Game sales, Twitter, Netflix: 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.

Video game sales defy economic gloom

While many sectors – particularly retail – are suffering slow growth or falling sales in an economy hampered by Brexit uncertainty, video games are bucking the trend. In spite of consumers reining in overall spend as inflation continues to outpace wage growth, game sales hit a record £5bn in 2017, a 12.4% rise from the previous year.

Online and digital games saw the biggest growth, according to trade body UK Interactive Entertainment (UKIE), but physical disc sales also saw a small rise thanks to the popularity of blockbuster titles such as Fifa 18. Games console sales were also a third higher year on year, as Sony, Microsoft and Nintendo all released new versions of their consoles from late 2016.

UKIE said video games are currently being consumed by an “ever-expanding audience”.

READ MORE: UK gaming sales defy spending squeeze

Twitter seeks ideas for measuring ‘health’ of conversation

Twitter has responded to widespread concerns about the often offensive nature of discourse on social media by committing to develop a measure of the “health of the public conversation” on its platform. It is seeking submissions from outside experts to advise on how this could be defined and achieved.

“By measuring our contribution to the overall health of the public conversation, we believe we can more holistically approach and measure our impact on the world for years to come,” Twitter announced in a blog post.

“Twitter’s health will be built and measured by how we help encourage more healthy debate, conversations, and critical thinking; conversely, abuse, spam and manipulation will detract from it.”

The social network pointed to inspiration from non-profit organisation Cortico, whose own measure of conversational health is based on the metrics of shared attention, shared reality, variety of opinion, and receptivity. Twitter is looking to develop metrics that are specific to its own platform.

The company stipulates that any projects it chooses to fund should produce “peer-reviewed, publicly available, open-access research articles and open-source software whenever possible”.

READ MORE: Twitter Health Metrics Proposal Submission

Sky seals partnership to offer Netflix on its platform

Netflix may be seen as a long-term threat to Sky as a subscription broadcaster, yet that hasn’t stopped the company from signing up the streaming service to its pay-TV platform, even as its future ownership remains uncertain. Customers using its Sky Q set-top box will be able to access Netflix within the coming year.

With Netflix spending $8bn per year on commissioning original content, the deal allows Sky customers to access a far greater range and volume of programmes than it currently produces on its own TV channels, despite investing more in original dramas. It also reduces the chances of consumers rejecting a Sky service – Sky Q costs a minimum of £20 per month – in favour of Netflix’s online-only service, costing from as little as £5.99 per month.

Sky Q viewers will be able to search for Netflix content on the Sky Q platform without opening the Netflix app, creating a more seamless Sky-branded user experience. The BBC has so far only allowed access to its content on the Sky platform via the BBC iPlayer app.

READ MORE: Sky seals pact with Netflix to share the spoils of pay-TV growth

Burberry signs up Italian chief creative officer

Burberry label
Photo: Robert Sheie

Fashion brand Burberry has named former Givenchy creative director Riccardo Tisci as its new chief creative officer, succeeding Christopher Bailey, who quit in November after 17 years heading up designs at the company.

While the share price has jumped around 4% in response to yesterday’s announcement, the Italian’s appointment by his compatriot, Burberry CEO Marco Gobbetti, means that neither of the iconic British business’s two key executives is from the UK – although Tisci did study at London’s Central Saint Martin’s fashion college. Gobbetti and Tisci previously worked together at Givenchy.

Tisci’s recruitment defies the prediction of Marketing Week columnist and luxury brand expert Mark Ritson, who expected Burberry to hire British designer Phoebe Philo. She left French fashion house Céline in December 2017, shortly after Ritson argued that Burberry required “a British sensibility to direct the next chapter of Burberry’s success story and Philo is surely his only option”.

However, a statement from Tisci claimed he has “an enormous respect for Burberry’s British heritage and global appeal”.

READ MORE: Mark Ritson: Burberry has a big brand challenge to replace Christopher Bailey

McCain promotion under fire, with 99% of prizes not won

Frozen food brand McCain has been criticised for running a promotion in which only 160 out of 28,815 prizes were actually won. According to BBC Radio 4’s You and Yours programme, among the advertised prizes were 10 cars, none of which was won, while consumers only picked up four of the VIP experiences on offer, involving trips to the set of ITV soap Emmerdale.

