Legoland, Snapchat, Diageo: 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.

Legoland in global ad campaign

Legoland is today launching an advertising campaign by agency BMB across several countries, aiming to promote the theme parks as more than just hotels and attractions and positioning the brand as the place for children to “unlock their imagination”. The TV ad, running in the UK, US, Europe, United Arab Emirates, Japan and Malaysia, features a park warden who oversleeps and has to get the attraction’s Lego characters ready for it to open.

It marks only the second brand campaign for Legoland, whose parks are owned and operated by Alton Towers owner Merlin Entertainments, rather than by Lego itself.

According to Legoland global marketing director Paul Harvey: “In our second brand campaign, we wanted to tell the story of our Lego models coming to life before the park opens – from a giant multi-coloured Lego Octopus to a tiny Lego frog – and give a glimpse of the awesome world of play that the whole family will be a part of when they visit.”

Rihanna Instagram post knocks $1bn off Snap’s value

Rihanna has become the latest celebrity to wipe a significant chunk off the value of Snapchat owner Snap Inc with nothing more than a social media post, after the singer complained on Instagram that the rival image-sharing platform had shamed victims of domestic violence. Snapchat ran an ad for a third-party game that asked users if they would rather “slap Rihanna” or “punch Chris Brown”, which referred to a 2009 incident when singer Brown, then Rihanna’s boyfriend, was convicted of assaulting her.

Rihanna wrote: “Now SNAPCHAT I know you already know you ain’t my fav app out there!” Rihanna said. “But I’m just trying to figure out what the point was with this mess! I’d love to call it ignorance, but I know you ain’t that dumb!”

Snapchat said the ad had mistakenly passed through its review process, but was removed once the company became aware of the content.

As of 2pm yesterday, Snap’s share price had fallen 5% below that of the previous day, although it has risen slightly since.
Snap suffered an even bigger drop in its share price in February, when model Kylie Jenner sent a tweet complaining about recent changes in a Snapchat update, which had separated posts by celebrities and brands into a separate stream from those by users’ friends. The changes also prompted a petition for their reversal, which has over 1.2 million signatures.

Diageo acquires first brand to graduate from accelerator programme

Diageo has acquired premium aperitif Belsazar, the first brand to be bought via accelerator initiative Distill Ventures. The organisation is solely funded by Diageo but is independent from the drinks giant. Belsazar, a German drink made from grapes, herbs and brandy and designed to be served with tonic, was launched in 2013 by founders Maximilian Wagner and Sebastian Brack. It has been a member of Distill Ventures since 2014, benefiting from advice and investment directed at building and scaling its business.

Diageo’s press release says Belsazar will help extend its offering in the aperitifs category, while also being used in low-alcohol casual cocktails. It will sit within Diageo’s Reserve division, which will aim to boost the brand’s growth in Europe through its marketing and distribution operations.

Diageo Futures managing director David Gates said: “Partnering with entrepreneurs like Max and Sebastian, and nurturing the global drinks brands of the future is core to our strategy.”

Virgin Atlantic records loss as Richard Branson prepares sale of 31% stake

Virgin Atlantic fell to a £48.5m loss after tax in 2017, after making £187m profit the previous year, thanks to issues with engines and costs of last year’s hurricane season in the Gulf of Mexico. The airline, which is majority-owned by founder Richard Branson, had to pay to evacuate customers from Caribbean destinations, while it also suffered from faulty Rolls Royce engines, which meant that at a given time up to 10% of its fleet was unable to fly.

Virgin Atlantic also suffered from the weakness of the pound, which made American holidays less attractive to UK customers, as well as increased transatlantic competition from the likes of low-cost carrier Norwegian. Sales fell 1% to £2.7bn.

Branson is currently in talks to sell most of his 51% stake in the company to Air France-KLM. After offloading 31% he would be left with 20% of the company, with American brand Delta owning 49%.

HSBC reports 60% gender wage gap

HSBC has revealed the biggest wage gap between men and women of any major UK company, with men earning more than double what women make at the company on average. The revelations come as part of the government’s mandatory initiative forcing companies employing more than 250 people to publish statistics on male and female pay. Businesses have until April to release their figures publicly.

The bank’s report shows less than a quarter of its most senior staff are women, and the difference in mean hourly earnings between the sexes has risen 59% since last year.

Before HSBC’s figures were published, travel group TUI previously held the dubious record for the biggest pay gap among major companies, with women earning 56.9% less than men on average per hour. The figures compare wages across an organisation, not between those holding comparable roles.

