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Mindshare beats Carat to €150m SFR media-buying and planning account

August 1, 2012

Word reaches me that Aegis’ Carat has just lost one of France’s biggest media accounts to WPP’s Mindshare. SFR, the mobile phone carrier owned by Vivendi, has a media budget of about €150m (£120m). Overall, it is one of France’s biggest advertisers, ahead of Orange, but behind Renault, with a total budget of about €300m.

For WPP, it’s second time lucky. In 2009 a joint-ticket of Mediaedge-CIA and Mediacom got into the final frame of a review, but was seen off by Carat, which has now been the incumbent agency for about 15 years. OMD and Zenith-Optimedia also participated in the 2009 pitch. It is not known whether other agencies were involved in the current one.

SFR, which offers fixed line, mobile and broadband services, spends the biggest part of  its advertising budget on television – about €92m last year. Next comes outdoor, with a spend of €65m, then digital, with €62m.

Separately, Carat will have been shaken by the news that Joel Ewanick, the man responsible for placing General Motors’ $3bn global media account in their hands, has been abruptly fired by his company.

Earlier last week, John Gaffney, who led Carat’s North American General Motors account out of Detroit, quit the media agency. The circumstances surrounding Gaffney’s departure are unclear. Some sources maintain his departure was related to client dissatisfaction with Carat’s performance. Others more directly connected to the situation insist Gaffney’s exit was not directly related to performance on the GM assignment.

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“Silly” remark by Everything Everywhere chief lets slip truth about T-Mobile brand

October 26, 2011

Dear Mr Swantee

How do these female Telegraph journalists do it? Trap you into saying things you didn’t really mean to say, that is? Not many months ago, Mr Cable was silly enough to tell two such hackettes that Mr Murdoch’s empire was thoroughly evil and that he was going to put a stop to it, just when he was supposed to be impartially adjudicating the self-same Mr Murdoch’s bid for BSkyB.

Now you, too, have been very silly. Or, to be more precise, you have been caught rubbishing Everything Everywhere, the brand name of the company where you are chief executive.

Here are the very words you used, as reported by the delightful Katherine Rushton:

“Everything Everywhere is not a brand, it’s a silly name with a stopping effect”, he said, although he maintained it was useful for stores which house the two mobile brands.”

Now I know what you’re going to say; in fact what you have said: just like poor old Vince, you were quoted out of context. His context was entrapment; yours we’re going to work on a bit – just in case there’s any misunderstanding.

The first thing I’d like to make clear is that we are all right behind you. Not only do we admire the candour of someone in so senior and responsible a position voicing what we have all long since judged to be a self-evident truth (just, as it happens, we did with Mr Cable). We are also quite prepared to accept that journalists, with their obsession for compression, tend to miss the bigger picture.

I expect, when you were describing your corporate brand as “silly”, what you were really doing was employing a bit of time-honoured rhetorical licence: using the part as shorthand for the whole. It’s not Everything Everywhere the brand that is “silly” with “a stopping effect”, but the brand strategy behind it. That, surely, is the bigger picture that got left out of the context.

Right from the beginning, that brand strategy has been misconceived, hasn’t it?

I mean, the initial idea was all right as far as it went: putting together 2 failing UK mobile telecoms brands in one brand-new holding company and, overnight, transforming yourself into UK leader by customers, ahead of those snake-oil people at O2. What a clever sleight of hand, and one that avoided Orange and T-Mobile experiencing serious difficulty with the competition authorities into the bargain.

The trouble is, your predecessor Tom Alexander wasn’t empowered by his twin masters, France Télécom and Deutsche Telekom, to take the idea any further – and you were left to clear up the mess that resulted. 50:50 ventures never work, do they? Still, you’ve done what you can, within the agreed terms. You’ve swept away all those unnecessary backroom boys and girls, stripped out excess infrastructure, rationalised the shops, brushed up the margins, cleansed the boardroom of useless, nay-saying, former T-Mobile executives and ploughed on with a leaner, meaner Orange team. Yes, Sirree, having worked at HP before you joined France Télécom, you know just about everything there is to know about consolidating tired, low-growth companies.

