Twitter, Spotify, Mothercare: Everything that matters this morning

A round-up of all the marketing and business news you need to know this morning.

By Marketing Week Reporters 3 Apr 2017 7:00 am

Twitter takes on Trump over anonymous account

Twitter has taken legal action to prevent the US government from demanding that it disclose who is behind an account opposed to President Donald Trump’s immigration policies.

In a lawsuit, Twitter argued that freedom of speech should allow it to refuse the order to reveal the identity of the @ALT_uscis account.

The account, which describes itself as “immigration resistance”, is claimed to be the work of at least one federal immigration employee.

The legal dispute throws into sharp relief the battle for online privacy rights under the Trump presidency and presents a challenge to the independence of internet companies.

In the lawsuit Twitter said: “The rights of free speech afforded Twitter’s users and Twitter itself under the First Amendment of the U.S. Constitution include a right to disseminate such anonymous or pseudonymous political speech.”

Samsung on track for huge profit growth

Samsung has forecast huge first-quarter profit growth despite a global slowdown in smartphone sales.

The compay said it expects to report operating profit of 9.9 trillion won (£7.1bn) for the first three months of 2017, up 48% on the same period last year. Revenues are due to remain flat at around 50 trillion won.

Samsung is benefiting from strong growth in its components business, which makes items such as memory chips and flexible displays. Such growth has helped the business to combat a slowdown in handset sales.

The forecast provides some much needed good news for Samsung as its chief, Lee Jae-yong, begins a high profile trial in South Korea today (7th April) over his alleged role in a bribery scandal.

Last week Samsung launched its latest Galaxy S8 smartphone.

Spotify could bypass IPO in favour of direct stock market listing

Spotify is considering whether to bypass an initial public offering (IPO) in favour of listing its shares directly on a stock market, according to reports.

The move, which is relatively rare, could allow Spotify greater flexibility in how it reports results and raises funds. However, the company has so far declined to comment.

The Swedish business is aiming for a valuation of more than $10bn (£8bn), the BBC reports. This week it also signed a long-term licensing deal with Universal Music Group.

Spotify, which has more than 50 million paying subscribers, counts TPG and Goldman Sachs among its major investors.

Mothercare plans to raise prices due to Brexit impact

Mothercare has announced that its prices will rise between 3-5% this summer as a consequence of Brexit.

Announcing the company’s results, chief executive Mark Newton Jones said the fall in the value of the pound since last year’s EU referendum had resulted in higher sourcing costs.

The price rises will affect items like clothing and toys, though Newton-Jones said the retailer had also limited the impact of price hikes by agreeing better deals with suppliers.

Mothercare’s UK like-for-like sales were up 4.5% in the 11 weeks to 25 March, beating some analyst expectations. Newton-Jones has been leading a turnaround plan of the retailer, which includes closing loss-making stores and modernising remaining outlets.

Co-operative still hopeful of bank sale despite loss

The Co-operative Group is still searching for a buyer for the troubled Co-op Bank despite having to write down the value of its stake in the business from 20% to zero.

The group announced a pre-tax loss of £132 million for 2016 as it was forced to write down the value of its holding in the bank from £185m to nothing.

However, chief executive Steve Murrells insisted the move would not affect the sale of the bank. Virgin Money is one of the brands thought to be interested in buying Co-op Bank, the Evening Standard reports.

Thursday 6 April

Pepsi pulls ad, admitting ‘we missed the mark’

PepsiCo has pulled its latest ad campaign featuring model Kendall Jenner after being accused of co-opting a global protest movement in order to sell fizzy drinks.

In a statement, the company says: “Pepsi was trying to project a global message of unity, peace and understanding. Clearly we missed the mark, and we apologise.

“We did not intend to make light of any serious issue. We are removing the content and halting any further rollout. We also apologise for putting Kendall Jenner in this position.”

The soft drinks giant suffered a severe social media backlash after the ad was first aired on 3 April, including criticism from Bernice King, the daughter of civil rights leader Martin Luther King Jr.

Created by PepsiCo’s in-house content creation arm, the advert showed model and reality TV star Kendall Jenner defusing tension between police and protesters by giving an officer a can of Pepsi, a depiction many described on social media as a parody of the Black Lives Matter movement.

The advert was referenced in 124,598 social media posts by 5 April, according to digital agency Meltwater. Of those 105,524 were posted by members of the public, some 45% of which (47,202) were judged to be negative.

