Just Lovin’ It (Not) – Part 2. McDonald’s chokes on its social media initiative

January 26, 2012

When will brands with a corporate reputation problem finally realise that social media – whatever its siren attractions – is not for them?

Not yet, as evidenced by the so-called “McFail” initiative. Last week, McDonald’s (yes, the Brand the World Loves to Hate, see my earlier post), bought two “promoted tweets” – Twitter’s answer to generating advertising revenue. The aim, apparently, was to persuade McDonald’s customers – those presumably with an excess of serotonin in the bloodstream – to share their happy-clappy experiences with the world.

Surprise, surprise, the clickable Twitter “hashtag” McDStories was (all too easily) purloined by mischievous malcontents. Very soon, instead of reading about McNuggets like Grandma used to make them (not), we were subjected to tsunami-force tirades on alleged animal-welfare abuse, wage slavery, food poisoning induced by McD fare and graphic descriptions of the bodily symptoms that accompany it.

By about 1400 hours Eastern Seaboard Time, D-Day, Operation McDStories had been ignominiously aborted. “Within an hour, we saw that it wasn’t going as planned,” explained a baffled Rick Wion, McDonald’s US social media director. “It was negative enough that we set about a change of course.”

Too right, Rick: a 180 degree one, to avoid losing your job.

Before you ask what planet Rick and his McD chums live on, let me explain: it’s the same one inhabited by the folk at Dr Pepper (owner, Coca-Cola), Nestlé, Wendy’s and Qantas. All of these brands have, at various times, lived under the narcotic delusion that social media is a marcoms nirvana utterly divorced from the everyday travails of brand management – and experienced brutal cold-turkey on discovering it is not.

When they go well, social media campaigns are a dream: they inexpensively capture the zeitgeist. But the gains are purely tactical, while the reverses, however infrequent, tend to have asymmetrical, strategic consequences. Why? Because negative high-profile media coverage brings the feckless actions of Rick and people like him to the immediate attention of their CEOs, for all the wrong reasons. If McDonald’s chief Jim Skinner was previously unaware of Wion’s existence, he is no longer. #McDStories has, with one fell blow, managed to poleaxe Jim’s precious Good News story: burgeoning corporate growth in Q4. Not great for Rick’s career advancement, I suspect.

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FIFA sponsors are the only ones who can splatter Blatter

November 20, 2011

Well, what a week of wasted moral outrage that was, even if it did produce one of The Sun’s finest headlines for a very long time.

Make no mistake. “Splatter Blatter” may have sold extra copies of the red-top, but will do nothing to remove the Teflon Man, whose life’s achievement has been to carve himself an impregnable position as world football’s supremo.

In a way, you’ve got to admire him. Like Bernie Ecclestone, whom he resembles in a variety of ways, Blatter is a master tactician at the top of his own, very particular, game: not the administration of Formula One or FIFA, but the administration of power.

The secret of their supremacy is the same. It lies not (or very little) in formal status, but in a second-to-none understanding of how to manipulate an opaque global system that has no loyalty beyond its self-perpetuation.

To be sure, FIFA and F1 are, or have, venerable governing bodies guided by what appear to be democratically elected representatives acting in accordance with a constitution. In reality, the election of these officials is manipulated to suit insiders; and the workings of the institutions they represent are so complex and well-defended that they defy almost any outside attempt to hold them to account.

If there is any parallel to representative government, it is the quaint Rotten Borough system that existed in Britain before 1832. Boiled down to essentials, it involved the King and his chosen First Minister fixing a parliamentary majority by procuring the election of their chosen placemen in all the seats that actually mattered. For placemen read “men in blazers”, and you get the picture.

Corruption was the indispensable lubricant of this system. It involved greasing people’s palms, and not just at election time. The disbursement and retraction of patronage – primarily offices of state awarded on the basis of interest rather than merit – was key to successful management.

Recognise the parallel? Allegations of corruption have plagued Blatter’s 4 consecutive terms of office, culminating in the 2018 World Cup scandal that broke earlier this year. As for F1 scandals, need I enumerate them?

