office in the US. Wayne Arnold, one of the two brothers who own and co-run the group, will lead the New York outpost, which launches with two existing clients, Johnson & Johnson and Western Union. Profero already has an extensive network in Europe and Asia.

Gary Goldsmith quit his role as creative chief of Y&R North America, shortly before the arrival of newly appointed global creative chief Tony Granger, poached from Saatchi. Goldsmith's local duties at Y&R New York will be taken over by new recruits Scott Vitrone and Ian Reichenthal. Tom Sebok was named as regional president & CEO of Y&R North America, filling a role which had been vacant since early 2007. Meanwhile Euro RSCG appointed Jose Caboco from W&K as its first regional chief creative officer for North America.

Unilever is in the middle of a global review of creative for its Knorr culinary brand. Lowe is understood to have secured worldwide creative for Knorr soups and stocks; incumbent agency JWT and CHI & Partners are said to be competing for the remaining business, covering sauces and dressings. Lowe was also named as the winner of Nesfrappé, a new canned chilled coffee from Nestlé. In other news, PepsiCo shifted US creative for Gatorade and Tropicana out of Chicago's Element 79 and into TBWA\Chiat\Day and Arnell Group respectively. Industry chatter figures Element 79 as a prime candidate for merger into neighbouring DDB Chicago. New Balance sports shoes consolidated global media into PHD; Visa retained Mediaedge:CIA for European media. For all other appointments, subscribers can access the full Adbrands Account Assignments database here.

In the news this past week: Media

Workers at France's most prestigious daily newspaper Le Monde went on strike this week to protest against plans to cut 130 jobs, including a quarter of the editorial staff. It is only the second strike at the paper since it launched in 1944, but this action has been building for almost a year. Effectively independent, Le Monde has been reporting increasingly steep losses for several years, and there has been long-running tension between the paper's employees, who between them own around 22% of the company's equity, and corporate minority shareholders such as French publishing group Lagardere and Prisa of Spain.

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Simon Tesler
Publisher, Adbrands

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