Tesco plots 3,000 job cuts as it axes night shifts

Tesco is planning to cut night shifts at 69 of its UK stores, putting 3,000 jobs at risk.

Beginning this summer, eight stores will cease 24-hour trading, following on from the 76 stores that stopped selling around the clock in January 2016. Roles are also expected to be eliminated by a planned merger of customer service counters with lottery and tobacco kiosks.

Tesco joins fellow supermarket Waitrose, which in February announced 700 staff would be affected by the closure of six stores as the business looked to streamline store management.

Deliveroo develops ‘own vocabulary’ to avoid calling workers employees

Deliveroo has been accused of developing its own vocabulary to avoid referring to its riders as employees.

In a document seen by the Guardian, managers are told to refer to couriers as “independent suppliers” rather than “staff” and talk about “onboarding” instead of “hiring”. They are also told to refer to the riders’ “availability” rather than their “shifts”.

By classifying workers as self-employed independent suppliers, gig economy giants like Deliveroo and Uber can save millions in holiday pay, sick pay and tax. It also means the workers have no right to the minimum wage.

Following protests by riders over pay and conditions, a UK court ruled in August 2016 that Deliveroo must pay its workers the national living wage, unless a court or HM Revenue and Customs defines them as self-employed.

Lloyds to cut 100 branches threatening 325 jobs

Lloyds Banking Group is to close 100 branches nationwide between July and October, putting 325 jobs at risk.

The closures span 54 Lloyds branches, 24 Bank of Scotland and 22 Halifax branches, part of a wider programme to close 400 branches and axe 12,000 jobs by the end of the year. The closures are blamed on the declining level of branch transactions as the shift to mobile banking intensifies.

Lloyds also plans to shrink hundreds of branches in size, open several new flagship centres and send out 20 mobile vans to visit affected communities by the end of 2017.

Following the closures, Lloyds Banking Group will have approximately 1,950 branches, the largest network of any UK high street bank.

Ebay founder pledges $100m to fight ‘fake news’

Ebay founder Pierre Omidyar has pledged $100m (£80m) to fight fake news and hate speech, and to support investigative journalism.

The sum includes a $4.5m bequest to the International Consortium of Investigative Journalists, the Washington-based group that last year ran the Panama Papers investigation into tax evasion.

Donations will also be given to the Anti-Defamation League, which plans to build “a state-of-the-art command centre” in Silicon Valley to combat hate speech online, and the Latin American Alliance for Civic Technology, which will receive $2.9m to promote government accountability in Latin America.

Wednesday 5 April

Sports Direct scandal has undermined faith in UK business, MPs say

British businesses must crack down on excessive pay for bosses and improve boardroom diversity to restore public trust after scandals at Sports Direct and collapsed retailer BHS, MPs have warned.

The MPs’ committee called for a ban on long-term investment plans, complex multi-year pay deals that have been criticised for masking the true extent of huge awards to executives and for encouraging short-term thinking. The MPs also urged the government to grant the corporate governance watchdog more powers to hold company directors to account.

“The UK corporate governance system is recognised throughout the world as of high quality. However, recent scandals and the issue of executive pay have undermined public trust in corporate culture,” said the committee’s chair, Labour MP Iain Wright.

“That, together with rising stakeholder expectations, changing business models and technology, means that corporate governance needs to evolve to provide assurance to investors and wider society.”

Spotify signs deal with Universal Music Group ahead of possible IPO

Spotify has signed a new long-term deal with Universal Music Group, one of the world’s biggest record companies.

Artists on Universal may now offer their music on Spotify’s Premium tier before they appear on its free service. Universal artists would gain greater flexibility, claims Spotify.

“Starting today, Universal artists can choose to release new albums on Premium only for two weeks, offering subscribers an earlier chance to explore the complete creative work, while the singles are available across Spotify for all our listeners to enjoy,” said Daniel Ek, chief executive of Spotify.

Spotify is still loss-making and started only nine years ago, but it now has 100 million users and 50 million subscribers and is a dominant force in the global music industry.

Spotify has been trying to sign similar long-term deals with big labels, including Sony and Warner, ahead of a possible stock market flotation.