But one thing they haven’t let you do is to slay the elephant in the room. Yes, I know what you said when you took over earlier this year:

“The T-Mobile customers want a flexible payment and usage system. The Orange customers want a predictable amount paid every month. There is a clear difference.”

But the justification for that difference is becoming less and less apparent, isn’t it? Look at your latest, Q3, figures: pre-paid, plummeting; contracts up. T-Mobile’s days as a UK brand are surely numbered.

Truth to tell, Orange is and always has been much the stronger brand; better serviced too. Maybe, if there hadn’t been all that fudging at the beginning by your corporate masters, then the figures would have been a lot more convincing than they are today. And your brand hierarchy a lot more coherent. Without T-Mobile to worry about, poor old Tom would never have had a nervous breakdown trying to justify the vacuous sticking-plaster of Everything Everywhere – as the best of all branding in the best of possible worlds, when it patently wasn’t.

No wonder you let slip your frustration with a “silly”, unguarded remark.


Bad news for Rebekah Brooks, but good news for BSkyB’s Jeremy Darroch

July 6, 2011

Jeremy Darroch, chief executive of BSkyB, now looks in an even more powerful position to inherit the News International mantle of power (should he wish to) than when I flagged up his significance to the Murdoch empire in my last Marketing Week column.

Rebekah Brooks, NI’s current chief executive, is terminally damaged goods, in the wake of ‘Millygate’. Not to mention ‘Jessica-and-Hollygate’ and ‘7/7-gate’.

For the moment, of course, it’s Andy Coulson, ex-News of the World editor and David Cameron’s former director of communications, who has been thrown to the lions. Thanks to some NI emails which have mysteriously surfaced just in time, Coulson is now a proven liar. He procured, or authorised procurement of, paid information from the police while he was News of the World editor – something he has previously strenuously denied. And for good reason: it is quite illegal.

It’s an astute, if cynical, sacrifice, and proves the Murdochs are still thinking on their feet. Coulson’s disgrace tarnishes both Cameron (by association – after all, he picked Coulson, despite his dodgy reputation, and then backed him to the hilt in his hour of need) and Knacker of the Yard (assistant commissioner John Yates, once the officer in charge of investigating the phone-hacking scandal at the epicentre of the Murdoch crisis, who is now looking woefully ‘under-informed’ and incompetent, after previously vociferously denying the merest scintilla of police complicity in the matter).

Even so the Coulson gambit is, at best, a delaying tactic. It will make our leading politicians and policemen tread a little more carefully, but it will not prevent them from taking decisive action. Public opinion is now too inflamed for them to do anything else.

Inescapably, the smoking gun is pointing at Brooks, née Wade, and editor of News of the World when – it now emerges – NI’s private investigator of choice Glen Mulcaire was hacking into the phones of Milly Dowler’s distressed relatives. She says she knows nothing about it. Do we believe her, any more than we believed Coulson’s protestations of ignorance? I’ll leave that one hanging in the air.

Ordinarily, implicated NI and former NI executives have been able to take refuge in prevarication, in the sure and certain knowledge that rapidly abating public interest will soon allow them to emerge from their burrows relatively unscathed. This crisis is different.

It has an unprecedented commercial dimension to it. Top advertisers, led by Ford, are boycotting News of the World, and that really will hit the Murdochs where it hurts. Ford is the single biggest advertiser, contributing about £4.5m annually to NoW’s £40m display advertising revenue. Halifax (owned by Lloyds Banking Group) has now joined Ford. Other major advertisers believed to be considering their options are T-Mobile/Orange, Vodafone and nPower. The danger, from the Murdochs’ point of view, is that this commercial contagion spreads to other NI newspapers, such as the Sun – which Brooks also edited. It could easily do so, given a swelling social media campaign goading consumers to boycott advertisers who refuse to align themselves behind Ford. (There’s a useful live update on the brands boycott at Marketing Week.)