Consumers were asked to enter codes printed on packets of products such as oven chips onto the McCain website, while an algorithm randomly assigned prizes to them, according to the company.

McCain defended the Great Village Raffle promotion, saying it had stated clearly that the prizes on offer were available but not guaranteed to be won, and that the terms were approved by the Institute of Promotional Marketing. But it also indicated that it would not run a similar promotion again, in response to consumer feedback.

The promotion prompted four complaints to the advertising standards authority since it began in January 2017.

READ MORE: McCain under fire for competition prizes

Thursday 1 March

unilever

Unilever chief Paul Polman’s pay rises by 51%

Unilever is looking to restructure its corporate pay to encourage an “owners’ mindset” among its executive leaders. The move comes after CEO Paul Polman’s pay increased to £10.3m in 2017, up 51%, as he benefitted from a £6.4m payout from a long-term bonus scheme.

The move will see the pay structure simplified to include fixed pay, bonuses and shares. Under proposed changes, Polman’s fixed pay would increase by 5% to £1.45m while bonuses and shares could also increase. However, this increased pay comes with conditions, for example, Polman has to hold five times his annual salary in shares and invest two-thirds of his annual bonus in shares and hold them for at least four years.

Unilever says its remuneration committee is “of the view that this increased maximum opportunity is fully justified by higher risk and more stretching performance requirements”.

READ MORE: Unilever chief’s pay package rises 51% to £10.3m

Toys R Us and Maplin fall into administration putting 5,500 UK jobs at risk

Two of the UK’s biggest highstreet retailers have collapsed putting 5,500 jobs at risk.

The UK arm of Toys R Us and Maplin Electronics both failed to reach a rescue deal on Wednesday and were forced to call in administrators within an hour of each other.

Administrators said they were still hoping to sell the two companies, which have struggled with the rise of internet sellers like Amazon.

If no buyers can be found, about 3,000 staff at Toys R Us and 2,500 at Maplin are facing redundancy

READ MORE: 5,500 jobs at risk as Toys R Us and Maplin collapse (£)

Spotify files to go public

Music streaming service Spotify filed for an initial public offering on Wednesday with the US Securities and Exchange Commission.

Spotify is the first company to file for a direct listing of up to $1bn with the US— an unconventional route to go public.

The company —which has a presence in more than 60 countries— will list its ordinary shares on the New York stock exchange eliminating the need for a Wall Street bank or broker.

Spotify Ltd included a placeholder amount of $1bn in the listing for calculating fees, though it’s unknown how many shares will be bought when it lists.

READ MORE: Spotify nears float after filing listing documents

PG Tips to switch to plastic-free teabags

PG Tips is switching to fully biodegradable teabags. Most teabags are currently made with plastic polypropylene which is used to seal teabags as it is heat resistant. 

Unilever said the move was based on “cutting edge science and technology.” PG Tips be replacing plastic with corn starch to seal teabags.

The first bags sealed with the new material will go on sale next week. Unilever said plastic would disappear from all its tea bags by the end of the year.

Start4Life launches 24 hour breast feeding service with Alexa

Public Health England (PHE) is launching a new breastfeeding support service through Amazon Alexa.

The ‘Breastfeeding Friend’ service from Start4Life, PHE’s marketing programme, will be on hand 24/7 for new parents to ask questions about breastfeeding.

Currently breastfeeding rates in England are among the lowest in the world with only 44% of mothers breastfeeding after between six and eight weeks.

Wednesday 28 February

Disney to invest €2bn in its European ‘brand beacon’

The Walt Disney Company is set to invest €2bn on expanding Disneyland Paris, as it commits to the long-term success of its “brand beacon” in Europe.

The multiyear development plan was outlined yesterday (27 February) by Robert A Iger, chairman and CEO of The Walt Disney Company alongside French President Emmanuel Macron, and will be rolled out in phases beginning in 2021.

As part of the transformation, three new areas will be added to the Walt Disney Studios Park, based on Marvel, Frozen and Star Wars, while multiple new attractions and live entertainment experiences will also be created.

