Google, Nestle, Thomas Cook: Everything that matters this morning

Marketing Week’s daily round-up of all the important marketing news from around the world.

Google slammed for sex discrimination

Google has been accused of systematic discrimination against female employees in a class-action lawsuit filed on behalf of all women employed by the company in California over the past four years.

The lawsuit alleges women are paid less than men for doing a similar job, denied promotions and “segregated” into lower-paid roles. According to the Guardian, the class-action names three plaintiffs who offered specific stories of Google “assigning and keeping female employees in lower compensation levels than male employees with similar skills, experience, and duties”.

This is despite the fact that Google claims to have eliminated its gender pay gap.

These allegations come a matter of weeks after Google was forced to fire a male engineer who wrote a memo criticising the company’s diversity efforts and claiming men were becoming victims of discrimination within the tech sector.

Nestle eyes premium market with latest acquisition

Nestle has acquired Californian speciality coffee business Blue Bottle Coffee for $500m (£370m).

Operating minimalist coffee bars selling speciality roasted coffee and bottled coffee drinks, Blue Bottle’s integration into the Nestle portfolio takes the Swiss food and drink giant firmly into the premium market. Blue Bottle also offers a subscription service dispatching beans within 24 hours of roasting and operates stores across the US and in Tokyo.

The Californian coffee business, which expects to double its number of outlets to 55, will continue to operate as a standalone entity with the current management and employees retaining a minority stake in the company.

Thomas Cook inks Expedia hotel deal

Thomas Cook has signed a deal with Expedia opening up access to the US travel company’s 60,000 hotels.

While the British tour operator has been increasingly focused on promoting its own brand hotels, the tie up with Expedia gives Thomas Cook greater control over its offering of third party hotels and enables it to sell its package holidays via Expedia sites globally.

According to chief executive Peter Fankhauser, the move will cut the cost of Thomas Cook’s city breaks and hotel-only business, enabling the tour operator to focus on its own brand offering in sun and beach locations.

Ryanair targets long haul travel with Alitalia bid

Ryanair has confirmed its intention to submit a binding bid for Italian airline Alitalia, which would see the budget Irish airline retain the Alitalia brand and long haul operations.

However, Ryanair would seek to change the ownership structure of the Italian airline’s short-haul fleet, which is currently leased. The Irish carrier operates an almost entirely owned fleet of Boeing 737 planes.

The bids are due to be submitted by 2 October and other interested parties include Ryanair’s budget rival EasyJet, IAG, Delta and Air France.

Alitalia collapsed into administration in May and is being propped up by a €400m (£358m) loan from the Italian government until a new owner can be found.

Foxy Bingo owner targets gaming rivals as revenue soars

Foxy Bingo owner GVC Holdings has reported a 25% increase in net gaming revenue across its sports betting platforms, casino and gaming sites of €486.2m (£432m). The company’s underlying earnings jumped 47% to €133.9m (£120.6m)

Speaking to City AM, GVC chief executive Kenny Alexander confirmed the business is looking into further possible acquisitions in the sports sector, saying the company is “in the strongest position of any gaming group” following its £1.1bn acquisition of online betting company Bwin in 2015.

However in August GVC’s rumoured £3.6bn takeover of Ladbrokes Coral fell apart for the second time due to disputes over the value of the Ladbrokes Coral business and concerns regarding the findings of the government’s review into the gambling sector.

Thursday, 14 September

Morrisons profits soar as Potts turnaround continues to impress

Morrisons saw pre-tax profits rise 40% in its first half of the financial year as like for like sales also climbed 3%. This means the big four supermarket has now achieved seven consecutive quarters of sales growth.

Particularly impressive has been its wholesale collaboration with Amazon Fresh of which Morrisons supplys with own-label food and drink items. And Morrisons brought in £14m of incremental profit from wholesale, services, interest and online, over the half.

“This is another good performance from Morrisons. Our seventh consecutive quarter of positive like for like means that we are able to report profit growth on growth for the first time in the turnaround,” said Morrisons chairman Andrew Higginson.

“With good trading momentum and a strategy to build a broader, stronger Morrisons, the business is well set to continue to deliver consistent and sustainable growth for its stakeholders.”

John Lewis suffers a steep fall in profits

It was less positive news for John Lewis. It saw pre-tax profits fall 53.3% to £26.5m for the half-year ending 29 July as it blamed a £56.4m charge for restructuring and redundancy costs.

For the John Lewis brand, operating profits rose by 10%. However, for Waitrose, operating profits fell 18% as its margin was eaten into by higher costs.

