Hush my mouth – not ‘Chevy’ but ‘Chevrolet’. Repeat after me, ‘Chev-ro-let’

June 11, 2010

I was tickled to discover General Motors has issued a decree that, heretoafter, the brand formerly known as “Chevy” (as in “levée”) will be called “Chevrolet” and nothing else.

GM decree: No more Chevy at the levée

A po-faced memo, sent to all to all employees working at the megamarque’s Detroit HQ, says: “We’d ask that whether you’re talking to a dealer, reviewing dealer advertising, or speaking with family friends, that you communicate our brand as Chevrolet moving forward.” Then, without a trace of irony, it goes on to observe: “When you look at the most recognized brands throughout the world, such as Coke or Apple for instance, one of the things they all focus on is the consistency of their branding…”

Er, no. Consistency, certainly; but Coke is “Coke” and the “Apple” in “Apple Mac”  is silent.

The memo is signed by Alan Batey, vice president for Chevrolet sales and service, and Jim  Campbell, Chevrolet’s vice president for marketing, but I strongly suspect the influence of  GM’s wunderkind marketing supremo Joel Ewanick, freshly hired from Nissan. Ewanick, it will be recalled, spectacularly fired Publicis Worldwide from the $600m ad account the minute it had won it and installed his old chums from Hyundai days, Goodby Silverstein & Partners, in its place.

Branding by decree never works when what you are up against is the property of popular culture. And Chevy (whoops, a quarter into that Detroit cuss bucket by the water-cooler) – GM’s biggest brand, accounting for 70% of its sales – is very much public property. Need I go further than quote the New York Times here? …”What about rolling back the popular culture references to Chevy? Elton John, Bob Seger, Mötley Crüe and the Beastie Boys have all sung about Chevy, and hip hop artists rap about ‘Chevy Ridin’ High’ or ‘Ridin’ in my Chevy.”" Not merely Don McLean, then.

Just to underline the wrongheadedness of it all, I have a personal anecdote to relate on this very subject. Shortly after he was installed as president of InBev UK and Ireland, Richard Evans tried to address the plummeting brand equity and sales of his company’s flagship product, Stella Artois, by deleting from the record all references to its popular sobriquet “Wife Beater”.

Kowalski: Not Stella

It was, I suppose, a bit mischievous of Marketing Week to run a cover story illustrating the sad decline of this once proud brand with a still taken from A Streetcar Named Desire, featuring Stanley Kowalski (aka Marlon Brando), clad  in “Wife Beater” tee-shirt and wielding a (photo-comped) bottle of the offensively-misnamed brew in his hand. Evans, inevitably perhaps, had a sense of humour loss and threatened to sue over defamation of the brand. A casual search of Google revealed over 1 million references linking Stella Artois to “Wife Beater”, some going back to the Sixties. We heard no more from the other side’s lawyers.

I’m not for a moment suggesting that his run-in with Marketing Week had anything to do with Evans’ precipitate departure from InBev less than two years into the job. Merely that high-handedness and successful branding are not good bedfellows.

UPDATE: Furious back-tracking by senior GM executives, who now realise what a PR blunder they have made. The memo was “poorly worded”, they admit; “We love Chevy. In no way are we discouraging customers or fans from using the name”; But “Chevrolet” will have to stay, otherwise foreigners (?!) won’t understand the brand. Globalisation, just like Marathon and Snickers, eh? Not.  More on the controversy here.

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Agencies go on strike over client approach to pitch process

February 11, 2010

Agencies are in revolt over clients’ increasingly arrogant approach to the pitch process. The rebellion has started in Belgium, where 20 different agencies have suspended their websites to post a message of protest. What’s nifty is that the message forms a continuous web across the competitive divide, each agency posting a paragraph or so of the complete manifesto and giving a link to the next section. Representatives of all the big names, as well as local hot shops, are there: Publicis, McCann, BBDO, JWT, Ogilvy etc.

This is the worm turning. Agencies are sick of a commoditisation process which has led to up to 10 agencies vieing for a single piece of business, simply because the client believes it will get a better ‘deal’. Short-term financial gain for clients; but long-term suicide for the industry as a whole, as agencies buckle under the pressure and creativity is squeezed out.

See for yourself here. This rebellion could well have transborder legs.

