Amazon, Uber, ITV: Everything that matters this morning

Good morning and welcome to Marketing Week’s round-up of the news that matters in the marketing world today.

Amazon predicts sales slowdown despite record Christmas period

Amazon is preparing for lower-than-expected sales for the first three months of 2019, seeing shares fall almost 5% in after-hours trading in spite of record Christmas sales and profit.

The online giant has partly blamed a hit from currency exchange rates for the anticipated 10% to 18% growth in sales in the first quarter, which is slightly lower than analyst forecasts.

Profit rose 63% to $3bn (£2.2bn) in the final three months of 2018, while revenue was up 20% to $72.4bn (£55.24bn).

Neil Saunders, managing director of GlobalData Retail, says there are several dynamics at play here. First is the maturity of Amazon’s operation.

“Amazon is now a massive retailer and it is simply unrealistic to expect it to keep on growing at its historic pace,” he says.

“However, more concerningly, this maturity is also coinciding with a period of rising competition. Retailers like Target and Walmart have invested heavily in their online operations and pulled out all the stops this holiday season. Our data show that they made solid customer gains, and some of that dinted Amazon’s growth. In our view, the gap between Amazon and the rest is now narrowing.”

Another area of concern is Whole Foods, where sales at physical stores dropped by 2.7% year on year.

“The investment in lower prices partly explains this, but it does not account for the bulk of the decline,” Saunders says.

“In our opinion, much of this is because Whole Foods’ proposition is simply not up to scratch. Basics and commodity products still cost way more than at rivals like Target, and this is one of the reasons perceptions that Whole Foods is needlessly expensive have persisted. Such expense is not justified by store experience nor by customer service, both of which remain lackluster.”

Uber adds public transport to app

Uber has updated its app to give users real-time information on public transportation, meaning for the first time the taxi company will be suggesting there may be better options than taking a traditional Uber.

Starting in Denver, the feature will allow users to see ETAs for buses and rail, with Uber planning to make it possible to purchase tickets from within the app, including daily and monthly passes, for all modes of public transport.

Speaking to USA Today, Uber’s head of transportation policy and research, Andrew Salzberg, says: “We are bringing transit as a way to get around, which we know in many cases is the best, fastest, most convenient way for someone to get from A to B within a city.”

Uber says it will gradually roll out Transit in other US cities over the course of the year, as well as worldwide.

Children seeing less age-restricted TV ads

Children’s exposure to TV ads for alcohol, gambling and food and soft drink products which are high in fat, salt or sugar (HFSS) is declining, according to a new report from the Advertising Standards Authority.

Data from 2017, the latest year covered by the report, shows that children see an average of 161.2 TV ads per week, of which: one is for an alcohol product; 2.8 are for gambling products; and 9.6 are for HFSS products.

Compared with 2013 where exposure peaked at 229.3 ads per week, this is a reduction of 29.7%. Broken down, TV ads for alcohol have decreased by 62.5%, gambling ads by 37.3% and HFSS ads by 45.5%.

While the results are positive, Guy Parker, chief executive of the ASA, says it must not be complacent and will continue to actively monitor and report on this area of work.

“Protecting children has always been at the heart of our regulation,” Parker says. “Our next focus will be to examine whether the rules are working in the same way online and we’ll report on that later in 2019.”

Uber Eats to sponsor ITV’s Love Island

ITV has signed a record-breaking deal with Uber Eats to sponsor the next series of Love Island.

Uber’s food delivery service is thought to have paid around £5m for the spot – double that of last year’s main sponsor Superdrug which paid approximately £2.25m.

The last series of Love Island, which was broadcast during the summer of 2018, was the most popular series ever aired on ITV2 with viewing figures surpassing five million at times.

More than three million people also downloaded the programme’s app for updates, while Missguided, which had a product placement deal to dress the islanders, said it saw a 40% increase in sales every evening the show aired.

Cross border law enforcement ‘insufficient’ with online gambling

83% of regulators have the power to enforce regulations when it comes to illegal online advertising but barely a quarter (26%) have taken action against influencers and affiliates, according to a new study.

The research report by Queen Mary University of London into the enforceability of online gambling also found that only 30% of EU and EEA member states have implemented payment blocking to tackle unlicensed online gambling operators, while 39% of states imposed no fines at all between 2015 and 2017.