“The reason our profits are down is predominantly because of margin, and cost prices are rising. It’s a very competitive market, retail prices are not rising as fast,” explained John Lewis Partnership chairman Sir Charlie Mayfield.

“While it’s been a difficult first-half, our sales have still been up, our profits are down, but we’ve made some really important progress for the future.”

Facebook trials new group video chat app in Denmark

It seems the next phase of Messenger could be video-based. Bonfire, a new group video chat app, is being tested in Denmark by Facebook.

Its listing in the country reads: “Welcome to Bonfire, a new way to group video chat. With Bonfire, you can video chat up with to eight friends and their friends, plus play with effects and take pictures of your video chats.

“Use effects to express yourself and take pictures of your video chats to share on Instagram, Facebook, Messenger and more. From doing homework to catching up, Bonfire is the best place to get together with all your friends.”

And a spokesman for Facebook Messenger has confirmed it is in fact behind the trial: “We’re running a very small test in Denmark of an app we call Bonfire. We have nothing further to share at this time.” Stay tuned.

Volkswagen forced to recall nearly 5 million vehicles

With its emissions scandal barely over, Volkswagen has another potential crisis on its hands. In China, the German car maker is being forced to recall 4.86 million vehicles due to issues with faulty airbags that were supplied by Takata Corp.

Volkswagen isn’t the first car maker asked to do this, with China’s quality watchdog already forcing General Motors and Mercedes-Benz to recall vehicles with the same air bags. The watchdog says over 20 million cars have been made with the faulty air bags, which have been linked to at least 16 deaths and 180 injuries globally.

Volkswagen delivered 3.98 million vehicles in China last year, an increase of 12.2% on 2015, making it the biggest foreign automaker in the country. However, from March next year, China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) says VW China will recall 103,573 vehicles, FAW-Volkswagen 2.35 million vehicles and SAIC Volkswagen 2.4 million vehicles.

Jay-Z’s Tidal is not doing too bad after all, claims study

Streaming service Tidal, a business venture of rapper Jay-Z, has received its fair share of negative press over the years. But even if it will probably never topple Spotify, it’s still doing pretty well, according to new data from App Annie.

It claims Tidal is now the 27th top-grossing app on the iOS App Store and the third-highest-grossing music streaming service.

This means Tidal is now making more money on iOS than YouTube music, iHeartRadio, and multiple popular dating apps including Plenty of Fish.

The fact it is the third-highest music service on iOS in terms of revenue means that Tidal executives could be winning in terms of their focus on winning over paying members.

Wednesday, 13 September

Apple finally reveals its iPhone X

After suffering a major leak earlier this week, the tech company finally revealed its latest iPhone models at a media event yesterday evening. Like the leak papers suggested, it is launching a high-end ‘iPhone X’ model that is Apple’s most expensive phone yet.

It costs £999 for a 64 gigabyte capacity version and an eye-watering £1,149 for 256GB. It also uses a facial recognition system to recognise its owner rather than a fingerprint-based one. It also comes with a new feature called ‘Animoji’ – animated emojis including monkeys and robots that mirror a user’s facial expression. Pre-orders start Friday 27 October.

There are also the new lower-end iPhone 8 and iPhone 8 Plus models that have glass rather than metal backs and faster processors, costing between $699 to $949. The company received some criticism on social media for its decision to use glass on both sides, due to a higher risk of smashing either screen.

Apple also unveiled a version of its smartwatch with its own 4G link. The innovation means that the Watch Series 3 can receive phone calls, access internet services and stream music without being linked to an iPhone. Users will, however, face an additional monthly charge for the benefit. The 4G Apple Watch will cost $399 (£300) and be released on 22 September.

The Advertising Association talks Brexit with House of Lords

Brexit talks are in full swing, and the UK advertising industry wants to ensure that its thoughts are heard. Stephen Woodford, CEO of the Advertising Association, provided evidence to The House of Lords Communications Committee yesterday, which has launched a new inquiry into the future of the advertising industry.

He outlined a number of important areas in which the Government could add to the industry’s own efforts to maintain the UK’s position as a “world leader” in advertising. He also reiterated the importance of the sector to the UK domestically: it generates more than £120bn in economic activity and supports 1 million jobs.

Woodford specifically pointed to the importance of having access to talent from overseas, promoting the UK and London as a global advertising hub and data and privacy regulations.

“There is strong evidence that foreign brands who decide to manage their global advertising from the UK often invest in being based here. Government can encourage this more through their inward investment initiatives and by promoting the expertise in the advertising and marketing sectors in the UK,” he said.

