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Test case opens in Supreme Court with Ikon accused of overseeing a ‘failed campaign’

A former client of Ikon Communications has told a court that a marketing campaign drawn up by the agency was “a complete flop” that generated “no sales” in a case that is understood to be without precedent in Australian legal history.

 

Advangen, a company that manufacturers hair treatment products, blames the agency for a failed campaign that had a paltry impact on sales and included a TV ad that it claims completely missed its target audience.

The legal battle centres on a campaign for Evolis, a product designed to treat hair loss, which launched in Australia in mid-2015. The campaign had been scheduled to run for 12 months from August 2015, but was pulled after only three months.

Ikon, which is owned by WPP AUNZ, launched legal action claiming its former client had refused to pay invoices, with Advangen launching a counter claim alleging Ikon was to blame for a massive sales shortfall amid a TVC with misguided creative.

Advangen, owned by ASX-listed Cellmid, also argues that other elements of the campaign, including social executions, were not ready by the time the TV spots ran.

It is the first time an advertising agency’s duty of care has been challenged in such a way through the courts and is being regarded as a test case such are the potential implications for the agency-client relationship.

Outlining the case for Ikon, Todd Alexis SC said Advangen had not paid several invoices for services performed by Ikon and, in addition, had not reimbursed $575,000 paid upfront by the agency to media companies.

He said Ikon will call several witnesses to show the work produced by Ikon was up to standard and in line with a services agreement struck by the parties.

Media auditor Ebiquity will also say the anticipated reach of the campaign hit targets, Alexis told the court.

Advangen barrister John Kelly SC, said the “heart of the matter” was Ikon’s misrepresentation of the product.

The court was shown two TV ads, one targeted at women which ran on Seven and pay TV channels, and another aimed at men which ran on digital platforms. The creative featured a woman in one ad, and a man in the other, on a rugged cliff top with the wind blowing through their hair.

“The heart of this matter is that Evolis is a hair loss, hair thinning therapeutic remedial product, it is not a beauty product, it’s not shampoo or the kind of product that makes your hair…improve its appearance,” Kelly said in his opening remarks. “The central problem is that when the creative department became creative they created a number of problems.”

He said the creative content has initially “overreached and overstated” the product to the extent it was rejected by regulators who oversee the way therapeutic goods are advertised.

Ikon then became “more creative” and “moved so far away as to lose the basic message the advertisement needed to convey”.

It is not designed to “make people look beautiful…..but to tackle hair thinning and hair loss”, Kelly said.

The court heard the content of the proposed advertisement was to feature “real life hair loss stories” caused by problems including hormonal changes, cancer and stress, with the message to sufferers to try a “12-week challenge and share their story”.

Examples were contained in the agency’s pitch, he said.

“We are not looking at beautiful people walking on a cliff top exhibiting abundant hair and exciting the interest of a market place in the pursuit of beauty,” Kelly said. “This product is a therapeutic product dealing with a serious problem.”

Kelly also cited an email from the director of the TV ad who described the script as a “bold and visually rich idea” and “other-worldly” which had a “sophisticated poetic backbone”.

“What is happening here is a move in the direction of this other-worldly, stunning arty presentation featuring beautiful people with beautiful hair when the product is not about that,” Kelly said. “It’s a therapeutic product directed at people with hair loss or hair thinning problems for which they are seeking a solution.”

He added the campaign was a “complete flop in real terms” that “generated no sales at all and did not make any contact with its market”.

Furthermore, it was a “waste or money” and required Advangen to appoint another agency, Chaos, to create a new campaign.

Kelly also told the court his client will show other elements of the campaign were not rolled out in a timely way to coincide with the TV ad.

Alexis, questioning Advangen chief executive Maria Halasz, sought to highlight discrepancies and unpick suggestions contained in her written evidence that the campaign was haphazard from the outset.

Far from Halasz’s claims that the Ikon campaign team chopped and changed “so much”, Alexis painted a picture of consistency with key personal, including executive creative director Rob Martin Murphy, and media buying chief Pia Coyle remaining on the team throughout.

He also cited documents that showed meetings between Ikon and Advangen were held on a regular basis.

Suggestions to the contrary were “utterly false”, Alexis told Halasz, as were claims Ikon did not have an account manager.

“The idea of a chaotic campaign that was devoid of any management is completely ridiculous,” he told the court.

Halasz responded that it appeared, operationally, that the Ikon team did change from the one Advangen started with because meetings were attended by so many different agency staff. There was also no single point of contact at the agency, she argued.

Alexis later turned his attention to the $750,000 sales targets for the Evolis product.

Halasz claimed she signed the services agreement with Ikon on the back of the agency’s belief it could achieve such targets, a claim rubbished by the barrister.

“You know the sales figures totalling $750,000 was provided by (Advangen sales director) Mr Rees to Ikon, don’t you?,” asked Alexis.

“Yes, correct,” she said.

Alexis produced an email from Ikon requesting sales figures from Advangen to help with its media planning. The email was dated two days after the services agreement had been signed.

“The idea that you relied on sales figures has got to be wrong. Do you accept that?” asked Alexis.

“I do,” Halasz said.

In other documents, Ikon told Advangen the campaign would reach 1.872m women aged over 35 – its major target market – at least three times. Assuming a 1% conversion rate that would achieve 18,727 sales and achieve the target of $750,000 worth of sales of Evolis.

Halasz said she understood that to mean Ikon was confirming that it could hit the targets.

Alexis said it was nothing of the sort, and was Ikon merely pointing out what needed to happen, not what would happen.

He told the court that was illustrated by Ikon’s remark that conversion rates were “dependent on many factors beyond media”.

Alexis also said Ikon had warned Advangen that a decision to ditch $190,000 worth of out of home advertising would see fewer sales of the product. Halasz agreed that the agency had communicated the decrease but said she did not think it was material enough to justify the out of home expenditure.

The case continues.

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