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HSBC’s £400m global review that never was

March 9, 2013

Chris Clark HSBCSo, what was all that about? HSBC’s group marketing director Chris Clark calls a review of the “£400m” (actually rather less these days) global account late last year. Well, not exactly a review. More a series of private meetings that happen to take in the incumbent agency’s rivals at Omnicom, IPG and Publicis – just in case they have any bright ideas. No fundamental discussions take place on either strategy or creativity, because none are called for, even from the incumbent JWT.

Sniffing a rat, McCann (IPG) and BBDO (Omnicom) pull out. Late yesterday (a good time to bury news) it trickles out that WPP has, er, retained the account. But there have been a few twists of the kaleidoscope. Most salient is that outsider Saatchi & Saatchi (Publicis) will now handle the small-spending (relatively speaking) retail banking and wealth business across Europe and in Latin America. JWT is still at the epicentre, with the global brand business, but will now share the rest of the account with its WPP sister agency, Grey London.

Is this a classic piece of agency punishment meted out by the client? We still like you, WPP: but you’ve gone a bit flabby. So, just to make sure you’re on your toes, we’ll keep you on tenterhooks for a few months and then award a chunk of business to one of your rivals – to see how hungry they are.

Was it simply an exercise in cheese-paring the fees, as JWT officially likes to see it, on the part of one of the world’s wealthiest institutions?

Or is this Chris Clark desperately trying to justify his job as CMO (in all but name)? A marking time exercise, while he and his boss, HSBC chief executive Stuart Gulliver, dream up a successor to the faded strap line, The World’s Local Bank?

Because, of course, it isn’t anymore. If you rolled the market capitalisation of Barclays, Lloyds Bank and RBS together, they wouldn’t add up to that of HSBC – which remains by far Britain’s largest bank. But internationally, Gulliver has been busy rolling back the borders, with the divestment of businesses from as far afield as Argentina, Russia and Singapore. The proceeds of which were one contributory reason for the humungous profits the bank was able to declare only last week.

In the recent past, Clark has talked up the need to spend more marketing pounds on the product side (i.e., the separate bank businesses) and less on the corporate brand. One reasonable interpretation of this stance is that banks, in these bonus-bashing times, would do well to get their heads down to providing some basic customer service, as opposed to extravagantly boasting about their global expanse.

Another (they are not mutually exclusive) is that Clark and his colleagues haven’t got a clue what they should do. “In the future” doesn’t quite do it, does it? And in any case, as Clark himself once quipped, it’s more of a start than an end line.

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Rita Clifton to step down as UK chairman of Interbrand

June 16, 2012

Rita Clifton, one of the UK’s best-known brand experts, is stepping down as UK chairman of Interbrand, the Omnicom-owned brand consultancy which she has headed for 10 years.

Clifton will officially leave on July 31st, although she is thought to have submitted her resignation earlier this year. She has long served on a three-day-a-week basis, and has a well developed career portfolio that includes several non-executive directorships. Besides being non-executive chairman of opinion pollster to The Times Populus, she is also a NED of Dixons, the electrical retailer, and BUPA, the global healthcare company. Since 2007, she has been a trustee of WWF-UK. In 2009 she was appointed president of the Market Research Society.

“Ten years in the chair (and 5 years as CEO before that) is quite long enough when it’s not your own company, and I have wanted to set up a private office to run/extend my non-exec and pro bono portfolio and do independent speaking and writing about brands for some time,” she says.

Clifton is a prolific writer on brands. Among her publications are the Future of Brands, published by Interbrand, and Brands and Branding, published by The Economist.

She began her career as an account planner at DMB&B and J Walter Thompson (JWT). In 1986 she moved to Saatchi & Saatchi London where she rose to deputy chairman and executive planning director in 1995.

Started in 1974 by John Murphy in the UK, Interbrand has morphed into a global organisation with nearly 40 offices and claims to be the world’s largest brand consultancy. It was acquired by Omnicom in 1993.

 


Advertising industry sheds crocodile tears over Steve Hilton’s departure

March 6, 2012

Few in the ad industry will lament the departure of Steve “Yoda” Hilton, David Cameron’s director of strategy. Indeed, such is the relief that he is going, some would willingly pack the diminutive “blue-sky” thinker’s bags, as he contemplates a year’s ‘sabbatical’ with his family in California. Politically speaking, California is the sunny side of Siberia.

Why good riddance? Well, the word that best sums up Hilton’s relationship with the ad industry is “renegade”.

Although Hilton’s association with Cameron and the Tory party predates the 1992 election campaign, most of his subsequent years were spent in the service of advertising, the career that actually earned him a living. Hilton quickly hooked up with Maurice Saatchi, who professed to see in young Steve a kind of son: “No one reminds me as much of me when young as Steve”, he is reputed to have said. And the admiration was mutual. Steve dutifully followed Maurice from Saatchi & Saatchi to breakaway M&C Saatchi as a kind of intellectual bag-carrier. Hilton’s ability to think “out of the box” or perhaps more accurately, “to get out of his box”, soon became apparent with his contribution to the 1997 election campaign. The “Demon Eyes” poster was certainly visually arresting and highly memorable, but trying to make the then-saintly Tony Blair into the Devil Incarnate probably did more to win votes for Labour than for the party originating it. This episode would seem to underline an abiding truth about Hilton’s career: that high intelligence and original thinking are no guarantee of common sense.