Reebok to launch ‘sustainable shoes’

Brands such as Nike and Reebok get a lot of flak for producing their products on a mass-scale without considering the environment. And with Adidas deciding to produce trainers made out ocean plastic last year, Reebok has now taken a similar route with a “plant-based” footwear range.

Reebok’s “Cotton + Corn” push is focused on shoes that are made from sustainable, growing materials, that can even be used as compost after they’re worn out.

Reebok Future head Bill McInnis said: “We like to say, we are ‘growing shoes’ here at Reebok. Ultimately, our goal is to create a broad selection of bio-based footwear that can be composted after use. We’ll then use that compost as part of the soil to grow the materials for the next range of shoes. We want to take the entire cycle into account; to go from dust to dust.”

Uber drivers temporarily blocked from unionising

Uber has had a rough couple of months, tainted by negative headlines around sexual harassment. The business has now finally had some good news.

A federal judge in Seattle temporarily blocked the city’s first-in-the-country law allowing drivers of ride-hailing companies such as Uber and Lyft to unionise over pay and working conditions.

Seattle has been gradually raising the minimum wage to $15 (£12) and requiring most employers to provide paid sick leave. The legislation approved by the Seattle city council in late 2015 was seen as a test case for the changing 21st-century workforce.

It requires companies that hire or contract with drivers of taxis, for-hire transportation companies and app-based ride-hailing services to bargain with the drivers, if a majority shows they want to be represented.

Opponents of the law, such as Uber and Lyft, argued at the time that drivers were independent contractors and federal labor law prevented cities from regulating collective bargaining. They also said it would stifle the growth of the on-demand economy.

Vodafone eyes up West Ham stadium in sponsorship deal

Vodafone is closing in on a multi-million pound deal to rename West Ham’s football ground, says The Telegraph.

The telecoms giant is in advanced talks with the owners of the former Olympic Stadium in East London with a six-year agreement possible this month, according to multiple sources.

A deal is not yet certain but if final negotiations progress smoothly, it is understood the 60,000-seater venue currently known as London Stadium will be named after Vodafone from the start of the next football season.

The deal will mark Vodafone’s return to major sponsorship in its home market. It previously backed the McLaren Formula 1 team and sponsored music festivals but pulled out following a review of its brand spending.

Tuesday 4 April

Burberry inks beauty deal with Rimmel owner Coty

Burberry has signed a deal with Coty to hand over control of its fragrances and cosmetics arm to the American beauty firm in a deal worth £180m. The 10-year deal, which kicks off in October, will include manufacturing and distribution of Burberry’s beauty range.

Fragrances and cosmetics have been one of Burbbery’s fastest growing businesses, with sales up 8% in the year to March 2016. Its brands include the My Burberry and Mr Burberry fragrances. According to The Telegraph, the move back to a licensing model after Burberry took its beauty business in house in 2013 is expected to drive growth while at the same time reducing Burberry’s financial risk.

Amazon focuses on business market with marketplace launch

Amazon is bringing its business service to the UK, offering a marketplace where companies can buy everything from office stationery to cleaning equipment to highly specialised equipment. Amazon Business is aimed at any company, large or small, as well as instiutional buyers such as hospitals, universities and non-profits. More than 100 million products will be on offer.

“Whether you are a sole trader, a buyer in a mid-size company or a chief procurement officer in a large multi-national organisation, Amazon Business has the products and capabilities to serve your needs,” says Bill Burkland, the boss of Amazon Business in the UK.

Amazon Business was first launched in the US in April 2015 and has now grown to serve more than 400,000 business in that market alone. It generated $1bn (£800m) in sales in its first year and came to Europe in December last year with a German launch.

Verizon creates Oath brand to house AOL and Yahoo

Verizon is creating a new division to house its AOL and Yahoo acquisitions that will be called Oath. Verizon bought AOL back in 2015 and Yahoo’s core internet business in July last year. Once that deal closes, Yahoo will be merged with Verizon’s AOL unit under the leadership of Marni Walden, EVP of production innovation and new businesses.

Billion+ Consumers, 20+ Brands, Unstoppable Team. #TakeTheOath. Summer 2017. pic.twitter.com/tM3Ac1Wi36

— Tim Armstrong (@tim_armstrong) April 3, 2017

Despite the creation of the Oath brand, both the AOL and Yahoo brands, as well as publishers such as Huffington Post, Engadget and Techcrunch owned by AOL, will continue to be used. In a tweet, AOL CEO Tim Armstrong wrote about the new divisions: “Billion+ consumers, 20+ brands, unstoppable team. #taketheoath. Summer 2017.”

