COMMENT:
The Herald understands that Fonterra has updated its retainer agreement with Colenso BBDO.
While Colenso remains Fonterra's main agency partner, it's understood the client has shifted its payment model to a project basis.
Asked for comment on the change, Colenso BBDO head of account management Angela Watson would not provide specific details on the change, saying only: "We continue to enjoy working with Fonterra as their agency of record and are currently in the midst of a number of projects as we head toward the new financial year."
Fonterra was similarly coy on the move, with spokesman Graeme McMillan refusing to elaborate beyond saying that the dairy co-operative has a "supply agreement" with the agency.
"As with all our suppliers we don't discuss our contract details as these are confidential," McMillan said.
Colenso has developed a number of award-winning campaigns for Fonterra-owned brands in recent years, including a major rebrand of Anchor in 2016.
A source close to the business told the Herald that Fonterra had pulled back on marketing spend in recent months and that there were some broader strategic shifts at play.
This was confirmed by the Nielsen advertising spend statistics, which showed overall spend for Fonterra brands dropping off from around $11m in the previous two years to $7.7m this year.
There have also been changes at a global level, with one source suggesting the Singapore office may have closed.
"We still have people in Singapore but at the same time we have made it clear that we are getting the basics right," McMillan responded to the Herald.
"This includes fixing the businesses that are not performing and lifting the level of financial discipline throughout the co-operative so debt can be reduced and return on capital improved."
It's understood Fonterra has moved some roles back to New Zealand and eliminated duplication where necessary.
In related news, Fonterra-owned cheese brand Mainland recently completed a pitch process, which concluded with good news for the incumbent, Colenso BBDO.
The pitch win will likely add a few more years to the decades that the agency has already spent working on the account.
Retainers v projects?
The shift from a retainer model has been something of a trend in recent years, with high profile clients such as BNZ, Kiwibank and Tui opting to pay agencies on a project basis rather than covering the annual or monthly fees.
Ad agency veteran and founder of indie shop Hunch, Michael Goldthorpe, told the Herald this shouldn't be seen as a reflection of the quality of the agency.
He says the pendulum tends to swing from time to time, with clients changing their payment models in accordance to what they need at a given time.
"I probably have around 80 per cent of my agency's revenue coming from project work at the moment."
He said he wouldn't be surprised to see the momentum swing back to the traditional retainer model in the future.
Kiwibank makes its pick
The Herald understands that Kiwibank has awarded its advertising account to Clemenger-owned agency 99.
This comes after a pitch announced by the bank just before Christmas last year.
Until then, Kiwibank had been working with a handful of agencies – including Assignment Group, The Enthusiasts, EightyOne and Wrestler – on a project basis.
Kiwibank did not confirm the appointment of 99, but chief marketing officer Mark Wilkshire did say the team is currently finalising contracts.
"Once that's done we'll make what is looking to be a highly anticipated announcement," he said.
Nielsen figures show that Kiwibank spent around $9.9m on advertising between June 2018 and May 2019, up from $8.8 million a year earlier.
The win comes at a good time for 99, which recently also claimed the valuable Farmers advertising account.
It's understood that the agency has increased its headcount steadily on account of the increased workload arriving with these accounts.
Sport NZ's pitch battle
Government organisation Sport NZ is casting its net for a full-service marketing partner to assist with a number of long-term marketing initiatives in 2020 and beyond.
While government advertising accounts aren't always the most lucrative, an agency source interested in the business said he understands that Sport NZ will be spending "a few million" on a concerted effort to get more women involved in sport.
It's understood that a number of the bigger agencies around town are circling the opportunity for what might pose an interesting creative challenge.
There have been some excellent international examples of government organisations investing in marketing efforts to get women involved in sports. One of the more notable would be the ongoing "This Girl Can" campaign launched by Sport England in 2015, which offered a gritty, honest, yet inspirational look at what participation in sports looks like.
Rather than only leaning on beautiful models, the campaign showcased a wide array of real women – and body types – across the campaign.
The tender listed on the Government procurement website closed on June 13 and Sport NZ will now be working through all the applicants in an effort to narrow it down to a few contenders.
The curious case of two telcos
On the lighter side of the advertising world, a digital mishap recently saw a mobile user served with ads from competing telcos at the same time.
The advertising tango features a broadband ad for Skinny mobile partly covered by a Vodafone ad for a Huawei handset.
The two ads appear to have been served by different mobile advertising providers, which would explain why the mishap occurred.
Ad providers target web users in terms of whether they believe an ad would be relevant to them. It just so happens that the user in this instance was identified as a target for both Skinny and Vodafone.
As digital advertising companies continue to track people around the internet, these problems tend to happen.
Another issue with algorithm-driven advertising is that it can sometimes accompany slightly more unsavoury content. The fallout from this can range from something as simple as a car advertisement placed alongside an article about a traffic accident to more serious matters like adverts featuring on terrorist-themed content.
The big tech giants are working to solve these problems by purging offending accounts and improving their algorithms, but the system remains far from perfect.