Thursday, 15 March

ASA tackles ‘blurred line’ between advertising and editorial

The Advertising Standards Authority has called for evidence on recognition and labelling of online ads in a bid to ensure consumers are able to recognise them.

The move comes amid the rise of social media influencers, which is confusing consumers’ perceptions of advertising.

The ASA has since launched a new project aimed to explore how online ads are recognised and how they’re labelled while one of its rules indicates ads must be obviously recognisable so that people can understand when content is intended to promote a product or brand.

If people are unaware they are being advertised to, it is not only misleading but it also damages trust in advertising, the ASA says.

The advertising watchdog is also looking into how people expect to be informed about ads and specific labels used to indicate content as advertising, such as #ad.

Unilever to pick Rotterdam for main HQ

Unilever has picked Rotterdam over London for its new headquarters.

The consumer goods giant currently has joint headquarters in both London and Rotterdam but, since it fought off a £115bn takeover attempt from Kraft Heinz last year, Unilever has been reviewing its dual corporate structure.

The decision to pick Rotterdam will be seen as a huge blow to the UK government after Brexit, although Unilever CEO Paul Polman is adamant the decision had nothing to do with the vote to leave the EU. The Netherlands offers better protection against hostile corporate takeovers than the UK.

For nearly a century, Unilever has been headquartered in London and Rotterdam. It currently employs 7,500 people in the UK and around 3,100 in the Netherlands, with the vast majority of those staff unaffected by the changes.

Disney goes digital and introduces online streaming service

Disney has revealed plans to focus on digital streaming services, in a bid to keep up with the likes of Netflix.

As part of a digital restructure, the company has created a new unit for its streaming video and international businesses. It is understood the company will pull the first run of its movies from Netflix in 2019 to offer them on the Disney-branded service.

The company’s chief strategy officer, Kevin Mayer, has been named chairman of the division as Disney negotiates purchasing film, TV and international businesses from 21st Century Fox.

“We are strategically positioning our businesses for the future, creating a more effective, global framework to serve consumers worldwide, increase growth, and maximize shareholder value,” Disney’s chief exectuive Bob Iger says.

Renewed calls to crackdown on junk food advertising

Charities and campaigners are launching a renewed push to crackdown on junk food advertising amid the childhood obesity crisis.

The call comes after a new study of 3,000 11- to 19-year-olds in the UK by YouGov revealed youths who have been exposed to junk food adverts more frequently are more likely to be overweight or obese. The research suggests it doesn’t matter whether the advertising was seen on television, billboards or social media.

The team of analysts also revealed the likelihood of being obese doubled for young people who reported seeing junk food advertising daily. However, they also pointed out that the figures were based on a self-reported survey not only of viewing habits, but also height and weight, which could have impacted the results.

The revelation has prompted campaigners, including the charity Cancer Research UK, to call for a crackdown on junk food adverts shown to children. They want a 9pm watershed and more regulation of streaming services.

However, the Advertising Association says:“Further restrictions on the advertising of HFSS [high in fat, salt or sugar] food and drink are at odds with research that shows obesity among young people varies significantly across the UK, correlating strongly to areas with increased deprivation,” they said. “This suggests that effective action must be targeted at local level and that a blanket nationwide ban is not the answer. Such a ban, if implemented, could have damaging implications for the economy and jobs.”

A fifth of children aged between 10 and 11 and 27% of adults are considered obese, according to recent UK government statistics.

Toys R Us to close all 700 stores

Struggling retailer Toys R US has unveiled plans to close all its stores in both the UK and US over the next six weeks, following its fall into administration.

According to administrators, the chain has outstanding liabilities of about £300m and attempts to find a buyer have failed despite interest from 120 different parties that were simply interested in buying stock.

So far about 25 stores have already closed their doors and more than 30,000 people are expected to be out of work.

Simon Thomas, joint administrator, says any potential purchaser would have difficulty in sorting things out, for instance getting the rights to use the name, which is held by the American parent.

Remaining stock will be discounted.

Wednesday, 14 March

Google doubles number of bad ads removed from its platform to 3.2 billion

Google removed more than 3.2 billion so-called “bad ads” from its platform in 2017, almost twice as many as it removed in the previous year as it looks to make viewers’ experience of the site as “safe and positive” as possible.

It has been able to significantly increase the removal rate because of new technology that spots bad ads and sites faster. That has allowed it to remove 320,000 bad publishers from its ad network in 2017, up from 100,000 in 2016. It also blocked nearly 90,000 websites and 700,000 mobile apps.

