P&G, Snapchat, Pfizer: 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.

p&g

P&G expands its consumer health business with Merck deal

Procter & Gamble is to acquire the consumer health business of German pharmaceutical giant Merck for around €3.4bn (£3bn) in a deal that adds vitamins and minerals to its over-the-counter (OTC) medicine business.

P&G says it sees the deal as an opportunity to expand its consumer healthcare business, while also bringing expertise to the company in the shape of strong health care commercial capabilities, technical skills and health care leadership. P&G already owns health brands including Vicks, Oral-B and Pepto-Bismol, while Merck’s brands include Neurobion, Nasivin and Seven Seas focused on areas such as relieving muscle pain and treatments for colds and headaches that P&G currently doesn’t cater for.

“We like the steady, broad-based growth of the OTC health care market and are pleased to add the consumer health portfolio and people of Merck to the P&G family,” says P&G CEO David Taylor.

P&G beat out the likes of Nestle and Perrigo to buy the deal, although according to Reuters Merck had to climb down from an initial price of closer to €4bn (£3.5bn). The deal is expected to close by the fourth quarter. As part of the transaction, around 3,300 employees will transition from Merck to P&G.

Snapchat launches shoppable AR

Snapchat is launching shoppable augmented reality that will allow advertisers to engage with potential customers using the company’s ‘lens’ feature. The tool allows users to share images of themselves overlaid with effects; it was later launched for brands, encouraging users to overlay ads on their selfies.

Now, advertisers can include a button on their sponsored lens that carries out an action, such as sending users to a website, letting them watch a video or asking them to install an app. Brands including Clairol, Candy Crush-maker King and Adidas are already trialling the feature, with Adidas using it to promote its Deerupt running shoe and including a link through to its website.

Peter Sellis, director of revenue product at Snap, says: “Shoppable AR Lenses give brands a new way to leverage our unique scale — more than half of the 13- to 34-year-old population of the US plays with our AR Lenses each week on average — to drive real and measurable ROI, whether that’s through sales, downloads, lead gen, or video views.”

UK brands’ reputation sinks for the first since 2008

The reputation of companies operating in the UK has declines for the first time since 2008, when the financial crisis hit trust in financial services and big business. According to the UK RepTrak from the Reputation Institute, the biggest drop came amid consumers’ willingness to give companies the benefit of the doubt (down 13%), followed by an 11% decline in consumers saying something positive about a brand and 10% decrease in views around investments and trust that they will do the right thing.

The data also reveals the public is increasingly ‘neutral’ in their perception of corporate governance and citizenship practices, rising from 64% to 69% and 69% to 74% respecitively.

Harry Foster, director of consulting at the Reputation Institute says the data points to a “crisis of trust” as consumer become more sceptical about governments, politicians and companies, driven by factors including Brexit, Donald Trump, fake news and concerns over data protection and security.

“The jury is out on most big companies, resulting in a fall in overall reputation due to a loss in benefit of the doubt, and a decline in the belief that companies will do the right thing when no one is looking,” he explains.

“With a looming crisis of trust hanging over many big companies and lingering global issues related to fake news, it is more important than ever for companies to communicate with an authentic voice and to exude transparency. This makes the role of corporate communications a particularly important part of the media mix.”

In terms of rankings, Rolex overtook Lego to take the top spot, while Bosch, Nintendo, Amazon and The Walt Disney Company made the top 10 for the first time, knocking the likes of Michelin, Intel and PayPal out. Biggest improvers include L’Oreal, Merlin Entertainment and Nintendo, while the biggest fallers were Delta Air Lines, Uber and Ryanair.

Pfizer launches first marketing campaign for Viagra

Pfizer is launching its first marketing campaign for Viagra since it became available for the first time in the UK with a prescription as it looks to encourage men to take action.

The first phase of the campaign, created by Y&R London, includes print and outdoor advertisers that aims to help men understand what a common problem erectile dysfunction is. It uses real world examples to bring to life the number of sufferers, which totals 4.3 million in the UK.

This will then be supported by social and content partnerships aimed at engaging with men and building normality and awareness around the condition. This will run alongside PR activity to promote the in-store launch of Viagra Connect and shopper communications, as well as training and education for pharmacists.