All of which may well rapidly result in Brooks becoming surplus to NI requirements.

OK, you say, but what has this got to do with Jeremy Darroch? I’m coming to that. Whatever the backwash from the phone-hacking scandal, it will not prevent culture secretary Jeremy Hunt from giving his blessing to Murdoch-vehicle NewsCorp’s acquisition of the 61% of BSkyB it does not already own. Legally, a challenge to that assent is now well-nigh impossible. Indeed, Hunt and the Government would probably be on the receiving end of a writ it they were obstructive.

Let’s assume for a moment that the deal is done, that the Murdochs have pacified BSkyB shareholders with an eye-watering amount of money and are now the proud possessors of the rest of the organisation. What are the repercussions for NewsCorp and in particular its UK-centric arm, NI, in the wake of a full takeover?

BSkyB is one of the UK’s most powerful companies with, just to give the flavour, a marketing communications budget of £1.2bn a year. It is phenomenally cash rich. One estimate reckons that, once acquired, it would contribute 30% of NewsCorp’s cashflow. Like the Murdochs’ newspapers, it is UK-centric. Unlike the newspapers, it is highly profitable. Unlike the newspapers again, it is still a dynamic growth business, which has made good use of product innovation.

In short, it would be the jewel in NI’s crown. Who better to manage that jewel in the new, enlarged organisation – a man of untarnished reputation who intimately understands subscription TV; or Brooks, with her yesterday’s tabloids background?

Of course, I have no idea whether Darroch would actually be interested in such a proposition. He may well take his money and run. But it’s worth thinking about, isn’t it?

UPDATE 17.30 – 7/7/11: So, The News of the World is no more. The Sunday edition, shorn of advertising, will be the last in the newspaper’s 168-year history. Nothing could more graphically illustrate the gravity of the crisis engulfing NewsCorp than that its chairman and chief executive Rupert Murdoch should take the drastic step of closing his most profitable newspaper and the one – to boot – he started out with back in 1969. The suspicion lingers that a skeleton NoW staff will be retained to flesh out a 7-day version of The Sun. “The Sun on Sunday” has long been rumoured as a cost-cutting project. How typical of Murdoch that he should turn a disaster into a publishing opportunity.

UPDATE 7/7/11: Determination not to be the last advertiser at the News of the World has now reached frenzied proportions, as Vauxhall, Virgin Holidays, O2 (£1m), Boots (£800,000) and  Sainsbury’s stampede to the exit with Ford, nPower and Lloyds Banking Group. Morrisons next, I suspect. Will anyone be buying the paper anyway? Newsagents expect a boycott on Sunday.


Iris retrenches in China – already

January 10, 2011

Word has reached me that Iris, the ever-expansive integrated marketing services micro-network, is closing its Beijing office.

That might (to mix my sub-continents) sound like a small earthquake in Chile. Until you realise that the agency group only opened in Beijing about 18 months ago. Isn’t the Chinese economy still going gangbusters? And did Iris chief executive and founder Ian Millner not say, only a year ago: “Our intent is to become the leading integrated marketing agency worldwide and we see China as a key market for our growth and development.”?

Suspicions about the company’s health might be further confirmed by exploring some of its recent history. Iris has been struggling, no doubt about it. In the summer, it closed down its German office, put its Spanish office on notice and was then forced to make a number of redundancies back at London HQ. Later, last November, UK chief executive Steve Bell was moved sideways to joint ceo, and agency chairman Drew Thomson stepped down. European chief executive Paul Bainsfair, meanwhile, was handed a more “client-focused” role and – proof of the urgency of matters – Millner and fellow-founder Stewart Shanley were called back from the China and US stations respectively to take the troubled ship’s helm.