But what do Blatter or Ecclestone care about that? The same opacity which protects these organisations from outside investigation also insulates their ringmasters from public criticism – and any punitive measure that might result from it. Hence the stream of crass remarks that regularly issues from their mouths. For Bernie, Hitler was an OK bloke who built excellent roads even if he did later succumb to a power complex. For Blatter, racism on the pitch is a non-issue which can be settled with a handshake at the end of the match. Out of touch, clearly. But then, so what? They’re also out of reach, and they know it.

Blatter has deftly deflected calls for his departure from the likes of David Cameron, David Beckham and The Sun by portraying the outcry as a case of sour grapes. Only Britain has worked itself up into a national lather over racism on the pitch. Why? Because England lost out in the contest to become 2018 World Cup host, and is now conducting a vendetta against the man perceived to be its nemesis.

So, can he now blow the final whistle and move on? Not quite. If there’s one chink in Blatter’s armour, it’s money – or rather its threatened withdrawal. What if the sponsors – household brand names, with household reputations to maintain – deem he has gone too far and pull the plug on the hundreds of millions of pounds a year that FIFA depends upon for its survival?

Ordinarily, that simply wouldn’t happen. However much they may privately tut-tut about Bernie’s ex-wife spending £12m on their daughter’s nuptials, Max Mosley’s grubby sexual antics or Blatter’s moral insensitivity, the last thing they are going to do is scupper a strategic investment with a noble gesture. Their investment is, after all, in the global game, not the administating organisation and the people who lead it. And their justification for inaction the not unreasonable conjecture that most football and motor-racing aficionados have little knowledge and less interest in the shenanigans of sports administrators.

One sponsor’s uncharacteristic response to Blatter’s racism episode is what, in fact, makes this furore so interesting. True, most of FIFA’s six official partners have played entirely true to form. Coca-Cola has categorically rejected a review of its sponsorship; while Visa, Hyundai/Kia, Sony and Adidas have contented themselves with more or less bland statements condemning racism in sport. But Emirates has broken ranks by taking the almost unprecedented step of reviewing its sponsorship.

Whatever next? Not Blatter’s resignation, for sure. But perhaps the beginning of the end of his reign.


Synovate ponders controversial $1.5m Sudan deal

July 2, 2011

Synovate, the research arm of Aegis Group now being exclusively courted by Ipsos, should be careful who it does business with. Particularly at a time like this.

Word reaches me that it has recently been pitching for a lucrative $1.5m slice of pie in Northern Sudan. The client in question is DAL Group, a Khartoum North-based conglomerate which handles such august brands as Caterpillar, Mitsubishi Motors, KIA Motors, Mercedes-Benz, JVC, Glaxo, Unilever and, most interesting of all (see below), Coca-Cola (since 2002 DAL has been sole Sudanese bottler and distributor of the company’s brands).

DAL Group makes claim to “strong, clear business principles and ethical values”, and I have no reason to doubt it. The problem lies elsewhere. Since 1997, the US has placed a stringent trade embargo on Sudan, with penalties for infringement ranging up to $1m and 20 years imprisonment.

From what I understand, these sanctions can be circumvented by routing the business through the EU (where they are not in force). But leading the business from the US, which seems to be what is required here, would be tricky. The idea has certainly been enough to put the wind up WPP’s Kantar – believed to be the only other research company on the short-list – which withdrew from the pitch after it failed the corporate ethics test.

My advice to Synovate? It’s not worth it.

Mind you, when it comes to ethics, Synovate’s suitor Ipsos isn’t exactly above reproach itself. It recently came to my attention that the global research company is being investigated by the Brazilian authorities over suspected infringements of employment law and, in effect, tax evasion. Ipsos is quietly trying to settle some 82 claims against it, after the Labour Prosecutor Office began an investigation into the treatment of many local employees as long-term freelances, a by-product of which is the avoidance of taxes and social benefits attached to full-time status. There’s more on this here, for anyone whose Portuguese is up to speed.


FIFA’s Sepp Blatter and Max Mosley are two of a kind

June 1, 2011

Will the sky fall in on Sepp Blatter, much reviled president of FIFA, just because Coca-Cola and Adidas, Visa and Emirates Airline – 4 of football’s 6 biggest sponsors – have fired a shot across his bows?

Will the English and Scottish football associations’ vociferous appeals for a postponement to FIFA’s presidential election – which currently leaves Blatter dribbling up to an open goal – make an iota of difference?

