Weekly Update 9th March 2006

Weekly Update 9th March 2006 | why am I getting this email?

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Recently Revised Profiles and Snapshots

Fox Entertainment Group	Telefonica
News Corporation	Novartis

In the news this week: Advertisers

Fast-feeder KFC, a division of Yum Brands, launched a new campaign in the US designed to counter the threat to ad breaks from digital recorders such as TiVo which can be programmed to skip commercials. Viewers are invited to record the current ad for KFC's new Buffalo Snacker sandwich, and then replay it at slow speed to uncover a hidden code, which can be exchanged for a free meal voucher on the KFC website. Most US networks have accepted the ad, except ABC which claimed the promo contravened its regulations regarding subliminal advertising. ABC's refusal, however, earned KFC just as much exposure as the ads would have done, without the cost, because of the acres of media coverage it generated.

Philips tried an equally post-modern approach to advertising in a new cinema spot. Tapping into the frustration often voiced by American cinemagoers because they usually have to sit through four minutes of ads before a film starts, Philips' agencies DDB and Carat devised a plan to buy up the entire ad break in several theatres in Boston and Minneapolis. In a riff on its slogan Sense and Simplicity, Philips would then run just one 15-second ad which explained: "We could have run a four-minute commercial. Instead, we chose simplicity. Sometimes, simplicity means getting you to your movie quicker." A lovely idea, only cinema media seller Screenvision didn't like the way the ad appeared to make fun of cinema advertising and refused to run it...

The week's biggest corporate news story was the apparent quest by US telecoms boss Ed Whitacre to rebuild the old Bell System. That monopolistic national giant was broken up in 1984 into seven separate regional companies linked by long distance giant AT&T. Whitacre was head of one of the smallest of these so-called Baby Bells, Southwestern Bell Co, later SBC. Over the last decade or so, he has transformed SBC into what will soon be the world's biggest telecoms business with a string of acquisitions, including much of the old AT&T itself, whose name SBC adopted at the end of last year. His latest deal, worth an estimated $67bn, will add Bell South, previously SBC's partner in wireless service Cingular, to the fold, reuniting no less than four of the old Baby Bell operators.

AT&T's growth is likely to lead to further pressure on Verizon, now pushed into 2nd place, to respond with purchases of its own. These could include the 45% shareholding in Verizon Wireless currently owned by British company Vodafone. The latter is under intense pressure to bolster its flagging share price. The wireless giant recently announced plans to write off a further $28bn of goodwill, a move which will trigger a substantial loss in the current financial year. Investors are pushing Vodafone to make up ground with the sale of its struggling Japanese division, as well as its cash-generating but strategically valueless shareholding in Verizon Wireless. A Japanese deal could already be on the cards, but Vodafone says it will not be rushed into selling off its Verizon shares at anything less than the best possible price.

In other deals this week, Heineken agreed a deal with Anheuser-Busch to brew and sell Budweiser beer in Russia under the "Bud" brand. (The Budweiser trademark is already registered in that country to Czech brewer Budvar.) Also, NBC Universal agreed to buy women's internet portal iVillage for around $600m; and GM reduced its stake in Japanese auto manufacturer Suzuki from 21% to around 3% in order to raise cash. The two companies will maintain their strategic alliance.

Annual results announced this week included Publicis, LVMH and HSBC (all excellent); Bayer and Aegis (good to very good).

In the news this week: Agencies

Over at Havas, long-running rumours regarding the group's leadership were confirmed when Chairman Vincent Bollore suggested to Le Figaro newspaper that Fernando Rodes may be named as CEO, replacing former banker Philippe Wahl, who is expected to take a more senior role within Bollore's private holding company. Rodes also heads up media division MPG and is, along with his father, one of the group's biggest shareholders after Bollore himself. The latter, meanwhile, has other irons in the fire. This week he announced plans for the Spring launch of a new free daily evening newspaper for Paris, Direct Soir.

There were further troubles at Lowe's London outpost, still reeling from the loss of the Tesco account to Frank Lowe's new agency Red Brick Road. On Friday last week, parent group Interpublic announced the indefinite suspension of London CEO Garry Lace, accusing him of having met with Frank Lowe on several occasions last year to discuss the Tesco account. Whatever the actual circumstances or content of any such meetings, this is the second such incident with which Lace has been connected. In his previous role at Grey London, an anonymous informant accused him of plotting to poach the agency's Air Miles account as the founding client for a new agency of his own. Lace strongly denied the accusation, which was never proved, but he left Grey soon afterwards.

Despite the continuing problems at Lowe London, there was some much-needed good news from the New York office, which picked up the account for ISP Earthlink, said to be worth up to $50m. There were a number of other major account announcements during the week. Reckitt Benckiser has called a review of its $350m global advertising account, currently split between three networks: Euro RSCG (fabric care, air fresheners and dishwashing products), JWT (surface care, health and personal care products) and McCann Erickson (which currently still handles the healthcare portfolio acquired from Boots). Reckitt aims to eliminate one of the three. Meanwhile France Telecom appointed a trio of French-owned agencies to its European Orange account. Euro RSCG C&O takes over the B2B side of the business; Publicis-owned Marcel and Fallon London share the consumer account. Orange's arch-rival SFR, until now handled by with the main Publicis Conseil agency, immediately cancelled its contract, claiming account conflict.

In the US, independent agency Doner said that its electronics retailer client Circuit City would not be renewing its current contract, but will instead allocate future advertising to different agencies on a project-by-project basis. Hasbro consolidated its games marketing into Grey, which separately lost Panasonic to Kirshenbaum Bond. Sprint Nextel consolidated its entire media budget into MindShare; and General Motors has shifted around half of its US marketing budget for Cadillac into Modernista, which will work alongside incumbent Leo Burnett.

Regards

Simon Tesler
Publisher, Adbrands

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