Never mind. After 13 years of hard Labour, which saw the 2002 ban on cigarette advertising followed in 2007 by severe TV restrictions on foods high in fat, salt and sugar, and much muttering about out-of-control drinks advertising, the ad industry seemed to have every reason to pop the corks when it emerged that one of their own was to become the man officially in charge of David Cameron’s brain.

How wrong they all were. Had they done their homework more carefully they would have found our man wasn’t the pragmatic trimmer everyone hoped he might be. A Steve Hilton blog post from as early as 2004, entitled “Will sexual marketing be the next consumer backlash?”, espoused some rather unfashionable, untraditionalist opinions on the matter of “the relentless drive by big businesses to sexualise small children, ageing them prematurely in the process”, while denouncing the “sexual predators of the advertising industry” for good measure.

Ring a bell? “The Bailey Report”, says one insider, “Appears to have taken its brief directly from Steve Hilton’s old blog.” Too right, and laudable though the principles informing Reg Bailey’s report are, what a nightmare they have proved to implement. The regulators have gone into puritanical overdrive, with a zeal reminiscent of the Salem witch trials. Practically any female flesh exposed in a public place (ie, on posters) is now regarded as a potential contaminant of young minds – as the recent case of the Advertising Standards Authority versus Marks & Spencer only too vividly reminded us.

However, the Bailey Report and its aftermath are a mooncast shadow when compared with Hilton’s other bequest to the ad industry. Fairly or not, Hilton’s blue-sky thinking is blamed for the ultimate destruction of the Central Office of Information. For which read a £540m-a-year ad industry gravy-train.

Pinning the blame on a single person for what may yet turn out to be a government-wide communications disaster zone might seem a little harsh. After all, there are plenty of available villains – if that’s what they are – from Francis Maude to half the cabinet office. And yet the suspicion lingers that Hilton somehow gave Maude the intellectual confidence to take an axe to the venerable institution in the first place, with his bizarre proposal for a spare and minimalist Ad Council to displace the heavily bureaucratic COI.


WPP hurls BRICbats at Publicis Groupe’s performance figures

February 11, 2012

An arcane row has broken out between agency behemoths WPP and Publicis Groupe over the latter’s claimed financial performance.

First, some necessary background to the dispute.

These days, only two things really matter for global agency holding companies presenting themselves in the annual financial beauty parade. Two things, that is, beyond a clean set of figures showing decent organic growth, enhanced operating margins and a handsome improvement in earnings per share (EPS).

They are: how much revenue is digital (as opposed to derived from ‘traditional’ advertising). And: how much comes from emerging economies.

The annual figures merely tell us how well the company has been stewarded in the recent past. But the other two criteria are much more exciting because they are predictive. Get them right and you tantalise shareholders with the thought of future gain, garner positive headlines in the financial media, boost the share price and – if you are one of the company’s most senior executives – make yourself still richer in the process.

By these standards, Publicis Groupe has just produced a corker. Never mind revenue growth of 5.7% to €5.8bn in near economic-blizzard conditions, or operating margins of 16%, or EPS up 14%. What really mattered to The Financial Times was a sound-bite: Publicis’ US digital revenues are set to overtake those of traditional media.

And to be fair, it is a pretty singular statistic considering that, as recently as 2006, digital was only 7% of PG’s revenue globally; now by comparison that global figure is nearly 31%.

“Digital” is of course shorthand for: our share of the pie in the only bit of the advertising economy still growing in developed economies, such as the USA and Europe.

Of no less importance as a corporate virility symbol is “emerging markets”, the geographical counterpart of “digital’s” sectoral dominance. Maximum bragging rights are accorded to those who can establish leadership in the most significant of these markets, the BRICs (Brazil, Russia, India and China).

PG chief Maurice Lévy’s claim that 75% of group revenues will in the “pretty near future” be derived from a combination of digital and emerging markets such as “Brazil and China” is therefore music to the investment community’s ears.

Better still for investor returns, Lévy claims he will reach this milestone ahead of his rivals Omnicom and WPP.

Not surprisingly, these rivals are livid at the suggestion. So incensed in fact that WPP, for one, is challenging the factual evidence on which Lévy has built his ambitious projections.

It has dissected PG’s webcast financial presentation and done a slide-by-slide demolition of PG’s BRIC performance. I won’t bore you with all the details. But here’s the gist:

Slide 32, Brazil. Lévy mentioned last year that Brazil was PG’s 4th largest market. Now he’s saying it’s the 6th. What happened?

