Sainsbury’s, Amazon, Virgin Atlantic: Everything that matters this morning

Catch up on all the latest marketing news with our morning round-up.

Sainsbury’s extends GB Paralympics support to 2020

Sainsbury’s has extended its sponsorship of the British Paralympic Association for the next four years, including both the PyeongChang 2018 and Tokyo 2020 Games.

The supermarket giant became the first Paralympic-only sponsor of the team during the London 2012 Games, and has since partnered with ParalympicsGB at Sochi 2014 and Rio 2016.

Tim Hollingsworth OBE, chief executive of the British Paralympic Association, says Sainsbury’s had demonstrated a “true understanding of the power of Paralympic sport” and had encouraged its customers and colleagues to get behind the GB team.

“We know that the inspirational performances of our athletes on the field of play can help to change perceptions and help to create a better world for disabled people. Sainsbury’s has a very clear understanding of our vision and has engaged superbly around programmes to impact on the lives of young people in particular,” he says.

Sainsbury’s Group CEO Mike Coupe adds: “Inclusivity, for both our colleagues and our customers, is at the heart of Sainsbury’s values, which is why we are so keen to continue to support ParalympicsGB and help change perceptions of what it means to have a disability.”

Earlier this week Volvo won Channel 4’s first Diversity in Advertising award, winning £1m in advertising airtime for its pitch around non-visible disability.

Virgin Atlantic sells 31% stake to Air France

Virgin Atlantic has sold a 31% share to Air France-KLM, leaving founder Sir Richard Branson with a minority stake in the airline.

Air France-KLM’s stake is worth £220m and is part of a four-way joint-venture with US partner Delta.

Virgin Group’s share will fall from 51% to 20%, while Delta will retain 49%.

The airline’s founder, Sir Richard Branson, says he will remain “very much involved” despite now having a minority stake.

Amazon’s profit down 77% following heavy investment

Amazon’s profits took a knock in the second quarter, despite increasing sales, following a period of heavy spending as it accelerates overseas expansion and invests in new products and services.

The online giant recorded revenues of $38bn during the three months to the end of June, up 25% compared to a year earlier, but profit was down 77% to $197m.

Expenses increased to $37.3bn, however, up 28% year on year.

Over the past year, Amazon has invested heavily in a number of key areas including subscription service Amazon Prime, as well as stepping up its connected home offer with the development of Echo and Alexa. The company has also invested in video content, and fulfilment and data centres.

It also continued its push into food with the £10.7bn acquisition of Whole Foods, following major investment into its ‘Go’ shopping concept that allows customers to automatically pay for goods as they exit a store.

It is currently the world’s fourth most valuable brand, according to the latest BrandZ ranking, having increased value 41% since 2016, meaning it entered the top five for the first time this year.

Google trials auto-play video in search

Google is testing the use of auto-play videos in search results, according to a report on search-focused site The SEM Post.

When searching for a movie or TV show, for example, a video appears in the sidebar on the right-hand side and will play automatically once without ads on desktop. Mobile users must tap to play.

People were quick to slam Facebook’s introduction of auto-playing videos so users could be similarly non-receptive to Google’s move.

Porsche called out for cheating emissions

Porsche is the latest car brand to get caught up in an emissions scandal, after Germany’s transport minister announced a recall of 22,000 vehicles to remove what he calls illegal emissions-controlling software.

The recall, which Porsche will be forced to pay for, affects the three-litre Cayenne model.

Porsche is owned by Volkswagen Group, which in 2015 admitted 11 million VW cars had been fitted with emissions fixing software, a problem at the time is set aside €6.5bn to fix.

Thursday, 27 July

Facebook ad sales surge thanks to mobile

Facebook has released yet another set of stellar numbers, beating all analysts’ expectations, as it announced $9.32bn (£7.01bn) revenues in Q2. Advertising revenues, which make up 98% of that figure, grew year on year by 47%, and net income by 71%.

Mobile drove the lion’s share of Facebook’s sales in the quarter, accounting for 87% of advertising revenue, compared with 84% in the same period last year. Its monthly active users and daily active users both increased by 17%, with the greatest growth coming in the Asia-Pacific region. The vast majority of revenues (73%) are still made in North America and Europe, however.

