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While GM’s Ewanick dithers over global ad review, Big Fuel runs out of gas

January 12, 2012

It’s difficult not to feel a smidgin of sympathy for General Motors whirligig marketing supremo, Joel Ewanick. Clearly he’s bitten off more than even he can chew with a stupendous $5bn global creative advertising and media planning/buying review. Five months into the review, reaching a decision is causing him sleepless nights. Or so he confides to Ad Age:

“It takes a while to sort through all the data — and there’s a lot of data. We have 40-odd media agencies, 50-odd creative agencies; that’s a lot to sort though. We’re getting very close. We need a couple of extra weeks. …We hoped to have it wrapped up before Christmas, we couldn’t do it. No one out there knows anything. They think they do. But it can change tomorrow. I went to bed last night, and changed my mind.”

Agencies gnawing their finger nails as they await the final result of these nocturnal deliberations may come to welcome his procrastination. Because when he does make a decision, it can have devastating consequences.

Ewanick’s sleepless nights are nothing, I suspect, to those of staff at Big Fuel, which has now lost most of its business as a result of him placing GM’s social media account elsewhere.

Nor to the insomnia of senior executives at VivaKi, the Publicis Groupe digital division which in July last year took a calculated gamble on shoring up Publicis’ worldwide GM business by acquiring a 51% stake in the social media specialist.

Big Fuel without GM is like Hamlet without the Prince. According to information that has come to hand, in late 2010 Big Fuel signed a 2-year annually renewable contract with GM under which all its social media activities were consolidated at the agency. As a result of this, GM was projected to be $28m (77%) of total Big Fuel revenues at the end of 2011. Other clients, which include McDonalds, Philips and Fisher-Price, were budgeted at $8.5m. It is important to emphasise that these figures were forecasts: nevertheless, they are unlikely to diverge hugely from real performance. Circumstantially, we may also care to note that Big Fuel staffed up heavily in the wake of its GM contract. In early 2010 it had 30 employees; by July last year  – when PG pounced – that figure had reached 170, according to Ad Age.

The timing of the annual breaker in the 2-year GM contract may account for why Ewanick ‘let the agency go’ before making a general announcement on the agency roster.

The decision of Laura Lang – CEO of the Digitas unit of VivaKi responsible for Big Fuel – to quit in the wake of the GM decision (she is going to head Time Inc) is no doubt entirely coincidental. A more reliable indicator of the temperature at VivaKi will be whether PG takes up its option to buy the rest of Big Fuel, which it must decide upon by 2014.

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StrawberryFrog is up for sale, but will anyone want to buy it?

November 3, 2011

Word reaches me that StrawberryFrog, the maverick international advertising network, has hoisted a discreet “For Sale” sign. Whether it will succeed in its objective is open to doubt, as will be seen below.

First a little background. StrawberryFrog – curiously named after a colourful, nippy and spectacularly poisonous Latin American amphibian – was founded in 1999 by Canadian entrepreneur Scott Goodson as an agile alternative to the big, cumbersome, advertising holding companies. Goodson, who remains to this day head honcho, likes to see himself, and his company, as an avatar of what is called Movement Marketing, a concept first dreamt up by sociologist Neil Smelser. Stripped of jargon, this means “avantgarde” or “revolutionary”. In practice, Goodson was one of the first to spot that small, manoeuverable agencies with strong creative ideas that travelled well could use digital leverage to undercut the legacy giants – with their expensive but increasingly quaint bureaucratic structures wedded to traditional advertising.

For a time things went extraordinarily well. With only 2 offices, one in Amsterdam and one in New York – which deployed a staff of no more than 70 “Frogs” (but rather a lot of freelancers) – Goodson and his co-founder in Amsterdam, Brian Elliott, pulled in some extraordinary global business. We’re talking Sony Ericsson (when that was still a name to conjure with), Mitsubishi Motors Europe, Pfizer, RIM’s Blackberry, Ikea, Heineken, Morgan Stanley, PepsiCo, Emirates – to name but a few.

In 2009, the agency reached its apogee when – against all odds –  it seized the prized global digital account of Procter & Gamble’s biggest brand, Pampers, from under the nose of Publicis Groupe’s Digitas and WPP’s Bridge Worldwide. It was not even a P&G roster agency. Pampers remains StrawberryFrog’s most prestigious account.

But that was then. From thereon in, it seems to have been downhill.

Already, the cracks had begun showing when in 2008 Elliott broke away, rechristening the StrawberryFrog Amsterdam business Amsterdam World.

True, Goodson (left) patched up the network. He set up a new Amsterdam office, and had already opened a successful Brazilian boutique in Sao Paolo, a shop in Mumbai and disclosed his intention to set up an office in London (project later aborted). But he signally failed to control his New York hub, which has gone into freefall.

Not a week seems to go by these days without news of redundancies, stories emerging of Goodson’s increasingly tyrannical behaviour and acrimonious exits by senior staff. Two of his former top team are, I’m told, suing. One, ex-chief strategy officer Ilana Bryant, wants $2m for alleged breach of contract (I should add in fairness that StrawberryFrog is counter-suing her for $50,000).

All of which, as can be imagined, does little to impress clients, who have become still more alarmed by rumours that StrawberryFrog’s NY office is increasingly reluctant to pay its suppliers’ bills.

By way of illumination, some interesting “numbers” recently came into my hands – from what appears to be an unimpeachable source. They are as follows:

NY office: Dire. Revenue has declined from $17m (2010) to  about $12m (2011). A loss of $600,000 is expected this year. NY has about 40 employees, down from 76 a year ago.

Amsterdam and Brazil have different ownership structures to New York: Amsterdam is smaller by revenues, and expected to generate a $200-300,000 loss this year; Brazil has about 80 employees with $8-9m revenue – it is profitable.

Back in 2007, StrawberryFrog came quite close to sealing a deal with Publicis Groupe (it failed at the due diligence stage). This time a sale is more urgent. But I wonder whether Goodson will be able to find a buyer.


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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