No and no. The contest between FIFA and its critics is asymmetrical precisely because, unlike Coca-Cola and its fellow sponsors, FIFA is not a brand. It is not vulnerable, in the first degree, to public criticism – however merited or angry that criticism may be.

Indeed, as Matthew Patten recently pointed out, FIFA resembles nothing so much as a medieval guild. It owes allegiance to no one other than the 208 merchant adventurers who make up its membership. Nothing, culturally speaking, could be more removed from the modern corporation. There is no transparency in its business dealings, because the daylight of accountability is not an element in its constitution. The anonymous men in blazers ply their trade in a way that is endemic to all closed mercantile organisations: through mutual back-slapping, nepotism and, let’s face it, financially lubricated manila envelopes – if they think can get away with it. And lording it over them are the merchant prince oligarchs: men (they are always men) like Sepp Blatter and Mohamed Bin Hamman.

FIFA is part of a pattern which, if not peculiar to the administration of world sport, is certainly highly characteristic of it. Remember the cleansing of the Augean Stables at the International Olympic Committee (IOC), after the corruption scandal that was the Salt Lake City Winter Olympics bid came to light in 1998? That was a relatively benign outcome. Less satisfactory have been the consequences of the more recent shenanigans at Formula One. Despite the engulfing stench of scandal, and the twittering of vocal criticism, its twin ringmasters Max Mosley and Bernie Ecclestone managed to protect the integrity of their power base. Admittedly Mosley eventually went, but it was at a time of his own choosing and on his own terms. Ecclestone, meanwhile, continues to crack the whip without let or hindrance. He is currently said to be negotiating an exit deal with Rupert Murdoch.

Blatter, a man who once fronted an organisation dedicated to stopping women exchanging their suspender belts for pantyhoses, is more likely to draw his inspiration from Mosley than the aftermath of the Salt Lake City scandal. He will brazen the “crisis” out.

And there is little, in the last analysis, the sponsors can or will do about it. On the surface, that might seem a strange thing to say. After all, they are bankers to the organisation and provide its marketing pot. Each contributes between £100m and £300m to a FIFA revenue estimated at £2.4bn in the 4 years up to and including World Cup 2010. Surely that gives them more clout than most stakeholders in the struggle to wring reform from the World Cup organiser? Only up to a point. Let’s not forget that FIFA is less dependent upon sponsors these days to the extent that it can dip into billions of dollars worth of syndicated worldwide TV rights. Moreover, rather than presenting themselves as a united front, the sponsors perceive themselves as embattled and vulnerable competitors (rather like the constructors in the F1 equation). Blatter, like Ecclestone, is a supreme tactician in exploiting such weaknesses. There’s always someone else, he will say, to take their place if they don’t want to play ball. A Pepsi for a Coke, a Nike for an Adidas, a Delta for an Emirates, a Mastercard for a Visa.

And do you know what? He’s right. The only chance the sponsors have of effecting change is if they stand united. My suggestion is not that they threaten to defect, merely that they withhold some of their funding until tangible reforms, prime among them greater transparency and accountability, are in place.


Sir Shred’s threadbare win in the courts

March 13, 2011

On what spurious legal grounds has Sir Fred Goodwin persuaded some mentally bewildered British judge that he may no longer be referred to as a banker? We may not know, we may not even discuss: such is the all-encompassing gagging power of the superinjunction.

Some say that The News of the World was about to blow the gaffe on his private life. If so, I am greatly surprised that the former financial shredder has a private life worth dissecting, given his celebrated 24/7 dedication to work. I can only imagine that mere sight of the word “banker” attached to his name in the newspapers is enough to provoke a trauma so profound and inconsolable among other members of his family that it may be deemed an invasion of their privacy.

However, I digress. Little remarked so far is Sir Fred’s stupendous contribution to legal history. He is the first non-celebrity (excluding Trafigura, a corporate entity – albeit one of surprising sentience) to be granted such an injunction, which opens the floodgates to all sorts of hitherto unexplored avenues of advantage – some conceivably relevant to the marketing community.