Disneyland Paris celebrated its 25th anniversary last year. Since 1992 it has racked up more than 320 million visits and the attraction represents 6.2% of France’s tourism income.

Calvin Klein brings back CMO role as it plans to up marketing investment

Calvin Klein has named Marie Gulin-Merle CMO, filling the role more than a year after its previous marketing boss Melisa Goldie resigned. At the time the brand said a replacement would not be named.

Gulin-Merle, who joins from her role as CMO of L’Oreal USA, will be responsible for global brand and marketing activity, taking up her post in the spring.

The PVH-owned brand is reportedly putting more money into marketing after a positive third quarter, which saw revenue rise 6% to $943m.

Calvin Klein unveiled an ad last month showing the Kardashian and Jenner sisters together in bed in their underwear playing a game of ‘never have I ever’.

Gulin-Merle will report into chief creative officer, Raf Simons, who joined Calvin Klein in 2016 from Dior. Former CMO Goldie’s departure followed Simons’ arrival.

Meanwhile, Burberry’s long-standing CMO Sarah Manley has left the fashion house. Her departure comes shortly after the exit of creative director Christopher Bailey.

READ MORE: Calvin Klein taps L’Oreal vet as new  CMO

ITV to focus on ‘strategic refresh’ as it posts earnings drop

ITV has posted a preliminary 5% drop in earnings before interest and tax for 2017 to £842m, in what it describes as a “challenging year with ongoing economic and political uncertainty in the UK”.

Looking forward, the business’s new CEO Carolyn McCall says ITV is focused on its “strategic refresh” to help it define the priorities that will “highlight the opportunities and address the challenges” in future.

While the broadcaster says it “took action early to reduce overhead costs”during 2017 it suggests the uncertain climate has “undoubtedly had an impact on the demand for television advertising” and therefore impacted ITV’s financial performance.

The business cut overhead costs by £29m and reduced schedule costs by £25m during the period. 

ITV says profit was impacted by ongoing investment across the business and the fact its 2016 result includes the full £37m revenue and profit benefit of the four-year licence deal for The Voice of China.

In better news, ITV’s share of on-screen viewing was up for the second year by 2%, while the ITV Hub saw a 39% boost to viewing. Online, pay and interactive revenue grew 7% and total ITV Studios revenue grew 13% including currency benefit.

New CEO Carolyn McCall, says: “There is no doubt that ITV’s operational performance in 2017 in a challenging environment was strong. ITV delivered a great viewing performance on-screen and online and double-digit revenue growth in video on-demand advertising and ITV Studios. This gives us a solid
foundation to build on for the next phase of ITV’s development.

“We are very focused on our strategic refresh. This will enable us to define a clear strategy and priorities that will highlight the opportunities and address the challenges that we face in an increasingly competitive media landscape. This project is well underway.”

Amazon acquires smart doorbell firm Ring

Amazon has acquired Ring, the high-tech doorbell firm, in a move that will extend its lead in the connected home arena and help improve deliveries.

Ring makes doorbells that record live videos of customers’ doorsteps and sends them to users’ smartphones, enabling them to accept deliveries even when they’re not home, as well as improving security.

Amazon is thought to have paid more than $1bn to secure the deal.

READ MORE: Amazon buys ‘smart’ doorbell firm Ring

Pret trials plastic bottle deposit to boost recycling

Pret is gauging customer interest in the roll-out of a deposit return scheme for plastic bottles.

Clive Schlee, Pret’s CEO, has outlined the plan which would see the sandwich chain add 10p to the cost of drinks sold in a plastic bottle, which will be returned to customers if they recycle bottles at a Pret store.

He said in a blog post: “The idea is that we would add 10p to all plastic bottles and return 10p for each Pret bottle given back to our teams to recycle. The aim is to understand how many bottles are returned and to see if it encourages more customers to opt for a reusable bottle. We will of course reinvest any unclaimed deposits in future sustainability work.

“It will take time to eliminate unnecessary plastic, but I hope this sort of initiative will bring that day forward by drawing attention to the issue and stimulating new ideas.”

