Apple outsmarts its competitors

March 31, 2012

Unmistakable stress signs among competitors appear to herald a tectonic shift in the smartphone sector – to Apple’s advantage.

One rival RIM – maker of Blackberry – has retired hurt from the consumer ring. Another, Apple’s principal adversary in the field, is having to carefully rethink its ‘open-door’ strategy.

No surprise, perhaps, that the cracks are appearing at RIM, which has been heading for the casualty ward almost since the iPhone first appeared. After a disappointing financial year and downright disastrous Q4, new RIM chief executive Thorsten Heins has cleared out most of the old guard, including former co-CEO Jim Balsillie – still on the board – as well as the COO and CTO. And announced at the same time that RIM is all-but jettisoning the consumer market in favour of the business and public sectors.

At very least this means RIM will cease to develop content and music services. But the strategic review could signal a lot, lot more where that came from. Why exactly should business and government be interested in propping up the failing Blackberry brand, just because consumers aren’t? Even if they are, would RIM – so pared – still be a scalable global business? These are two of the questions Heins has, understandably, failed to answer so far. And yet, even at this stage, he has admitted that the future is “outsourcing” and possibly a trade sale. Echoes of Palm here, the PDA innovator which – despite a superior operating system – was eventually gobbled up by Hewlett-Packard.

More nuanced than Blackberry’s rout is Google’s response to worsening sales figures in the most hotly contested smartphones sub-sector, tablets. Here, Android-powered product is being squeezed by the exotically priced but more glamorous iPad (entry-level, $399) and the bargain-basement ($199) Kindle Fire, made by Amazon.

Reportedly, the search and smartphones titan is preparing to sell Google co-branded tablets directly to consumers through an online store.

That shocking, you say. So what?

Superficially, Google adding its awesome brand to the Android-powered tablet platform looks like a sign of strength. But that’s not what the techno-commentariat to a man and woman believes is behind the move.

On the contrary, they say, Google is attempting to shore up its position in a fracturing market. Unlike Apple, which maintains a dictatorial control over its operating system at all levels of innovation, manufacturing and distribution, Google has always favoured a laissez aller approach. By opening up its Android operating system to outside manufacturers such as Samsung, HTC and ASUS. This strategy has the merit of reducing development costs and potentially speeding up market penetration, with the corollary of making a killing in the apps field. If it succeeds, that is. But the downside is a lack of quality control; meaning that the Android brand and, indirectly, Google will be tarnished by the poor performance of its weakest collaborators.

It is this perception of fragmented user experience that has driven Google to intervene more directly in the market by taking over distribution.

With what effect we shall see. Commentators have been quick to point out that Google has tried this stratagem before, with the HTC-manufactured Nexus One smartphone.

And failed. The co-venture was shut down in mid-2010.

Jam tomorrow, but never today, as Maurice Lévy contemplates final bonus of €16m

March 28, 2012

Readers of this blog will recall that Publicis Groupe supremo Maurice Lévy’s €900,000 “salary sacrifice” isn’t quite as altruistic as it appears (although, all credit for some skilful self-publicity on his part).

Among the emoluments he won’t be foregoing is a one-off “deferred compensation payment”, which crystallises when he (supposedly) retires at the end of this year.

Thus far, the exact amount has been shrouded in mystery. It was with great interest, therefore, that I read the following extract in The Economic Times:

PARIS: Publicis boss Maurice Levy is set to collect 16.2 million euros ($21.6 million) in deferred pay this year after the advertising agency hit some performance targets and based on the length of his service as chief executive, according to a regulatory filing.

“The deferred compensation is due to Maurice Levy because of his commitment to carry out his responsibilities until December 31, 2011,” Publicis said in its annual report. “It was from the beginning a loyalty tool that was not linked to his departure from the group but to his commitment to remain in his post until the end of his fixed contract.”

A loyalty tool, eh? More perhaps what Arthur Daley, of saintly memory, would have called “a nice little earner”.

UPDATE 3/4/12: With a general election only weeks away, Lévy’s €16m terminal bonus has now become ready ammunition in a mudslinging match between the two leading French presidential candidates. Parti Socialiste candidate Philippe Hollande has called the bonus “unacceptable”. Others in the PS have termed it “obscene”.

