2016 year in review: It’s been a bad year for…

From Samsung’s exploding phones to scrutiny of media agencies and the incoming sugar tax, 2016 was a difficult year for a number of brands and sectors.

Media agencies

Media agencies have been scrutinised like never before this year since the Association of National Advertisers (ANA) revealed highly controversial practices taking place within the US ad industry.

A report by the ANA found evidence of a “fundamental disconnect” between advertisers and agencies, highlighting a far greater need for transparency as the prevalence of cash rebates and kickbacks from media owners to agencies was brought to light.

A  study by marketing consultancy ID Comms published before the ANA’s report suggested that agency rebates are the main cause of distrust between global advertisers and agencies, more than 70% of which believe it will hinder relationships in the long term.

You have to be free to choose your own suppliers, not have a media partner tell you who to use.

Debbie Morrison, ISBA

And brands do not expect the situation to improve any time soon given that only 7% said trust would increase ‘a lot’ in the near future.

To help repair relations, ISBA introduced a new contract template in April designed to create more transparency for advertisers, after highlighting the lack of detail around viewability, brand safety and click fraud.

At the time, ISBA’s director of consultancy and best practice Debbie Morrison, spoke of the “unacceptable position” caused by media agencies dictating which suppliers a client should use, which has been exacerbated by the rise of digital marketing.

“You have to be free to choose your own suppliers, not have a media partner tell you who to use. Certain agency groups only use certain auditors and it all looks very fishy,” she said.

As a result of the rise in automated ad buying Marketing Week columnist Mark Ritson believes the industry is “rapidly turning into a shadowy black box filled with turds and spiders”.

Soft drinks and sugar

Sugar

The soft drink sector has not had the easiest of years. In March,then Chancellor George Osborne unveiled plans to introduce a sugar tax, which will place a levy on all sugary drinks and come into effect by the end of 2018. The sugar tax will reportedly raise £520m, which will be used to help support school sport and fitness programmes, but Mintel expects it to have a “severe impact” on sales.

Brands such as Coca-Cola, Pepsi and Red Bull will be affected, as will beverages with lower sugar content such as tonic water and alcohol-free shandies. Innocent’s head office probably issued a collective sigh of relief, as the new levy will not be paid on milk-based drinks, smoothies or fruit juices.

READ MORE: Soft drink brands should embrace the sugar tax

But it is not just the sugar tax that brands have to worry about. British consumers are increasingly worried about how sugar is affecting their health. Mintel figures show that 32% of soft drink consumers say sugar concerns have prompted them to limit their intake of non-diet variants.

Brands are not sitting still as the war on sugar rages on. Coca-Cola relaunched its ‘Coke Zero’ variant as ‘Coca-Cola Zero Sugar’, and ran a £10m campaign to promote it. It wants 50% of its sales by 2020 to come from its no-sugar options. Other brands such as Lucozade have also launched low- and no-sugar variants.

Yet the industry still has a lot of work to do to turnaround a decline in soft drink sales. According to Canadean, volume sales of carbonated soft drinks were down 0.89% in 2015, while fruit juices fell by 4.1% and sports drinks by 11.2%.

Political polling

polling station

The political pollsters had promised they had improved their models following a disastrous UK general election in 2015, when they failed to predict a Conservative majority, the extent of support for the SNP and the decimation of the Liberal Democrat vote. Yet this year the majority failed to predict that ‘Leave’ would win the UK’s vote on its membership of the European Union or that Donald Trump would be the next US President, not Hillary Clinton.

The issues are similar to those found during the general election. The evidence shows pollsters tend to underestimate conservative voters, hence the Conservative, Brexit and Trump wins. Many people simply did not want to admit, even in an anonymous survey, that they were voting for Trump or to leave the EU.

Joe Twyman, head of political and social research at YouGov, says the popular vote in the US, which Clinton won despite losing the presidency on electoral college votes, fell within its margin of error but in a few key states its preliminary analysis shows it “slightly underestimated” turnout among Trump supporters.

READ MORE: What brands can learn from election polling failures

It is clear that polling methodology needs to be scrutinised. Although the polling of voting intentions in the EU referendum was unique, it seems clear there is a common problem. Declining response rates to phone polls mean they are increasingly costly and that online should become research companies’ favoured method. But pollsters will need to do more tweaking to ensure their respondents are representative.

Twyman agrees: “We will continue to refine our processes, building on the work we have already done incorporating a large amount of additional data from users’ responses to form detailed models of turnout.”

Samsung

It all started so well for Samsung. Its latest flagship phone launch, the Galaxy S7, gave it a sales boost leading it to post its biggest profit in two years. Plus it won the Creative Marketer of the Year award at Cannes Lions. But then it all went up in flames, literally. Its Galaxy Note 7 phones had to be recalled as their batteries were prone to catching fire, while a problem with its washing machines caused some to explode and led to another recall.

Unsurprisingly, the brand’s image has taken a hit. According to YouGov BrandIndex, its ‘Buzz’ score, a measure of the positive and negative things said about a brand, fell by a significant 3.3 points to 8.4 in October. This led to Samsung plummeting down a list of mobile operators and handsets from first to 32nd.

To top this off it reported its worst ever decline in smartphone sales in its third quarter results, down by 14.2%, causing its global market share to fall to 19.2%, from 23.6% in the same period last year.

As a result of its declining sales and brand image, the company had no choice but to end production of the Galaxy Note 7 and reassess the situation. But that cost is $2.3bn in what could prove to be one of the costliest product safety issues ever in the tech industry.

The focus for Samsung has been on reassuring its customers and trying to convince them that its products, including Galaxy S7, are safe. “Samsung stands behind the quality and safety of the Galaxy S7 family,” it said in a post released on its site. Yet it will take more than that to rebuild trust in the brand and its products.

Flashy CEOs

Sir Philip Green at the FT Summer Party in 2011
Sir Philip Green at the FT Summer Party in 2011

Once upon a time it did not matter how many super yachts Sir Philip Green was papped on. The over-the-top parties with A-list celebrities came with the territory. Yet following this year’s demise of BHS, the historic British retailer Green sold to Retail Acquisitions for £1 in March 2015, the archetype of the flashy CEO is starting to feel very outdated.

In a year to forget, MPs demanded Green be stripped of his knighthood, blaming his rush to sell BHS for the retailer going into administration and 11,000 people losing their jobs. And critics claim Green’s inability to publicly acknowledge his role in the demise of BHS has made his adventures on super yachts feel like a slap in the face to thousands of Britons.

Sports Direct’s CEO Mike Ashley, another billionaire with a penchant for flashing wads of £50 notes in public, also came in for criticism after it emerged staff at his Derbyshire warehouse were paid below the minimum wage and fined for turning up to work late.

“I don’t like it when I see CEOs out there in the public eye. It smells of money. I don’t want to think about how much someone owns and how much they make – it is ugly and the public don’t like it,” was the verdict of Ted Baker’s CEO Ray Kelvin. “These people – like [Green and Ashley] – all they want to do is show off how much they earn. That turns people off.”

While Kelvin might just be another over-confident, multimillionaire CEO, it is difficult to imagine many disagreeing with his verdict. Do not be surprised if CEOs make a conscious effort to stay out of the limelight in 2017.

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