We’re all in the soup now, Luv

October 30, 2009

Alphabet soupEver tried predicting the future with Alphabet Soup? It’s easy. You just pick up an amorphous piece of pasta, dunk it in the hot liquid and – Hey Presto!  – the emerging letter tells you what’s going to happen in the next few months. Anyone can play and lots of people do, including  leading economists and captains of industry. Some reckon it will be the top-ranking game this Christmas. It certainly beats econometric analysis for fun.

Still not convinced you want to play? Well here’s a simple example to encourage you. Take the letter ‘V’. Spot that in your soup and it means the recession will be deep, but short-lasting, with a steep and symmetrical recovery. If it’s ‘L’ you happen upon, I’d put it back if I were you and leave it to someone else. It’s like the electrocardiogram stopping: meaning, there won’t be any recovery for several years and your business will probably die.

Luckily, ‘L’ is a rare letter. More likely, you’ll hear of people coming up with a ‘W’. Don’t listen to them. They’re reheating last month’s soup in the hope of sounding awfully wise. No one in the swim thinks ‘W’ is going to be the winning letter any more. Some claim to have seen a ‘VW’: either they’re indecisive, or they’ve been spending too much time in a camper van recently. Then there are the clever clogs. They believe the future can be predicted with mathematical precision, and they’ve got the formula to prove it. It’s √. We’ll sort of. The trouble is the look of the square root symbol, which is what they’re on about, depends on the font you use. The plateau bar could be anywhere along an indefinite length of upstroke. So it’s no help to anyone. As I say, clever clogs.

However, the most inscrutable, and probably unbeatable, combination to date is the so-called LUV pattern. Apparently it means: West Europe L-shaped, US U-shaped and BRIC V-shaped. But we only have Sir Martin Sorrell’s word for that, because he’s the only one who’s seen that shape so far (although he has confessed he got the idea from Reuters). Sorrell is a past-master at the Alphabet Soup game. During the last recession, he was the principal backer of the U-shape. When recovery stalled, he hedged his bets a bit and came up with the bath theory, later the corrugated bath theory. Which is simply not playing the game.

Still, we’ all know after Christmas who’s right, won’t we?

Kellogg has the last laugh

October 30, 2009

KelloggsWhen Kellogg announced it was lasering its brand name on Cornflakes, to avoid any confusion with own-label imitators, the reaction was derision mixed with incredulity. Surely even Kellogg can’t be that paranoid? Or, on reflection, maybe they’re having a laugh… In fact, come to think of it, this is a super-sophisticated stunt. They’re not really spending all that money on proprietary laser technology at all; it’s just a clever way of getting journalists to put their ‘pure branding’ message across free of charge…

Well, not exactly. The first thing to know about Kellogg is that it doesn’t do humour or wind-up. They’re deadly earnest over at Battle Creek, Michigan. It turns out they really have been experimenting with laser branding – on Pop Tarts in Canada. But ridicule isn’t the right reaction either. Kellogg just does everything by the book. And as a result, competitors will now be smiling on the other side of their face.

Because Kellogg has just produced a recession-busting set of financial results. And the reason? Religious adherence to the Book of Branding, of course. See chapter two, Advertising During a Recession, in particular. Last quarter, they increased spend by 17%. Next quarter, they plan another double digit rise. “Rather than take advantage of lower rates to reduce the cost of our advertising investment, we see this as a great opportunity to increase our investment and build even stronger brands in the future. Higher spend combined with media deflation and a push on efficiency is driving a significant increase in advertising pressure,” says Kellogg chief financial officer John Bryant. So there.

BBH director defects – but not to WPP

October 30, 2009

MahoneyI see the diaspora of talent from BBH has claimed another emigré. This time, it’s from the creative department. Mick Mahoney, a creative director, has quit to become ECD at Euro RSCG – which has been bereft of a creative chief since Mark Hunter went to TBWA\London, back in April.

At least Mahoney didn’t defect to a WPP agency. For a while, it was beginning to look personal; or, alternatively, as if WPP lacked imagination in the talent department.

Is own-label really Miles better? Or Becht simply best?

October 27, 2009

Who’s right, Miles Roberts, ceo of McBride – own-label purveyor to the likes of Tesco and Carrefour – or Bart Becht, ceo of Reckitt Benckiser and arch-high-priest of the cult of the brand? Both claim to be winning the battle for the hearts and minds of consumers. Both can produce ample evidence to support their conviction.