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Age may wither them and custom stale their finite variety

November 7, 2009

Tim LindsayI was struck by WPP chief Sir Martin Sorrell’s comment on the marketing services industry at ad:tech this week. “The people who run agencies tend to be of an older vintage – to put it politely,” he said. “They tend to be resistant to change and want to spend the last three to four years of their careers travelling around the world rather than dealing with fundamental strategic issues on a daily basis.”

They should be so lucky to reach “an older vintage” these days. The number of people over 50 who are active in the ad business is a vanishingly small figure, according to Incorporated Practitioners in Advertising (IPA) figures, and it’s getting smaller all the time. One particularly endangered species seems to be the heads, or group heads, of UK network creative agencies.

To take a small but illuminating sample, Gary Leih, group head of Ogilvy (just over 50), and Tim Lindsay, president of TBWA\London (53), have both been put out to pasture recently. We could perhaps add the case of Bruce Haines, group chief at Leo Burnett, who managed to stay the course until the ripe old age of 55. And the comparatively youthful former chairman and group chief executive of Saatchi & Saatchi, Lee Daley, who moved on in his late forties to an all-too-brief spell as marketing director of Manchester United. While we’re there, let’s tie in the long time management void at the top of Lowe, and the problems in filling the top slots at Publicis UK a couple of years ago when the self-same Lindsay left for TBWA.

To go back to Sorrell, I’m not sure anyone – other than himself perhaps – is capable of dealing with “fundamental strategic issues on a daily basis”. Just one or two over a two-year period is usually enough. As far as I can see, that’s exactly what Daley, Leih and Lindsay tried to do. They all instituted fairly far-reaching management changes in an effort to meet the digital challenge subverting traditional agency structures. With hindsight, the problem seems to be that they were judged not to have gone far enough. Or, put another way, they may indeed have embraced a “fundamental strategic issue”, but they were not allowed long enough to savour their triumph. The truth is, if an agency doesn’t bring in enough big business in the first two years of your tenure, you’re likely to be turfed out in the third. The digital challenge may simply have made it a little harder to win that business in the first place.

Lindsay was probably on skid row once his agency lost the advertising account for McCain to Beattie McGuinness Bungay. He was lucky to survive the subsequent – abortive – attempt to buy BMB. Nissan had also begun to look shaky. Pinning the Media Arts rebranding fiasco on him sounds like the thinnest of subterfuges employed by a management that had long since lost confidence in him – fairly or otherwise.

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Louis Vuitton prepares global digital assault

September 30, 2009

Catherine DeneuveStand by for some crowing. Not from me, from WPP. It looks as if one of its agencies, OgilvyOne, has won a colossal piece of digital business from luxury goods company Louis Vuitton.

Reasons to be cheerful? Part One: this is a global account and, according to some, the largest digital budget awarded this year. Part Two: the LV pitch was held in Paris (as it would be, since LV is French-owned) and prominent on the shortlist were two agencies we are now intensely familiar with, Digitas and Razorfish (hint: they are now both owned by Publicis Groupe). WPP, you may recall, was the runner-up in the auction to buy Razorfish. So there’s a special piquancy in winning such a prestigious piece of business from right under the nose of Publicis group ceo Maurice Levy on his home ground.

More interesting perhaps is the question: why is this such a big account? After all luxury goods brands, however exclusive, are not generally known for the size of their budgets. A bit of decorous advertising in some upmarket magazines usually defines the limits of their imagination.

Not so LV – the luggage to watches to shoes and handbags operation owned by one of France’s most powerful businessmen, Bernard Arnault. Arnault departed from tradition a year back with the company’s first commercial, a two-and-a-half minute epic (originally) featuring Polish model Monica Krol and meditating on the theme Where Will Life Take You? More familiar perhaps will be the employment of uber celebrities such as Mikhail Gorbachev and Catherine Deneuve in the press ads.

Now Arnault seems to have found digital in a big way. In a study just out from New York University’s Stern School of Business, Louis Vuitton, Porsche and Tiffany have emerged as some of the very few luxury brands that “get” online. Among those that don’t are Trump, Bulova, Fabergé and Graff. The study surveyed 109 brands in all, and discovered that where only 33% were selling online a year ago, 66% are doing so now. Digitally savvy, or just desperate as a result of the recession?

Arnault himself take the internet very seriously indeed. He has involved LV in a titanic trademark dispute with Google, over the introduction of its AdWords service which – according to Arnault – recklessly encourages counterfeiting. The score so far? One all. Arnault won his case in the French courts but the finding was recently quashed by the EU’s highest court, which ruled that Google did not have a case to answer. We’ll see. Arnault is nothing if not tenacious.

