I'll keep the Ads of the Week preamble short this week because there's a load of news to deal with. We like the new ad for Chevrolet by Campbell-Ewald, which manages to convey a warm, family-minded message without slipping into sentimentality. The same can't quite be said for the new Adidas spot by 180 Amsterdam. Great ad, but it indulges itself with a slightly cloying, though impressively executed, paean to the man who kick started the global sports shoe industry. RKCR/Y&R is responsible for a striking trailer for a controversial new BBC documentary about the erosion of working-class white culture in the UK by multiculturalism. (How long can it have taken to wash all that ink off?). Finally, a bizarre and very funny spot by Canadian agency ZiG for cable channel Scream TV. 

In the news this past week: Advertisers

Nike pulled off a huge coup in France this week, snatching the official sponsorship of "Les Bleus", the national football team, away from Adidas for the next contract period, which runs from 2011 to 2018. Adidas have sponsored the French team since 1972. However, Nike offered to pay at least E320m for the seven-and-a-half seasons covered by the deal, equivalent to a stunning E42.7m per season. (Currently Adidas pays around E10m per season). Nike may also pay out a bonus sum if France does well in the 2014 and 2018 World Cups. The deal makes France's shirt, for now, the world's the most valuable, ahead of England for which Umbro (also now a Nike subsidiary) pays around E30m a year. Other high-rankers are Germany (E20m, sponsored by Adidas ), Italy (E13m, Puma) and Brazil (E13m, Nike). At the same time, Nike is continuing to streamline its brand portfolio. It agreed to sell its Bauer subsidiary, which makes ice hockey apparel and equipment, to private investors. The price tag was $200m, less than half the $430m Nike paid for Bauer in 1995. Despite Nike's grand plans when it bought the business, hockey has remained a comparatively niche sport in the US, and Bauer's range of helmets and skates doesn't easily translate to the urban leisure environment which has supplied much of the impetus for the Nike brand's growth. Bauer will be able to continue using the Nike brand under license until 2010.

British Airways' plans to launch its spin-off service OpenSkies this summer, flying between continental Europe and New York, have been disrupted by The British Air Line Pilots' Association (BALPA). The union is unhappy about the airline's decision to employ a separate group of pilots at OpenSkies, who will not have equivalent seniority with their counterparts at BA. They're worried that BA will use its new division to introduce a low-cost operating structure that will lead to reduced salaries and benefits. Growing frustration over BA's refusal to discuss the matter culminated in a strike vote, supported by 86% of BA pilots. If a strike were to go ahead, it would effectively ground British Airways altogether. The company agreed to reopen talks to find an acceptable solution. Ironically, a similar row is holding up the almost-sealed merger of US airlines Delta and Northwest as each carrier's pilots try to resolve a formula for seniority that gets around the fact that Delta's flight drew are in general younger than their counterparts at Northwest. Unless a new set of rules can be finalised, Delta's pilots would rank below those from Northwest in terms of seniority.

On Tuesday afternoon, Starbucks closed virtually all of its 7,100 coffee shops in the US three and a half hours earlier than usual to allow for a nationwide training session. After years of spectacular growth, Starbucks' performance has begun to slow, especially in the US. Founder and controlling shareholder Howard Schultz reappointed himself as CEO earlier this year in a bid to revitalise the business and fight off the growing challenge from rivals such as McDonalds and Dunkin Donuts. He has for some time complained that the chain has sacrificed its style and spirit in pursuit of profit. This week's retraining session, conducted from handouts issued centrally from HQ, was designed to reintroduce employees to "the romance of coffee". "We are the coffee that brings people together every day around the world to foster conversation and community," wrote Schultz in an all-staff memo. "We will revisit our standards of quality that are the foundation for the trust that our customers have in our coffee and in all of us." Among other refreshers, staff were told to make test espressos in shot glasses and compare their colour, and also brush up on their cappuccino skills. “Without aeration," advised the teaching kit, "the milk screams and lacks sweetness... The perfect milk requires surfing the tip of the steam wand until the sound is SSHHHH.” 

In a response to the planned merger of Activision and Vivendi to create the world's biggest software developer, current #1 EA made a formal offer to the shareholders of publicly quoted rival Take-Two to acquire that business for $2bn. Best-known for its various sports games and the Sims series, EA is keen to keep hold of the top spot. Take Two, which has risen to the senior ranks of the industry as a result of its Grand Theft Auto franchise, rejected EA's public offer, and has already rebuffed two private approaches. A combined EA-Take Two would have reported sales of around $4.1bn for 2007. The Activision-Vivendi combination, due to complete by mid 2008, had around $3.8bn.

Another shiver ran through the pharmaceutical sector this week following the publication of new research which suggested that widely used antidepressants such as Prozac and Seroxat have little or no real effect. According to the report from the Department of Psychology at the University of Hull, these drugs work no better than a placebo for patients with mild to severe depression. The study concluded that "there seems little reason to prescribe antidepressant medication to any but the most severely depressed patients, unless alternative treatments have failed. The difference in improvement between patients taking placebos and patients taking antidepressants is not very great. This means that depressed people can improve without chemical treatments.” Eli Lilly and GlaxoSmithKline, the makers of Prozac and Seroxat respectively, were quick to defend their own proven research and, quite rightly perhaps given the slightly hysterical tone of some media coverage, warned that the study "should not be used to cause unnecessary alarm and concern for patients". 