Miles RobertsRoberts is sitting atop a sparkling set of first quarter financial results. He’s had an altogether good year, with McBride earnings well above trend as consumers look more critically at their shopping list in the midst of recession. This particular Q1 set were so good that there will be no need of Tesco own-label teeth-whitener to bring a gleam to Roberts’ smile. McBride’s share price shot up 10% as City analysts jostled to upgrade their underpowered year-end forecasts.

But Becht has been no slouch either. Profits for the maker of Cillit Bang, Vanish, Dettol and Finish were up 40% last year, and the City was just as eagerly awaiting his news and views as Q3 announcement time hoved into view.

And he has not  disappointed. RB has just released its own set of stunning quarterly results: profits were up 25%. A tribute, says Becht, to “our 17 Powerbrands, …. significant investment in media and marketing, and successful new product initiatives.”

“We see no let-up in the demand from retailers for great value and great performing products,” says Roberts. “The only way we you can do that is with own-brand.”

Bart BechtNot so contends Becht: “We are typically market leaders in higher growth categories. We clean dishes not shoes. I don’t have to tell you why. Penetration of dishwashers is going up but shoe polish is not growing because there are fewer people using these products.”

The impression we are left with is that own-label is growing, but RB is taking a larger slice of the high-margin branded sector that remains. It can do this because RB’s powers of innovation in engineering higher-margin products is second to none. Only, it’s not that simple. Part of McBride’s success has stemmed from greater product specialisation and innovation. It would appear that Roberts is no more interested in “shoe polish” than Becht. Instead McBride has been doing exactly the same as RB: engineering higher-margin products such as a five-in-one dishwasher tablet.

So in answer to the question: who’s right?  – it’s neither and both. A case of Frank Sinatra marketing: “I did it my way.”

Trafigura, Pepsi and the Mail buckle before the power of the internet

October 19, 2009

Stephen GatelyWhat links Trafigura’s “super-injunction” furore, Pepsi’s “Amp Up Before You Score” fiasco and the row that has erupted over Jan Moir’s alleged homophobia in the Daily Mail? Answer: all three have found they are no match for the internet and social media.

I have no desire to dissect Moir’s insinuation of “unnatural” causes in her article on the death of Boyzone star Stephen Gately. I have no need to. Baroness Peta Buscombe, recently installed as chairman of the Press Complaints Commission, will find her emailbag full enough with the outpourings of a campaign spontaneously generated through Twitter and Facebook without me adding anything to her workload. Good luck with that one, Peta.

One predictable turn of events in “Moirgate” has been the slippery attitude of advertisers who, the minute the heat was turned on, asked to be dissociated from the article. Marks & Spencer’s reaction was typical: “Marks & Spencer does not tolerate any form of discrimination,” said a spokesman for the retailer. “We have asked the Daily Mail to move our advertisement away from the article. This is a matter for the Daily Mail.” Er, no it’s not, or not exclusively. If you allow your media buyer to buy into a certain demographic, in this case the meat-and-two-potatoes prejudices of Middle England, you presumably know what to expect, and should not be surprised or manufacture offence when the Daily Beast serves them up with trimmings. As for the Beast itself, it has been bloodied by an unwonted confrontation with populist outrage. About the only thing it hasn’t done, amid all the fawning self-exculpation, is to actually withdraw Moir’s article online, although it has neutered the innuendo-laden headline.

But if the Daily Mail is out of touch with digital culture, its ignorance is not a patch on that of Trafigura, the oil trading company which has been doing its damnedest to mount an out-of-date cover-up of its iniquitous dumping operations off Ivory Coast. That it did not succeed is largely due to the long arm of Carter-Ruck, a bunch of overweening libel lawyers only too well known to journalists, being unable to gag the offshore operations of Yahoo and Google. The Minton exposé, which Trafigura dreaded seeing the light of day, then did exactly that. In the process, what was largely an anonymous, clandestine organisation has acquired an unenviable new brand identity as a tyrannical abuser of press freedom, parliamentary privilege and the 1688 Bill of Rights. Pretty good going for a week’s work.

Pepsi’s offence was less in scale, but greater in culpability. As a global packaged goods corporation it will pride itself on its digital nous. The Amp Up Before You Score Apple iPhone app promised to be cutting-edge stuff, but in the event only seemed to prove that the right arm doesn’t know what the left is doing in the cola giant’s marketing department. The app has caused such a torrent of abuse on the internet, on account of its crass, “neanderthal” attitude to women, that Pepsi has had to issue a grovelling apology on behalf of its previously little-known soft drink brand, Amp Energy. It’s well known now, but for all the wrong reasons. More on what went wrong in my column this week.

Low Grade performance at ITV

October 17, 2009

GradeIt’s a bit rich of Michael Grade, outgoing chairman of ITV, to blame the media for a mess substantially of his own making.