Typically, a superinjunction comes about when a celeb of apparently unimpeachable public deportment (such as Tiger Woods) finds his or her reputation is about to be besmirched by irresponsible journalistic muckracking. The potentially ruinous effect of publication upon sponsorship earnings, combined with the anticipated hurt felt by the celeb’s family on reading the exposé, is often enough to persuade tender-minded judges – Mr Justice Eady prime among them – that the celeb’s inalienable Human Right to privacy is indeed being infringed.

Thanks to Sir Fred, the superinjunction contagion may now spread to all sorts of other commercial activity. Max Mosley could perhaps insist that the word “debauchery” be expunged from any description of his private activities over the past few years, for fear of damaging the reputation of Formula One. Likewise, F1 ringmaster Bernie Ecclestone might exercise a veto over the word “Hitler”.

But these are mere legal foothills, considering the potential for indemnifying careers against all-time marketing disasters.

Imagine how useful a bit of UK juridical tourism might have been to the Ford family if the superinjunction had existed back in 1958, as the Edsel disaster began to shape up.

Robert Goizueta, former chief executive officer of Coca-Cola, could have discovered in the superinjunction a helpful antidote to being hurtfully described as “the author of New Coke.”

And Niall Fitzgerald might have been counting his superinjunction blessings in 1995, when he presided over the introduction of Persil Power. Instead of which, he had to engage in a long and painful public relations battle to rescue his company’s reputation (and his own).

Absurd extrapolation? Well, no more than not being able to call the architect of the RBS/ABN Amro deal a banker.

PS. Are we still allowed to refer to Fred as “Sir”? I understand he was knighted in 2004 for “services to banking”.


Ogilvy wins $300m global Coke Zero account…

December 15, 2010

…Something that has come as a bit of a shock to VCCP, which handles the £35m business in Europe, McCann Erickson – responsible for South-Asia, and Crispin Porter + Bogusky – the same, in the USA – who didn’t even know they were in a competition.

Why has Coca-Cola been so reluctant to disclose the fact that there has been a pitch at all, let alone that Ogilvy & Mather has won it? It’s a mystery. Although on the existing roster, Ogilvy has thus far been in charge of Latin America only. It’s not the most promising piece of Zero terrain (Latin Americans’ aversion to the ‘toxic’ aspartame infusing the brew is well known). Then again, maybe Ogilvy just had to fight that much harder to come up with a winning idea.

Two years ago, Coke instituted, at considerable expense, a European review which ended with VCCP triumphing over Wieden & Kennedy and Argentinian agency Santo. It was part of a global consolidation of agencies aimed at delivering stringent “marketing efficiencies”. At the time, coke CEO Muhtar Kent noted: “Agency numbers have gone down by more than half, and I think we have driven a lot of efficiencies in our market research costs, in our marketing over the past 12 months.”

Evidently not quite enough of them, judging from Coke’s recent conduct. The current “secret” review appears to be aimed at developing a single, global, advertising concept. I have not idea at this stage what that might be. Apply to Ogilvy Paris, which will be handling the global campaign.

Huge thought the win is, Ogilvy should remember that today’s favourite may be tomorrow’s casualty. In its agency relationships, Coke is beginning to resemble a gangster playing Russian roulette. Who will be the last agency standing?

There’s more on the nature of the win, and the turbid roster politics of Coke Zero, in an article by Joe Fernandez on Pitch.

UPDATE 16/12/10: Coke, under pressure, is now claiming “This [the Ogilvy] appointment does not affect local market agency relationships on Coke Zero.” Not much it doesn’t. Most of the money will now be flowing to Ogilvy. Still, you’ve got to keep the rest of the troops happy.


Omnicom close to $100m deal with Communispace

December 13, 2010

Omnicom is poised to clinch a $100m deal to acquire eCRM and research company Communispace, according to sources in a position to know.

Communispace specialises in creating communities online – it claims to have over 350 in operation. It can mine and shape sophisticated customer database material for large, blue-chip clients – which often find difficulty in establishing the actionable status of “chatter” in the social media sphere. Communispace clients include Coca-Cola, Campbells, Colgate, Hasbro, Heinz, HP, Microsoft, Pepsi and Unilever.

Communispace was set up in 1999 by current president and chief executive officer Diane Hessan, a Harvard MBA. It is based near Boston, Massachusetts, but has global reach, with offices in London; Genoa, Italy; and in the Asia Pacific region, operating out of Sydney, Australia. Maria Rapp, a founder of Communispace, is managing director of European operations.