So, just what is going on in China? I caught up with Millner who, for a man recently under some strain, seems chipper and friendly enough. Technically, it would appear the Beijing office will retain a ghostly presence as a client services office, but to all intents and purposes Iris’s China operations will now be regrouped in Shanghai – which Millner set up as an office only a year ago. Apparently, most international clients find it easier to operate out of Shanghai than Beijing. Be that as it may, one particularly large client – Sony Ericsson, with Iris since it set up in 1999 and still accounting for about 20% of revenue – obviously thought differently. Reading between the lines, it was Sony Ericsson, long the backbone of Iris international expansion plans, which drove the network to China in general and Beijing in particular. But ambitions to crack the smartphone market there (it is the fourth-largest player) do not seem to have gone entirely to plan.

Millner admits that China has been a steep learning curve (expensive as well, I imagine). “We need to be more focused and less expansionist. It’s now about making the network work and being profitable on a global scale,” he tells me. Luckily for him, his is still a privately-owned company, so we’re never likely to learn just how much this experiment has cost him and his fellow directors.

Note: Iris has grown like Topsy. It has offices in London, Manchester, Paris, Amsterdam, Singapore, Sydney, Melbourne, New York, Miami, Portland, Atlanta and Delhi. It also had plans to open up in Russia, Indonesia, Vietnam, Cambodia, Laos and Sweden. At one point, it employed 750 people worldwide, over half of them in the UK. What began as a sales promotion and direct marketing outfit has now branched out into experiential, digital, PR, sponsorship and even management consultancy. Its biggest clients after Sony Ericsson are Orange, VW and Barclaycard, none of which account for more than 10% of revenue. Its second biggest client was COI (know what I mean?). Total revenue is £48m, according to Millner – up from about £27m 3 years ago. But pre-tax profit is reported to be about £2m, according to a well-placed source; and debt is a sizeable £10m.

Iris has a well-deserved reputation for creativity and was recently voted one of the UK’s top creative agencies in a YouGov survey commissioned by Pitch.

UPDATE 3/3/11: No wonder there was a spring in Millner’s step. What he knew, but I didn’t when I talked to him back in January, was that Iris was about to land an enormous US account. No less, in fact, than all of Reckitt Benckiser’s North American digital business, formerly handled by Euro RSCG, and worth about $20m (it already handles digital in Europe). It also explains a mysterious ad appearing on LinkedIn, trawling for two senior suits. That should help to tidy up the bottom line a bit. My thanks to Angie Dean for bringing the win to my attention.

PS. Whatever is going on at Euro RSCG, which seems to have received the celebrated three phone calls recently?


I-Level default sends tremors through the industry

May 6, 2010

For those in marcoms, the descent of digital agency I-Level into administration has some alarming echoes of the sovereign debt crisis being played out in Greece.

Just a few short months ago, no one would have seriously contemplated the possibility of either event. Now, we’re beginning to worry that this portends the second leg of financial meltdown, and that a domino effect will ensue.

I don’t want to push the parallel too far, of course. I-Level’s management was always infinitely more competent than that of the Greek economy. Nonetheless, for those who had eyes to see it, this was a calamity waiting to happen. The detonator clock started ticking in February when I-Level, in alliance with Starcom MediaVest, lost out to WPP’s GroupM in a pitch for the COI’s £250m consolidated media planning/buying account. Up to that point, government digital media business accounted for £40m of I-Level’s billings, or about 40% of its revenue. Replacing a slug of income that big was never going to be easy, but the difficulty was exacerbated by I-Level’s financing mechanism. Private equity investors ECI bought a 60% chunk of the group in April 2008, as a precursor to its international expansion. The deal valued I-Level at about £46.5m, but had the effect of burdening it with debt of £32m – much of it redeemed at an unsustainable interest rate of 12%pa. Put another way, that meant the group had to earn pre-tax profits of at least £3m a year merely to cover its interest payments. Guess what? The punitive interest payments kicked in just as I-Level was beginning to lose business. And that was before the coup de grâce delivered by the COI.