Car brands question appeal of electric

The car industry says consumers are not yet ready to make a wholesale switch to electric cars and need financial incentives to consider buying them, amid the surprise news announced yesterday that the government intends to ban sales of new petrol and diesel cars from 2040, as part of a clean air plan. The Society of Motor Manufacturers and Traders claims the ban will “undermine the current market for new cars”.

Consumers currently get up to £4,500 back in subsidies from the government when buying an electric car and £2,500 for a hybrid. Doubts have arisen that the country may not be able to generate enough electricity to meet the demand at UK charging points if all cars are battery-powered.

Brexit inflation hitting consumer spending

The pound’s weakness following the UK’s vote to leave the EU last June – and the subsequent jump in consumer prices as businesses’ costs rise – have caused a “notable slowdown” in the economy, chancellor Philip Hammond has admitted. New GDP figures from the Office of National Statistics show anaemic Q2 growth of 0.3%.

“Consumers are being affected by the inflation that was created by the depreciation of the currency in the autumn of last year,” Hammond told ITV news.

This has potentially had knock-on effects on advertising too. Brands’ lower outlay on TV dragged down overall ad spending in Q1, which saw its slowest growth in nearly four years according to AA/Warc. Supermarkets and food brands cut TV spend by 25%, says Warc analyst James McDonald.

RBS could ditch spin-off of Williams & Glyn brand

The Royal Bank of Scotland is to pump money into a scheme to move business customers over to smaller competitors, in order to avoid selling off Williams & Glyn. The brand for consumers and small businesses was launched in order to be spun off to satisfy regulators by increasing competition, however it is doubtful W&G could continue to fund itself as a standalone bank.

The failure with W&G stands in stark contrast to Lloyds Banking Group’s 2013 relaunch of TSB, with the same objective. The brand quickly re-established itself in consumers’ minds, having been absent from the high street for several years.

It launched via an initial public offering in 2014, before being bought by Spanish bank Sabadell a year later.

Jinn to focus on London alone

Delivery brand Jinn, which picks up goods from local shops and restaurants and delivers them in an hour, has pulled out of all cities except London, in another sign that deliveries have become an overcrowded space for startups.

In terms of food, it faces competition from the likes of Deliveroo and Uber Eats, while Amazon and Quiqup are rivals in the shopping arena. The latter recently unveiled a partnership with Tesco to fulfil its one-hour grocery delivery service in central London.

Jinn’s suspension of services outside London comes with an objective of becoming profitable this year, founder Mario Navarro told TechCrunch, with 90% of orders coming from the capital.

Wednesday, 26 July

New diesel and petrol cars face ban from 2040

New diesel and petrol cars and vans will be banned in the UK from 2040 in a bid to tackle air pollution, the government is set to announce.

Ministers will also unveil a £255m fund to help councils tackle emissions from diesel vehicles, as part of a £3bn package of spending on air quality.

The government will publish its clean air strategy later, favouring electric cars, before a High Court deadline.

Campaigners said the measures were promising, but more detail was needed.

The UK seems to be following France’s example, after President Emmanuel Macron announced similar plans to phase out diesel and petrol cars in France earlier this month.

Outdoor air pollution is said to contribute to about 40,000 early deaths a year in the UK, according the Royal Colleges of Physicians and of Paediatrics and Child Health.

Amazon doubles research and development team in London

It seems like Amazon is not worried about Brexit just yet. The US e-retail giant has announced it plans to massively expand the number of people it employs in research and development across London.

The company, which opened its new office earlier this week, said it would be doubling the capacity of its development centre in the city from 450 to 900 and that it plans to occupy all 15 floors of a new 600,000sq ft building in Shoreditch, east London.

The move means that by the end of 2017, Amazon will employ more than 5,000 people in research and development roles as well as corporate jobs across several sites in London. It has invested more than £6.4bn in the UK since 2010 and has pledged to create 5,000 new permanent roles across the country in 2017 taking its total UK workforce to 24,000.

The Guardian explores paywall around website and apps

The Guardian has developed plans to erect a paywall around its website and apps if its existing membership scheme and appeals for donations do not meet financial targets.