Facebook makes Instagram ad changes to ‘increase flexibility’

Facebook has unveiled further changes coming to Instagram ads that will make it easier for businesses to share content in Stories. It’s also rolling out more options to users.

Facebook is extending its multi-format Canvas ad tool to include Instagram Stories. This means brands can create and publish a single campaign that spans mediums including Facebook, regular Instagram posts and Instagram Stories.

Facebook is eager to monetise Stories, built around in-the-moment sharing, after observing massive growth in the feature since it launched last year.

Stories now boasts more than 250 million daily active users, a higher number than Snapchat’s entire audience. Instagram’s also revealed that over 50 percent of its business users regularly create Stories, even though there’s previously been no direct way to monetise them.

Unicef UK launches new campaign to challenge refugee stereotypes

Unicef UK has launched a new campaign today (13 September), urging people to see past refugee and migrant labels and “value each child as a child, first and foremost”.

The film, which is part of the ‘A child is a child’ platform and created in partnership with FCB Inferno and photographer Rankin, depicts refugee and migrant children watching footage of children in danger around the world.

Many of the children who are featured in the film are themselves refugees who have fled war and are now trying to rebuild their lives. The film aims to challenge refugee stereotypes and prejudices by giving children a platform to express they have the same hopes, fears and dreams as any other child.

Lily Caprani, Unicef UK’s deputy executive director, said: “We’re so used to hearing about the refugee and migrant crisis, but the truth is that half of these refugees and migrants are children. First and foremost, this is a children’s crisis.”

Bookmakers could face crackdown on betting machines

The Government is expected to recommend new limits on fixed-odds betting terminals (FOBTs) — machines within betting shops which offer games such as roulette – which are denounced by campaigners as the “crack cocaine” of gambling.

The Government is expected to announce new measures when it announces the findings of a review into the gambling industry next month.

Officials conducting the review at the Department for Culture, Media and Sport are pushing for a big cut to the maximum stake of £100, with some sources claiming it could be reduced to as low as £2.

The FT claims this move will lead the UK’s largest bookmakers to lose at least £150m in annual revenues.

FOBTs provide the largest source of revenues at some retail bookmakers, including Ladbrokes Coral and William Hill, and a significant source of income for groups including Betfred and Paddy Power Betfair. Anti-gambling activists and some MPs have argued the machines disproportionately attract addicts — a claim vigorously contested by the industry.

Tuesday 12 September

Google appeals €2.4bn fine over search engine results

Google is appealing against a record €2.4bn (£2.2bn) fine imposed by the European Union for its abuse of the search engine market in building its shopping comparison service.

The search engine giant is accused of artificially and illegally promoting its own price comparison service in searches, thereby denying consumers free choice and failing to allow rival firms to compete on a level playing field.

The EU claims that the manipulation of searches caused traffic to Google’s shopping service to jump 45-fold in the UK, 35-fold in Germany and 19-fold in France.

The €2.4bn fine takes into account the “duration and gravity of the infringement”, and is based on Google’s revenue from its comparison shopping service in the 13 countries where it is claimed to have broken EU antitrust rules.

Mothercare CCO Andy Harding quits after two months

Mothercare chief customer officer Andy Harding is leaving the business after two months to take over as boss of stock photography company Alamy.

Retail Week reports that Harding, who joined Mothercare two months ago to help drive the company’s turnaround strategy, will assume his new role at the stock photography site on 4 December.

Harding joined Mothercare from House of Fraser, where he most recently served as chief customer officer and executive director of multichannel. His career also spans roles as director of multichannel at Ryman, head of ecommerce at Carphone Warehouse and various positions at BHS.

VW to offer electric option for all models by 2030

Volkswagen is to offer an electric version of all its 300 models by 2030 as it looks to distance itself further from the diesel emissions scandal.

The German car maker will double its investment in zero-emission vehicles to €20bn (£18bn) and plans to offer 80 new electric cars across the group by 2025. To make this possible the company plans to place orders worth more than €50bn for batteries to power the cars.

While VW is the first major carmaker to announce a mass-market push into electric vehicles, Mercedes-Benz also announced yesterday it plans to offer electric or hybrid versions of all its ranges by 2022.

Natura to keep The Body Shop “legacy alive”

Brazilian cosmetics manufacturer Natura Cosméticos plans to keep the legacy of The Body Shop founder Anita Roddick alive after completing its £880m acquisition of the beauty brand from L’Oréal last week.

Speaking to the BBC, Natura co-chairman Guilherme Leal claimed the Brazilian firm had closer synergies to The Body Shop than its previous owner.

