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Big is beastly, especially if we’re talking big banks like Barclays

August 28, 2012

Which brands make us most angry? Yes, you guessed correctly. The big ones that rip us off, starve us of mortgage funds, pilfer our savings and behave with amoral disregard for everyone’s interest but their own. Anything, in short, that ends with the word “Bank”.

But come, let’s be a bit more specific. How about some brand differentiation – which is the worst, and which the runner-up? Well, coming in at number 2 – just behind the winning “All banks” category – is Barclays. And next, in 7th position, is Royal Bank of Scotland.

I know all of this thanks to some research, just out, conducted by YouGov and commissioned by creative agency Johnny Fearless (of which more below).

Why don’t Lloyds, Santander and HSBC make it into the top 10? Surely not on account of the odour of sanctity. We can only speculate, but could it be that Barclays and RBS have the two biggest Swinging Dicks attached to their brand heritage, namely Bob Diamond and Fred the Shred? I doubt that most people know who Antonio Horta-Osario is, and would struggle to recall his name in sufficient detail if they did. Which is probably just as well for Horta-Osario and Lloyds Bank.

More interesting, if perplexing in some ways, is the identity of the other 7 members of this exclusive Top 10 club. Tenth equal with Coca-Cola is Nestlé – still regarded as a corporate pariah on account of its anti-social baby-milk marketing practices in developing countries. I’m sure that doesn’t depress sales of Kit-Kats and Yorkie bars one bit, though.

And what’s Coke doing in there? Sorry boys and girls, for all your tender investment in clean athleticism, those grubby practices in Third World countries have not gone unnoticed.

Next up, “All utilities companies” at number 8, on account of their high prices and perceived profiteering. But two deserving special mentions here are British Gas – with its conspicuously bad customer service; and BT – with its ineffectual overseas call centres.

Virgin Media is in there at number 8 as well, although I have yet to discover whether this is because we’re all being beastly to Beardie or on account of some graver underlying cause – such as woefully inadequate service.

That leaves us with McDonald’s at number 4 – poor quality food and an inappropriate Olympics sponsorship, apparently.

…And, weighing in at number 3, the nation’s unfavourite retailer – Tesco. Memo to Tesco CEO Phil Clarke: it’s because you’re too big for your boots, despoil our high streets and blackmail your suppliers. No other retailer can do this so successfully, it seems.

  1. Which companies or brands make you feel angry? 
  2. What is it they do to make you feel angry?
Rank Company or brand
1 All banks’, ‘Banks’
2 Barclays
3 Tesco
4 McDonald’s
5 BT
6 British Gas
7 Royal Bank of Scotland’, ‘RBS’
8= Virgin Media
8= Utilities’, ‘Energy companies’
10= Nestlé
10= Coca-Cola

The research was commissioned by Johnny Fearless and carried out by YouGov. Total sample size was 2077 adults. Fieldwork was undertaken between August 3-6th 2012. The figures have been weighted and are representative of all UK adults (aged 18+).

Johnny Fearless is a Soho start-up agency founded by Paul Domenet and Neil Hughston, whose stock in trade is creating “social crackle” around brand messages. Or so it says in their publicity blurb.

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Who will win Tesco’s £110m advertising account?

April 13, 2012

Stand by for the most hotly contested UK advertising pitch of the year – the £110m (Nielsen) Tesco account is up for grabs.

But don’t hold your breath for a result. This is going to be a long-drawn-out contest, meticulously referee’d at every stage by agency intermediary Oystercatchers. Not a cosy inside job, pushed through on a nod and a wink from Tesco’s C Suite, as has tended to be the case in the past.

The first stage, happening quite soon, will be the selection of 13 agencies for a credentials presentation. From these, 6 will be invited to pitch, 3 will be eliminated and the winner will emerge in, oh, July some time. If all goes according to plan. So, expect the air to be thick with speculation over the next 4 months.

Let’s be clear before going any further. What’s particularly interesting about this pitch is not the fact that it is taking place now. Few readers will have failed to notice a changing of the guard at Britain’s top retailer, starting with the departure of group chief executive Sir Terry Leahy about a year ago and his replacement by Phil Clarke. Clarke is clearly a man who knows what he wants, and has wasted little time letting his senior colleagues know it too. Out went one-time rival for the top job Richard Brasher, until very recently UK CEO, after some lacklustre performance in the core operation and in came (a little earlier, as it happened) David Wood, late of Tesco Hungary, as head of UK marketing to replace Carolyn Bradley; meantime micro-managing Clarke has seized the UK helm himself.