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Citi smells ‘fishy figures in Publicis deal

September 28, 2009

PublicisNew evidence has emerged that Razorfish, the digital agency which Publicis acquired from Microsoft for $530m, was not be quite the snip it appeared at first sight.

In an earlier post, I expressed surprise at WPP’s reluctance to test Publicis’ resilience in the last round of bidding and suggested there may have been anxiety about Razorfish’s underlying performance.

I am not alone in this suspicion. Microsoft has just released more detailed figures on Razorfish financials and analysts at Citi have been quick to point out that they do not tally with the sunny, upbeat, picture portrayed by Publicis at the time of the acquisition in August. Specifically, revenue has been declining throughout the year, where Publicis said it had improved year on year; and the agency is set to make a loss of $50m, where Publicis claimed it would make a 6-8% margin. Citi cites potentially extenuating circumstances for the discrepancy, the more important being incentives for senior Razorfish executives which Publicis may have failed to count in. “While this doesn’t derail our positive assessment of the deal, it is strange,” concludes the Citi circular. Strange indeed. Particularly, one assumes, for Publicis shareholders.

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Will Razorfish make Publicis cutting edge?

August 11, 2009

RazorfishPublicis Groupe may have dramatically trumped Dentsu’s higher offer to acquire digital and interactive agency Razorfish, but has it cut a good deal  ?

I ask the question because WPP Group, the third contender in second-round negotiations with Microsoft, has played a curiously muted role in this contest. That, to say the least, is unusual. Normally a locking of horns between WPP and Publicis is enlivened by the electric personal animosity between their principals, Sir Martin Sorrell and Maurice Levy. It’s a sore point with Levy that Sorrell has often outgunned him, most conspicuously in the hostile takeover bids for Y&R, Cordiant and Grey. But there was no war of words this time. WPP allowed itself to be meekly outbid.  Why?

The answer has nothing to do with the strategic value of the acquisition, which is indisputable. Razorfish has, by common consent, considerable scale and skills in digital and interactive, particularly in the US market. A recent AdAge survey ranked its revenue behind only Publicis-owned Digitas in 2008. It has over 2,000 employees and a raft of blue-chip clients which include Kraft, Ford, Visa, McDonald’s and AT&T. Moreover, while admittedly US-centric, it has valuable outposts in London, Beijing, Shanghai, Hong Kong, Tokyo and Sydney.

levy

Levy: Digital king?

Fitting Razorfish into Publicis’ VivaKi unit will undoubtedly help it to build that global presence, not to mention its client list. But the acquisition is a big coup for Publicis, too. As David Kenny, managing partner of of VivaKi, has pointed out, more than half of his division’s revenues will now come from digital for the first time – and Publicis itself will be able to boast that, with 25% of its income derived from that same source, it will have more digital assets than any other advertising holding company.

“It gets us a culture that’s more savvy about technology and innovation, more nimble and more connected to Silicon Valley. We’re very connected to Microsoft and very connected to Google – the big platforms underneath all this,” he adds.

So far, Publicis has been much more aligned to Google’s DoubleClick adserver platform. Now, by embracing Microsoft’s Atlas platform, via Razorfish, it has redressed the balance; not unimportant given that Microsoft has bolstered its competitive position vis-a-vis Google with the Yahoo! search deal.

So, a strategic snip, bought in the midst of a recession and under the very nose of WPP into the bargain?  Well, not necessarily. As with any deal, the devil is in the detail. In this case, the detail is what allowed Publicis’ $530m cash-and-shares offer to best Dentsu’s $700m one. Superficially, it comes down to the fact that Dentsu has almost no media buying presence in North America, whereas Publicis has a lot. Microsoft made it clear it wanted a conditional deal whereby it could exploit that very buying power – and it has duly got its pound of flesh. Under the terms of the agreement, the two companies Microsoft and Publicis have signed up to a five-year alliance that will allow Publicis-owned agencies to buy display and search advertising from Microsoft on supposedly favourable terms. But here’s the rub: the discounts only kick in above a certain volume of business. I hear that Publicis will have to commit $3bn-worth of clients’ business over those five years to make the deal work, and that there will be financial penalties if it does not. I wonder what Publicis clients P&G, Coca-Cola and General Motors think of that.

