I think Greg Delaney deserves some sort of medal, quite possibly an Olympic one. Because he has just proved – beyond all doubt – that he is one of the smartest deal-makers in adland.
Success in building advertising agencies, as with comedy, is about timing. It’s all about knowing when to buy and when, at the top of your game, to sell. The slightly-built chairman of Delaney Lund Knox Warren has demonstrated this quality not once, not twice, but three times in his business career.
With one farce playing on at Whitehall, it’s easy to overlook another at Southwark Crown Court that flopped almost instantly.
“Ludicrous”, “disgraceful”, “shabby”, “cynical” were some of the kinder epiphets being showered upon it by the critics – most of them in the legal profession. Yes, I’m talking about the Office of Fair Trading’s case against four BA executives for alleged price-fixing. After four years of painstaking preparation, the trial collapsed before a single witness took the stand; inexplicably, the prosecution had sat upon email evidence that immediately exonerated the defendants from any suggestion of conspiracy.
No doubt heads should roll – those of John Fingleton at the OFT and Steve Ridgway at Virgin Atlantic come to mind; yet it is the heads already lying in the blood-stained sawdust which are my main concern here. And one in particular, that of Martin George, formerly commercial director of BA: judged guilty before he was proved innocent.
Let’s face it, no one ever went into advertising to remain poor: the extravagant severance payments awarded to top executives by compliant remuneration committees in London, Paris and New York are the stuff of legend. But, as RBS’ Fred the Shred discovered, being filthy rich isn’t much fun if you end up a pariah. The context of gain matters.
John Dooner, latterly chief executive of McCann Worldgroup, recently retired from Interpublic Group with a pension of $37.7m. This extraordinarily generous provision was bolstered by payments made during his years as IPG group ceo – a position from which he stepped down in 2003. Had he actually done a good job in either of these roles, no one would have batted an eyelid. As it is, the IPG years were mired in scandal and the normally reliable McCann has been haemorrhaging major accounts. By any standards, $37.7bn is a handsome reward for failure.
With Barack Obama poised to repeal the trifling $75m ceiling on BP’s liability for cleaning up the oil spill, supplicants have wasted no time in bringing their financial demands directly before the oil giant.
Most of these demands for compensation seem entirely reasonable. A fishing industry brought to its knees by the Deepwater Horizon blow-out needs restitution. Conservationists grappling with an environmental disaster about to afflict the ecologically-sensitive Mississippi and Louisiana coastline are desperate for every clean-up dollar they can get. The $20bn local tourist industry faces massive lay-offs and a collapsing infrastructure…
Mike Anderson, former managing director of The Sun and News of the World, is launching a company specialising in building and marketing mobile phone applications for smartphones. Handheld Company, based in Chelsea, opens its doors this month.
Anderson believes that with smartphones – such as the iPhone, Blackberry and Google-spawned Android handsets – becoming cheaper, more efficient and popular, the mobile platform is finally coming of age as a commercial opportunity. And that the way ahead is to be found in the development of apps that work effectively across platforms.
I cannot be alone in wondering why the Office of Fair Trading has given Project Canvas a clean bill of health after coming down so hard on Project Kangaroo.
Both, after all are VoD joint multichannel ventures in which the BBC would play a significant role. Ignorance of the differences is no doubt attributable to my superficial understanding of these two projects.
Here’s how Sheldon Mills, the OFT’s director of mergers, explains the case for non-intervention: “… The partners, including the BBC, do not intend to transfer an existing business into the JV…Therefore the proposals do not give rise to a merger qualifying for substantive investigation by the OFT.”
Blimey, that was quick. Publicis Worldwide barely had time to savour its triumph in landing the massive Chevrolet account – Chevrolet amounts to 70% of General Motors’ sales – before discovering it had spectacularly lost the business to Omnicom-owned Goodby Silverstein & Partners.
The loss of the account, reckoned by one well-placed insider to be worth roughly what the whole of Publicis’ UK office earns in a year, is a huge set-back for group chief Maurice Lévy.