Equally evidently, Clarke has been under heavy pressure from shareholders to shake things up, pronto. Tesco is still the UK’s biggest grocer by a wide margin, but it is a declining one. Others – practically all its leading rivals in fact – are bettering it in today’s tough market. Earlier this year, Tesco had to do the unthinkable: issue its first profit warning in 20 years, which knocked about £4.5bn off its stock market valuation in one day.

Personal animosity certainly came into Brasher’s dismissal, but there is little doubt that he was a convenient scapegoat too. And maybe with good reason. Brasher’s Big Price Drop campaign was a prelude to a disastrous Tesco Christmas. Brasher also held some rather fixed views on long-term investment. Whereas, what shareholders actually want is profits now, not in some misty future. Clarke knows that a second profit warning will effectively be his corporate suicide note.

So no pressure, Phil, to review your strategy. Ordinarily, UK advertising might seem to bat fairly low in a retail group CEO’s priorities – way beneath, for example, such operational issues as how many and what sort of new stores to open. Not so here, however. In giving Brasher the heave-ho and replacing the muddled duarchy at the top of UK management with a more focused leadership – himself – Clarke is also implicitly challenging Tesco’s long-established marketing tradition. Note that Brasher – like Leahy – came up the marketing route; before being promoted to UK CEO in March 2011, he had been UK marketing supremo since 2006. Clarke, on the other hand, is grounded in operations and IT, not marketing.

That’s why the key word associated with this advertising review is “clarity”. Having brought more focus to UK leadership, Clarke also intends to bring more focus to Tesco’s UK marketing effort. And he’s going to do it by asking some fundamental questions about Tesco’s current positioning. Are the assumptions underlying ‘Every Little Helps’ still relevant in today’s market? How does Tesco’s current marketing strategy benchmark against that of its apparently more successful UK rivals? Has the Tesco brand become too arrogant and impersonal – through servicing the requirements of the City rather than its customers? Clarke wants ideas from his agency pitch list, not just a new colour chart.

Superficially, this looks like bad news for the incumbent agency of 6 years, The Red Brick Road (or Ruby, or whatever the new digitally-enhanced business is going to be called). Although asked to repitch, it is indissolubly linked to the very marketing tradition that Clarke seems hell-bent on changing. Lineally, TRBR is descended from Lowe Howard-Spink; and the strong historic relationship forged between Lowe founder Sir Frank Lowe and Tesco top brass Leahy and his chief marketer Tim Mason. When Sir Frank split from Lowe & Partners (as it was by then called), Tesco backed his breakaway TRBR, but only on condition that Lowe creative chief Paul Weinberger was an integral part of the deal. To this day Weinberger, now chairman of TRBR, is the key mediating figure on the Tesco account (Lowe himself having retired).

That said, there are plenty of good reasons why Tesco might choose to retain TRBR’s services.

First, alone among competing agencies, TRBR will be the one tailored specifically to Tesco’s requirements. (Indeed, many would say this is its primary problem as a diversified advertising agency: despite doing good work for the likes of Magners cider and Thinkbox, it has failed to shake off the image of being Tesco’s house agency.)

Second, notice that Tesco has been careful not to pull the rug entirely from under TRBR. Up for grabs is all the consumer-facing digital and traditional (ie television, press, radio and outdoor) advertising. But not, you’ll observe, trade advertising, which is a substantial part of the overall TRBR fee package. One explanation for this, no doubt, is the sheer complexity of trade marketing; but Tesco also seems to be sending a mildly positive signal to its agency of longstanding.

Third, since this review is really about positioning rather than a creative makeover or a new catchline, don’t underestimate the skills of David Hackworthy and his TRBR planning department.

Fourth, don’t forget that Tim Mason is part of the review team. It’s surely only a matter of time before shareholders get their way and have Clarke cauterise the eye-watering losses at US venture Fresh & Easy, on which Mason currently spends two-thirds of his executive time. That will free more time for Mason’s other two roles as group deputy chief executive and, more pertinently here, group CMO. (It’s also possible that he might choose at that point to bow out; but no one should bank on it.)

Who else will compete for the account? Many prime candidates with suitable retail experience – BBH, DLKW/Lowe, Fallon, AMV BBDO, Rainey Kelly Campbell Rolfe/Y&R – are excluded precisely because they have conflicting supermarket accounts. However, Tesco has made it clear it will look tolerantly upon other kinds of agency conflict: for instance, a clash in financial services or telecoms.