But Nicolas Sarkozy, incumbent president and candidate of the right-wing UMP, has not pulled his punches either. He rounded on Elisabeth Badinter, Publicis Groupe’s biggest shareholder, as the guilty party (though not by name). “M. Hollande, it is shareholders who decide on remuneration, and they are your friends,” Sarkozy said in a speech on March 28th, the day after Hollande’s outburst. “The champagne Left, the bohemian-bourgeois Left, has no morality lessons to give us.” Badinter is a friend of Hollande, and has widely-known radical chic leanings. Her husband was a minister under Socialist president Francois Mitterand.

Eventually, Laurent Parisot – head of employers’ association Medef, in which Lévy plays a prominent role – had to come to the embattled adman’s rescue:

 “Publicis, which has [had] exceptional results, is one of the biggest French companies and, most importantly, is a world leader in the advertising business. What isn’t acceptable is high compensation when companies are in trouble.”

An interesting rumour was doing the rounds about a year ago, to the effect that Lévy would seek an ambassadorship after stepping down from PG. Not the kind of controversy he would be wanting if so.

McCann and Goodby to work together on global Chevy brief, but how harmoniously?

March 28, 2012

Once again, General Motors CMO Joel Ewanick has demonstrated his ability to surprise and to innovate, with the announcement of his “Commonwealth” solution to the global Chevrolet creative account.

GM spent $4.7bn on advertising last year, and the majority of that was channelled through Chevy, a brand accounting for 70% of GM’s US sales. So, all eyes will be on what Ewanick, after much agonising, has done with one of the world’s largest creative accounts.

Which is, exactly? The easy bit is that he has fired most of the 70 agencies that were, somehow, somewhere, working on the account – superfluously bloating management and production costs.

More controversially, Ewanick has placed the two winning agencies, Goodby Silverstein & Partners and McCann Erickson, in a joint venture dubbed Commonwealth. It will be based in Detroit, home of GM, but have 3 other creative hubs dotted across the globe at Milan, Mumbai and Sao Paolo. And the controversial bit is that the two agencies – Goodby, which holds the Chevy business in the USA, and McCann, which is strong in Latin America, Mexico, China and Canada – are owned by rival ad holding companies, Omnicom and Interpublic Group respectively. Omnicom and IPG are 50/50 owners of Commonwealth, we are told, but profits will be allocated “geographically”.

That in itself may be cause for friction. But just as interesting is who and what will be running Commonwealth day to day. It is to be led by an eight-strong “global advisory board”, overseeing creative initiatives and strategy, which consists principally of Jeff Goodby, the Goodby Silverstein & Partners founder, who will be creative chairman, Washington Olivetto, McCann Worldgroup Latin America chairman and chief creative officer, Linus Karlsson, the McCann New York and London chairman, and chief creative officer and Prasoon Joshi, the chairman of McCann Worldgroup India. A hat-tip to Goodby’s creative eminence, but note McCann’s dominance on the board.

Now, before muttering “sacks” and “cats”, let’s all take a deep breath and peer long and carefully into the glass half-full. There certainly is a rational case for Commonwealth, or something very like it. And part of it is saving an estimated $2bn in production and management costs over 5 years.

What’s more, we can expect some unwonted co-operative zeal from the two rival agencies. Both will be hugely relieved they have landed the business.

Goodby started as early favourite, not least because it was hand-picked for the US business by Ewanick himself. But  the work has disappointed. And, despite the pleasing publicity surrounding the Ford-knocking Silverado spots at this year’s Super Bowl, there have been gnawing doubts at the Goodby office about the agency’s ability to retain the account.

McCann, on the other hand, desperately needed a coup of any kind to stabilise its faltering performance. True, this is not the outright win that leaves it the undisputed global agency of record earlier rumoured. But it’s a fairly decent outcome, which consolidates McCann’s already strong position in high-growth emerging markets.

But once the novelty has worn off, what then? Will the creative dream-team pull together to make Chevrolet’s global message more consistent, or will the nightmare of agency politics take over? It’s anyone guess. For that very reason Ewanick should be taken at his word in describing Commonwealth as “historic”. We’ll find out soon enough how deep Chevy really runs.

Kony 2012: Is there a marketing angle? No

March 23, 2012

The trade publications are still full of it. Kony 2012: the marketing angle. Apparently, the 30 minute video viral, which has now attracted about 85 million viewers on YouTube, is replete with key “learnings”  for anyone working in the marcoms biz.