Aurore Bourdeau, senior brand manager for Viagra Connect at Pfizer Consumer Healthcare, says: “The launch in the UK provides men with a new, convenient route of access for the treatment of their erectile dysfunction, however it is important that any personal barriers to managing ED are overcome. The integrated marketing plan developed and executed by the WPP agency team aims to normalise erectile dysfunction and support men in recognising and treating this often-debilitating condition.”

Debenhams profits slump as ‘beast from the east’ hits sales

Debenhams saw profits slump 84.6% to £13.5m in the first half of its financial year as a difficult environment on the high street was made worse by bad weather including the ‘beast from the east’. Like-for-like sales were down 2.2%, while on an underlying basis profits fell by half to £42.2m.

To compound the bad news, the retailer’s CFO Matt Smith is also set to leave for a role at Selfridges. He will depart once a successor has been found.

Debenhams had already warned profits would be hit after disappointing Christmas sales, but CEO Sergio Bucher pointed to the positives, highlighting that digital growth is ahead of the market, up 9%, and its new strategy ‘Debenhams Redesigned’ is yielding more positive results.

Debenhams is also taking further steps to halt the slump, getting rid of long-standing lines and phasing out its furniture business to focus on soft furnishings. It will instead partner with other furniture retailers such as Maisons du Monde and Swoon. It is also looking to roll out more in-store cafes and restaurants following success with Nando’s in its Stevenage store.

Bucher says: “It has not been an easy first half and the extreme weather in the final week of the half had a material impact on our results. But I am hugely encouraged by the progress we are making to transform Debenhams for our customers.

“We are holding share in a difficult fashion market, and in other categories such as furniture, exciting new partnerships have the potential to transform our offer. We approach the remainder of the year mindful of the very challenging market conditions, but with confidence that we have a strong team and the right plan to navigate them and return Debenhams to profitable growth.”

READ MORE: Debenhams profit drops 84.6 per cent and CFO leaves for greener pastures

Wednesday, 18 April

Facebook takes major step on the path to GDPR compliance

Facebook will change the way it targets ads as part of the company’s first major step toward GDPR compliance ahead of the new regulations kicking in on 25 May.

From this week, the social network will ask its users to agree to its updated terms of service and data policies and to review information they’ve shared on the platform, according to a blog post.

Facebook will also no longer be able to process news feed posts for ad-targeting purposes, unless those posts are marked “public” or “friends of friends”. Reports suggest this is because these posts tend to include “special categories of data” such as religious beliefs, sexual orientation and ethnicity

The social networking giant is now urging users to review information they’ve shared on their public profile including religious affiliation or relationship status. It also asked users to review their ad preferences, in case they’re being targeted via data gathered from third-party websites or their browser history.

Facebook is also asking for European and Canadian users to turn on facial recognition so it can identify them in photos and videos. The technology was originally launched in 2011, but the social network disabled it after protests from privacy regulators.

Starbucks to close 8,000 US stores for a racial bias training day

Starbucks

Starbucks will close 8,000 of its US stores on 29 May as the company’s staff undertake racial bias training.

The move follows an incident that occurred at one of its Philadelphia stores, when two black men were arrested. Reports claim the two men were sitting in the store waiting for a friend and hadn’t ordered anything yet when police were called, sparking accusations of racial profiling.

Now, the world’s largest coffee company is trying to cool tensions by training 175,000 of its staff about how to prevent racial discrimination in its stores.

The company’s chief executive Kevin Johnson says while this is not “limited to Starbucks” we’re committed to “being part of the solution”. He has also issued a public apology for the arrests.

READ MORE: Starbucks is closing 8,000 cafes in the US for racial tolerance training

Major UK firms face ‘investor backlash’ over lack of women in board rooms

A number of the UK’s biggest businesses have been called out for their lack of female leaders with the Investment Association (IA) suggesting investors are “becoming restless”.

Oil giant BP, Sports Direct and travel firm TUI are among more than 30 businesses that have received a letter from the IA on behalf of its members, saying investors are frustrated over their lack of progress.