There are large disparities in enforcement at an international level too, with fines ranging from €100 up to over €1million.

“Online gambling in its multiple forms can easily be provided from a foreign country, where it is more difficult to enforce player protection standards making enforcement tricky and resource-intensive,” explains Julia Hörnle, Professor of Internet Law at Queen Mary’s Centre for Commercial Law Studies.

“User-generated content on social media also adds to the difficulty since it is effectively a form of illegal advertising but often not recognised as such. Current regulations are not fit for purpose.”

Thursday, 31 January

Facebook shakes off scandals as ad revenues soar

Despite a 2018 that Facebook would probably rather forget, its ad business shows no sign of being impacted as both its revenues and profits surged.

Total revenue was up 37% in 2018 to $55.8bn, while net income was up 39% to $22bn. Ad revenues rose 38% to $55bn as both daily active and monthly active users rose by 9%, although growth in user numbers came mostly from Asia Pacific rather than its home market of North America, where user growth has stalled.

Revenue growth was driven by Facebook pushing out more ads, with impressions up 34% and driven by Instagram. Mobile ads now make up the majority of its revenues, accounting for around 93% of ad revenue.

The growth comes despite a torrid year for Facebook in 2018, with the company embroiled in a data hacking scandal involving Cambridge Analytica. It also continues to be plagued by criticism of its content guidelines and struggled with issues such as election integrity, safety and security, data privacy and digital wellbeing.

“Our community and business continue to grow,” says Facebook CEO Mark Zuckerberg. “We’ve fundamentally changed how we run our company to focus on the biggest social issues, and we’re investing more to build new and inspiring ways for people to connect.”

McDonald’s modernisation push pays off as global sales rise

McDonald’s push to modernise its operation is paying off, with global same-store sales up 4.4% year on year in the fourth quarter, ahead of analyst expectations. McDonald’s has been investing in improving its stores, introducing mobile ordering and touchscreens, as well as table service.

However, in its core US market growth was slower, with same-store sales up just 2.3%, the slowest growth rate in almost two years. McDonald’s is working to turn around that slowdown, replicating its modernisation push internationally in its home market and focusing on improving the quality of its menu by removing artificial flavourings from burgers and switching from frozen to fresh meat in its Quarter Pounders.

Total revenue was down 3% to $5.16bn, largely due to the company selling restaurants to franchisees, while net income increase to $1.42bn, up from £698.7m. But the company warned costs could mount up in 2019 as rising wages, a strong dollar and the cost of its restaurant remodelling programme eat into profits.

CEO Steve Easterbrook says: “As we begin 2019, we have confidence in our plan and the continued growth opportunities from delivery, Experience of the Future and digital. We remain committed to running great restaurants, which will continue to make a difference for our customers and drive long-term sustainable growth.”

Brands look to change agency remuneration models in bid for better relationships

The majority of major multinationals believe a different approach to the way they pay their agency partners will improve their relationship with agencies, according to new research from the World Federation of Advertisers (WFA).

The research, conducted by The Observatory International, found that 71% ‘agreed’ that changing remuneration models could improve the client-agency relationship. Some 81% of respondents expect a shift towards performance-based models and away from labour-based and commission-based models.

The proportion of respondents using output-based fees as their main remuneration contract was 28%, up from 20% in 2011. A further 15% combine performance and labour-based payment, up from 9% eight years ago, while pure labour-based models are at 36%, down from 54% in 2011.

As remuneration models shifts, brands are already saying their perceptions of value provided by agencies are improving. Some 87% of respondents say they feel they are getting genuine value for money, up from 67% in 2011. Nearly 70% agree agencies are now accountable for the value they create.

Nevertheless, concerns around transparency of agency costs and getting sufficient detail on the scope of work remain concerns.

The research is based on responses from global and regional senior marketing procurement experts from 42 different companies with a total communication spend in excess of $84bn.

Unilever sales struggle in its first results under new CEO

Unilever’s sales were lower-than-expected in the fourth quarter, as both economic and political uncertainty hit volume growth in developed market.

In its first set of results since Alan Jope became CEO at the start of the year, Unilever said underlying sales were up 2.9%, behind analyst expectations of 3.5%. Turnover hit €49.6bn, with full-year sales growth likely to be at the bottom of its 3% to 5% forecast range and the FMCG giant forecasting that market conditions will “remain challenging” through 2019.