Google is also fighting deceptive and controversial content in its ad network, for example banning ads on sites with dishonest content such as fake diplomas and plagiarised exam papers. In 2017, it reviewed 11,000 ads for this type of misrepresentation, suspending 650 websites and terminated 90 publishers from its ad network.

However, Google admits the work is never done and in 2018 it is planning to introduce new policies having added 28 new advertiser policies and 20 new publisher policies in 2017. These will include actions to address ads in unregulated, overly complex or speculative financial products including cryptocurrency and foreign exchange markets, as well as updates to its gambling policies.

Adidas returns to double-digit revenue growth

Adidas saw revenues climb 19% in its fourth quarter as it benefitted from the popularity of its retro sneakers in the crucial footwear market. The return to double-digit growth comes after a slowdown to 9% raised concerns among investors. Adidas now expects revenue to grow at a forecast 10% this year, when adjusted for currency swings.

International sales were a particular highlight, with double-digit growth, however US sales declined as Adidas closed a number of stores in the market. Ecommerce was also strong, with revenues up 57%. Adidas is now upgrading its 2020 profitability target, with revenue expected to be up by an average of between 10% and 12% between 2015 and 2020 net income from continuing operations rising by between 22% and 24% (this was previously 20% to 22%).

“2018 is a key milestone on the road to achieving our long-term targets for 2020. We expect quality growth, with overproportionate bottom-line improvements. This will enable an even stronger increase in profitability by 2020 and allows us to upgrade our long-term target yet again,” says CEO Kasper Rorsted.

BBC hires first chief customer officer

The BBC has hired Virgin Media CMO Kerris Bright as its first chief customer officer as the broadcaster looks to develop closer and more personal relationships with its viewers. The BBC’s marketing and audience team, as well as its licence fee unit, will join together to form a customer relationship management function headed up by Bright.

Anne Bulford, deputy director-general at the BBC, says: “This appointment will allow us to better understand and engage with our audiences across all platforms. Kerris brings a wealth of experience to this role as we look to build on the progress we’ve made towards a more personalised BBC. She h as worked at some of the biggest name in the UK industry and will help deliver a step-change in our relationship with our audience.”

The BBC has already convinced more than 12 million people to sign to iPlayer and it is now focused on personalising its service to make it more relevant for its audience. Bright will join in the summer and report into Bulford.

Bright adds: “I’m thrilled to be joining one of the world’s greatest brands at a time when competition for the attention of our audience has never been more challenging and multi-dimensional. The opportunity to play a role in creating the next chapter of the BBC’s story was irresistible. In pursuing this goal, I have one very simple governing idea: putting the customer at the heart of what we do will be central to the BBC’s long-term vitality and success.”

Carlsberg ups focus on craft with rebrew of its first lager

Carlsberg is launching a new version of its first quality lager, Carlsberg 1883, as it steps up efforts to showcase its craft credentials. The beer, which will be available exclusively in the on-trade until June, is a Danish-style dark lager and will use the brand’s original 134-year-old yeast.

Liam Newton, vice president of marketing for Carlsberg UK, says: “We’re proud of the role Carlsberg has played in the history of brewing. Carlsberg 1883 celebrates the discovery of the purified yeast strain that was shared with brewers worldwide to secure the consistent qualities of beer, as we know it today.

“The beer market has changed dramatically in the past few years, let alone since 1883, so it is important that brewers like ourselves demonstrate the quality of our beers and the dedication of our brewers and ultimately help create reasons for beer drinkers to visit the pub.”

Carlsberg has upped its focus on its Danish roots in recent months as it looks to stand out in the beer market. It has also look to play on its credentials as the world’s “first craft brewer” as it looks to fight off smaller brewers and premiumise its products.

uSwitch to sponsor Britain’s Got Talent

uSwitch has inked a deal with ITV to be the headline sponsor of Britain’s Got Talent. The brand plans to use the sponsorship to talk up its position as one of the leading price comparison sites and its range of services, including helping customer save money in areas including electricity, broadband, TV, phone and banking.

Britain’s Got Talent is one of the most coveted sponsorship slots, with the TV programme regularly pulling in audiences of close to 10 million. This deal will run for the duration of the 12th series of the show, set to return to TV in the spring. New creative will aim to motivate consumers to consider switching.

Gareth Helm, CMO at uSwitch’s owner ZPG, says: “We’re delighted to be partnering with ITV on one of its biggest shows. This is an excellent opportunity for us to further build the uSwitch brand and help the nation understand how they can save hundreds of pounds a year off their household bills in a matter of a few minutes.”