Legal & General Investment Management, one of the UK stock market’s biggest investors, says it will vote against the re-appointment of chairs if boards are not at least 25% female.

IA chief Chris Cummings says a number of key investors have told IA that they will vote against “AGM resolutions on the grounds of gender representations”.

“With the AGM season now in full swing, companies who are falling short should take urgent steps to outline what they plan to do to increase diversity,” he adds.

READ MORE: Major firms told to put more women on boards or face investor backlash

Apple preps a monthly news subscription service

The world’s largest technology company Apple is reportedly planning to launch its own premium monthly subscription news service within the next year.

The magazine-style service would be made available in an updated version of the Apple News app with the company making use of its Texture purchase – a magazine subscription service that allows users to subscribe to more than 200 magazines for just $9.99 a month.

The move can be viewed as a broader push to generate more revenue from its online content and services. It is understood a portion of the subscription revenue will go to magazine publishers.

Apple’s new offering world work similarly to Apple Music.

READ MORE: Apple music for journalism? Apple plans paid subscription service for news.

Majority of marketers say there’s not enough mental health support at work

A new survey by Westfield Health reveals more than 80% of employees in the marketing, PR and advertising industries are looking for better physical and mental wellbeing support in the workplace.

Another 52% say the NHS doesn’t budget enough for wellbeing services while 47% believe the UK government needs to do more.

Meanwhile, 48% of employees in these sectors would use wellbeing services if their employer provided them, with emotional wellness and counselling services plus health check-up at the top of their agenda.

With workplace-related stress, illnesses and mental health issues on the rise, 69% of working adults in advertising, marketing and PR industries believe that businesses are not doing enough to support the physical and mental wellbeing of their employees.

Westfield Health commercial director David Capper says the number of UK working days lost to stress, anxiety and depression is 12.5 million.

“It makes sense for employers to relieve some of the pressure through wellbeing initiatives. Not only would they be supporting our economy, they’ll make huge cost savings by looking after their staff’s health, with presenteeism now costing businesses up to three times more than absenteeism,” he adds.

Tuesday, 17 April

amazon

Amazon ranked ‘most valuable’ global retail brand

Amazon, McDonald’s and Alibaba have topped Kantar Millward Brown’s inaugural BrandZ top 75 most valuable global retail brands ranking, with Starbucks, The Home Depot and Louis Vuitton also featuring in the top 10.

According to Kantar, retail brands have been growing their value 35% faster than non-retailers over the last 10 years.

The top 75 brands – which also include Nike, Subway, eBay and Aldi – are worth over $1 trillion in value between them. They run across categories including supermarkets, ecommerce platforms, department stores, and convenience and DIY chains.

“Shopping is no just longer just about buying things,” says David Roth, CEO of WPP The Store, EMEA and Asia. “Often, a decision to shop is a search for entertainment – whether in a physical space or the virtual world. It can be a way of spending time with like-minded people, or being in an environment that reflects an individual’s values.

“Shopping is also a way of simply feeling good – what we used to call ‘retail therapy’. This explains why the BrandZ Top 75 most valuable global retail brands includes brands specialising in everything from business suits and bras to bath oil and burritos. Today everyone is a retailer.”

P&G lays out new sustainability goals

p&g

Procter & Gamble has laid out new sustainability goals for 2030, which aim to enable and inspire positive impact on the environment and society while creating value for the company and consumers.

Within the next decade, P&G says packaging for its 20 leadership brands including Always, Fairy, Pampers and Tide will be 100% recyclable, while its manufacturing sites will cut greenhouse gas emissions in half and will purchase enough renewable electricity to power 100% of its plans.

The company also says it will look to create more “transformative partnerships” that will stem the flow of plastic into the world’s oceans, protect forests, expand recycling solutions for absorbent hygiene products and protect water in priority basins around the world. At least five billion litres of water will be sourced from circular sources.

“We believe P&G can be a force for good and a force for growth, and we are taking a more deliberate approach to delighting consumers while enabling responsible consumption,” says David Taylor, P&G’s CEO.