Homecare was a highlight, with sales up 4.5%, while beauty and personal care saw underlying sales up 3.1%, 2.5% of which was accounted for from volume growth. Food and refreshment (excluding spreads) was up 2.5%, with 1.6% volume helped by strong ice cream sales.

“2018 was a solid year for Unilever, with good volume growth and high-quality margin progression,” says Hope. “Looking forward, accelerating growth will be our number one priority. With so many of our brands enjoying leadership positions, we have significant opportunities to develop our markets, as well as to benefit from our deep global reach and purpose-led brands.

“We will capitalise on our strengthened organisation and portfolio, and our digital transformation programme, to bring higher levels of speed and agility. Strong delivery from our savings programmes will improve productivity and fund our growth ambitions.”

TSB sees customers switching slow as bank tries to bounce back from IT meltdown

TSB has seen the proportion of customers switching away from the bank slow as the bank tries to bounce back from the IT meltdown that affected millions of customers last year.

According to the Current Account Switch Service (CASS), the bank lost 18,022 customers and gained 1,880 in the three months to the end of September, a net loss of 16,142. In the previous three months, 21,790 switched away from TSB through CASS. TSB says it also saw a further 22,000 customers open bank accounts outside the CASS system, although has not said how many closed them.

Overall, Nationwide saw the most customers switch into the bank, with a net gain of 31,773. HSBC, including First Direct and M&S Bank, came second with a net gain of 16,430. The best of the challenger banks was Monzo with 5,363, while Starling Bank saw a net gain of 2,116.

Wednesday, 30 January

M&S to transform plastic into playground equipment and store fittings

Marks and Spencer (M&S) has unveiled a new initiative enabling customers to return non-recyclable plastic packaging which the retailer will turn into store fittings, furniture and playground equipment for schools.

Shoppers are urged to return a variety of plastic packaging from crisp packets, ready meal trays, sauce sachets and cosmetic containers which can be dropped in designated M&S recycling bins.

M&S says it plans to make the take-back initiative available at all of its stores nationwide by the end of the year.

“Customers often don’t know how best to recycle certain types of plastic or where it goes after being collected by local councils. We’re on a mission to provide a greater awareness of landfill avoidance and plastic recyclability, while ultimately helping our customers to give plastic a new purpose and support a truly circular economy,” senior packaging technologist at M&S, Laura Fernandez, says.

The scheme is part of a wider sustainability plan which includes a sleeveless card trial across 119 of its stores as well as a pilot at its Tolworth store which involves removing plastic packaging from 90 lines of fruit and vegetables.

M&S has also promised to ensure all of its packaging is widely recycled by 2022.

Apple’s revenue plunges during first quarter

Apple has posted an overall revenue of $84.3bn for Q1, down 5% year on year.

Revenue from the iPhone – responsible for the firm’s profits – also fell 15% in during the first financial quarter.

However, the drop was anticipated since the tech giant told investors earlier this month that revenue would be about $84bn, which was lower than predicted.

International sales accounted for 62% of the quarter’s revenue while total revenue from all other products and services grew 19%. Services revenue reached an all-time high of $10.9bn, up 19% year on year.

Meanwhile, home and accessories also experienced record growth at 9% and 33% respectively, and revenue from iPad grew 17%.

“While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter’s results demonstrate that the underlying strength of our business runs deep and wide,” Apple’s CEO Tim Cook says.

Apple’s CFO Luca Maestri also adds that Apple generated a very strong operating cash flow of $26.7bn during the December quarter and set an all-time EPS record of $4.18.

Counter Terrorism Policing launches nation-wide campaign

Counter Terrorism Policing has unveiled a new campaign aiming to highlight the importance of communities in the UK’s fight against terrorism.

The 60-second public information campaign, which will feature at 120 cinemas nationwide, takes inspiration from last year’s ‘Communities Defeat Terrorism’ but takes more of a narrative in order to engage with cinema audience.

The spot is based on real-life foiled terror plots and terrorist-related suspicious activity.

Additionally, it will target key audiences on a local level, with 46 localised messages being delivered to elaborate on the importance of local communities in helping end terrorism. The film encourages people to report suspicious behaviuor.

