Alibaba, Apple, Birds Eye: 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.

alibaba

Alibaba sales soar to record high

Chinese ecommerce giant Alibaba saw revenues rise 56% year on year in the final quarter of 2017 to 83 billion Chiese yuan (£9bn) as it shrugged off concerns about rising competition and a wider market slowdown. Revenue at its core commerce division was up 57% to 72.3 billion yuan (£8bn), while cloud computing sales more than doubled to 3.6 billion yuan (£400m). The company has now increased its revenue guidance

“Alibaba had another great quarter driven by the continued strength of the Chinese consumer and the wide and innovative range of services we provide for merchants and consumers,” says Daniel Zhang, CEO. “We expanded the scale and footprint of our New Retail initiatives with the vision of delivering true convergence of the online and offline consumer experience through mobile and enterprise technology.”

Apple’s revenues hit record high

Apple had its biggest quarter in hisotry in the fourth quarter of 2017 as revenues increased 13% to $88.3bn. While iPhone sales came in lower than expected at 77.3 million, the higher price of its flagship iPhone X pushed up revenues.

“We’re thrilled to report the biggest quarter in Apple’s history, with broad-based growth that included the highest revenue ever from a new iPhone lineup. iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November,” says Tim Cook, Apple’s CEO.

Apple’s active installed base, a key metric of its engaged audience, increased to 1.3 billion, up 30% over the past two years. Apple is increasingly moving away from relying on device sales to build a service business around this installed base by selling them apps and access to content such as video and music. Cook called the increase “a testament to the popularity of our products and the loyalty and satisfaction of our customers”.

Birds Eye pulls fish finger advert over safety concerns

birds eye

Birds Eye has pulled an ad for its fish fingers after water safety campaigners raised concerns over the spot. The TV campaign features a man and boy jumping into the sea while a voiceover says: “Captain Birds Eye loves the simple things, like jumping into cold water on a hot day with his grandson.”

However, a campaign group set up after the death of 14-year-old Cameron Gosling from cold water shock called the ad “inappropriate” and asked Birds Eye to amend it.

A Birds Eye spokesman told the BBC: “We take our advertising responsibilities very seriously and we were grateful to be made aware of the issue. We have taken the current advert off air. We are now amending the voiceover to remove references to the temperature of the water and weather. As a family brand, we decided to take swift action and wish campaigners every success in highlighting this important issue.”

READ MORE: Birds Eye fish finger ad withdrawn over water safety fears

Ebay drops PayPal as its payments partner

Ebay is to stop working with PayPal and will instead work with Amsterdam-based Adyen for its backend payments service. The move means that while PayPal will still be offered as a payment option on eBay, it won’t be listed above credit and debit cards as it is on the moment. PayPal will also stop processing card payments for eBay, with Adyen taking on that role from mid-2020.

Ebay says the move will give it more control over the checkout experience and mean it can offer customers more payment methods. It will also be positive for its bottom line, with the Adyen deal expected to eventually add $2bn in revenue to eBay because it will charge sellers for the payment service; at the moment PayPal receives those charges.

PayPal became eBay’s main payments partner in 2003 just months after the ecommerce giant acquired the company. The two firms split in July 2015, at which time they signed a five-year agreement to work together for five years. In 2015, eBay accounted for 30% of PayPal’s revenues and 50% of its profits; it is not clear how much PayPal relies on eBay now but it has taken a number of steps to diversify its business.

READ MORE: After 15 years, eBay plans to cut off PayPal as its main payments processor

Thursday, 1 February

M&S to close unprofitable stores putting jobs at risk

Following a tough Christmas, Marks and Spencer has revealed plans to close six unprofitable stores by April and boost food services.

Another eight stores are also likely to close, as part of the struggling retailers’ transformation efforts which were announced back in 2016.

However, M&S says it is trying to prevent any job losses and that some of its 468 staff will be moved to nearby stores if their branch were to close down.

“We don’t want any colleagues to leave M&S and we will work with each colleague individually on what is best for them as we endeavour to give everyone a role,” the company’s director of retail, Sacha Berendji, said.