Just what these lessons are eludes me. To be sure, the exposé of child murderer, rapist and serial sadist Joseph Kony is a story compellingly told, which probably accounts for its success in holding the butterfly attention of the social media generation for a full half-hour, rather than the conventional 2 minutes maximum prescribed by digital lore.

But to infer from this that amateur film-maker and social activist Jason Russell has distilled an alchemistic formula that can be meaningfully applied to brands and brand management is, frankly, ludicrous.

If there is a universal truth behind this amazingly successful video viral, it is the one first coined by Andy Warhol: “In the future, everyone will be world-famous for 15 minutes.”

Sadly, that 15 minutes of fame has been visited upon Russell, and he has paid the price in inexpungeable personal humiliation and a nervous breakdown that has landed him in hospital, probably for months. Most of us, like Russell, are not very good at handling fame when it comes knocking at the door.

Personal misfortune aside, is there anything else to be learned from Kony 2012? Surely, the cynic will say, it is no more than an amplified instance of “Fenton/Benton” with a bit of social activism attached.

Or, more precisely perhaps, a supercharged version of Corporal Megan Leavey’s titanic struggle with US military bureaucracy, played out on Fox Television and the social media, to rescue her dog Sergeant Rex from undeserved euthanasia. Like Russell, Leavey has managed to activate her campaign “offline” by winning support from useful celebrities and important people on Capitol Hill. Nothing new in that. It’s simply the scale of her achievement, leveraged by social media, that surprises.

That’s not to belittle Russell’s own coup de theâtre, merely to put it into context. Kony 2012 does provide considerable inspiration for a certain kind of marketer – the cause-related one, typically a charity such as Amnesty International or Oxfam. But its relevance to the brand manager’s marcoms arsenal is strictly limited: to PR, and in particular, “advocacy”.

It’s very easy to see why. Brands are never likely to excite, of themselves, the emotional engagement that permeates Kony 2012. And, if they were ever to attach themselves, except ever so marginally, to such a political hot-potato, it would surely spell unwelcome controversy.

Controversy there has certainly been with Kony 2012. A searing media searchlight has scoured Russell’s Invisible Children charity after allegations of fund mismanagement came to light (one of the the things that seems to have driven him into “temporary psychosis”). And the prime minister of Uganda has – via YouTube – personally called Russell to account over an erroneous factual narrative – which, he claims, has done great damage to the Ugandan tourist industry. If this is not “ambush marketing”, I don’t know what is:

Brands are not there to grandstand and take sides: they are there to serve their customers.

Rosenfeld’s wretched road to Mondelez

March 22, 2012

By and large, corporate life is no laughing matter. One exception – and a cause of bottomless mirth at that – is the pompous business of corporate name-minting.

Latest in a long line of jokes is “Mondelez International”. What, you ask? It’s the new monicker for the Kraft spin-off snack business which will shortly be headed by Irene Rosenfeld, after offloading the lumbering US grocery business onto poor old Tony Vernon.

One of Vernon’s few high cards will be the fact that he retains the Kraft name which, whatever its downmarket connotations, has the merit of being agreeably monosyllabic and memorable.

If only we could say the same for Mondelez International. Why, oh why (as The Daily Mail might put it) couldn’t it take the Cadbury name? After all, organisationally and with the exception of a few Kraft legacy brands such as Oreo, Mondelez is the ex-Cadbury company. It faithfully maps Cadbury’s emerging markets strategy and, if it is to achieve the higher margin growth commonly associated with the snack sector, that will in no small part be due to the dominance of Cadbury brands within its portfolio.

Instead of the instant mnemonic, however, we have the instantly forgettable “Mondelez”. Apparently, this was dredged up from an exhaustive trawl of 2,000 ideas – fashionably and inexpensively crowd-sourced from Kraft employees. The ultimate choice was, in fact, a portmanteau word derived from one suggestion fielded in America and another in Europe. Which probably tells you all you need to know about Rosenfeld’s imaginative powers. Camel, horse, committee anyone?

On second thoughts, however, I’m not entirely convinced by this folksy little conceit of hers. “Mondelez” has about it a strong whiff of corporate ID specialist. Allegedly it’s a bit of cod-Latin, derived from a hybrid of mundus (world) and delectatio (delight or pleasure), which is more readily understood by substituting the French modern equivalents “monde” and “délice”. Note the subtle potential French wordplay – Mon délice – perfect but for the fact it is grammatically incorrect, délice being feminine.