UK Counter Terrorism Policing assistant commissioner, Neil Basu, says the public plays a crucial role in helping police and security services disrupt terrorist activity, with more than 22% of reports from the public producing intelligence which is helpful to police.

“The important thing for people to remember is that no report is a waste of our time, trust your instincts and tell us if something doesn’t feel right,” he adds.

Rail user satisfaction at decade-low

Rail user satisfaction has hit a 10-year low, according to a study by independent watchdog Transport Focus.

While some 79% of people surveyed were satisfied with the overall services, this marks the lowest figure since 2008.

The BBC reports that rail firms Northern and Great Northern saw the biggest decline in satisfaction.

During Autumn last year two of the 25 train operating companies, Heathrow Express and Chiltern Railways, “significantly improved” with Heathrow Express scoring the highest rating of 96%, followed by Grand Central, Chiltern Railways and Hull Trains.

However, during the same period seven operators such as Great Northern, which had the lowest rating of 68%, Northern, TransPennine Express, Greater Anglia, Thameslink, ScotRail and London North Eastern Railway all “significantly declined”.

Anthony Smith, chief executive of Transport Focus, says: “Government and the industry must continue to focus on performance. In the longer term, the government’s Rail Review must bring about fundamental change.

“Passenger irritation at poor performance erodes their most basic trust in the industry. Passenger frustration at continual fare increases saps confidence in the system to reform itself.”

Meanwhile, 71% of customers were satisfied with levels of punctuality and reliability, 46% were satisfied with value for money. Though, value for money fell to 31% for commuter journeys.

Shop price inflation inches up in January

Shop price inflation rose to 0.4% in January, up from 0.3% in December, marking the fourth consecutive month of price increases and the highest inflation rate since April, according to data from the British Retail Consortium.

Non-food deflation continued to decelerate from 0.4% in December to 0.3% in January, signifying the lowest rate of deflation since March 2013.

Food inflation remained steady at 1.5%. In line with global food price developments, dairy products saw a slowdown in inflation and meat saw prices fall. However, inflation accelerated for other goods (alcoholic beverages and fish), keeping inflation steady.

Fresh food inflation climbed to 1.2%, up from 0.9% in December, while ambient food inflation slowed to 1.9% in January from 2.3% in December.

Meanwhile the lower rate of deflation for non-food goods reflects heavy discounting this January compared to last year for some goods, such as furniture and clothing, or some price increases for others, such as DIY or health & beauty goods.

Tuesday, 29 January

Marketers could be impacted as Tesco cuts 9,000 jobs

Tesco is looking to cut around 9,000 jobs across its stores and head office as it looks to simplify the business and its processes in order to “remain competitive”. Many of the cuts will come at its fresh food counters, which are seeing hours stripped back and being shut in 90 stores, although Tesco says it expects about half the people affected to be redeployed to customer-facing roles.

There will also be “changes” in some of its head office teams as it looks to move to a “simpler and leaner structure”. It is thought these changes could impact the marketing team, although the supermarket giant would not break down the figures to specific departments within head office.

The move comes four years after Tesco launched its turnaround plan, with the aim of building a stronger business that can adapt to changing consumer demands.

Jason Tarry, CEO, UK & ROI, says: “In our four years of turnaround we’ve made good progress, but the market is challenging and we need to continually adapt to remain competitive and respond to how customers want to shop.

“We’re making changes to our UK stores and head office to simplify what we do and how we do it, so we’re better able to meet the needs of our customers. This will impact some of our colleagues and our commitment is to minimise this as much as possible and support our colleagues throughout.”

Sainsbury’s, McDonald’s and M&S warn of price hikes and food shortages with no-deal Brexit

A large group of retailers, including supermarket giants Sainsbury’s, Asda and Lidl, have warned MPs that a no-deal Brexit could put the UK’s food security at risk and would result in products disappearing from shelves.

The open letter was written by the British Retail Consortium and also signed by bosses at McDonald’s UK, Waitrose, Marks & Spencer, The Co-op, KFC and Pret A Manger. It warns that trading under World Trade Organisation terms would cause “significant disruption” and result in price hikes.