Tuesday, 13 March

People with disabilities want brands to ‘be braver’ representing them in ads

Almost two-thirds (63%) of people with physical disabilities think showing more disabled people in ads will help remove the stigma of such conditions, while 54% want brands to be braver in showing ‘people like me’ in their ads, according to a new study by media agency UM.

More than half (52%) of the 2,000 UK Brits surveyed believe people with physical disabilities are negatively stereotyped, which rises to 64% for people with mental health conditions. For people with such conditions this number jumps to 75%.

Given 71% of respondents think it’s important that ads accurately and authentically reflect UK society advertisers need to do more.

Maltesers is perhaps the most well known example of a brand representing people with physical disabilities in its advertising, while Lloyds launched a campaign last month exploring the common misconceptions about living with a non-visible disability. Both are winners of Channel 4’s diversity competition.

The survey finds 54% of respondents want to see more people with physical disabilities in advertising, which rises to 62% among the physically disabled, while 52% want to see more people with mental disabilities represented, rising to 72% among those with mental health conditions.

However, when asked why those with mental disabilities aren’t currently visible enough in UK advertising, 62% of Brits say it’s because they ‘make people uncomfortable’, while 43% say it’s because Brits aren’t exposed enough to people in this community.

It’s a similar story for physical disabilities with 55% of Brits again saying it’s because they make people uncomfortable – while 43% believe that brands are risking ‘not appealing to people’ by using disabled people in adverts. Shockingly, a third (34%) even say it’s because people with physical disabilities are ‘not attractive’.

Eve eyes end of year profit after extensive marketing push

Mattress firm Eve Sleep has reported widening losses but it expects to turn a profit by the end of the year thanks to an extensive marketing push.

The online business posted a pre-tax loss of £19m in the 12 months to 31 December, a 68% increase on its £11.3m loss the previous year, which the company has attributed to “investment in marketing and the team to support the continued growth targeted in 2018”.

The brand launched its ‘Join The Sleep Rich’ TV ad last year and overall marketing costs increased by 119% to £17.2m during 2017.

The company, which delivers roll-up foam mattresses to customers in a box, operates in 15 markets with 96 people and has concessions in 145 stores. It floated on the AIM stock market 10 months ago.

CEO Jas Bagniewski says the business “continues to target UK profitability in [the fourth quarter] of 2018 and group profitability by the end of 2019”.

Apple buys ‘Netflix for magazines’ subscription app

Apple is set to acquire virtual newsstand app Texture, dubbed the “Netflix for magazines”, for an undisclosed sum, in a move that sees it boost its content-related offer and “commitment to quality journalism”.

The digital service gives readers online access to current and back issues of around 200 titles, including Rolling Stone, Vanity Fair, Vogue and Cosmopolitan, for a monthly subscription fee of $9.99 (£7.19).

“We are committed to quality journalism from trusted sources and allowing magazines to keep producing beautifully designed and engaging stories for users,” said the Apple senior vice-president of internet software and services, Eddy Cue.

The deal is Apple’s latest move to develop content-related services and platforms, after it acquired music identity app Shazam for a reported $400m in December.

Texture is owned by Next Issue Media, a joint-venture between publishers Condé Nast, Hearst, Meredith, Rogers Media and private equity firm KKR.

Café Rouge owner reports £60m loss

The owner of Café Rouge and Bella Italia is the latest in the casual dining sector to fall on hard times after reporting a £60m loss.

Casual Dining Group posted an 18% increase in losses to May 2017, despite a 2.2% rise in like-for-like sales.

It blamed challenging conditions “due to consumer confidence levels and the broader impact on discretionary spending” and a “significant” rise in costs for the decline.

Evening Standard reveals new look

The Evening Standard unveiled its new look yesterday (12 March), its first makeover in eight years, which comes a year after George Osborne took over as editor.

After consultation with readers, ESI Media redesigned the newspaper’s masthead and has introduced colour-coded sections with a greater focus on financial, lifestyle and sports content.

The new masthead does not feature the word London in its title, which the publisher says reflects its status as a global city with a global outlook.

Jon O’Donnell, managing director of ESI Commercial, says: “The changes we’ve made are to ensure the paper is as relevant and engaging to our diverse audience as possible. We’re confident that brands and marketers will see the benefit of the updates and continue to see great value in connecting to this engaged audience.”

Chancellor preps spring statement

Chancellor Philip Hammond will deliver his spring statement at 12.30pm today, during which he will say the UK economy is in better shape than expected.

However, he will argue that the UK’s national debt is still far too high. He is also expected to resist calls from Labour and some in the Conservative party to use the extra cash from tax receipts to help the public sector and ease the spending squeeze they say is pushing it to breaking point.