What does all this remind you of? Yes, right first time: Diageo, Altria, Aviva and most memorable of all – for the wrong reasons – Consignia. All of these rejoice in being bland latinisms (although Diageo sounds all Greek to me – dia, “through”; geo, “world”: but let’s not get pedantic about it). It seems a curious irony that at a time when interest in classical languages is at an all time low, corporate identity specialists have turned their abuse into a high art form.

And, in their earnestness not to create offence by minting something more meaningful, have often achieved laughable results. Take Aviva for example. On one reading, it could mean “Without life”.

As for Mondelez, which Americans clearly have difficulty in pronouncing, I shall leave you with the wise words of Sharon Shedroff, founder of San Diego consulting firm Strategic Vision Inc:

“Until the brand is established, it will be difficult for people to give it meaning in the US and probably in Asia. Brands under it, like Oreo, could lend credibility to Mondelez.”

So why go to the trouble and expense in the first place?

Wren bags $22m in Omnicom stock sale. Roth to sell $4m IPG shares

March 20, 2012

Omnicom president and CEO John Wren has just sold a lot of shares in his own company. Interpublic Group chairman and CEO Michael Roth is about to do the same.

What is it that they know, and we don’t?

First, some background. Wren sold 258,110 Omnicom shares, worth $12, 549,308 on March 9, according to an SEC filing – leaving him with a total of 1,127,721 shares. The sale represents about 19% of his total holding. In fact, that’s not the full picture, because he also exercised some stock options. The full amount realised appears to be nearer $22m.

Roth’s transaction, which will be executed on April 2, is slightly more modest. He’s selling a mere 324,341 shares which, at today’s prices, would net him about $3.85m.

It’s important to note that director share sales (or “insider trading” as it’s misleadingly called in the USA) are not always what they appear to be. CEOs of publicly listed companies have to act with extreme care when liquidating any of their company portfolio, partly to achieve tax efficiency, and partly to avoid spooking the stock exchange (not to mention shareholders) by seeming to offload too many shares at once.

Roth, for example, normally rebalances his IPG holding every year by buying as well as selling stock. That said, I do not see any evidence of him purchasing stock in 2012 – thus far. Indeed, he currently appears to hold the minimum IPG portfolio permitted to him under company rules. That is, shares valued at five times his basic salary.

So, it would appear he is cutting down at a time when IPG’s share price is nearing a high of about $12. Last September, it was in an all-time pit of $7.93, but IPG has been buoyed by a good trading performance of late.

With Wren, the telegraphy seems much clearer. He’s selling a lot of his stake in the company at one time, no two ways about it. Nor has he bought any Omnicom shares over the last year. In fact, no one insider has. Well, almost no one: a mere 500 shares for a total of $20,583 have been acquired.

If I were a securities house analyst, I might cynically conclude we have a “sell” signal here. Though I hope I am wrong about that.

Do scary anti-smoking ads really work?

March 19, 2012

The last time the Department of Health tried to put the frighteners on smokers with a television advertising campaign, it got into trouble with the Advertising Standards Authority.

Apparently, this 2009 ad was much too scary for children. And could, in the future, be screened only after 7.30 in the evening:

That scary. Makes you wonder what the ASA would think of the following campaign, which has just broken in the United States:

Gruesome is the word that comes to mind. Enough to give small children nightmares for months, if not years, to come. It’s just one execution from a $54m (about £35m) multimedia campaign launched by US government agency Centers for Disease Control. “Really goes for the trachea”, as one US journalist put it; and the other ads are hardly less “gripping”.

But do shock-tactics actually work, faced with a tobacco industry which still wields a $10bn annual marketing budget?

Surprisingly, perhaps, CDC director Thomas Frieden admits that he was once a sceptic himself, while serving as commissioner of the New York Health Department. He has since changed his views in the light of research indicating success is positively correlated to a “dose-related strategy”. In other words, the more grand guignol horror you are subjected to, the more you are likely to give up the weed.

As it happens, Frieden’s successor at the NYHD shows none of the ASA’s squeamishness about inflicting psychic damage on young viewers. “I absolutely think it’s okay for an eight-year-old to be watching messages that prevent that child from becoming a smoker, even if it’s something that the parent and the child find disturbing,” Dr Tom Farley tells CBS.

Who, I wonder, has got it right here?

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