Around 90% of lettuces, 80% of tomatoes and 70% of soft fruit sold by UK supermarkets during the winter months are imported from the EU but as this produce is fresh and perishable, it needs to be moved quickly from farms to stores. The letter states that “this complex, ‘just in time’ supply chain will be significantly disrupted in the event of no deal”.

It warns that even if checks are not carried out on products at the border there is still likely to be “major disruption” and delays at Calais, which would impact retailers’ ability to offer the variety of products UK consumers are used to.

Advertisers failing to keep up with consumers’ views on gender stereotypes

Advertisers have been accused of “living in a bubble” when it comes to gender stereotypes after a new study found marketers’ views lagging behind consumers.

Kantar’s AdReaction: Getting Gender Right report finds 76% of female marketers and 88% of male marketers think they are getting it right when it comes to offering positive role models in advertising. However, 45% of consumers feel women are not being portrayed appropriately compared to 40% who are happy with the way women are shown in ads.

For men the gap is higher, with 44% believing the portrayal of men perpetuates outdated stereotypes versus 35% who think highly of male characters in advertising.

In the UK and Europe, women continue to be shown in care-giving roles, with 68% of all ads portraying women as likeable and/or caring, compared to just 4% that feature women as authoritative. However, the percentage of men shown in an authoritative role is also low at 7%, suggesting advertising is not presenting positive role models for either gender.

Despite the fact both genders are involved in purchase decisions for household goods, nearly all (99%) of UK ads for laundry products and 70% of ads for toiletries and food are still aimed at women. The research suggests marketers are being too simplistic in their targeting given 93% of women and 87% of men consider themselves a ‘main buyer’ of household goods.

Hannah Walley, Kantar Millward Brown’s joint head of media & digital, says: “The progressive representation of gender in advertising has become increasingly important, particularly in light of the ASA’s ban on the use of stereotypes that ‘hold back people and society’. However, the views of the ad industry and consumers on how far things have improved don’t match up. Society has evolved – but the industry is lagging in its response.

She urges the industry to get out of its bubble and “think hard about how to make ads that challenge outdated and over-simplistic assumptions” in order to resonate with a wider audience.

“There’s a commercial imperative to doing this – but it will also lead to marketing that’s bold and progressive, and which drives change,” she adds.

Facebook’s popularity among UK kids dips – but it is still their go-to social network

Facebook’s popularity among children continues to fall, while their interest in Instagram, Snapchat and WhatsApp rises, according to Ofcom’s annual report looking at media consumption and device use among kids in the UK.

Facebook is still the most widely used social media platform, with 72% of those aged 12 to 15 using it, but this is down from 74% in 2017. It was named as the ‘main’ social network by 31% of children in 2018, down from 40% in 2017.

Meanwhile, Instagram has gained in popularity, with 23% of 12- to 15-year-olds naming it as their main social network, up from 14% in 2017. Likewise, children’s use of WhatsApp and Snapchat also increased.

Oddbins blames Brexit uncertainty as it calls in administrators

The high street could be set to claim its next victim as Oddbins’ owner prepares to appoint administrators, blaming tough trading conditions and Brexit uncertainty.

European Food Brokers (EFB) confirmed it has filed a “notice of intention” to appoint Duff & Phelps, according to a report by Sky News.

Oddbins, which employs more than 500 people and operates subsidiaries, including Wine Cellar Trading and Whittals Wine Merchants, will continue to trade as EFB seeks a buyer.

EFB has owned Oddbins since its first collapse in 2011.

Monday, 28 January

Conde Nast launches business magazine as it focuses on ‘niche titles’

Condé Nast will launch a new business-focused fashion title in an attempt to tap into new sources of revenue as the publishing industry struggles.

Vogue Business will be a digital-only publication aimed at fashion industry professionals and will operate separately to the fashion magazine, running as a bi-weekly email newsletter.

The new title will cover the “market currents, cultural movements, trends and technologies that will impact the fashion industry”, according to the publisher and is the first product to emerge from the firm’s “incubator” which develops new products and services for the company.

Condé Nast International said in a statement: “We are constantly evaluating how we work across countries and brands and how we develop our products to expand our global leadership in the fashion, luxury and lifestyle spaces.”

The company says 7,000 industry professionals have been involved in beta-testing Vogue Business, including senior executives at some of the world’s biggest fashion brands.

