Adbrands Weekly Update 2nd November 2006

Weekly Update 2nd November 2006

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Our favourite ads this week:

The new ad series by Goody Silverstein for The California Milk Processors Board is delightfully silly, the latest in a long run of hits under the Got Milk? banner. In the new campaign, the inhabitants of alien planet Brittleactica come to Earth to abduct "Da Iry", the provider of a white wonder elixir said to cure numerous ailments from which they suffer, ranging from brittle bones to PMS. The ads are great on their own, but Goodby Silverstein has supported them with a range of other material including the very funny PlanetinNeed website.

Also notable is a sensitive and beautifully shot cinema ad for the UK's Breakthrough Breast Cancer charity to promote breast cancer awareness. Based around the 'Ode to Boobs' poem written by RKCR/Y&R creative team Pip Bishop and Chris Hodgekiss, this is a touching and poignant ad. However, male viewers are likely to find themselves a little distracted by the sight of all those boobs on show. This particular male heard the ad first on radio, where the poem's unadorned message was even more effective. Plaudits to all involved - most of the women featured are not actresses, and in fact five of them work at RKCR/Y&R.

In the news this week: Advertisers

Most large marketers have reported strong quarterly financial results, but the troubles within the US automobile business have persisted, despite a continuing rise in unit sales fed by deep discounting. Ford reported a loss of $5.8bn for the three months to September, its worst result in almost 15 years, and warned that the position could get worse before it gets better. The group's combined losses for 2006 could even exceed the $10.6bn that GM lost in 2005. Franco-Japanese combine Renault-Nissan has reaffirmed its eagerness to establish a partnership with a US manufacturer, but like GM a fortnight ago, Ford's new CEO Alan Mulally ruled out any such alliance, and also said there would be no sale of large assets such as Jaguar. However Ford's storied sports car brand Aston Martin is still for sale, and could become the first auto brand in the luxury portfolio of French billionaire Bernard Arnault. The LVMH boss was said to have teamed up with Belgian investor Albert Frere to launch a joint bid for that business.

Across town in Detroit, GM's 3Q figures showed considerable improvement, with losses down to $115m, from $1.6bn a year ago. However Chrysler reported a loss of E1.2bn ($1.5bn), down from profits of $310m a year ago. As a result, there was renewed speculation that DaimlerChrysler, which appears to have fixed the problems it was experiencing until recently at its Mercedes car group, might now consider a spin-off of its mercurial US division. The German company said it has no such plans, but also declined to rule out any such move for the future. Could Chrysler end up as Renault-Nissan's passport to Detroit?

The battle between Dell and HP for the worldwide PC market continues to rage. According to research firm Gartner, HP finally overtook Dell in 3Q 2006 to notch up 16.3% share of worldwide shipments, to Dell's 16.1%. Another research firm, IDC, has the two on level pegging. Both agree, however, that Dell continues to hold its lead in the US. Meanwhile Chinese manufacturer Lenovo, now the global #3 as a result of its acquisition of IBM's PC business last year, has agreed a multi-year marketing partnership with the National Basketball Association in order to build its profile in the US. Dell was the NBA's marketing partner until 2005.

In the UK, Cadbury Schweppes was reported to have lost the leading position in chocolate confectionery to rival Mars. According to figures from AC Nielsen for the four weeks to mid-October, Mars market share grew to 33.7%, compared to Cadbury's 31.3%. However the British company retains overall leadership of the confectionery market because of its position in sugar confectionery. It is to relaunch its Trident chewing gum in the UK this month in a bid to loosen Wrigley's virtual stranglehold on that segment.

Wal-Mart's attempts to enter the US banking business look increasingly unlikely to succeed. Approval for the retail giant's application for an "industrial banking" license has been put on hold in the face of fierce opposition from existing banks as well as a broad coalition of rival retailers. Despite their name, industrial banks are similar to regular banks, but are not subject to the same regulations as normal bank holding companies. As a result, they tend to be the preferred route for non-banking businesses such as car manufacturers wishing to expand into financial services. Meanwhile, chasing growth in the US, Wal-Mart is moving aggressively into the drugstore sector, extending the low-price pharmaceutical programme it has been testing in Florida into another 27 states across the nation. Under the plan, shoppers can purchase a regular supply of over 140 different generic drugs for just $4 a month.