With four of the company’s clothing and home stores having already shut following a five-year plan to boost sales, M&S is shifting its focus back to food with the promise to open another 36 owned and franchised food stores during the next six months.

READ MORE: 

Lidl

Lidl launches AI-powered ‘winebot’ app

Do you know your merlot from your Malbec? Well, there’s now a messenger app for that.

Lidl has launched a wine ChatBot named Margot who is powered by artificial intelligence.

The supermarket-giant says the fully-automated, AI-powered, Facebook Messenger chatbot is designed to help UK customers select the best wine for whatever the occasion, at the touch of a screen.

Margot can be found within the Facebook messenger app and will “provide a conversational experience for customers, answering questions such as ‘which red wines from Chile under £6 do you sell?’, ‘what goes well with grilled salmon?’, or ‘what makes a wine sweet?’, according to the retailer.

READ MORE: Lidl launches online chatbot that recommends wine.

Facebook posts profit but experiences major user decline

Facebook may have posted a £2.8bn profit last year but its boss Mark Zuckerberg described 2017 as “a hard one”, as the platform experienced a major decline in users.

The revelation comes as the social network rolls out changes to its news feed so users are more likely to see posts from family and friends rather than content from businesses and news outlets.

Zuckerberg said some of the changes, which include less viral videos being shown, have reduced time spent on Facebook by about 5% or approximately 50 million hours a day.

Though, Facebook reported an average of 1.4 billion daily active users and about 2.13 billion monthly active users in December. Those figures were higher than in December 2016.

READ MORE: Facebook tweaks prompt fall in user time.

Ryanair to help tackle plastic problem as part of 2018 plans

Ryanair has revealed its plans for 2018, which include becoming plastic free within the next five years as part of a wider carbon offset scheme for customers.

The airline’s ‘2018 Always Getting Better’ plan was unveiled by the company’s chief marketing officer Kenny Jacobs who outlined a number of planned changes to the airline this year.

These include: promising the lowest fares, that 90% of the company’s flights will be on time, a new bags policy, that valid EU261 claims will be processed within 10 days, money off flights when you book a hotel and that Ryanair plans to become the world’s greenest airline.

READ MORE: Ryanair makes pledge to become ‘plastic free’ on all flights by 2023.

Byron Burgers’ restructure to go ahead

Struggling burger chain Byron has had its Company Voluntary Agreement (CVA) approved by creditors, meaning it will close some of its stores and pay less to landlords as part of a major restructure.

The CVA proposal was overwhelmingly approved by creditors with 99% voting in favour of the agreement at a meeting on Wednesday.

Last month Byron announced it was seeking a CVA, likely due to rising costs and the fact that the sector is becoming over-saturated.

It is not yet known how many of its stores will close or if its 1,800 staff will be impacted.

READ MORE: Byron burger chain secures rescue deal.

Wednesday, 31 January

Facebook bans cryptocurrency adverts

Facebook is to block all advertising promoting cryptocurrency products and services.

Under the new rules any advert encouraging users to buy Bitcoin tokens or get involved in an initial coin offering (ICO) for virtual currencies will be banned. An ICO encourages people to buy into new cryptocurrencies before they launch with the expectation that one day they will be worth a lot more money. Virtual currencies are, however, not regulated in the same way as the traditional markets.

Facebook is urging users to report any ads that slip through its security measures. The company said it was open to emerging technologies, but argued that many companies were not acting in good faith, hoping to capitalise on Bitcoin’s recent substantial increase in value.

This move by Facebook caused Bitcoin’s share price to fall by more than 10% to a two month low, which is less than half the price reached in December.

READ MORE: Facebook bans all cryptocurrency ads

Amazon makes a play for the healthcare market

amazon advertising

Amazon is teaming up with investment firms JP Morgan and Berkshire Hathaway to create an independent healthcare company aimed at cutting costs for their US employees.

Intended to be “free from profit-making incentives and constraints”, the new healthcare company will provide “simplified, high-quality and transparent healthcare” at a reasonable cost. As the three largest private employers in the US Amazon, JP Morgan and Berkshire Hathaway collectively employ over 500,000 people.

Following the news shares in a number of US health insurers, such as UnitedHealth, Anthem and Cigna Corp, fell by more than 5%.