UK ad spend to slow in 2019 ‘as the clock ticks down’ to Brexit

Overall ad spend growth is forecast to slow to 4.6% in 2019 with a no-deal Brexit potentially causing further decline, according to the latest Advertising Association/Warc Expenditure Report.

The latest research finds overall ad spend is expected to slow even if the UK government secures a withdrawal agreement from the EU that minimises business disruption.

Ad spend in the UK increased 5.1% year on year in 2018 to reach £5.6bn, with digital advertising spend acting as a key driver having grown by an estimated 13.4% in 2018.

The report also finds total TV spend was flat during the quarter, despite an 11.5% rise in video-on-demand revenue for UK broadcasters, while radio (+5.0%), and out of home (+7.3%) recorded strong growth year on year.

Stephen Woodford, chief executive of the Advertising Association says: “As the clock ticks down to our departure from the EU, it is crucial the Government provides the certainty we are all seeking in business. We are predicting continued ad spend growth of 4.6% in 2019 and an agreement with the EU that keeps disruption at a minimum and keeps trade and talent flowing will greatly help this growth.”

M&S in talks with delivery service Ocado

Marks & Spencer (M&S) is in talks to take on aspects of delivery company Ocado in an attempt to combat the struggling high street.

A report in the Mail on Sunday suggests grocery delivery is part of M&S chairman Archie Norman’s plan to boost sales. The discussions are thought to be in the very early stages but the newspaper says M&S could be interested in buying key distribution centres, delivery vans and lorries from Ocado.

Ocado has had a long-standing deal with Waitrose but the current supply deal between the companies ends next year. Waitrose has developed its own Waitrose.com delivery operation in recent years with customers able to order from either Waitrose or Ocado.

NHS Blood and Transplant uses live data to encourage regular blood donations

NHS Blood and Transplant (NHSBT) is normalising blood donation with the launch of digital out of home ads that display the walking distance and number of free appointments at the nearest permanent blood donation centres.

The aim of the campaign, which launches today (28 January), is to discourage reliance on mobile donation centres with first party data from NHSBT to be displayed across 100 sites in Leeds, Sheffield, London, Liverpool, Birmingham, Gloucester, Bradford and Poole.

The ads, which are created with agencies Clear Channel and 23red, will also display the location of the nearest permanent blood donation centre as well as the number of first-time donors seen there in the past week, and the amount of people booked to give blood.

Ceri Rose, director of marketing and communications at NHS Blood and Transplant, says: “What we love about this campaign is that it tells an emotive story, through the imagery, to connect with specific donor groups that are needed. It also tells people where their nearest centre is and just how easy it is to start donating there on a regular basis.

“Our hope is that people start the new year with good intentions and they will be inspired to register as new blood donors. For our amazing existing blood donors, it will remind them to support their local donor centre by highlighting available appointments to donate.”

The ads feature photographs of a diverse range of real blood recipients including of a black man and women to try to inspire much-needed black donors for sickle cell disease.

Sainsbury’s Tu helps women find the right bra with London pop-up

Tu, the Sainsbury’s clothing brand, is creating an underwear pop-up to help women find the right bra as part of a new campaign to normalise breasts.

The ‘All Boobs Welcome’ campaign, is beginning with a a five-day pop-up shop in London’s Covent Garden which will feature workshops and discussions as well as bra fittings.

The shop, which will run from 6 to 10 February, aims to encourage body positivity through creative workshops after Tu found 58% of women wish their boobs were different. The campaign forms part of Tu’s overarching ‘Be You’ purpose which wants to make women of all sizes feel comfortable in their own skin.

Helen McGrath, Sainsbury’s head of campaign management, says: “Our research shows 71% of women feel that advertising presents an unrealistic view of women’s bodies. This February, we want to readdress the balance, with powerful visuals and messaging to inspire confidence and encourage women to embrace their bodies just the way they are.

“So, as the brand that stands for Be You, when it comes to communicating about bras, we’re going to celebrate the normality of the nation’s knockers. No matter what we call them, no matter what size or shape they are, at Tu all boobs are welcome”

Tickets for the workshops will be priced at £6 with all proceeds going to Sainsbury’s charity partner, Solace Women’s Aid, and customers taking part in the workshops will also receive a £10 voucher.