Here’s a sample of Grade in action. Asked by Lord Fowler, chairman of the House of Lords communications committee, whether he was surprised about the length of time the process of finding a successor was taking, Grade replied as follows:

“What surprises me is the extent to which this has been played out in the public arena, which is unfortunate. We are certainly not short of advice from our colleagues in the fourth estate. Coming into work each day, I feel as though I am inhabiting a parallel universe…the ITV business is going very well.”

Really, Michael? If it were going that well, you would still be in a job and we would be deprived of a riveting media circus, featuring acts of startling incompetence by leading ITV executives, non-executive directors, head-hunters and, last but not least, ITV shareholders. Thank goodness some of the people below board level seem to know what they are doing.

Unpicking all this: once Grade’s ‘high-production value’ strategy was poleaxed by the recession, he was toast. Herein lay the first problem, because he then proved as amenable as a sea anemone asked to vacate its favourite rock at low tide. All right, he’d give up day-to-day management as chief executive, but he was going to cling on to being chairman come what may, albeit of the non-executive variety.

Grade’s contempt for corporate governance (the Higgs Report specifically calls for the roles of ceo and chairman to be split in public companies) is a lesson for us all and Sir Stuart Rose at Marks & Spencer in particular. Allowing Grade to combine the two roles in the first place was a fiasco in the making for which the ITV board and shareholders must also bear responsibility.

We are now seeing the results of that misjudgement played out. Grade, in staying on, evidently hoped to persuade some youngish, pliable patsy with digital experience to be chief executive, while he continued to lord it over the board. Simon Fox, ceo of a resurgent HMV, self-evidently had the digital experience, but proved no one’s patsy when he turned the job down. Matters were not helped at this juncture by a group of self-appointed ‘activist’ shareholders (Legal & General, Brandes and Fidelity), who insisted on having Tony Ball as ceo come hell or high water.

Ball is an able executive, who did well at BSkyB. But there were two things wrong with his candidature from the start. To begin with he is very greedy. His demands (a package of up to £30m over 5 years was reported) were politically unacceptable in the present climate and caving in to them would have made Sir James Crosby, the ITV non-executive director charged with finding a Grade replacement, look even more foolish – if that were possible in the wake of his ill-judged escapades as HBOS chief. Then again (not that this troubled our militant shareholders), no one who actually worked at ITV seemed to want Ball. Why? Because it would be like letting Alaric the Goth into Rome: after comprehensive sacking, the place would never be the same again.

As it turned out, these anxieties were academic. Ball over-reached himself, not only with the grossness of his financial demands, but in his determination to put his stamp on Grade’s successor as non-executive chairman. Only then did the ITV board and Russell Reynolds the headhunters seem to wake up. They’d got it all topsy-turvy: sure, they needed to replace Grade, but it was the wrong Grade they were replacing. Grade the chairman should have preceded Grade the ex-ceo. Duh! At least Grade has now had the grace to do what he should have done months ago: step down unequivocally.

Has the selection “committee” learned anything else from its mistake? Not really. Shareholders still seem set on a deluded course of appointing a chief executive whose brief is to be “anyone but ITV chief operating officer John Cresswell or any other ITV insider.” If I were Cresswell, I too would be leaving – having been bridesmaid at too many weddings.

Which is unfortunate, since Cresswell is rapidly emerging as the only sound candidate for ceo by default. Anyone who, like me, has grown a little confused about who remains in the race would do well to turn to Mediaguardian, where they will find a handy visual device entitled The Big Cheese Chart. It’s a perceptual mapping graph that plots the fortunes, or otherwise, of those who are contending for the crown jewel roles at ITV and Channel 4. To outward appearances, the process of digging ITV out of the mire looks stalled. All the credible City types selected by shareholders as suitable chairmen have ruled themselves out, with the exception of former BBC chairman Sir Christopher Bland. And without a chairman, there can be no hope of a chief executive either.

Interestingly, given the unpromising turn of events, ITV’s share price has soared 16 % this month – well above the market average. I would put this down less to the fact there is about to be a resurgence in the media sector’s fortunes and more to the fact that ITV has become such a basket case that only a takeover of some sort can solve its problems.

The question is, who would want to take it over? Whoever these people might be, they’ve already missed a bargain-basement opportunity, when the ITV share price was in the low 20ps earlier this year (it’s now back to about 50p). And that’s not even to consider any other obstacles in the way. Such as: ITV no longer has a USP, it has no credible digital strategy, a huge pension deficit and an over-manned sales force.