Monday, 12 March

Farfetch readies for ‘£4bn’ IPO

Luxury UK-based fashion website Farfetch is readying itself for a £4bn initial public offering (IPO) that would see its valuation exceed that placed on the entire Marks & Spencer business.

According to the Financial Times, Farfetch has engaged bankers from JPMorgan and Goldman Sachs to work on a US listing, which would put the business in the same bracket as high profile fashion players such as Burberry (with a £7bn stock market valuation) and Asos (£6.3bn valuation).

Today Farfetch also announced a deal with Harvey Nichols to sell accessories and clothes from the high end department store through its online platform. Harvey Nichols will hope the deal will grow its online presence as web sales currently account for just 10% of its business.

Established in 2008, Farfetch connects nearly 900 boutiques and luxury brands with a customer base of two million shoppers across 190 countries. The company has seen its sales grow by more than 50% a year and boasts an average customer age of just 36.

TfL bans Brexit sensitive ad from Normandy government

Transport for London (TfL) has banned an advertising campaign from the Normandy government urging British businesses to flee across the Channel as Brexit looms.

TfL claims the campaign from the Normandy Development Agency “did not fully comply” with its advertising guidelines as it contained “images or messages which relate to matters of public controversy or sensitivity”.

Using the design of a mocked up newspaper called The Normandy Times, the outdoor adverts calls for entrepreneurs to “vote with their feet” post-Brexit and relocate their office or production to Northern France.

The advert also carries a mock classified ad which reads: “Hot entrepreneur wanted … Someone allergic to post-Brexit tariffs, legislation and restrictions preferred.”

Despite the TfL ban the campaign will appear on buses in Bristol, Birmingham, Manchester and Cambridge, as well as running in a series of national newspapers.

Restaurant bosses warn of ‘perfect storm’ hitting the dining sector

A group of 15 restaurant bosses have signed a joint letter warning the Government it must act to avoid “damaging closures and job losses” in the dining sector.

In a letter to Chancellor Philip Hammond, the group, which includes the chief executive of Bills and the chairman of pub and restaurant chain Mitchells & Butlers, have asked for “root and branch” reform of business rates.

The business leaders describe a “perfect storm” of soaring business rates, rising employment costs and Brexit-fuelled inflation hitting the UK dining sector. The letter calls on the Government to reduce the “unnecessary costs of doing business”, saying the “sector is at a tipping point and needs focused attention now”.

Just last week research from accountancy group UHY Hacker Young revealed that one in three of the UK’s top 100 restaurant groups are loss-making, a 75% rise over the past year alone.

In January, the premium burger chain Byron agreed to close 20 restaurants as part of a rescue plan, committing to operate a “smaller and more efficient restaurant estate”.

Last week Italian chain Prezzo confirmed the closure of 94 restaurants, a third of its outlets, while the Jamie Oliver Restaurant Group is closing 12 of its remaining 37 Jamie’s Italian restaurants. Carluccio’s has also called in accountants KPMG to advise on possible strategies to cut costs.

Manchester City expands eSports team

Manchester City is expanding its eSports team with the signing of Kai ‘Deto’ Wollin, who will represent the club in FIFA eSports tournaments and competitions around the world on the PlayStation 4 (PS4) console.

Wollin is Manchester City’s second eSports signing of the season, joining Marcus ‘ExpectSporting’ Jorgensen who signed with the club in December. The addition of Wollin takes the total of eSports players across the City Football Group to four, alongside Chris Holly who represents New York City FC and Marcus Gomes who works with Melbourne City.

Having debuted in the FIFA Championship in 2006, Wollin is the current Playstation World Champion and winner of the World Cyber Games titles in 2011 and 2012. His first competition for Manchester City will be the FUT Champions Cup in April.

According to City Football Group chief marketing officer, Nuria Tarre, the club is looking to tap into the growth of eSports over the past two years and use its presence in the gaming space to connect with Manchester City’s global fanbase, particularly the “younger audience”.

Gin sales hit record high

Gin sales hit a record high over Christmas with consumers buying the equivalent of a bottle for every adult in the UK, according to the Wine and Spirit Trade Association (WSTA).

Sales of the spirit rose by £104m over the festive period compared with the previous year. Over 16 million bottles of gin were sold in the 12 weeks to the end of December, up 28% on Christmas 2016.

Looking at the year as a whole, UK consumers bought 51 million bottles of gin in 2017, up 27% on 2016. That is the equivalent of more than nine and a half million bottles.

The boom in gin has spawned the rapid growth of UK distilleries, which now number 315 nationwide, more than double the amount operating across Britain five years ago.