Not only is it a hole in the revenue sheet when he, like everyone else, can least afford it, but also a stinging blow to corporate prestige. And yet there was little he could have done about it.
So far as I can make out, this account loss owes little to agency incompetence and almost everything to new brooms sweeping clean. The announcement comes only two weeks after GM hired former Hyundai marketing chief Joel Ewanick as overall brand supremo, pushing CMO Susan Docherty to the sidelines only two months into the job. Goodby has worked closely with Hyundai which, as is well known, is experiencing a sales surge in the USA. There’s another connection, too. San Francisco-based Goodby was once the agency for GM’s now discontinued Saturn brand.
"I believe that if there is an imbalance between the providers of creativity and those who exploit it, then we should care about it, and do something about it. Do not be misled by claims of high principle in this debate. When someone tells you content wants to be free, what you should hear is ‘I want your content for free’ – and that is not the same thing at all. We must rediscover something that should be very obvious: the importance of placing a proper value on creative endeavour."
Fine, sonorous words from James Murdoch, uttered at a speech at UCL last week. Murdoch used the occasion to broaden his attack on the public sector from the BBC to, rather extraordinarily, the British Library. Why? Because the British Library is planning to digitise newspaper collections, among them the News International-owned Times’ – and then charge a fee for them. Superficially, Murdoch has a point. As of right, the British Library receives a copy of every publication free of charge. It seems a bit rich that it should be allowed to profit from the private sector by charging a fee to online users.
Curiouser and curiouser. Word reaches me that Jean-Yves Naouri – heir presumptive to the Publicis empire – is being sent to China (as opposed to Siberia). Already holding down a top job as Publicis Groupe’s operations chief, he will now be spending one week a month in the new, and additional, role of chief executive of Publicis in China.
Sounds like hell on earth, but Naouri is inured to these supplementary troubleshooting roles. He has, in the past, run the group’s healthcare business and been in charge of ‘globalising’ various group functions. The signs are that he will now orchestrate the Great Leap Forward in China, where things have not been going so swimmingly as in other parts of the group.
What this means for his succession prospects is anyone’s guess. Maybe it’s one more dutiful task to attend to before ascending the throne. After all, success in China would be a huge feather in his cap and put some distance between him and any other candidate.
Personally, I blame the iPad. Its imminent launch here seems to have stimulated a bout of weltschmerz among newspaper proprietors, who are now outdoing each other in the gloominess of their predictions about the end of the Gutenberg era (c1453-2015, RIP).
Latest to join the swelling chorus is Pearson, owner of the Financial Times. Pearson’s director of global content standards Madi Solomon has come up with the rather snappy phrase “the sunset of print”, which FT executives expect to happen in about 5 years’ time. If anything, the 5-year estimate is a tad on the optimistic side. It could have been sooner but the financial crisis, and people’s avid interest in it, has artificially prolonged the time horizon.
Put it this way, the FT won’t be investing in any more printing presses. And nor will the Guardian or Times Newspapers (as it is still quaintly called). Guardian editor Alan Rusbridger has long claimed he felt “in his bones” that new printing presses installed at the time of the Berliner relaunch (2005) would be the last. But he originally scoped in 20 more years of production. Now he reckons that was vastly optimistic. John Witherow, editor of The Sunday Times, also predicts that his presses, installed in 2008, will be the newspaper’s last. For a fuller litany of pessimism, consult this page in PaidContent.
The departure of Rupert Howell, managing director brand and commercial ITV, cannot have surprised anyone. He was simply too close to the tainted heritage of Michael Grade, formerly ITV executive chairman, to survive.
The chemistry of the new regime won’t have helped either: too many alpha males scrabbling for power in the boardroom. In that sort of environment, Howell definitely looked the weaker species. In Archie Norman he had to contend with a more commercially astute and interventionist chairman than his predecessor, and in Adam Crozier, a chief executive who had himself been a media man and advertising executive (with no doubt firmly entrenched views on how the business of TV sales should be conducted).