Slide 33, China. WPP takes issue with PG’s assertion that it will double its size in this all-important market by 2013, from a $200m 2010 revenue baseline. It says the ‘3 creative network leaders’ claim is a myth. R3 sourced figures actually put WPP and Omnicom agencies ahead of PG’s. Cannes performance also suggests WPP outguns Publicis. PG claims to be top in media buying: this is flatly disputed by WPP, which says RECMA figures prove it is overall leader in Greater China. The key argument, avers WPP, is over organic growth. Here, PG is achieving about 8.5% while WPP appears to be nearing 16% a year.

Slide 36, Russia. PG claims leadership in this market both in media (Vivaki) and creative (Leo Burnett and Publicis Worldwide). WPP asserts that there are no reliable creative rankings in Russia and where media is concerned it is emphatically on top with 28% share versus PG’s 23.2%, according to RECMA figures.

Slide 37, India. PG claims to be number one in new media business (Vivaki) and no 2 in creative (Leo Burnett), quoting R3 as the source. But R3 does not do a new business table for India, says WPP. PG claims strong positions in digital, healthcare and PR, but with no source attached. PG’s digital presence is “tiny” (says WPP), and it has made no recent acquisitions. As for media, according to RECMA, WPP’s GroupM has 42.7% share while Vivaki is 3rd with 9.4% share. Creatively, the latest Economic Times 2011 Brand Equity rankings for agencies (the only authoritative source on this subject) puts two WPP agencies Ogilvy and JWT first and second, while Burnett is 6th and Saatchi & Saatchi 17th.

It’s no surprise, of course, to find these two deadly rivals engaged in another slanging match, albeit disguised in high-falutin’ finance speak. What will be interesting is if Publicis has a riposte.

POSTSCRIPT. I note that, despite a strong set of figures and robust balance sheet, PG has maintained rather than increased its dividend. As Lévy explained, that’s because PG needs to hold on to all the cash it can in case it has to buy back up to €900m of Dentsu shares later this year. In view of recent developments, this seems highly likely.


Unison lets off steam over sexy nurses, but what about flighty attendants?

July 6, 2010

Our favourite union Unison has been getting into a terrible lather about a Head & Shoulders commercial that supposedly demeans nurses.

The offensive ad features numerous nymphettes, clad in clinging white uniforms and red high-heeled shoes, serenading the bemused male occupant of a steamy shower.

Actually, says Saatchi & Saatchi – the agency responsible for the ad – they’re not nurses at all; they’re “a cross between beauticians and dermatologists”. Mmm, since when have beauticians worn those medal watches? But I’ll let you be best judge of that.

Moving on, I’m not surprised the Advertising Standards Authority has found no grounds for a formal investigation into Unison’s complaints. As far as I know silliness is not a CAP offence.

Besides, where would it all end? Nymphettes, red high-heeled shoes and sexually suggestive behaviour readily recall another, more famous, campaign: last year’s Virgin Atlantic retro ad. Given that flight attendants are a core trade union constituency, should that be blacklisted too?

Mind you flight attendants (or “air hostesses” as we used to insensitively call them) have every right to apoplexy over this raunchy little number from Russian budget airline Avianova:


Start with the question: Why is Seelert criticising Toyota in public?

March 1, 2010

Sack him, or back him? That’s the dilemma facing Toyota chief Akio Toyoda as he mulls the controversial advice given him by his agency chief, Bob Seelert – chairman of Saatchi & Saatchi Worldwide.

Seelert has taken the highly eccentric course of contradicting in public his client’s decision to continue advertising, amid a hail of criticism accompanying the recall of about 8 million vehicles globally because of accelerator and brake problems.

Due credit to Seelert for making a point about his client’s best interests at the expense of the agency he heads, but why is he doing it in public?

It’s tempting to conclude that Seelert, a former client himself (mostly at General Foods), cannot resist the temptation to play the management guru. About a year ago, he brought out a book entitled Start With The Answer: And Other Wisdom for Aspiring Leaders. It’s full of pithy insights into how to run a business, distilled by a man with a lifetime of experience (although, not in running his own).

What Toyoda thinks of this, we can only conjecture. He’s a bookish, thoughtful fellow known to have been deeply influenced by Jim Collins’ latest management blockbuster, How The Mighty Fall. Indeed, he has gone so far as to judiciously apply Collins’ analysis to the plight of his own company.

Somehow, I suspect he will be less sympathetic towards Seelert’s two ha’pence. For a start, Seelert’s views on Toyota advertising are far from gaining universal approval among crisis management experts. Many might accept that actively selling Toyota vehicles at this stage is unwise. A corporate campaign aimed at reassuring customers around the world is a very different matter.

Then, too, there is the not insignificant matter of causing the chief executive of a Japanese corporation (however modest, personally) to lose face in public through openly questioning his judgement. I’m sure that Seelert’s senior colleagues at Saatchi have been vociferously reminding him that Toyota has a choice.

That choice is called Omnicom, which has lost almost all of its General Motors business in the last year. It could of course go for more of the bits of business that remain, such as Chevrolet. All the same, I’m sure the significance of this spat has not been lost on Omnicom chief executive John Wren.


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