The recycing scheme will be trialled in Brighton this April, with a view to roll it out across the country during the autumn of 2018 if it is successful.

Schlee is asking customers for feedback on the scheme via Twitter to gauge whether 10p enough and if this type of initiative is the kind of thing Pret should be pursuing.

Earlier this year Pret said it would no longer be offering customers plastic straws and it has also looking to reduce waste by offering customers who bring in reusable cups for their coffee a discount.

Tuesday, 27 February

sky

Comcast makes rival bid for Sky

US cable TV gian Comcast had made a £22.1bn takeover bid for Sky, rivalling an existing offer from 21st Century Fox to buy the company. While Rupert Murdoch-owned Fox has agreed a deal to buy the 61% of Sky it does not already own, the deal is yet to go through and faces stiff scrutiny from the governent and regulators in the UK over the issue media plurality.

Comcast’s bid of £12.50 a share is 16% higher than Fox’s offer. It is initially looking to acquire more than 50% of Sky’s shares, but is interested in buying the whole of the business.

“We think that Sky would be very valuable to us,” Comcast CEO Brian Roberts, says, addin that the UK remains a great place to do business and that it sees Sky as a platform for its growth in Europe.

READ MORE: Media giant Comcast makes bid for Sky

Starbucks trials 5p takeaway coffee cup charge

Starbucks digital

Starbucks is the first Uk coffee shop chain to introduce a 5p charge on takeaway coffee cups as it looks to cut down the number of disposable cups it uses every year. The move, which is being trialled in 35 stores in London, aims to encourage behaviour change by encouraging customers to bring in their own cups when ordering takeaway coffee, while those drinking in the stores will be given a ceramic cup.

The trial is being carried out with environmental charity Hubbub, which will receive the money raised through the levy and use it to rund research. Research carried out so far found that 48% of customers said they would carry a reusable cup if a charge were introduced for disposables.

Some coffee chains do offer discounts for customers that bring their own cups, but this accounts for just 2% of purchases. Half a million coffee cups are dropped as litter every day and just 0.25% recycled.

READ MORE: Starbucks trials 5p takeaway cup charge in attempt to cut waste

Barclaycard trials ‘dine & dash’ restaurant payment feature

Barclaycard is testing a new payment service in restaurants that would enable customers to pay without having to wait for a bill. The Dine & Dash app works by linking up with a Dine & Dash device at the restaurant table. Users simply tap their phone on this device when they arrive and the app then tracks the food ordered and, when they leave, charges for the meal and takes payment. There are also options to split the bill and add a service charge.

The trial is taking place at Prezzo’s restaurant in St Martins Lane in Central London from 13 March.

READ MORE: Barclaycard wants you to dine and dash legally

Primark sales hit by unseasonable weather

Unseasonably warm weather in October has hit sales at fashion brand Primark, according to its owner Associated British Foods. The company says like-for-like sales at the discount retailer are likely to have fallen by 1% in the 24 weeks to 3 March, but to have increased by 1% in the 16 weeks to 3 March, helped by record sales in the week before Christmas.

Nonetheless, the group said that like-for-like sales for the 16 weeks to 3 March are expected to show growth of 1 per cent, driven by Primark achieving record sales in the week before Christmas. And it expects profit growth to accelerate in the second half, in part due to the weaker dollar

“This will be driven by better buying and some benefit of the recent weakness of the US dollar on purchases which will more than offset an expected return to a more normal level of markdowns, compared to the very low level achieved last year,” the company says.

READ MORE: Primark sales hit by warm autumn weather

Aston Martin roars to record revenues

Aston Martin is considering going public after it roared to record revenues and saw a £250m increase in profits last year. The company also reported its strongest car sales in nine years in 2017, a move that has promted the luxury carmaker to consider its strategic options, which could include a potential IPO. The business is majority owned by Kuwait’s Investment Dar and Italy’s Investindustrial, although Daimler has a 5% stake.

Revenues hit £876m, with pre-tax profits of £87m compared with a loss of £163m. The results have led to CEO Andy Palmer calling the company’s turnaround “done”, with the focus now on growth.