Baillie and Hatton defection to Ogilvy creates ripples at BBH

October 14, 2009

Baillie/HattonWhat’s really interesting about the appointment of Hugh Baillie as chief executive of Ogilvy Advertising is that he’s part of a breakaway. And the break is away from Bartle Bogle Hegarty.

Former group business director Baillie is being joined by Rachel Hatton as group head of strategic planning, and planning director at the ad agency. Hatton was head of planning at BBH during what may come to be seen as its heyday, when it won all those awards, culminating in the IPA Grand Prix and Agency of the Year title in 2008. Baillie helped to win the global Johnnie Walker business and has led some of the agency’s key accounts, Axe/Lynx, Britvic and Surf among them. Both are BBH stalwarts, Baillie having joined from Saatchi & Saatchi in 1998, and Hatton from Boase Massimi Pollitt (BMP) in 2000.

So, this is a significant coup for Ogilvy and a significant set-back for BBH. Baillie and Hatton come as a team (for example, they both worked on Britvic). It’s a little like that buddy-buddy wrench at DDB London when Paul Hammersley, then ceo, and David Hackworthy, planner, quit to go to The Red Brick Road in 2005.

What makes this worse for BBH is that the defection of senior staff to WPP agencies is becoming a habit. Richard Exon, ceo of RKCR/Y&R, once occupied a similar position to Baillie at BBH. True, he was seduced across at managing director level, and got the top job only after James Murphy set up his own agency, Adam & Eve. But let’s not split hairs. There was also the unfortunate matter of John O’ Keefe, who sat in the BBH creative pantheon only one echelon below Sir John Hegarty. He decided to seek his fortune as global creative director at WPP. Then there’s Guy Murphy, head of global planning, and Russell Ramsey, executive creative director, JWT London. Why has JWT come knocking on BBH’s door? Well, who else’s? BBH is the one to beat in JWT’s competitive creative set, and has the most clients in common (Unilever, Diageo and Vodafone spring to mind). If you can’t beat them, get them to join you, you might say.

Nor is the BBH exodus confined to WPP. Derek Robson quit to go to Goodby, in the USA, as a managing partner; Penny Herriman is managing director and – some would say – soon to be ceo of WCRS; Chris Harris was poached as managing director of Leagas Delaney.

Swallows not making a summer? Well maybe. Any agency which has attained the status of BBH is fair game for the headhunter. In a  sense, it’s a back-handed  compliment that rival agencies feel the need to pillage BBH for top talent.

Nonetheless, another conclusion can also be drawn. And I would be very surprised if this did not condition the thinking of at least some of those senior people who have recently defected. BBH is now 27 years old and in the throes of generational change. It has greatly expanded (into a micro-network) – which in itself offers fresh opportunity for younger talent. And in fairness it has tried hard to bring on a cohort of younger managers – of which London chief executive Gwyn Jones is perhaps the most prominent example. This has not been enough to quell mutinous thoughts in the marzipan layer, a few to the point of defecting. Of course, some of these people may have been talented, but not talented enough. BBH, like everyone else, has had to make some harsh decisions about the size of its workforce, which has been, literally, decimated. One in ten has gone or is going. Nevertheless, I cannot believe that every one of the top-flight defectors has had an assisted exit. After all, it’s also the case that the route upstairs, managerially speaking, is now blocked; and for ambitious people that is a signal to start looking elsewhere.

It is hard to think of BBH without Nigel Bogle, Jim Carroll or Simon Sherwood. On the other hand, if they do not outline their retirement plans in the foreseeable future, the result will be rebellion or atrophy. BBH, at very best, will become less an agency, more a law firm overloaded with “partners”. Not an enticing prospect for the UK’s premier creative shop.

ASA ban undermines Danone’s health positioning

October 14, 2009

DanoneAnother week, another food and drink company rebuked by the Advertising Standards Authority for running an advertising campaign that made unsubstantiated claims about the health benefits derived from its products.

The Glaceau Vitamin Water ‘More muscles than brussels’ campaign banned last week was, above all, silly in its health pretensions. Coca-Cola, which owns the brand, fell below its usual high standards in this area, but the outcome is hardly going to do significant damage to the soft drink giant’s image.

Not so for Danone. The ban imposed on its Actimel health drink campaign is altogether more serious. Health and ‘wellness’ are at the very core of the European food manufacturer’s positioning. Indeed, chief executive Franck Riboud underlined this very point a couple of years ago when he sold off the “unhealthy” bits of Danone, such as the LU biscuit business, to Kraft; precisely to concentrate on health-enhancing neutraceutical products such as probiotics Actimel, Activia and Yakult (which Danone now part owns).