READ MORE: Amazon joins up with US firms to enter healthcare sector

VW suspends media chief as latest scandal unfolds

VW

Volkswagen has suspended its head of external relations and sustainability after admitting he had known about experiments testing diesel car fumes on monkeys.

Thomas Steg has been relieved from his duties after it was revealed he had known about the experiments, involving locking 10 Java monkeys in airtight containers and exposing them to diesel exhaust fumes, potentially as far back as 2013. The animals were reportedly left to watch cartoons as they breathed in diesel fumes from a VW Beetle for up to four hours at a time.

It also emerged that a study in Germany had been measuring the effects of inhaling nitrogen dioxide on 25 human volunteers.

VW confirmed that Steg was prepared to take “full responsibility” for the scandal, which is the latest to hit the German carmaker. The company is still attempting to recover from the 2015 emissions scandal which revealed VW had manipulated tests on 11 million cars worldwide to make it appear that they met emissions tests when in reality the diesel engines greatly exceeded legal levels when out on the road.

READ MORE: VW suspends media chief amid scandal over fume tests on monkeys

Premier Foods appoints new marketing director

Premier Foods

Premier Foods has appointed Yilmaz Erceyes to the role of UK marketing director with responsibility for a 120-strong team spanning brand management, innovation, insights and R&D.

He takes over from outgoing marketing director Helen Warren-Piper, who will assume her new role as sales director at Mars’ UK Pet Nutrition business in April.

Erceyes joined Premier Foods in 2015 after 13 years with Procter & Gamble where he held both UK and international roles. He is currently brand director for the cooking sauces and desserts categories, with accountability for the Sharwood’s, Loyd Grossman and Homepride brands, alongside Ambrosia, Bird’s and Angel Delight.

Premier Foods’ UK managing director Alex Whitehouse praised Erceyes’ strategic capabilities, leadership experience and entrepreneurial spirit, as well as his strong track record in contemporising the company’s brands, which includes working on the turnaround of the Batchelors brand.

“I am particularly delighted to be promoting to this senior role from within the business, which is a great illustration of the strength of our talent pipeline,” Whitehouse added.

B&Q to cut 200 head office jobs

B&Q is to shed 200 jobs at its head office in Hampshire as part of a cost-cutting drive intended to improve efficiency and “simplify ways of working” amid rising inflation and depleted consumer confidence.

According to HR director Helena Feltham, if the company is to reach its goal to make home improvement “accessible to everyone” B&Q has to deliver “truly affordable prices”, which will mean operating differently.

The DIY chain’s parent company Kingfisher, which also owns tool specialist Screwfix, is already two years into a five year restructure plan, which have so far has involved streamlining the product range, changing the IT system and closing 60 B&Q stores nationwide.

B&Q is not alone in announcing large scale job cuts and restructure plans. Earlier this month Sainsbury’s announced it intends to shake up thousands of management roles, while Tesco said it would be cutting 1,700 jobs in a bid to slash costs by £1.5bn.

READ MORE: B&Q to cut 200 head office jobs

Tuesday, 30 January

Coca-Cola looks to beat sugar tax with launch of three new brands

Drinks giant Coca-Cola is prepping the launch of three new brands in the UK, as it looks to offer healthier, non-carbonated alternatives ahead of the sugar tax coming into force.

UK boss Jon Woods said it would be the first time the business launches three brands in one year, but that it was a “sign of things to come” as it looks to battle sluggish sales growth in the soft drinks market.

Coca-Cola announced at the beginning of the year it would be launching ice tea drink Fuze Tea in the UK, and it is also now prepping ready-to-drink cold coffee Honest Coffee, and dairy-alternative smoothies brand AdeZ.

It means 30% of its UK sales will soon be from still drinks – double today’s level.

“These launches have moved much quicker through the business than before,” Woods told The Telegraph. “This is a sign of things to come.”

The UK soft drinks market grew at 2.6% in 2017, behind the 4% rate globally, as consumers increasingly seek healthier alternatives.

READ MORE: Coca-Cola launches three new drinks ahead of UK sugar tax

Brands at risk of losing employees by failing to get purpose right

Brands are big on purpose. It’s one of those things that has been slowly but surely moving up the business agenda as brands want to be seen to stand for something more than simply making a profit.