Also in the pharma sector, drugstore chain CVS has agreed a $20bn takeover of Caremark Rx, a leading pharmacy benefits manager. The combined company will have annual revenues in excess of $75bn. Separately, drug manufacturer Merck & Co agreed to pay $1.1bn for biotechnology developer Sirna. In other deals, British cookie maker United Biscuits was taken private in a joint deal worth around Ł1.6bn with private equity firms Blackstone and PAI Partners. Dried fruit and nut specialist Whitworths was acquired by American Capital for Ł85m.

Bill Perez, the former CEO of SC Johnson who spent an unhappy year at the helm of Nike until the end of 2005, has resurfaced at Wm Wrigley. He takes over the CEO role from Bill Wrigley Jr, who remains chairman. Over at Kellogg Company, David Mackay, currently president & COO, is to succeed Jim Jenness as CEO at the end of this year. Jenness will remain chairman. Meanwhile Peter Stringham, global marketing chief at HSBC, is to leave the bank in March 2007. His successor has yet to be named. Finally, Carlos Ghosn, the CEO of both Renault and Nissan, has been awarded an honorary knighthood in the United Kingdom for services to Japanese-British relations. (Nissan has invested some Ł2.3bn in the UK since the 1980s, and its factory in Sunderland is now the country's biggest auto plant). As a foreign national, Ghosn cannot adopt the title "Sir", but instead becomes Carlos Ghosn KBE.

In the news this week: Agencies

Havas has created a new umbrella entity, Havas Media, to house its MPG media network and various satellite shops such as Media Contacts, Arena and Havas Sports. It also announced plans for a full launch of MPG in Asia Pacific on January 1st 2007. Currently the brand has only a minimal presence in that region, where it has until now been represented through Motivator, a joint venture between Euro RSCG and WPP's MindShare. Meanwhile comments from chairman Maurice Levy in an interview sparked off speculation that Publicis is considering a large acquisition. Several industry pundits suggested that Aegis was the likely target. But could it actually prove to be Havas? That move would lead to the creation of a French national champion, and would elevate the merged business into third place behind Omnicom and WPP, and ahead of Interpublic.

Meanwhile, several of the leading agencies in France are engaged in a round of senior level musical chairs. McCann Erickson last week launched a daring raid on Havas-owned BETC Euro RSCG, poaching no less than eight senior creative and planning executives to head up its own Paris office. Elie Ohayon will become president of McCann Paris. This week, Arthur Sadoun et Valerie Henaff, leading figures at TBWA Paris, quit and are thought to be heading over to Publicis Conseil. Also in Paris, Interpublic's local Lowe office merged with its corporate communications subsidiary Strateus to form Lowe Strateus; and British direct marketing agency dunnhumby opened its first French office to service new client Casino, one of the country's foremost supermarket operators. Dunnhumby is itself part-owned by UK giant Tesco, and is largely responsible for management of the latter's hugely successful Clubcard loyalty scheme. In the US, marketing giant Omnicom announced the acquisition of integrated agency Colangelo.

In the UK, new regulations which recently came into effect could have a significant impact on the financial implications of account pitches. An agency which picks up a new account must now also offer employment to any staff who worked mainly on that business at the previous incumbent, primarily to avoid the risks of those employees otherwise being laid off. In response to this new law, industry trade association the IPA this week agreed a new protocol whereby agencies will agree to disclose the names, titles and salaries of staff working on any accounts up for review. This will allow pitching agencies to consider upfront the potential additional cost incurred if they win the business.

The most significant account win of the last fortnight was Draft FCB's capture of the Wal-Mart creative account, a major boost for the newly merged network. However, there was mixed news for Draft FCB's parent Interpublic. At the same time, Tesco is reported (by Marketing magazine) to be considering a shift of its substantial media account out of the group's Initiative office in the UK. Wal-Mart's US media went to Carat, which was also reappointed as Dell's media agency across the EMEA region. Mother has captured the Ł20m Yell creative account (out of AMV BBDO). Subscribers can access the full Adbrands Account Assignments database here.

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Regards

Simon Tesler
Publisher, Adbrands