Anheuser-Busch

… Whacks Retainers for Its Agencies

Agency fees are the latest casualty in Anheuser-Busch InBev’s quest to trim $1.5 billion in costs out of the world’s largest brewer.

A-B has swapped its long-held retainer-based model of compensating its busiest agencies for a new approach based on an agreed-upon scope of work at the shops. That shift, which has become an increasingly common one for marketers looking to cut agency outlays, puts the agencies on the hook if projects require more hours or greater cost than expected. Other changes include stingier reimbursement rates for production costs and smaller, flat per-concept fees.

DDB handles new brand.

“I don’t think the agencies are going to be happy,” said agency-compensation consultant Bill Nicholson, who has worked with some of InBev’s agencies in the past and said the new model was typical of its approach. “They could lose 25% or 30% (of their fees) in the blink of an eye.”

A-B’s agency roster is led by DDB, Chicago, which handles Budweiser and Bud Light and, in the past year, won duties on two newer brands that have gotten significant marketing support, Bud Light Lime and Budweiser American Ale. DDB’s total fee — estimated at $12 million to $15 million by industry sources — is expected to decline under the new approach, but the newly won accounts ought to stem those losses somewhat.

Coca-Cola Still Classic

Just Not in Its Name / Brand Quietly Phasing Out Word After Two Decades

Coca-Cola says it’s clearly a classic in American’s hearts and minds, so the word “classic” is being dropped from its name. The brand plans to gradually phase out the word “classic” from its flagship cola products during the first half of this year. (Did you even remember “classic” was on the can?)

The word was added in 1985 to signal that the brand was using its original formula after consumers decried the introduction of a new recipe under the New Coke banner. The word “classic” has only been used in the U.S.

McDonald’s Credits Menu

Items for Strong Earnings Same-Store Sales up 5%; Details Marketing Spending Behind National Coffee Bar Rollout

Despite commodity cost pressures, price-sensitive consumers and soaring unemployment, McDonald’s reported impressive fourth-quarter and full-year earnings this morning.

The Oak Brook, Ill.-based burger chain reported same-store sales were up 5% in the U.S. during the fourth quarter, and up 4% for the year. It credited its breakfast, chicken, value and beverage items with continued strong sales. Full-year profit actually fell 23%, because of a tax benefit last year. “We serve customers when and where they want McDonald’s, and we provide value across the entire menu,” McDonald’s CEO Jim Skinner said during the company’s investor call. “This remains a significant, predictable and attractive brand differentiation that is critical when consumers are feeling the pinch almost everywhere else in their daily lives.” “While we clearly prefer a more robust environment, today’s market conditions play to our strengths; in fact our global comparable sales continue to be strong in January,” added Mr. Skinner. Best in the category?

A Million Views on Obama’s Inauguration

Can Agency World Learn Diversity Lessons From YouTube?

Standing behind a small lectern last March, Barack Obama addressed the nation as his campaign threatened to disintegrate underneath him. His near-40-minute speech on race, now considered one of the pivotal moments of the campaign, was remarkable both for the intelligence it credited to the audience and the depth with which it dealt with the issue. It has been viewed 40 million times* on YouTube. The advertising world has had its own race issue, on the table now for more than 40 years, but has yet to find a voice that can apply salve to that gaping wound whilst moving an otherwise ailing industry toward reconciliation.

Separately, and without our noticing it, YouTube has become the default TV channel of the internet. This is remarkable considering that a) YouTube did not exist during the last presidential campaign and b) so much of the content is published by non-professionals. As the 30-second spot eases into its golden years, the race is on to create advertising relevant to an era in which audiences increasingly consume their world crumb by crumb: Fantasy sports break games down to the individual achievements of players; iTunes encourages music consumption via individual songs; and YouTube breaks TV into the favorite three-minute bits we can e-mail or post to blogs.