Moreover, Howell’s three year career at ITV has been chequered. He can hardly be blamed for presiding over ITV’s worst-ever sales slump, but he can be held to account for his poor relationship with media agencies. Howell, in a way, showed his age (about 53) in his refusal to deal with anyone but the top man. You can’t act that way with 27-year old media buyers these days – especially if you represent the diminished ITV brand.
Cynics see in Anheuser-Busch Inbev’s decision to pool its US media buying resources with those of PepsiCo two wounded warriors propping each other up for support. Firepower is not the issue here; between them they spent $1.15bn on measured media (Kantar) last year. It is their fighting efficiency which has been under par.
In other words, both parties to the deal feel they are paying the main media far too much and by doubling their negotiating clout they will extract a big dividend.
They may well be right. Media owners, from NBC to Viacom, certainly have reason to be apprehensive. Heretofore, A-B’s media buying performance – which is the responsibility of an inhouse team, Busch Media Group – can best be described as sleepy and would certainly benefit from an infusion of new energy, even if that does come from OMD – which has done an adequate, although hardly effervescent, job for PepsiCo.
As predicted last year, the Digital Economy Bill – despite swaggering assurances to the contrary from culture secretary Ben Bradshaw – has proved a wash-out, with most of the contentious and significant proposals being axed after grubby horse-trading with the Opposition.
So, BBC executives can breathe a sigh of relief that all that bluster from Bradshaw about top-slicing the licence fee to subsidise an alternative to ITV’s depleted regional news services was exactly that, bluster.
More poignantly, the keystone in the arch has also caved in. What was the Digital Economy Bill really supposed to be about? Well certainly not intimidating a bunch of piratical file-sharers with a paper tiger of a law – both difficult to enforce and pregnant with legal prevarication over human rights infringements. But that’s all we seem left with.
If the Bill had any statesmanlike pretension at all, it was enshrined in former communications minister Stephen Carter’s cherished determination to guarantee that Britain had a first-rate digital superhighway through the imposition of a 50p a month tax on telephone land lines.
The two names most frequently mentioned as successors to Andy Bond – outgoing chief executive of Asda – are Asda trading director Darren Blackhurst and Waitrose managing director Mark Price.
Price would be an inspired and City-pleasing choice, given his performance at Waitrose, but I wonder whether such speculation is wide of the mark (so to speak). Let’s leave aside the fact that the ceo shortlist is very much biased towards insiders (for instance chief operating officer Andy Clarke and Wal-Mart’s David Cheesewright have also appeared on it) – and that an internal candidate would be in the Asda tradition. What would Price have to gain from such a move? Well, all right – recognition, a broader challenge and, of course, a bigger pay packet. But he could gain that anyway, if he hangs on a little longer at Waitrose. The key thing he lacks at John Lewis, and what he would also lack as a Wal-Mart employee were he to be offered the Asda job, is plc experience.
The plc issue seems to have been a catalyst in Bond’s own ‘surprise’ decision to stand down as Asda ceo after five very successful years at the helm. To be sure, relatively poor trading by Britain’s second-largest grocer during the Christmas period may have caused a bit of friction with Wal-Mart top brass as well. But if anyone thinks that was the real reason for Bond’s decision – after a preceding 15 consecutive quarters of unblemished growth – I cannot do better than quote Planet Retail analyst Bryan Roberts back at them: if Bond is leaving as a result of Asda’s recent trading “then Tesco boss Terry Leahy should be scared.”
Unabashed by a reprimand from the Advertising Standards Authority last autumn, Coca-Cola’s Glaceau Vitamin Water is again courting controversy, this time with an on-label promotion encouraging employees to take a “sickie”.
Surprise, surprise, it has garnered quite a bit of “edgy” publicity – in the fun-loving tradition of the brand. Most of it courtesy of those stuffy people at the Forum of Private Business – representing self-important SMEs – who have got themselves in a lather over the £12bn that lost working days cost the UK economy annually. Even lawyers have shown an interest– proof positive that this one should run and run.