According to The Telegraph, it is understood that the publisher has called in consultants to work on the details of compulsory subscription charges for some material, despite the growth of voluntary contributions. The proposals are “finished and ready to go”, a source said.

The news brand has always rejected calls for a paywall in favour of reach and scale.

The publisher said Tuesday that its current strategy was on track and that by April it had attracted 230,000 paying members online, up from 50,000 at the start of the financial year.

The Guardian is currently operating with heavy losses and is currently looking to cut costs. It revealed yesterday that operating losses were £44.7m, down a third from £68.7m the previous year.

TomTom moves away from wearables as it ‘falls short of expectations’

TomTom may be on the verge of leaving the wearables market, after a 20% year-on-year consumer sales decline, which management blamed on the Sports division.

“The wearables market has fallen short of expectations… And because of this and because we want to focus on automotive, licensing and telematics businesses, we are reviewing strategic options for our sports business,” said TomTom CEO Harold Goddijn.

TomTom’s sports division includes the company’s fitness trackers and the action cams.

According to a report by Wareable, several key figures in the division have already departed, including its VP of marketing, global product marketing manager, communications manager and VP of software.

Most of them left during TomTom’s last round of lay offs in December. The report says that most of the positions have not been filled, leading them to believe that the division might be shut.

‘Sharp drop’ in EU applications to UK tech industry

The UK government is yet to reveal its new visa rules for EU migrants after Brexit, but recruiters and executives say the country’s £170bn technology industry has already experienced a sharp drop in job applicants from the continent.

Data from Arrows Group, a recruitment consultancy, show a 10% reduction in applications in the first quarter of this year compared with the same period last year — down to about 900 from 1,000 before Brexit.

Despite government initiatives to encourage stem subjects at university, the industry relies on EU citizens to fill about 180,000 jobs in the sector, according to data from the Recruitment and Employment Confederation. The figure represents a fifth of tech jobs in London.

“The government is yet to categorically protect the rights of all EU citizens in the UK,” said James Parsons, CEO of consultancy Arrows Group. “So that’s causing a ripple of uncertainty, which is set against a backdrop of a number of the EU cities investing a lot of money in attracting people.”

Tuesday, 25 July

Alphabet revenues soar but profits take a hit after Google’s EU fine

Google’s parent company Alphabet saw revenues in the quarter to the end of June soar by 21% year on year to $26bn, with its ad business accounting for the vast majority of that turnover and suggesting that the brand safety issue has had little impact on the company.

Profit was down 30% year on year to $3.5bn due to the £2.1bn fine issued by the European Union after it ruled Google had abused its market position in online shopping. Without that, Google’s profits would have been 40% higher this quarter.

While Google still relies on advertising for almost all its revenue, it is trying to diversify with its ‘other’ revenues, which includes money from, among other things, app purchases and cloud services, up 40% to around $3bn.

“We’re delivering strong growth with great underlying momentum, while continuing to make focused investments in new revenue streams,” says CFO Ruth Porat.

Tesco takes on Amazon with launch of same-day delivery

Tesco has become the first retailer to offer a same-day online grocery deliver service across the UK. The supermarket had tested the service in London and the South East and is now extending it to more than 300 stores nationwide, which it claims cover 99% of UK households.

Customers ordering by 1pm will be able to have their shopping delivered from 7pm at a cost of between £3 and £8. However, it will be free for a limited period for those customers who are members of its ‘Delivery Saver’ scheme.

Tesco says same-day deliveries are proving increasingly popular, with demand up 18% so far this year. The grocer also offers same-day click-and-collect.

Adrian Letts, managing director of Tesco Online, says: “Customers tell us they like getting their shopping delivered quickly and conveniently, and with our same-day delivery service they can now order by lunch to get their shopping delivered for their evening meal“

Ad industry considers tougher 100% viewability standard

The advertising industry is considering toughening up standards around viewability, raising the threshold for what is considered a ‘view’ in digital from 50% to 100% viewability.

The Media Ratings Council (MRC) has used an industry standard for display advertising of 50% in view for one second, but this is at odds with the much stricter requirements of brands such as Unilever and media agency GroupM, which demand that all pixels must be displayed to count as a view.