Facebook tests second news feed focused on publisher content

Facebook is testing a second news feed as it looks to help its users surface more content, such as articles, videos and photos, that might be of interest to them. The ‘rocketship’ tab does not include any updates from friends, instead showing only recommended content based on the type of thing users like and follow in their main feed.

“We are testing a complementary feed of popular articles, videos, and photos, customized for each person based on content that might be interesting to them,” a spokesperson tells Business Insider. “We’ve heard from people that they want an easy way to explore new content they haven’t connected with yet.”

RB explores sale of food business

Reckitt Benckiser (RB) is launching a strategic review of its food business, which includes brands such as French’s, that could result in the division being sold. The move comes after RB announced a takeover of US baby food maker Mead Johnson, with any sale helping to fund that aquisition.

RB says in a statement that while French’s Food is a “truly fantastic business with great brands” it is not core to its business going forward. RB’s biggest brands include Cillit Bang, Nurofen and Durex.

Monday 3 April

YouTube to add more safety options for advertisers

As Google looks to convince brands that its YouTube platform is safe again for advertising, it has told the ad industry it will work with companies that are accredited by the ad industry’s Media Ratings Council in a bid to launch new verification tools.

Although it hasn’t given an exact timeline, YouTube says it will work with third-party brand-safety vendors such as DoubleVerify and Integral Ad Science to ensure ads stop appearing next to violent or unsavoury content.

However, DoubleVerify says it’s still unsure what’s supposed to happen next and hasn’t received any details from Google. A DoubleVerify spokesperson told AdAge: “As of yet, we haven’t received any details on the solution that they are planning.”

Waitrose talks up its sustainable tuna farming in new 360° video

Waitrose has launched the latest instalment in an ongoing brand campaign that gives customers the chance to see where its food comes from.

The latest TV ad, created by Adam&Eve DDB, transports viewers to the Indian Ocean, where fresh Waitrose tuna is sourced in the Maldives using the handline-caught method of fishing. The digital version of the ad, meanwhile, gives viewers 360°camera options so they can go deeper in the Indian Ocean.

“We’ve always been proud of the care and commitment our farmers, fishermen and suppliers put into producing our food,” says Waitrose’s head of marketing Rupert Ellwood. “All Waitrose own label fish are responsibly sourced and this shows customers where it comes from in an open and honest way.”

Amazon looks to grab a slice of the ‘influencer’ game

While it isn’t unusual to see bloggers get famous for posting on Instagram or YouTube, we’ve yet to see anybody blow up from using Amazon in the same way. However, that could be set to change.

Amazon has launched a new influencer program, which is currently at beta stage and only available on an invite-only basis.

“The Amazon Influencer Program is exclusively designed for social media influencers with large followings and a high frequency of posts,” says an Amazon spokesperson.

“An intuitive vanity URL makes it easy for customers to find, browse and buy the products introduced to them through social media influencers.

News Corp launches campaign to assure marketers its ads are safe

Over in Australia, Rupert Murdoch’s News Corp has launched a new campaign attempting to assure marketers who might be feeling a little shaky about all the current Google controversy.

The campaign boldly poses the question ‘Do you really know where your ads are today?’ as it encourages brands to think about where they are putting their money. News Corp Australia says it wants to reinforce its commitment to “accountable, effective solutions for advertisers” via the print and digital campaign.

“There has been a lot of discussion and coverage on media transparency over recent months and we want to take a proactive stance on these issues by launching this campaign to showcase our strengths and commitment to providing accountable, effective solutions for advertisers,” explains Nicole Sheffield, chief digital officer at News Corp Australia.

Twitter drops ‘egg avatar’ as it looks to break away from trolls

In a bid to shake its association with vicious internet trolls, Twitter is abandoning its default egg-based avatar.

For the past seven years, new Twitter accounts were assigned a profile picture of an egg, which is supposed to be a playful reference to the site’s bird logo.

However, the social network says it will be introducing default profile photos in a bid to “prompt more self-expression” and break free from the egg avatar’s previous association with abuse on the platform.

“There is an association between the default egg profile photo and negative behavior, which isn’t fair to people who are still new to Twitter and haven’t yet personalized their profile photo,” says Twitter in a blog post outlining the change.