As part of a presentation to financial analysts in New York, Procter & Gamble CEO AG Lafley announced plans to eliminate around 15% of the company's middle management positions as well as an unspecified number of underperforming brands. The company is keen to boost profitability in the face of rising commodity prices and fierce competition. The group wants to concentrate on the 41 brands in its portfolio which already have sales in excess of $500m annually. The remaining 250 or so products will be divided into three groups of “future stars” with potential for growth, “local jewels” that are strong in specific countries or regions, and “underperformers” that will be discontinued or divested.

BAT, the world's second largest tobacco manufacturer, agreed two substantial acquisitions which will increase its presence in important regional markets in Europe. The first to be announced was a deal with the Turkish government to acquire state-owned tobacco company Tekel. That purchase will boost BAT's share in Turkey, the world's 8th largest tobacco market, from 7% to around 36%. Today, BAT confirmed the purchase for £2bn of Denmark's ST Group. It already held a minority stake in that business, which accounts for more than 60% of cigarette sales in Scandinavia. Brands include Prince, the single biggest brand in the region with a 33% market share, North State, King’s Original, Scotsman Original and Corner Red.

Upscale British sandwich retailer Pret a Manger is to launch a major expansion drive, following the sale of a majority stake to private equity fund Bridgepoint. Pret plans to open at least 30 new shops during 2008, including seven in New York. It hopes to have 40 shops in Manhattan by 2010. Currently Pret has around 200 shops, mostly in the UK, but with a small number of additional outlets in the US and Hong Kong. Group sales were £223m in 2007, up around 15% on the previous year. The shares acquired by Bridgepoint included the 33% holding which had been owned since 2001 by McDonald's. The US fast-feeder assisted Pret to make its first inroads into international markets, but several of these experimental outposts, such as stores in Tokyo, proved unsuccessful. The sale of its shares in Pret marks the end of McDonald's experimentation with subsidiary brands. All its other secondary brands, which at one point included US chains Donato's and Boston Market, have now been sold.

There were no significant developments in the Microsoft-Yahoo takeover bid. In fact Microsoft had other things with which to concern itself. EU competition commissioner Nellie Kroes issued a third fine to the software company for failure to comply with a ruling issued four years ago that it must open up the details of its operating systems to third-party developers. Microsoft did eventually do this in 2006, but until October last year was charging those developers what the EU considered to be unreasonable fees to access its technical blueprints. As a result, the company has been handed a further penalty for the 15-month delay in full compliance. The new bill is for a record E899m ($1.4bn), bringing the total penalty accrued by Microsoft in this case to E1.7bn, or around $2.6bn.

Visa announced plans to press ahead with an IPO in March or April 2008 despite nervous stock markets. That flotation has been expected for more than a year, and follows a similar move by MasterCard in 2006. The offering is likely to be America's biggest ever, worth almost $19bn, nearly twice as much as the current record-holder, AT&T's spin-off of AT&T Wireless in 2000. The company being floated manages the Visa system in all markets except Europe. Because of the intricacies of trading within the European Union, Visa Europe was split off from the rest of the business in 2006 and will remain a members' association jointly owned by its partner banks. It operates the Visa brand under license.  

In the news this past week: Agencies

In what was described by local trade paper B&T as "a major coup for the Australian advertising industry", local agency Publicis Mojo of Australia has been awarded the lead role on the global Diet Coke account. There was an even bigger coup for Crispin Porter & Bogusky when it secured a $300m assignment to develop a global campaign for Microsoft's Vista and Windows Live platforms. McCann will continue to handle general advertising, but it must be feeling a little sweaty about its future prospects on the account. There were high-fives all round at industry blog Agency Spy, whose near-hysterical take on the news proclaimed, under an old still from Star Wars, "The software titan has bypassed the death stars, the agencies with all the resources and international locations, hundreds of workers to select Crispin. The game has changed and permanently. The Rebel Alliance has won." In other assignments, Delta Airlines was reported to be transferring its entire global integrated account, above-the-line as well as digital and direct, to Digitas. Insurance giant Axa appointed Publicis Conseil in Paris to supervise its own global advertising. For all other appointments, subscribers can access the full Adbrands Account Assignments database here.

In the news this past week: Media

Reed Elsevier announced its withdrawal from business-to-business publishing, putting its trade magazine division up for sale. The extensive portfolio covers more than 10 regions and includes market leaders such as US entertainment bible Variety; Farmers Weekly, Caterer & Hotelkeeper, Estates Gazette and New Scientist in the UK; and advertising industry titles B&T in Australia and Strategies in France. The group said that it wants to reduce its exposure to cyclical advertising markets. Instead it will concentrate on subscription-funded business information services, mainly in the legal, finance and scientific fields. Its flagship product is legal database Lexis Nexis. Earlier this month it announced the acquisition of ChoicePoint, a leading US provider of identification and credential verification services. Commentators were sceptical about the prospect of Reed achieving the £1bn price tag it is looking for given current market conditions. Reed CEO Sir Crispin Davis acknowledged this, commenting “Clearly today is not an optimum time to be divesting this business and it may be that we have to be patient.”

Having acquired an initial 15% shareholding in Germany's Premiere pay TV service earlier this year, News Corporation this week raised its shareholding to just under 20%, raising speculation that it might make a bid for the whole company. News Corp already controls the leading satellite TV services in the UK and Italy, which operate under the Sky brand. Coincidentally this week, the group finally pulled out of the US direct-broadcast market, completing the sale of its stake in DirecTV to Liberty Media.

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Simon Tesler
Publisher, Adbrands