Even so, its disappearance is a shock. Set up in 1999 by Andrew Walmsley and Charlie Dobres, I-Level had near-iconic status as one of the few first-wave digital agencies that surfed the dotcom bust and managed to retain its independence. Among its blue chip clients are Procter & Gamble, The Sun, Orange, Sky, Renault, Comet and Samsung. Its top brass, who are now all out of a job, include respected industry figures such as Walmsley himself, chief executive Steve Rust and chairman David Pattison. Up to 100 people are expected to be made redundant. I-Level’s demise is a warning, not merely to those who would sell out to private equity investors, but of the fragility of fortunes, even in the relatively buoyant digital sector.

UPDATE: RIP I-Level. The administrator, Zolfo Cooper, has liquidated I-Level. Media owners such as Microsoft, Yahoo and Google will be faced with multi-million pound losses. It’s the biggest and most spectacular implosion of a high-profile agency since Yellowhammer went bust in 1990. The only part of I-Level to survive is the fast-growing social media operation, Jam, which was sold to Engine yesterday. That means about 20 staff out of a total of 120 have been reprieved.

ELSEWHERE IN ADLAND, I note the champagne corks are popping – and for good reason. DDB London learned this week that it had scooped the £75m Virgin Media account, previously with RKC&R/Y&R.

Woodford: Walking tall

Its understandably chipper chief executive Stephen Woodford tells me that the agency’s proposed integrated strategy was key to winning the business. Whatever, it’s not every day an agency wins an account that instantly boosts its income by 10%. And it gets better. DDB is heavily dependent upon international business, such as VW. Virgin is almost entirely domestic. It thus provides the London office with some valuable “shop window” advertising that should in time attract other local buyers.


O2 brand cashes in on financial services

July 15, 2009

O2It’s possible to see in O2’s diversification into financial services a Branson-like instinct for strategic brand-building. Which is all the more surprising as O2 is steered not by a gifted, marketing-savvy entrepreneur but by an international conglomerate called Telefonica – the Spanish equivalent of BT.

Or rather, not BT; nor France Telecom (which has made such a mess of the once formidable Orange brand). Telefonica has been careful not to swamp the entrepreneurial drive of its subsidiary with the bureaucratic culture of a state-run, or former state-run, utility. And it has paid off: O2 retains market leadership in the UK mobile market; has far and away the most distinctive brand; and continues to be a first-mover in strategic brand innovation, as befits a market leader.

What do I mean by this last point? The big mobile networks know they are on borrowed time. Mobile airtime, once so profitable, is becoming a commodity, partly thanks to increased regulatory intervention from the European Commission. Added value is now the name of the game. But technologically, this has not been straigthtfoward. Even 3G is quite clunky and despite the advent of more user-friendly smart phones like the iPhone, access to the internet (and data revenue streams) is not all it might be.

O2 of course scored quite a few points by being the one to seal an exclusive deal with Apple over the iPhone’s UK distribution. But where it has been really imaginative is in exploring brand-stretching possibilities. Buying the naming rights to The O2 (formerly the Dome) for 20 years was one such step. At a practical level, it gave O2 users venue discounts over the mobile platform. At a more strategic level, it presented O2 as a youth brand with a finger in the leisure sector pie.

Much the same sort of thinking can be seen in the launch of O2 Money. Although the product launch – two prepayable Visa cards – is modest to begin with, the same trademarks are in evidence. Cash Manager and Load & Go (as the two cards are called) will be particularly attractive to on-the-go youth (and their parents, so far as the control element is concerned), and provide another practical vindication of the mobile platform. More widely, O2 is making a strategic move into financial services at a time when trusted brands –and we’re not talking banks here, because there aren’t any – are at a premium. It is probably no coincidence that O2 has done the service-provision deal with NatWest, the self-same bank that underpinned Tesco’s successful foray into financial services.


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