EXCLUSIVE: HERE'S a first look at the latest advertising campaign by Australian Wool Innovation.

The images, seen by The Weekly Times, are understood to be by UK advertising agency Euro RSCG, the company favoured by Australian Wool Innovation to promote Merino wool, as part of AWI's $7.5 million fibre promotion campaign for 2010-11.

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While AWI this week wouldn't confirm that Euro RSCG had the contract, purported to be for $1.7 million, AWI chief executive Stuart McCullough said the AWI had selected a preferred agency from a shortlist of four - two international and two local.

He said negotiations were continuing with the preferred company.

The Weekly Times understands AWI was impressed with Euro RSCG's identification of Merino as the "fashionably unexpected" face of wool.

To this end, the agency was keen to promote the slogan "Must have Merino".

Under the campaign, AWI has invited northern hemisphere retailers to join with AWI in promoting the Merino brand.

AWI will provide the retail partners with advertising or creative material up to a value of about $250,000.

The Weekly Times understands that the fibre promotion campaign doesn't mention Australia, thereby avoiding any connotations or association with the mulesing issue.

Mr McCullough said because of AWI's limited funding, the fibre promotion program would be restricted to in-store advertising, some print advertising and social media such as YouTube.

Mr McCullough has confirmed that several retailers, sensitive to the mulesing issue, including the UK's Marks and Spencer and nine Italian brands and retailers, would join the fibre-promotion campaign.

This campaign is different to AWI's other marketing strategy of individual product promotion, where AWI will assist a retailer or brand in promoting a retailer's innovative wool apparel.

AWI labels this product promotion as its "business-to-business-to-consumer" strategy, with retailers committing three to four times AWI's contribution.

Mr McCullough said AWI had also committed $23.4 million for its post-farm marketing and research.

He said as part of the commitment, $6.7 million would be spent on post-farm research or product innovation.

Included in the product innovation budget is a feasibility study into establishing showfloor-retail outlets for Woolmark-licensed product.

Mr McCullough envisaged these outlets would be in major cities such as London and New York. He also said the outlets might be franchised by AWI.

A further $1.5 million has been earmarked for a test marketing program in China.