Who will put Lowe London out of its misery? The loss of its principal accounts seems an everlasting litany. To Stella Artois, John Lewis and Nokia N-Series should also be added the Beck’s account. All that’s propping Lowe London up is international business from Unilever (barring Peperami, which went last year) and Johnson & Johnson. According to Nielsen, 2009’s already depleted billings of £91m shrank to a minuscule £53m.
How to attract top talent in such circumstances – the talent that will draw in vital new business? It’s a vicious circle, from which there are only two ways for a once famous agency to extract itself. Call it a day, as Lowe alma mater CDP did long after it should have. Or buy something that will enthuse new talent and new enthusiasm.
Not surprisingly, it is the latter course that Lowe Worldwide chief Michael Wall has embarked upon. Evidence of his enthusiasm and determination may be deduced from approaches to Creston plc (owner of Delaney Lund Knox Warren); Rapier; and Dye Holloway Murray. So far, it would seem, the overtures have been unrequited. But we should not underestimate the charm of a man with an open cheque book in these straitened times; nor the forcefulness of someone who has managed to persuade cash-strapped Interpublic to cough up.
Mixed messages for the advertising industry in two influential reports out today.
First the good news. Recession is definitely behind us and advertising spend poised for significant growth, according to the latest IPA/BDO Bellwether report. For the first time in two-and-a-half years, a majority of UK advertisers are predicting a return to growth in their advertising budgets. That’s not confined to digital advertising, either. Traditional media is set for a boost, although sales promotion and direct marketing continue to trail. At last, a mentality of cost-reduction seems to have given way to the notion of top-line growth.
Now that the volcanic dust is settling, we’re beginning to see some explosive fault lines developing in the travel business. Packaged holiday companies, TUI Travel and Thomas Cook chief among them, are irate at the way the budget airlines have apparently been trying to wriggle out of their legal responsibility for repatriating stranded British tourists – while they themselves are left to bear the financial and logistical burden.
I say “apparently” because Ryanair – the largest short-haul European airline and budgetdom incarnate – has set itself up nicely by falling into its natural default role: pantomime villain. Last night we were treated on our television screens to the extraordinary spectacle of spokesman Stephen McNamara telling us that Ryanair could not, and would not, pay compensation to stranded passengers (other than the miserly £4 they might have forked out on an air fare) and it was just plain unreasonable to expect them to do so. Instead, we should blame the Civil Aviation Authority, who inflicted this phony lock-down on us in the first place, and from whom, by the way, we can expect Ryanair to extract “rapacious”amounts of money in due course for the inconvenience experienced by its shareholders over the past week.
I note that Publicis Groupe chairman and chief executive Maurice Lévy has used his first quarter earnings call to confirm what we knew all along: that he is stepping down at the end of 2011. However, details about his preferred successor and his continuing relationship with the global marketing services empire he has built up remain elusive; any interested readers may wish to visit my previous post on this subject.
With more certainty I can throw some light on his likely severance payment, thanks to information that has come to hand. Lévy does not receive a pension from Publicis. Instead he will be given what is called a “deferred bonus” and sometimes “deferred conditional compensation” in company documents.
Are the imminent departures of high-profile marketers Phil Rumbol and Cathryn Sleight, from Cadbury and Coca-Cola GB respectively, by any chance related? In one important respect they most certainly are: both are casualties of globalisation. The corporate circumstances may be different, but the underlying cause has been the same.
Cadbury had its destiny decided for it by the deus ex machina of corporate takeover. A successful global company with a premier-league set of brands and high-octane growth prospects in emerging markets, it nevertheless had significant vulnerabilities – particularly in Europe – which Kraft was able to exploit with the seductive promise of greater efficiencies and economies of scale should the two companies “merge”.
Coca-Cola has reacted to similar cost inefficiencies in its mature European operations by embarking on an internally generated “rationalisation” programme which will reduce its ten existing European business units to four. Coke is in no way a potential takeover target, but may well be reacting to investor pressure.