“Consumers expect the brands they trust to deliver superior performance and to also help solve some of the most complex challenges facing our world. Our global reach, our understanding of the five billion consumers we serve, and our innovation capabilities give us a unique ability to make a positive difference.”

However, Virginie Helias, P&G vice president of global sustainability, says P&G alone does not have all the answers.

“Building on our progress to date, our 2030 goals seek to address two of the world’s most pressing environmental challenges: finite resources and growing consumption,” Helias says.

“We know P&G alone does not have all the answers. It will take partnerships and collaboration to make meaningful progress and our brands will develop innovations to take responsible consumption to the next level.”

P&G has already achieved many of its sustainability goals for 2020 in its focus areas of climate (reduced absolute greenhouse gas emissions by 16% since 2010), water (reduced water use in manufacturing facilities by 27% since 2010), and waste (achieved zero manufacturing waste to landfill for more than 80% of manufacturing sites).

House of Lords urges digital industry to fully commit to JICWEBS or face legislation

Following a six-month long enquiry into the UK advertising industry, the House of Lords has recommended the digital industry bodies must be given more power to enforce rules on robust standards or face government legislation.

In a statement, the House of Lords’ Select Committee on Communications said it is in the interests of the whole industry to take greater steps to self-regulate through independent third parties such as JICWEBS.

“We think that the largest industry bodies should commit to signing up fully to JICWEBS,” the committee said.

“We recommend that the industry should give these bodies greater powers to create and enforce rules establishing robust industry standards on measuring effectiveness and third-party verification. If businesses fail to do so, the Government should propose legislation to regulate digital advertising.”

In response to the announcement, Phil Smith, director general of ISBA – the body that represents UK advertisers – said: “Brand safety is a major concern for our members and we support any action that improves the environment where they advertise. We believe that signing up to JICWEBS indicates a company’s commitment to raising digital standards and expect more organisations to take this important step.”

Diageo invests £150m in Scotch whisky tourism

Diageo will pump £150m into the transformation of its Scotch whisky visitor experiences over the next three years, marking the biggest concerted programme ever seen in Scotland’s whisky tourism sector.

This will include a new state-of-the-art Johnnie Walker immersive visitor experience in Edinburgh, alongside multi-million pound upgrades to Diageo’s 12 existing distillery visitor centres.

Over the past six years, Diageo has invested more than £1bn in building its Scotch whisky production infrastructure, with the latest investment expected to bring economic benefits to communities throughout Scotland.

“This significant investment will not only help attract more tourists to Scotland, offering world class visitor experiences, but it also underlines the fundamental importance of the whisky sector to Scotland’s economy,” says Scotland’s first minister, Nicola Sturgeon MSP.

“Last week, I launched Scotland is Now, a new campaign that will put Scotland in the international spotlight and showcase the country’s world-leading assets, such as whisky, to a global audience. Today’s announcement highlights to the world that Scotland is a leading destination for tourists and business investors.”

Diageo is also extending the £1m per year funding support for its Diageo Learning for Life programme that has helped over 1,000 young unemployed people in Scotland into training and jobs in the hospitality industry over the last five years.

Sky and National Geographic partner to combat ocean plastic

Sky and National Geographic are joining forces in the fight to eradicate the impact of plastic in the world’s oceans.

Sky Ocean Ventures launched in March with a £25m cornerstone commitment from Sky, with National Geographic pledging a further £7m to bring its scientific expertise, grants and media reach to support the project’s activities.

“This is a unique opportunity to build upon National Geographic Society’s 130-year history of investing in bold people with transformative ideas and using the power of our storytellers to help achieve a planet in balance,” says Jonathan Baillie, chief scientist and senior vice president, grants and exploration at the National Geographic Society.

“By 2025, Sky and National Geographic will have helped to bring pledges of people taking action to reduce their own plastic footprint, helped transform the way businesses deal with their supply chain and innovation as far as plastic is concerned and will have invested in or supported technologies with high potential to be transformational.”

Jeremy Darroch, Sky’s group chief executive, says: “I’m excited that we share the same vision and understand the pressing need to take action and find meaningful solutions to the plastics problem. Together, we will create real impact, and I look forward to bringing other financial and non-financial partners on board.”

