2007: A year to remember

This has been a year of marketing battles and agency bust-ups, flashy new product launches and an avowedly unflashy new Prime Minister. In 2007, we have witnessed some stratospheric highs and nadir-scraping lows, while a number of pivotal events have wrought changes across many of marketing’s biggest sectors.

Significant events include the introduction of smoking bans in England and Wales, the first ever curbs on junk food ads to kids and the resignation of Prime Minister Tony Blair, to be replaced by Gordon Brown. There was flooding on a biblical scale across parts of the UK, the launch of the iPhone and the rise of social networking sites. And let’s not forget a new management at ITV under Michael Grade, the re-emergence of food price inflation, the near-collapse of the global banking system and the relaunch of Wet Ones.

In their own way, these events are emblematic of wider trends that are reshaping media and advertising (just joking about Wet Ones). They testify to the tectonic shifts which have rocked the marketing world this year.

However, we have decided to dispense with the usual chronological enumeration of the year’s events. Instead we suggest that any recollection of such a momentous period would be incomplete if we failed to draw lessons for the future. So what did we learn in 2007?

Upward trends
The rising and falling fortunes of individuals, markets and brands continued in 2007, providing some rich lessons for the future but also underscoring the importance of learning from the past.

Social networking sites soared in popularity but the question of how to make money from them was never really answered. Facebook took the UK and the world by storm. The site’s youthful founder Mark Zuckerberg unveiled changes to the site this autumn to tap into the Holy Grail of word of mouth marketing in a bid to “monetise” social networking. But his claim that “the next 100 years are going to be different from the last 100 years starting from today” were a hostage to fortune. Within weeks, the new advertising system ran into privacy problems and had to be altered. This should teach marketers to be wary of making grandiose claims they cannot back up.

Meanwhile, some believe that the Cadbury Gorilla ad created by Fallon which became a viral phenomenon on sites such as YouTube seriously undermines the concept of user-generated content. It will be advertisers that control word of mouth content in future rather than unskilled amateurs – not surprising really, given brands’ sky-high production budgets and the fact they employ some of the world’s best creatives.

Preparations are underway for the London 2012 Olympics, though some critics scent trouble over the ballooning budget. Are there lessons to be learned here from the Millennium Dome disaster? Unperturbed, Lloyds TSB became the first brand to sign up to London 2012 in January in an £80m tie-up. Later in the year, Adidas and EDF Energy signed deals to become top tier sponsors. The lesson of the Dome, though, is that it was the reputations of politicians that suffered, rather than sponsors. The brands actually emerged looking rather brave.

In the field of marketing services, lessons can be drawn from the downfall of the London office of Publicis and the rise of sister Publicis Groupe-owned shop Fallon.

Publicis waved goodbye to its senior management following the loss of nearly one third of its billings, including the MFI, Asda and Post Office accounts. In contrast, Fallon has become the darling of London’s advertising scene. It has won a number of major clients, including Asda, and created the Cadbury gorilla ad. It was reversed into that other failing network agency Saatchi & Saatchi, and Fallon chief executive Robert Senior now has a dual role running both agencies.

Publicis is in bail-out mode and in September hired former Adidas, Vodafone and Coca-Cola marketer Neil Simpson to turn it around. This came after Grey hired Sony’s marketing director David Patton as chief executive. Whether marketers make good agency bosses will become apparent some time over the next couple of years.

Another success story with clear lessons for rivals is CHI&Partners, which sold a 49.9% stake to WPP in April. The fast-growing agency is credited with demystifying advertising through “big ideas” and giving marketers a feeling of control over ads. Uber-networking founder Johnny Hornby’s black book of contacts cannot have harmed the agency’s chances either.

Battles and bust-ups
The battle between Virgin Media and BSkyB over carriage charges has led to the withdrawal of Sky channels from cable TV and hit the bottom lines of both parties. They each blamed the other for an “apparent reluctance to negotiate” in the tit-for-tat battle.

Meanwhile, the departure from Leo Burnett of UK chairman and chief executive Bruce Haines after a showdown with the network’s global management team in Chicago showed that agency bust-ups are still among the most entertaining shows in town.

Brand trust
Predictions that brand trust would become a critical factor this year were borne out time and again over the past 12 months.

It transpired that you can fool a lot of people for quite a long time, but you will eventually get your comeuppance. This applies as much to ITV, GMTV and C4, convicted of running fraudulent phone quizzes, as it does to those fined for price-fixing. The dairy industry and some supermarkets were busted good and proper in December for colluding to raise the prices of dairy products.

Meanwhile, the mythological rivalry between BA and Virgin Atlantic turned out to be just that – a myth. In fact, they had been quietly working together to agree price levels. In August, BA was hit with a £250m Office of Fair Trading fine, which most saw as a fair cop. The big unanswered question is what will become of former BA marketing director Martin George – will he face trial in the US for his part in the offences?