Communispace is 43% owned by California-based Dominion Ventures Inc. A further 13% is in the hands of Boston-based Women’s Growth Capital Fund. Senior staff appear to own the rest.

It is easy to see why Omnicom would be interested in buying such a company, but not why it should be paying so high a price –  if financial data that has come my way is any guide. Communispace’s 2010 gross revenue is expected to be $47m and profit before tax, $6.3m: which suggests an already high price/earnings multiple of about 16. Additionally, however, just under 30% of that profit-before-tax figure is expected to be siphoned into an options bonus scheme for senior Communispace management, which would effectively make the multiple soar well into the 20s. It has rightly been pointed out that Omnicom is not normally known for its financial extravagance. Nor has it been particularly active on the acquisitions front recently. There must be a pretty important piece of mutual business at stake to justify paying Communispace’s $100m asking price.


J&J, Hollywood and Toni & Guy – JWT hides its hat-trick win under a bushel

December 1, 2010

JWT has racked up a hat-trick of significant ad account wins on the sly recently – perhaps it’s time for that achievement to be more widely known.

One of them is the global Toni & Guy business. ‘Global’ might sound a tad hyperbolic, in view of T&G’s origins as a trendy London hair salon in the Swinging Sixties. But, hey, it’s a worldwide franchise now, big enough to sell its hair product business to Unilever for a cool $411m two years ago. Which is what we’re talking about here.

Then there’s the Kraft Euro haul. Kraft-owned Hollywood is France’s biggest chewing-gum brand. It’s a little-known fact that the French are the biggest consumers, per capita, of gum in the world – Americans excepted. Like the Coca-Cola habit, the French acquired it fairly recently, after rubbing shoulders with ‘visiting’ GIs during the Second World War.

Besides leading the chewing gum market in France, Hollywood is exported throughout Europe, to Africa, China, Madagascar, South America and Canada. Its factories are located in France and Denmark. Ironically, Kraft first acquired the Hollywood brand in 1961, but later sold it to Cadbury in 2000. It’s fair to say  the high-margin Trident gum business, to which Hollywood is aligned, was one of Cadbury’s principal attractions as a bid target. Interestingly, Kraft has just opened a new SwF14m research and development centre at Eysins near Geneva, dedicated to gum and ‘candy’. And maybe just in the nick of time, because trouble is brewing for the $23bn industry, in Europe at least. The anti-social gumminess of the discarded product is causing serious concern – serious enough for the Spanish government to decree that manufacturers change the formula. Unfortunately, the new unsticky stuff is no less controversial: it contains all sorts of chemical nasties such as co-polymer acetate – more commonly associated with glues and emulsion paints.

Last, and most enigmatically, JWT seems to have scooped a very large chunk of Johnson & Johnson’s Western Europe consumer business – worth up to £300m my sources tell me. Enigmatically, because earlier this year Omnicom roster agencies BBDO and DDB were making all the running with J&J business wins. If rumour is to be believed, the JWT windfall will be dire news for J&J’s other roster agency, Lowe – it now retains little more than the femcare creative business in London. Scarcely a consoling thought for Lowe London’s new management buy-in team from DLKW, which itself has just lost the core £25m Halifax account.


Anomaly seeks financial assistance

November 15, 2010

Anomaly, the maverick marketing services group set up by former TBWA chief Carl Johnson (left), is seeking financial assistance after its business strategy stumbled – according to sources familiar with the situation.

A cash injection is likely to take the form of partnership with another organisation – if negotiations work out. Whether this partnership would involve a private equity specialist or investment by an international marketing services holding company is unclear at this stage.

Anomaly has a volatile track-record in winning large accounts, which include Converse, Nike and Virgin America. It held Diesel for only 9 months before losing it to WPP-backed Santo, and has recently ceded a large chunk of its Sony Europe business to Grey, also owned by WPP. However, its financial problems are not thought to relate to advertising but a specific division, Anomaly IP.