That leaves plenty of possible contenders. As my associate Stephen Foster at MAA has pointed out, Publicis London is surely one of them. Historically, it was keeper of the Asda account and is now captained by former TRBR managing director and Tesco account director Karen Buchanan.

But the hot money will be on WPP. There’s some unsettled business here. Those with keen memories for this sort of thing will recall that, 7 years ago, WPP agency JWT came close to winning a big supermarket account after hiring two key Tesco agency players, Mark Cadman and Russell Lidstone, from a clearly flagging Lowe.

From what I hear, WPP is putting every resource possible behind winning the Tesco trophy. Not only is JWT throwing its hat into the ring; so are Grey, Ogilvy, 24/7 Media and CHI. Though whether individually or as part of a WPP “Team” effort I don’t yet know.

However, WPP agencies should tread with care.

Tesco will surely be aware, or have been made aware, that there is a certain amount of bad blood between Britain’s best-known agency intermediary Oystercatchers (founded by Suki Thompson and ex-JWT new biz director Peter Cowie) and Britain’s best-known and biggest marketing services company, WPP. Namely, the Everystone breakaway affair and its litigious sequel, which came to an unhappy conclusion about a year ago.

The formality of Tesco’s pitch procedure and its choice of intermediary suggests that there is no easy inside-track here for WPP chief Sir Martin Sorrell. I suspect his best course will be to keep an uncharacteristically low profile for the duration of this pitch.


Tesco’s maestro moves on

June 8, 2010

It’s a fitting, if back-handed, compliment to one of Britain’s leading businessmen that Tesco’s share price dropped 1.74% after the surprising news that its chief executive of 13 years, Sir Terry Leahy, will be stepping down next spring.

Leahy really can claim to have inherited an edifice made of brick and left it of marble. There are many landmarks in his long reign which single him out as a pivotal figure. When he began as ceo, in 1997, Tesco was already a major high street and out-of-town player, but it was still in contention with Marks & Spencer and even Sainsbury’s. No one could say that today. When he began, Tesco made pre-tax profits of about £750m a year; today they are nearly £3.5bn. When he began, Tesco was barely an international player; now it is the third-largest retailer in the world. Clubcard was little more than a twinkle in the eye; now it is an invaluable customer database, CSR and promotional tool integral to Tesco marketing. Then, Tesco was a grocer; now it is a diversified retailer with substantial interests in financial services and consumer durables. Then, Tesco was just bricks and a few clicks; now it is one of our most successful online operators.

Most of all, perhaps, we should recognise the personal dimension in all this achievement. Leahy is a self-made man who had no particular advantage in life except a Robert the Bruce determination to succeed against all odds. Even Tesco rejected him the first time he applied for a job. A natural flair for marketing was his eventual conduit to achievement. But that would have meant little in the top job had he not also demonstrated managerial skills of the highest order. This rare blend has earned him an iconic position in the marketer’s pantheon. The fact that he heads a top FTSE 100 company and that marketing has been integral to Tesco’s success remains an inspiration to people in the sector who feel that industrial culture is too driven by the bottom line and not enough by the top. Leahy has been exemplary at both skills.

It’s typical of Leahy’s unobtrusive personal style that his succession arrangements should come as a surprise. And yet, they should not have done. The falling share price, ironically, misses the point about him. He will have achieved little if those arrangements crumble soon after his departure. Strong management is a culture, not a cult of the individual. The anointment of Phil Clarke as his successor emphasises the latter-day importance of non-US international expansion as Tesco’s main business driver. It’s no surprise that Tim Mason, one-time favourite to succeed Leahy, has not made the final cut. Fresh and Easy, the Californian grocery enterprise he is steering on Tesco’s behalf, has proved anything but. Note, however, that Leahy has not entirely cut him out of the will: he has been promoted to deputy chief executive. Similarly, he has attempted to bind in other strong, but disappointed, contenders – David Potts, UK retail and logistics director, and commercial director Richard Brasher – with promotion to two new roles,Tesco’s first Asian chief executive and UK chief executive respectively.

For Leahy, however, it’s over. The Tesco strategy has been set: now it’s for others to implement more of the same. The manner of his departure is itself a lesson in management, often overlooked by the best. Quit while you are ahead.


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