This may be one reason why WPP shied away from a more aggressive bid. Another seems to be that the Razorfish profit and loss figures simply do not add up – and that it will actually make a loss this fiscal year.

Even so, Publicis has scored a considerable propaganda triumph with its acquisition.

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Publicis and Dentsu cut up nasty over Razorfish acquisition

July 29, 2009

RazorfishWord reaches me that Razorfish, the digital interactive-cum-media placement agency being disposed of by Microsoft, is causing controversy as the bidding enters the second and final round.

Microsoft originally bought Razorfish as part of its $6bn acquisition of aQuantive in 2007, but clearly feels an agency of this size conflicts too much with its ad sales operation. The idea is to offload it, via Morgan Stanley, onto one of the big agency groups for well over $400m, plus  a commercial deal involving Microsoft proprietary advertising technology and a commitment to buy ad space across Microsoft web properties such as Bing. Conditional selling, you might say.

Interpublic and Omnicom have fallen by the wayside, which leaves WPP, Publicis Groupe and Dentsu in contention.

Publicis emerged as an early favourite, despite the fact that its platform technology (via Double Click) is more closely aligned to Google than Microsoft’s Atlas. So it was somewhat miffed to discover that its ally Dentsu – which holds a strategic stake in Publicis – has comprehensively outbid it.

But the $700m rumoured to be on the table may not be the knockout bid it appears. The trouble is Dentsu doesn’t have the US presence to do an appealing commercial deal. Which is where, in other circumstances, its ally might have come in…

Experts think that $700m is over the top in current market conditions, a symptom of Dentsu’s desperation to catch up. Maybe Microsoft should take the money and forget the side-deal. But then again, that side-deal has become more important now Microsoft is acquiring Yahoo!’s search business.

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No quarter for ad giants

July 29, 2009

GM bankruptAnother day, another dollar less. Quarterly results from the big agency groups paint a revealing picture of financial pain, and nowhere more poignantly than in the case of the stricken automobile sector.

Publicis Groupe recently disclosed that its exposure to bankrupt General Motors was ‘only’ $12.8m (about £8m) rather than the £78m (£47m) originally projected. That did little to soften the blow when the half-way figures came out a few days later: net income (pre-tax profit) down 13%, and nasty deterioration in organic growth in the last quarter. The only bright spot was a 6% increase in digital revenues over the six months. That, and the assurance of group chief executive Maurice Levy that things can only get better – from September onwards. Tell that to the 1,800 people (4% of the group) he has had to ‘let go’ this year.

Still, Publicis did a lot better than Interpublic Group, home of Lowe and McCann Erickson (one of whose biggest clients is GM). IPG has actually managed to achieve a loss of $53m (£32m) over the six months. So the reduction of its latest quarterly net income by 76% must be accounted something of a triumph by comparison with first quarter performance. Quite a lot of its losses are attributable to the severance costs of the 4,100 people it has made redundant – 9% of its workforce.

Omnicom (BBDO, TBWA, DDB etc), too, posted pretty dismal figures, slightly more encouraging than IPG’s but not, on most criteria, as buoyant as Publicis’. It is laying off 3,500 of its staff, nearly 5%. Profits for the last quarter were 24% down, about the same as the previous quarter. Which was probably pretty good really, considering Omnicom’s $58m exposure to bankrupt Chrysler. On this subject, however, chairman and ceo John Wren was understandably vague – despite analysts’ obvious interest in the subject. It was the second biggest search term employed in Omnicom’s earnings call. There are, as I have pointed out before, some unresolved mysteries about Chrysler and Omnicom.

As for WPP, we will not be seeing its half-year results until the end of August. Things are not looking too clever, though. True, WPP is the odd one out so far as the car industry is concerned. Not only has Ford not made its way to the bankruptcy court, it has even managed a small operating profit this quarter. So no write-downs; but that’s slim cause for comfort, as ad spend is likely to be depressed for some time to come. Redundancies give us a fuller picture. In a trading statement released early in June, WPP admitted to making 4,300 employees redundant – about 4% – since the beginning of the calendar year. The final figure is expected to be about 7,200.

Both Publicis’ Levy and Omnicom’s Wren seem to be spinning the idea that we are at, or near, the nadir. Don’t believe everything you hear, though. Next  quarter’s earnings may look better than they really are simply because the dive they took in Q3 last year will flatter the percentage increase. That, at least, is the view of WPP ceo Sir Martin Sorrell.

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