Stormy sea of changes

As the recession starts to bite, marketing budgets look set to be slashed even further, and retailers attempts to lure shoppers seem futile. While smaller ad independents have thrived, for most, the past year has been the rockiest for over a decade. By Marketing Week reporters

While companies strove to cut the excesses of their businesses – from workforce numbers to marketing budgets – as the world neared recession, the Government aimed to trim the fat of the land in 2008. The past year has been a year of contrasts, consolidation and soul-searching, as companies and marketers continued to battle worsening market conditions.

We entered the year nursing a hangover from the effects of a near meltdown of the global banking system, yet ill-prepared for the worst. Northern Rock, which last year experienced the first run on a British bank in modern times, limped on until February when it was nationalised – a common theme as the year continued. The Edinburgh powerhouses of RBS Group and Halifax Bank of Scotland, along with Lloyds TSB, were forced to accept partial nationalisation in return for billions of pounds of state aid. And Lloyds TSB set about plans to merge with HBOS in order to create a new superbank, which is likely to shed jobs and consolidate marketing budgets in 2009.

Not all was well with the car manufacturers either. Japanese marque Honda announced its plans to quit Formula One, citing pressures caused by the global economy, alarming the most conspicuously consumptive of sports into agreeing to stringent cost-cutting measures. Meanwhile, a bail-out planned for the so-called “Detroit Three” – General Motors, Chrysler and Ford – hung in the balance as the year ended. The US Congress agreed in principle to a $15bn (£10bn) loan to rescue GM and Chrysler, and $9bn (£6bn) for Ford, but was unsupported by the Senate. A decision is expected when US President-elect Barack Obama takes over in mid-January.

Obama and his canny digital electioneering are perhaps the success story of the year; his victory giving a much-needed shot of enthusiasm amid the gloom. But his was not the only “unprecedented” victory of the year. London said hello to a new Mayor in May, as Boris Johnson toppled Labour incumbent Ken Livingstone. Immediately, he set about slashing the city’s advertising and communications budget, in what many see as a dry run for a Conservative Government. Indeed, the Tories pledged, earlier this year, to slash the Whitehall ad budget by almost 60%, taking the level of spend down to what it was in 1997.

Little wonder that Tory peer Baroness Peta Buscombe is swapping her stewardship of the Advertising Association for chair of the Press Complaints Commission. Baroness Buscombe is credited with having transformed the AA into an efficient lobbying machine for advertising, amid threats of further regulation and Government reform.

The Queen’s Speech earlier this month contained plans to ban cheap alcohol, including twofor- ones, all-you-can-drink and bar promotions – yet it refrained from outlawing happy hours. The plans follow a year of debate on how to tackle binge drinking, including the launch of a Know Your Limits campaign aimed at middle-class drinkers, and proposals for an industry-wide initiative, similar to that devised to fight obesity.

The Government finally put meat on the bones of its obesity strategy this year, and appointed M&C Saatchi to spearhead a £75m ad campaign. It has also called on business, brands and media owners to help deliver Change4life.

Curbing the excess was also the order of the day on the high street, as customers kept their wallets closed. Already this year we have seen the demise of Woolworths – a year shy of its centenary and with little hope of a rescue – while MFI has called in the administrators. Retailers including Marks & Spencer, Tesco and Debenhams launched price reductions in a bid to jumpstart sales, but there is little Christmas cheer on the UK’s illuminated shopping streets.

Yet the supermarkets were rallying, with discount stores such as Poundland, Lidl and Aldi the new face of consumer savvy. Meanwhile, Tesco and Morrisons fell over themselves to become the champions of value – and values.

2008 was the year we said goodbye to a number of products. Coca-Cola claimed a rare failure with its Diet Coke Plus range of functional soft drinks, while PepsiCo was forced to axe PJ Smoothies. Instead came vitamin-infused waters – Coca-Cola launched Glaceau and PepsiCo bought V Water. There was a launch, too, for Red Bull Cola and a permanent return for Cadbury’s Wispa after the success of a limited edition. Premier Foods overhauled bread brand Hovis, in an attempt to catch Warburton’s, with a Miles Calcraft Briginshaw Duffy-created campaign that for many was an advertising high point.

We were also treated to a very public spectacle of China’s ambitions on the world stage with the Beijing Olympics. The pomp and splendour that heralded the Games contrasted with calls for an “Austerity” Olympics at London 2012. This year, the London Organising Committee of the Olympic Games added Cadbury, British Airways, BT, BP and Nortel as Tier One sponsors. Less successful were Government attempts to raise £100m in commercial deals for its rising sports stars, while Olympic Park plans were downsized.

The credit crunch claimed more victims in the holiday sector, including the collapse of West Ham shirt sponsor XL, business carrier Silverjet and budget airline Zoom.

Yet spare a thought for British Airways, whose Terminal Five launch fiasco was entirely a problem of its own making. The debacle at Heathrow in March forced the airline to draft its top marketers onto the airport concourse to help alleviate the chaos. Marketers including Tiffany Hall and Katherine Whitton have since left the company.

BA also attracted the ire of rivals with a constant stream of mooted tie-ups to cement its dominance. The continued suggestion of a BA/American Airlines partnership prompted Virgin Atlantic to cry: “BA/AA No Way.”

Another pan-Atlantic partnership was fiercely contested before succumbing to the inevitable; for months Anheuser-Busch and its all-American supporters attempted to stave off the predations of InBev, but to no avail. A new global brewing giant, AnBev, was born.

InBev was also the originator of one of adland’s most anticipated reviews – that of its flagship lager Stella Artois. InBev appointed Mother to handle the launch of a new 4% variant of Stella over incumbent Lowe London. The agency scooped the £20m main account in December, following Lowe’s resignation of the business.

The loss topped a bad year for the Interpublic network, which started the hunt for a global chief executive to replace Steve Gatfield, who is due to leave next year. It also lost London chief executive Amanda Walsh, who was not replaced, leaving the agency in the hands of creative director Ed Morris, who this month effectively tendered his resignation. On the plus side it wins the £150m Wallsowned Magnum business from McCann Erickson and the bulk of the £100m Knorr business.

If it was a less than stellar year for advertising’s big guns – Euro RSCG also lost The Sun and 3 Mobile in quick succession, and this month managing partner Mark Cadman left – then the smaller independents and start-ups have enjoyed a boost. Mother also snared a raft of Coca-Cola business and scooped global advertising for Moët Hennessy’s Chandon brief, while Beattie McGuinness Bungay topped the new billing chart and sold a 49% stake to Cheil Worldwide after aborted conversations with TBWA. New kid on the block Adam & Eve had a sterling new year with accounts including Lloyds TSB, AirAsia, Cadbury Biscuits and the Westfield shopping centre.

Advertising has also given us pause for thought, from the furore in August over a “whitened” Beyoncé for L’Oréal to the Abbott Mead Vickers.BBDOcreated gay kiss for Heinz in July. A watershed moment maybe, but Heinz pulled the ad after 200 complaints to the Advertising Standards Authority. Marketers have retained their ability to shock, in what has been a truly transformative year.



    Leave a comment