“We are much more similar to The Body Shop than L’Oreal. I respect L’Oreal, but they are a huge corporation.

“Natura is a company that was born in the same way of The Body Shop almost at the same time. And we have this connection with sustainability, with ingredients from the Amazon, and we need a platform to go abroad.”

Already one of Latin America’s biggest cosmetics groups, Natura is adding the The Body Shop’s 3,200 shops in 66 countries to a portfolio which also includes Australian beauty group Aesop, purchased in 2013.

Boohoo branches out with own brand cosmetics

Fast fashion retailer Boohoo is to take on rival Asos with the launch of its first own brand cosmetics range.

Priced at £4 to £19, the Boohoo Cosmetics collection will include contour palettes, lip kits and primers. The news comes a week after Asos introduced its debut make up collection for “20-somethings”, ranging from £4 to £10.

The online fashion players are following in the footsteps of high street rivals such as New Look and Primark, which launched own brand cosmetics ranges in 2014 and 2009, respectively.

Monday 11 September

YouTube advertises to advertisers

YouTube is running its first ad campaign aimed at marketers as it looks to convince them up spend more money with the video platform. The campaign, which is running across digital channels including Twitter and LinkedIn, features YouTube influencers and aims to showcase the types of audiences found on YouTube, including sports fans, gamers and young parents.

The campaign is set to run for six weeks, according to Ad Age, which means it will be airing during Ad Week New York. The decision to run a campaign aimed at advertisers comes after a number of marketers pulled ads from YouTube after the brand safety scandal, which saw brands’ ads appearing next to unsavoury content.

While most advertisers are now back advertising, there are still some, including Marks & Spencer, which are waiting for more safeguards before returning to the site.

Apple suffers major leak ahead of latest iPhone launch

Apple has suffered a major leak, with details of the new iPhone, which is set to be unveiled tomorrow (12 September), revealed. The documents reference the iPhone X, a further sign that Apple intends to unveil a high-end model that could cost more than £1,000. More incremental updates for the iPhone 7 range are also expected.

There are also suggestions the phone could include Face ID and ‘Animoji’ – animated emojis including monkeys and robots that mirror a user’s facial expression.

Apple hopes that by launching a top range model it can help boost growth in the smartphone market, which has plateaued as markets such as Europe and the US near saturation. Dixons Carphone recently issued a profit warning, saying smartphone owners are now keeping their phones for longer than they used to.

New formats to drive digital display above search spend for the first time

Social media in-feed ads, online video and other digital formats such as paid content and native advertising will drive growth in the global ad industry over the next few years. According to Zenith Optimedia, they will drive 14% annual growth in display advertising between 2016 and 2019, with total display spend to be $126bn in 2019. It will then account for 50.4% of internet ad spend, the first time it has overtaken search.

However, it is a different story in the UK, where search will continue to dominate. Display has an unusually low share of the digital ad market in the UK because ecommerce rates are so high.

Overall, Zenith estimates the global ad market will grow 4.0% to $558bn by the end of 2017, down fractionally from a previous forecast of 4.2%. The UK is expected to see a sharp slowdown, with growth estimated at just 0.7% this year compared to 7.3% in 2016.

Marmite launches biggest ever campaign to attract new generation

Marmite is launching its biggest marketing campaign to-date that aims to challenge consumers to ‘Just Try It’. The £3m campaign went live over the weekend on TV and is running online and on social media.

It follows a piece of “ground-breaking” research that found there are genetic reasons why some people love Marmite and others hate it. The brand is offering Marmite DNA kits so people can discover if they were born to love or hate the brand, while a facial recognition app will measure their facial expressions as they taste the product.

Philippa Atkinson, Marmite brand manager at Unilever UK, says: “We want to encourage families across Britain to try Marmite with our biggest-ever campaign. For the first time, we are able to understand the role of genetics in influencing consumer taste preference for Marmite and retailers can really benefit from the greater sales opportunities presented with The Marmite Gene Project.”

Samsung Note sales soar despite recall scandal

Pre-sales of the new Samsung Note 8 are soaring, suggesting the brand is in rude health despite its predecessor, the Note 7, being hit by a recall scandal after some of the devices were found to catch fire or explode. The company says more US customers have pre-ordered the Note 8 than any of the previous devices.

The Note 8 has a hefty $930 price tag, but Samsung has looked to lure customers with deals such as a free Gear 360 camera or wireless charging bundle. Owners of the Note 7 were also offered big discounts if they traded in their old device.