But new research shows companies are failing to get it right, and by doing so some are actually at risk of damaging their brand and losing employees.

The ‘F**king up purpose’ report by consultancy Kin&Co suggests the biggest error companies make is rushing into communicating their purpose externally before it is fully embedded in culture, operations and decision making internally.

Nearly half (42%) of employees believe their company does not act in line with the purpose and values they claim to have, according to the study. Part of the reason employees feel uneasy is because businesses are advertising what they are doing externally before ensuring everything is fully operational internally – just 47% believe their company’s advertising reflects what they know to be true of the company.

As a result, 49% of employees would consider leaving their business, while 34% would consider leaving a negative review on a site such as Glassdoor.

Alex Dimiziani, outgoing global marketing director at Airbnb, says: “For purpose to resonate as real, persist over time and yield rewards, it must be ‘inside-out’. It must be found in consultation with employees so it is really true to the business, to the organisational culture, to the benefits delivered by the products or services.

“It must be the single most important criteria via which a company evaluates – and that with which it imbues – all actions.”

Click here to read Dimiziani’s full opinion piece on the subject for Marketing Week.

Google completes $1.1bn HTC deal

Google Pixel

Google has completed its deal to acquire a $1.1bn chunk of Taiwanese mobile brand HTC’s hardware business, a deal that was first announced in September 2017.

As part of the deal, one-fifth of HTC’s engineering team (about 2,000 engineers) will transfer over to Google and it will also receive a non-exclusive license for HTC’s intellectual property. HTC will continue to make smartphones under its brand name and retain its Vive VR division.

Many of the HTC team transferring over worked on the hardware for Google’s Pixel smartphone as the contract was outsourced to HTC, so the move boosts Google’s hardware credentials.

“I’m delighted that we’ve officially closed our deal with HTC, and are welcoming an incredibly talented team to work on even better and more innovative products in the years to come,” Rick Osterloh, Google’s senior VP of hardware, wrote in a blog post.

READ MORE: Google completes its $1.1B deal to buy a chunk of HTC’s smartphone division 

Facebook promotes local news to drive trust

trust

Facebook is set to push more local news in its drive to boost trust and deliver more “high quality” content.

The move comes shortly after the social network said it would make posts from brands, businesses and media less prominent.

The update, which is now live in the US and will soon be rolled out more widely, means if users follow a local publisher or if someone shares a local news story, it may show up higher in their news feed.

CEO Mark Zuckerberg said in a blog post yesterday (29 January) that he believes “local news helps us understand the issues that matter in our communities”. He hopes the move will encourage people to get involved in local issues and “make a difference”.

Marketing Week columnist Mark Ritson argues that Facebook’s news feed changes were needed to fix it before it breaks.

READ MORE: Facebook to promote local news in drive for ‘trusted’ content

JICWEBS and TAG align to tackle digital advertising issues

Cross-industry standards bodies in the UK and US are joining forces to align their initiatives on ad fraud and brand safety in order to offer a consistent approach to tackle digital advertising issues on both sides of the Atlantic.

A year after P&G’s Marc Pritchard’s now infamous speech, the UK’s Joint Industry Committee for Web Standards (JICWEBS) the US’s Trustworthy Accountability Group (TAG) are combining efforts to tackle media transparency.

The alignment will roll out in three stages. Firstly, JICWEBS will offer TAG Registration in the UK market and introduce TAG’s ‘certified against malware’ and ‘certified against piracy’ initiatives into the UK. By the end of 2018, JICWEBS’ existing anti-fraud programmes will be merged into TAG’s ‘certified against fraud’ programme, and by 2019, TAG’s and JICWEBS’ brand safety initiatives will be aligned.

Until then, TAG will endorse and promote the JICWEBS version to all existing and future members trading or seeking to trade in the UK.

Richard Foan, chair of JICWEBS, says: “It makes sense to create a consistent approach across the UK and US, which is what many from both the buy and sell side want.

“Initially, the partnership will offer a practical way for companies operating in the UK market to buy and benefit from both TAG’s and JICWEBS’ products, with the ultimate aim to fuse the best bits from both approaches to create a ‘super’ programme that maximises brand safety and minimises fraud.”