IP is an incubator which seeds early-stage businesses, in which Anomaly itself takes a stake and a share of the eventual profit, if any. Projects include Avec Eric, a joint-venture with Eric Ripert, head chef and co-owner of the Michelin triple-starred Le Bernadin restaurant; eos – a line of women’s shaving and skincare products; Shop Text, a mobile commerce platform; and By Lauren Luke – a co-venture with the eponymous English beauty-products doyenne, also known online as panacea81.

Johnson, a former planner, set up Anomaly in 2004 with a number of like-minded individuals from backgrounds such as TBWA, Wieden & Kennedy and Nike. It was founded in New York, but now has a London office as well. Like Crispin Porter & Bogusky, Anomaly has sought to define itself as an antidote to traditional “legacy” agencies which – it claims – only cater for the services they have experience in providing, rather than for what clients actually require. When Anomaly beat stiff competition to win Virgin’s start-up US domestic air-service in 2006, it produced not only an advertising strategy, but designs for the interiors of Virgin’s new fleet of Airbus A320s, the flight attendants’ uniforms and the content for a pay-per-view entertainment system.

If it is to find a financial partner, Anomaly may have to strike a difficult bargain with its founding principles. A recent $600m bid by Dentsu for digital group AKQA – later withdrawn – exposed tensions between the majority owners, GA Capital, and its two founders. Ahmed Ajaz and Tom Bedecarré were opposed to the Japanese bid and reported to prefer an IPO as a means of buying out the private equity investor. Siding with a traditional agency holding company, on the other hand, might lead to charges that Anomaly had betrayed its principles.


Advertisers mull the hidden costs of child-proofing the web

September 1, 2010

The extension of the Advertising Standards Authority remit to corporate websites and social media content has not come a moment too soon.

The self-regulatory principle – and therein, the ability of advertisers to deflect calls for an unwieldy statutory alternative – is only as robust as its weakest link. And this was a very weak link – so flimsy that unscrupulous malefactors within the industry could, and did, drive a coach and horses through the CAP code. Since 2008, the ASA – which enforces CAP – has received more than 4,500 complaints about online content abuse. To which the lame – but unavoidable – rebuttal has been: that’s not our affair.

No doubt as billed, the new CAP code revisions comprises some of the most ambitiously scoped regulation in the world. The devil, of course, will be in policing the detail. There are at least two areas of concern here.

Punitive sanctions are notoriously more difficult to enforce online than they are with strictly regulated traditional media. The ASA has shrewdly enlisted Google’s help (Google is also supplying seed-corn capital to prime the pump of wider regulatory coverage). Among its options are to remove paid-for search ads linked to persistent offenders and, if necessary, to escalate the pressure by inserting the ASA’s own “name and shame” search ads opposite the offending site. This, of course, does not have the same force as an outright ban.

More subtle is the issue of scrutinising what constitutes code-breaking content and what does not. Nowhere, it seems, in the newly revised code is there a precise definition of “marketing communications”. Possibly for good legal reason. The boundary between self-promotion and “free editorial comment” is often a difficult one to draw. Nevertheless, the penalty in not defining it precisely will be a slow and – for the sometimes unwitting perpetrators – painful and expensive learning curve while case histories are built up. I doubt that the six-month induction period before the new restrictions are fully implemented will be long enough for the industry to get up to speed.

Let’s look at a rather alarming example of the depth of industry ignorance. ASA chairman Chris Smith, taking his cue from David Cameron’s warning about the sanctity of family values, portrays the revised code as having “the protection of children and consumers at its heart.” Coca-Cola recently, and notoriously, fired it digital agency, Lean Mean Fighting Machine, over a Facebook promotion for Dr Pepper that badly miscarried. No doubt the agency thought it was being smart and edgy when it inserted a cryptic reference to hardcore pornographic movie Two Girls One Cup into the copy. But the reference was wholly inappropriate for the 14-year old girl who ended up reading it – and whose mother subsequently blew the whistle on Coke’s irresponsible behaviour. Coke fired the agency and apologised fulsomely. But the chilling thing was Coke clearly had no idea what the reference meant, and no idea what its agency was up to. If an advertiser of this sophistication can make such an elementary blunder, what hope is there for everyone else?

The upshot of these revised regulations will be to promote a host of new hirings. At the ASA, to sift through the prodigious number of case studies generated; and at advertisers and their agencies, to monitor the new boundaries of acceptability.


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