BP chief executive John Browne resigned in May after admitting he lied to a High Court judge over a tabloid kiss- and-tell story. His credentials as an agent of corporate social responsibility lie in tatters. A number of accidents across BP’s operations over recent years have suggested that the oil giant’s conversion to the cause of responsible business was nothing but spin. It has much work to do to slough off accusations of greenwashing.

Following the Stern report on climate change in May 2006, many brands put their green plans into action this year. In January, M&S launched a £200m eco-plan to make it carbon neutral in five years called Plan A – “because there is no Plan B”.

However, the Advertising Standards Authority (ASA) revealed that there has been a sharp rise in complaints this year about false environmental claims by brands. Policing the over-exuberant assertions of marketers has emerged as an ever-more critical task in justifying the preponderance of advertising in our society.

Thank the Lord, then, that we have a new peer in charge at the ASA. Lord Smith, inventor of the Department for Culture, Media & Sport became ASA chairman in July.

Tightening regulation
That leads us on to another red-hot topic this year – tightening regulations on the consumer society. We will apparently gorge, smoke and drink ourselves into a stupor if sufficiently encouraged by advertising.

Even so, banning tobacco ads was not enough to clear away the fug of smoke. So in July, a ban on smoking in public places was introduced, though early reports suggest it has not had the devastating effect on pub attendance some doommongers had predicted.

Meanwhile, curbs on ads high in fat, salt and sugar aimed at children have been introduced and will be tightened next year and there are even greater threats ahead. Ed Balls, the Secretary of State for Children, Schools and Families, announced his children’s plan this month, which promises “an independent assessment commissioned to understand the impact of the commercial world on children’s wellbeing”. Marketers can expect a rough ride from the review next spring.

But brand owners are not taking all this ad bashing lying down. As part of the fightback, the Advertising Association has hired Conservative peer Baroness Peta Buscombe, who joined in January as chief executive.

People moves
Another Lord – Michael Grade – is also playing an essential role in ensuring television ads are not gradually reduced to a quaint relic of the past. He became ITV’s executive chairman in January and started to turn around the brand owners’ favourite media owner.

Other less noble but equally important names have risen, fallen, appeared and disappeared from the world of marketing, each one offering its own lesson. Readers can draw their own conclusions from the following.

In January, 3’s marketing director Graeme Oxby left and reappeared as managing director of Virgin Mobile, while 3 chief executive Bob Fuller departed in June. Toyota commercial director Paul Philpott left to join Kia as UK managing director and Scottish & Newcastle promoted UK marketing director Tim Seager (an ex-Procter & Gamble marketer) to UK managing director – and then to run S&N France.

But one of the most spectacular job moves of the year was ex-Vodafone marketer Lance Batchelor’s appointment as Tesco marketing director in July.

Other notable moves include Motorola’s European marketing director Simon Thompson leaving the handset manufacturer after just a year to join Lastminute.com as chief marketing officer.

In October, Coors Brewers, the UK arm of Molson Coors, appointed former marketing chief Mark Hunter as its chief executive.

Takeovers and break-ups
The break-up of magazine and radio giant EMAP after it sacked chief executive Tom Moloney showed us what a poison chalice he had been handed in the first place. This month, its consumer magazine and radio interests have been bought by H Bauer.

Meanwhile, a series of mergers and acquisitions in the beer market indicate that here is a sector ripe for consolidation as it struggles against rivalry from wine against a background of flat sales in the UK.

Heineken unveiled a bid to buy S&N’s UK brewing interests as part of a joint global takeover with Carlsberg. In November, SABMiller agreed a £583m deal for Dutch lager brand Grolsch.

 

Odds and ends

• Lee Daley, who left his role as Saatchi & Saatchi chief executive to join Manchester United as commercial director, lasted less than four months in his new role. Where next, Lee?
• Bacardi enlisted Michael Schumacher as global brand ambassador promoting sensible drinking and safe driving.
• The Michelin Man, one of the most famous brand icons of all time, was resurrected after an absence of eight years in a multimillion-pound push for the tyre manufacturer.
• The Honda Formula One team dropped sponsorship logos from the chassis of its car in favour of an image of the earth to align its brand with environmental issues.
• General Motors was labelled an “utter disgrace” by environmental groups for launching its gas-guzzling Hummer model in the UK.
• Carphone Warehouse axed its sponsorship of Big Brother after the Celebrity Big Brother racism row.
• Nokia revived its ill-fated N-Gage brand as a piece of gaming software built into handsets, rather than a standalone device.

  Additional reporting by Marketing Week reporters