Monday, 29 January

apple store

Apple prepares to shatter its own record for most profitable quarter in history

Apple will announce the most profitable fiscal quarter in corporate history on Thursday, according to analysts. Forecasters are predicting the tech giant will beat its own record of $18bn with a net income of at least $19bn when it announces its earnings this week.

Thursday’s announcement is reporting sales from the three months leading up to December and is traditionally the company’s biggest fiscal quarter. The sales will be the smartphones first including after the release of the iPhone X. In November the company’s executives said they were predicting its “biggest quarter ever”.

READ MORE: Apple set to break its own record for profitability

Marks & Spencer and Sainsbury’s among UK retailers who haven’t signed safety contract for Bangladeshi factories

UK retailers including  Marks & Spencer, John Lewis and Sainsbury’s have yet to sign a deal that safeguards workers in Bangladeshi factories. The brands have yet to renew the Bangladesh accord on fire and building safety over concerns about cost and possible lack of support from factory owners. Sainsbury’s has decided not to sign up to the new deal.

The deal was established after the Rana Plaza tragedy in 2013, which saw the Bangladeshi textile factory collapse killing 1,135 people. It has seen £39m invested in regular inspections, safety monitoring and health and safety training since it was established in 2013 but is due to end in May.

With the fifth anniversary of the Rana Plaza collapse coming up this month international brands including H&M, Zara’s owner Inditex and Primark have already signed up.

READ MORE: M&S one of UK retailers yet to renew safety deal in Bangladesh factories

Brewdog wins trademark battle with Elvis Presley estate 

Scottish brand Brewdog has won the right to use Elvis Presley’s name in its beers. The craft brewer can continue producing its Elvis IPA after the UK Intellectual Property Office (UKIPO) overturned a previous ruling — arguing that the average consumer will not think BrewDog Elvis Juice is referring to Elvis Presley.

UKIPO originally rejected Brewdog’s request in July on the grounds that there was going to be confusion between ‘Brewdog Elvis Juice’ and ‘Elvis Juice’ with the iconic singer. This is despite Brewdog founders James Watt and Mark Dickie legally changing their names to Elvis so they could claim the beer was named after themselves. 

“Brewdog has managed to show through strong product sales that its Brewdog Elvis Juice is a distinctive product in its own right,” says Tania Clark, partner and trade mark attorney at intellectual property firm, Withers & Rogers. 

Issues around data and privacy are the biggest concerns for consumers 

Issues around privacy lead consumer complaints and fines for breaching UK data protection laws double in a year, according to the Direct Marketing Commission’s annual report. Fines for breaching UK data protection laws have almost doubled from 2015 to 2016, with 35 fines raising nearly £3.5m. Of the 39 cases investigated by the Commission in 2016, 69% related to data, privacy and quality.

With the introduction of GDPR in May, the Commission warns that UK businesses could face even bigger fines if they fail to ensure compliance. George Kidd, chief commissioner of the DM Commission, says: “While the volume of complaints remains low the challenges with data and consents across lengthy value-chains are a cause for concern.”

Ford Motors’ China chief announces sudden resignation after five months

Ford Motors’ China chief has suddenly resigned after five months leading the company’s operations in the region. Jason Luo has left his role for personal reasons after being headhunted from safety manufacturer Key Safety Systems. Luo was expected to tackle the manufacturers falling sales which saw China sales decline by 6% last year despite a 3% rise for the automotive industry overall.

Peter Fleet, head of Ford’s Asia Pacific operations, says: “Ford accepted Jason’s resignation as the right way for him and the company to proceed. Jason’s decision was not related to the business strategy or performance of Ford China.”

Luo’s  resignation is effective immediately and Fleet will take over his role until a replacement is announced.

READ MORE: Ford China chief in abrupt departure, a blow to recovery hopes

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Comments
  • Nick Turner 1 Feb 2018 at 10:25 am

    There really isn’t anything new is there? The article regarding the efficacy of brand purpose (or current lack of it) is just a new spin on the importance of integrated marketing communications and the principles of effective Internal Marketing – same meat different gravy!

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