Up to now, this strategy has paid dividends. The fat margins (the only fat you’ll find in a lean business) that accrue to probiotics has allowed Danone to wage a successful recession. A fading celebrity like Nell McAndrew will have been able to relaunch her career on near-ubiquitous presence in Activia commercials, at at time when much of the rest of the industry was scaling back its ad spend. It’s paid off handsomely for Danone, too. Sales of Activia rose 38% in the year to the end of February, according to Nielsen. Similar large spends have been put behind Actimel, starring Sir Bobby Charlton and Felicity Kendal, with similarly gratifying results.

But this ban on the latest ad puts a spanner in the works. The advertisement shows a bottle of Actimel jumping over a skipping rope while a voiceover makes the claim: “Scientifically proven to help support your kids’ defences.”

As far as the ASA is concerned the claim is far from “scientifically proven”, despite the  wealth of clinical data Danone has adduced in its defence. This is a finding, and a ban, which undermines Danone’s core positioning.

Naturally, Danone can water down the language it uses and hope to blur the health-giving benefits a little. But that course is ultimately suicidal for probiotics products, which justify their handsome price premium over ‘ordinary’ yogurts precisely on the fact that they have “scientifically proven” credentials.

The ASA is by no means Danone’s only worry in this respect. The regulators in Brussels are also gunning for it. Empowered by a new raft of more punitive legislation, the EU-backed European Food Safety Authority is going through all food health claims with a fine tooth comb. Of the 70 it had surveyed at last count, 66 failed to pass muster. Danone, so far as I know, has had to redraft all significant health claims underpinning the promotion of Activia and Actimel and is awaiting their approval. Whether it will get that approval, I have no idea.

It’s conceivable, the way things are going, that any kind of health claim attached to food or drink promotion will in a few years time become as quaint as “Guinness is Good For You.”

Brussels has more muscle than health cheats like Coke

October 7, 2009

VitaminwaterThe Advertising Standards Authority’s comprehensive rejection of Coca-Cola’s Glaceau Vitamin Water advertising campaign highlights an unappetising facet of the soft drinks giant’s communications strategy. The rejected health claims in the ads reveal an underlying attitude which is at best naive about health trends, and at worst downright cynical.

The key problem is the positioning of the Glaceau range as something healthy. It is not. As the ASA pointed out, no 500ml bottle of a soft drink which contains 26% of our recommended daily allowance of sugar could reasonably be considered healthy. Coke sought to get around this inconvenient truth by exploiting the so-called functional food platform. The drinks are vitamin-enhanced, therefore they must be healthy. And what health benefits they apparently confer! Drink this stuff and you can kiss goodbye to the doctor’s surgery, because you’ll remain in rude good health. One ad also suggested that Glaceau is more nutritious than Brussels sprouts (“more muscles than brussels”), though when challenged Coke rather childishly tried to pretend the slogan was an esoteric reference to Belgian action-hero Jean-Claude van Damme.

Here in action is a positioning tactic beloved of the embattled processed food industry. Rather than addressing saturated levels of, say, sugar and salt, the manufacturers seek to bypass the vexed issue of obesity by injecting their products with “scientifically-proven” healthy additives distilled in the food laboratory. A good case in point (which I recently touched upon in a column) is the breakfast cereals sector which has studiously avoided bringing down sugar levels by jumping on the neutraceutical bandwagon.

Then again, Coke’s response was pretty typical when rumbled. It meant no harm it said, the ads were just ‘humorous and irreverent’. Who could be so po-faced as to object to a bit of fun? It’s akin to the yob’s excuse: “Me and the lads was just ‘avin’ a larf” ; and about as convincing.

This is wake-up time for Coke and other purveyors of debatably healthy foods masquerading as something diametrically the opposite. By all means market them as indulgence or convenience products, but don’t play the health card. The game’s up. The Euro health police are on to you, and they won’t let up. Brussels, I’m afraid, really does have more muscles.

How smart is Vodafone’s new strategy?

October 6, 2009

These furry monstrosities muttering Dutch, Double Dutch or possibly Womble, represent the front-line of Vodafone’s new brand positioning. Out goes the stuffy grandstanding calculated to appeal to Dad, in comes a warm, cuddly positioning designed to sweep the youth market off its feet.

The commercial may seem laughable, but the intention is not. Vodafone needs to be taken more seriously as a Web-savvy service, hence the imminent launch of Facebook-oriented 360 and the new Power to You slogan.

Like other mobile operators, Vodafone fears it will lose out in the next evolutionary twist of convergence technology – the smart phone. If it doesn’t act quickly, others like Apple and Google will steal all the glory. And the money. Leaving the once proud mobile operators “dumb conduits” down which others pipe their more valuable wares.

More on this in my column this week.

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