READ MORE: Aston Martin considers listing after record results (£)

Monday, 26 February

Leaked email suggests Arcadia Group boss asked HSBC for buyer

According to reports the owner of retail empire Arcadia Group, which includes Topshop and Miss Selfridges, is looking for a Chinese buyer to take over one of the company’s weaker businesses.

Sir Philip Green allegedly discussed the plan with two of HSBC’s most senior bankers over a meal, a leaked email – obtained by The Sunday Times – from February 2016 suggests.

The move would contradict initial claims by the billionaire tycoon that he was not plotting to sell Topshop.

Meanwhile, the email reportedly suggests Green is worried about a climbing pension deficit within Arcadia that was set to reach £900m, meaning he would need to sell Topshop to make ends meet.

Both Green and the HSBC’s UK chief executive Ian Stuart have denied these claims.

Rumours suggest, as part of the alleged deal a portion of Arcadia would be sold to Chinese company Shandong Ruyi which already owns several European fashion brands.

READ MORE: Secret HSBC memo turns heat on Topshop boss Philip Green

London’s transport body faces major financial struggle

During the last three decades London’s transport system has undergone a huge £30bn revamp but reports suggest TfL is about to face its biggest financial challenge in its history.

TfL is currently operating at a deficit of almost £1bn in 2018-19, up from £784m in 2017-18., with its troubled financial situation likely due to the withdrawal of a central government grant.

Additionally, a partial fare freeze initiated by London mayor Sadiq Khan is expected to cost £640m over four years.

The number of people using the tube has also fallen.

London deputy mayor Val Shawcross says the next two years will be “tight” budget-wise but that the TfL is not in crisis.

She adds that “we have a business plan that restores us to financial stability.”

The financial situation means the TfL has put off planned upgrades to the Northern and Jubilee lines as well as a proposal to extend the Metropolitan line.

READ MORE: London’s transport body faces bumpy financial ride

Deliveroo announces 250 new London tech jobs

Deliveroo

Deliveroo is set to introduce 250 new tech jobs, including data scientists, software engineers and cyber security experts, in London as it looks to keep up with its own growth and rivals such as UberEats and Just Eat.

The food delivery start-up currently has a workforce of 2,000 people and more than 30,000 riders and is set fill the new tech positions by the end of 2018, taking its hiring spree to 600 people in the last two years.

“These highly skilled new hires will join the incredible team building the technology that motors Deliveroo,” co-founder and chief executive Will Shu says.

“This technology is constantly improving to allow riders to work more efficiently, to allow restaurants to increase their revenues further and to bring more choice and an ever better experience to our customers.”

He adds that the move is part of the company’s “global ambitions”.

The plan also comes after Uber expanded its food delivery service in the UK last year.

READ MORE: Deliveroo to hire 250 London tech staff to help fend off rivals

Apple Australia releases pro same-sex marriage iPhone X campaign

Apple Australia has launched a new iPhone X campaign which celebrates same-sex marriage through a series of videos.

The advertisement titled, First Dance, features a number of couples and has been released just months after the Australian Government made it legal for same-sex couples to wed.

All wedding ceremonies were filmed on an iPhone X camera and are set to Australian singer Courtney Barnett’s rendition of “Never Tear Us Apart”.

It is unclear whether the ceremonies featured are real weddings.

READ MORE: Apple Australia celebrate same sex marriage with ‘First Dance’

Foxtons feels brunt of London’s property market slowdown

Struggling estate agent Foxtons is set to announce another halving of profits likely due to London’s cooling housing market.

According to reports, Foxtons pre-tax profits fell from £41m to just £18.8m in 2016 because of changes to stamp duty while analysts predict this figure to have dropped to £8.9m for 2017.

“They are facing the toughest of the UK housing markets and yes, profits are down a long way, analyst at Jefferies, Anthony Codling, says.

While London’s house prices remain high, the number of properties changing hands plummeted by 20% over the last four years.

Foxtons, which has 67 branches across London and Surrey, revenues have also fallen 12% to £117m.

The company’s chief executive Nic Budden says he expects “trading conditions to remain challenging throughout 2018”.

READ MORE: Foxtons profits expected to fall again on cooling London housing market

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