According to AdAge, the MRC has no imminent plans to change the standards but is launching a cross-media audience measurement project later this year that will look at the issue. Any decision will be based on industry feedback as well as data and analysis.

Michael Kors to buy Jimmy Choo for $1.2bn

US retailer Michael Kors is to acquire luxury British shoemaker Jimmy Choo in a $1.2bn deal. Co-founded in the 1990s by Jimmy Choo and Tamara Mellon, the brand was made famous by celebrity fans including Princess Diana who wore its famous stiletto heels. It was put up for sale in April after majority owner JAB decided to focus on luxury goods.

Michael Kors will hope the purchase can help turn around struggling sales as the popularity of its handbag range declines. It has expanded into dresses and menswear and invested in its online business in a bid to boost its performance.

“Jimmy Choo is an iconic premier luxury brand that offers distinctive footwear, handbags and other accessories,” says Michael Kors, honorary chairman and chief creative officer.

“We admire the glamorous style and trend-setting nature of Jimmy Choo designs.”

UK households stop spending as financial outlook deteriorates

UK households are cutting down on big purchases such as cars, holidays and household appliances as wage growth stutters and rising prices lead to a deterioration in households’ financial situation. IHS Markit’s monthly Household Finance Index dropped to 41.8 in July, its lowest level in three years and down from 43.7 in June.

“There are signs that squeezed household budgets and worries about earnings have started to spill over to consumer spending patterns,” says Tim Moore, a senior economist at IHS Markit.

The figures come as the International Monetary Fund downgrades its forecast for UK growth this year from 2% to 1.7% amid “weaker than expected” activity in the first three months of the year.

Monday, 24 July

Boots apologises over contraception comments

Boots has apologised over comments it made about the morning-after pill in which it said it was keeping the price high to avoid “incentivising inappropriate use”.

The chain was urged to drop the price of the emergency contraceptive by the British Pregnancy Advisory Service (BPAS) but said it was afraid of a public backlash.

The company has now apologised for its “poor choice of words” and has said it is looking for cheaper alternatives to the brands it sells.

Apple goes retro to show off personalised memory videos in new campaign

Apple has launched a campaign to promote the Memories tab in the iPhone 7’s Photos app.

The 30-second ad stars an old man creating slideshows out of his archives for the phone’s users. It shows a mother looking through her phone as the elderly man works away in his warehouse to find his Apple memories.

The man then goes through his archives and picks out videos and photos, editing them together before they come up on the woman’s iPhone.

Lyft to double staff numbers in drive to develop autonomous car

Uber rival Lyft if aiming to mix a robot fleet with real drivers in new hybrid network.

The San Francisco-based company is launching a new autonomous division that will double the number of Lyft’s employees by the end of next year. It will invest heavily in developing all aspects of self-driving technology, except making the actual car.

The self-driving cars will not only come from Lyft but also from partner companies.

“It will take time. What you will see is in small pockets, in isolation, these vehicles will start providing service,” says Taggart Matthiesen, senior director of product at Lyft.

Asda downplays B&M takeover interest

Asda has reportedly dismissed reports that it is planning a £4.4bn takeover of discount retailer B&M. The Telegraph, citing senior sources, claims there is “no interest” in the deal and that its US parent, Walmart, is in charge of mergers and acquisitions.

Trevor Green, fund manager at Aviva Investors which holds a 0.3% stake in B&M, said any deal would require Walmart “to pay up for a growth business”.

“The customer fit between the two is obviously excellent and there would be other obvious revenue and cost synergies. But the big question is whether Walmart is willing to write a cheque for £4.4bn to increase its exposure to the UK market,” Green says.

MoneySuperMarket fined for sending seven million unwanted emails

MoneySuperMarket has been fined £80,000 by the Information Commissioner’s Office (ICO) for sending more than seven million emails to people who had opted out of receiving its communications.

The emails regarded changes to the terms and conditions of the site. However they also invited people to “reconsider” their opt-out. The ICO said asking them to do this is against the law.

MoneySuperMarket has now issued an apology: “We take the protection of our customers’ data and privacy very seriously,” said a spokesman.

“We apologise unreservedly to the customers affected by this isolated incident and we have put measures in place to ensure it doesn’t happen again.”