Weekly Update 10th August 2006

Weekly Update 10th August 2006 | why am I getting this email?

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Our favourite ad this week:

Straight outta Connecticut! BBH scores again with Tea Partay, a spoof viral film which indirectly promotes Smirnoff Raw Tea, the latest in the vodka brand's collection of ready-to-drink "malternatives". The film purports to be a music video for rap group Prep-Unit, and transplants all the familiar cliches of urban hip hop to the gentler climes of Connecticut and Vermont. "No one's harder than a New England gangsta / We drink Raw Tea on the south wing verandah / We sail on yachts and ride on horses / Everything we eat comes in multiple courses..." Wonderful!

Recently Revised Profiles and Snapshots

The Jupiter Drawing Room	Mediaedge:CIA
Gap Inc	Coty
Nestle Japan	Johnson & Johnson
Sprite	Campbell Soup Company
Rapp Collins	Harley-Davidson
Pantene	Guess?

In the news this week: Advertisers

Wal-Mart continued to shuffle its portfolio of international businesses, making its biggest withdrawal from a local market to-date with the closure of its ailing German division. All 85 outlets were sold to rival Metro, generating a loss of as much as $1bn for the US giant. The stores will rebrand under Metro's Real hypermarkets banner. Wal-Mart now says its global ambitions are focused on Asia and Latin America, with India and China as its biggest potential markets. The German sale was followed by a flurry of media interest in Australia following a press report that Wal-Mart was weighing up a bid for one or other of the country's two major retailers, Coles and Woolworths.

As had been widely anticipated, AOL dropped its remaining subscription charges for content and services, shifting to a fully advertising-funded model, along similar lines to rivals such as Google and yahoo. The group also announced the loss of 5,000 jobs, or around a quarter of its workforce. They could well include the staff who published the search query histories of more than 650,000 US users on an obscure academic discussion site. The data was quickly seized upon by bloggers who distributed it widely before Time Warner could take it down. Although users were listed in the data only by an ID number, many could be easily identified by the nature of their search queries. "This was a screw-up and we're angry and upset about it," said the company in an official statement.

A group of advertisers including Lexus, Wal-Mart, HP and Microsoft have commissioned eBay to construct the prototype for an auction-style web portal that can be used to buy and sell TV advertising space in real time. The system, named eMedia Exchange, is set to go live in 2007. Meanwhile Google agreed a potentially groundbreaking deal with Viacom-owned MTV Networks to stream selected video clips from programs ranging from SpongeBob Squarepants to Jackass via its network of affiliate advertising partners. MTV also acquired games portal Atom Entertainment, and parent Viacom was said to be considering a bid for social networking site Bebo. Meanwhile Google secured a wide-ranging deal with News Corporation, becoming the exclusive search provider across all Fox Interactive Media websites, including social networking portal MySpace.com.

News International, the UK newspaper publishing arm of News Corporation, announced the September launch of a new giveaway afternoon title, thelondonpaper, which will compete head-on with DMGT's freebie Metro and paid-for Evening Standard.

Toyota overtook Ford for the first time ever in July as the #2 auto manufacturer in the US behind General Motors. The big three US manufacturers saw a continuing slump in sales as a result of high oil prices. Ford’s market share fell from more than 20% in 2005 to 16% in July, and the group warned of losses at its luxury car unit, which houses brands including Volvo and Land Rover. Analysts speculated that company may be forced to sell weaker brands, such as Jaguar, or even its financing arm in order to bolster its finances.

Charles Allen, CEO of the UK's commercial broadcast giant ITV, confirmed his departure after several years of disappointing performance and intense pressure from shareholders. ITV has for some time struggled to cope with fragmenting audience share, and a sharp downturn in advertising spend in mainstream media. For its 3Q 2006, ending in September, the group expects advertising revenues to fall by 14% compared to last year. Adult share of commercial impacts continued to slide in the first half of the year, down a further 2 percentage points to 40.2%.

Vodafone and Verizon appeared to have shelved any plans to dissolve their financial partnership in Verizon Wireless, in which the UK mobile company has a 45% investment stake. For much of 2006, Vodafone has been under pressure from investors to sell its shares. Verizon was at first keen to take full control of the business, but has since developed cold feet as a result of the high price demanded by Vodafone, and a sharp fall in its own profits for 2Q 2006. Recently merged Sprint Nextel also reported a sharp drop in 2Q profits, as well as much lower than expected subscriber growth.

Boots, whose merger with Alliance UniChem was completed last week, was said to be on the verge of agreeing a deal to distribute its cosmetics and healthcare products, including No 7 make-up and Botanics skincare, nationally in the US through drugstore giant CVS. It already operates in-store concessions in 50 CVS outlets, as well as 150 Target stores. The new deal would increase distribution to around 2,000 CVS pharmacies.

As had been expected, Philips sold control of its hard-pressed semiconductor division. Rather than issue an IPO as had originally been planned, the group sold an 80% shareholding in the business to a consortium of private equity investors led by KKR for around E6.4bn in cash. Philips retains a 20% stake.

In the news this week: Agencies

Avenue A / Razorfish added a further outpost to its international network, agreeing a deal to acquire German new media agency Neue Digitale. Omnicom acquired St Louis-based independent agency Rodgers Townsend, which partners group-owned GSD&M on the AT&T account. Bernstein-Rein, the independent Kansas agency that has held a position on the Wal-Mart roster for the last 40 years, has been dropped from the retail giant's current review, and also lost the $70m NetZero account.

Among the confirmed account changes this fortnight, Unilever cut its roster of digital and direct agencies in the UK from 20 to just seven, and announced a review of its Japanese media account; airline marketing partnership Star Alliance appointed DDB London to coordinate global creative; UK supermarket group Morrisons appointed DLKW; DaimlerChrysler gave BBDO New York responsibility for the launch of its Smart brand in the US in 2008. BBDO also took on global creative for New Zealand dairy producer Fonterra; Draft FCB picked up direct marketing duties for Merrill Lynch in the US and creative for game designer Atari worldwide.

Regards

Simon Tesler
Publisher, Adbrands

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