Monday, 16 April

WPP CEO Sir Martin Sorrell

WPP faces possible breakup

The world’s largest advertising group WPP could be broken up following the departure of founder and chief executive Martin Sorrell over the weekend.

According to reports in The Guardian, Sorrell’s decision to leave the company before the findings of an investigation into the improper use of company funds and improper personal behaviour have been delivered, could be viewed as a potential catalyst for the break up of the advertising giant.

Sorrell is reportedly in line for a £20m payout over the next five years as the result of a deal that will see him cash 1.6 million shares in the company through a number of award plans. WPP confirmed that it was treating Sorrell’s resignation as his retirement from the company.

The payouts received by Sorrell have stoked controversy over recent years. During the past five years alone he has earnt more than £200m from pay and reward schemes, including a payout of £70m in 2015, one of the largest in UK history. This is despite the fact that Sorrell and his family own just a 1.8% stake in WPP.

The findings of the misconduct investigation will be delivered to the WPP board next Friday by law firm WilmerHale, but are not to be made public. Sorrell rejects any claims of misconduct “unreservedly”.

READ MORE: Martin Sorrell stands to pick up £20m as WPP faces possible breakup

Wetherspoons quits social media

Wetherspoons pub

JD Wetherspoon is quitting Twitter, Instagram and Facebook with immediate effect.

The pub chain told its 44,000 Twitter followers that its head office and 900 pubs would be quitting their social platforms over concerns arising from the “misuse of personal data” and “the addictive nature of social media”. The company also linked its decision to the “bad publicity” social media has attracted recently, particularly around the “trolling” of MPs.

Speaking to the BBC chairman Tim Martin said he did not believe that closing these accounts would affect the business whatsoever, adding that he had always thought the idea that social media was essential for advertising was untrue.

The chain confirmed it would continue to release information via its website and printed magazine the Wetherspoon News. Customers used to interacting with the pub chain on social media are advised to speak to staff in their local pub or contact customer services online.

READ MORE: Wetherspoon pub chain shuts its social media accounts

Channel 4 begins search for new headquarters

Channel 4 is beginning its search for a new national headquarters outside London, a move that will see 300 of the broadcaster’s 800 staff leave the capital.

The initiative, known as 4 All in the UK, has been described as the biggest structural change in Channel 4’s 35-year history and will see the broadcaster open three “creative hubs” in the nations and regions. The largest of these hubs will be a new national headquarters, complete with a TV studio.

The Guardian reports that Channel 4 News will open three new news bureaus, trebling the number of news jobs in the nations and regions by 2020, while the annual spend on shows made by TV production companies based outside London will rise from £169m to £350m by 2023.

Currently Channel 4 only has 30 members of staff working outside London, 25 sales people in Manchester and five employees in Glasgow.

More than a dozen cities and regions across the UK have expressed an interest in becoming the home of Channel 4’s new headquarters, including Birmingham, Manchester, Brighton, Bristol, Nottingham, Sheffield and Hull. The final decisions on the new locations will be announced during the third quarter of 2018.

READ MORE: Channel 4 kicks off bids for new headquarters 

Starbucks apologies over alleged racial profiling

Starbucks digital

Starbucks has apologised after two black men were arrested while waiting for a friend at one of their shops in Philadelphia, leading to accusations of racial profiling.

In an amateur video taken of the arrest and released on Twitter, the men are handcuffed by police after staff accused them of trespassing. The two men were reportedly asked to leave by the store manager after they requested to use the toilet without making a purchase. The men were said to have told staff they were waiting for a friend and refused to leave.

Starbucks chief executive Kevin Johnson expressed the company’s “deepest apologies” to the men in question and said the coffee chain would do whatever it could to “make things right”. Johnson added that the video was “very hard to watch” and the actions taken were not “representative of our Starbucks mission and values”.

READ MORE: Starbucks apologises amid backlash over arrest of black men

Whitbread encouraged to spin off Costa Coffee

Costa

Whitbread is under pressure to spin off its Costa Coffee chain as the firm’s largest investor claims the move could create £3bn.

US hedge fund Elliott Advisors, which owns more than a 6% stake in the business, argues that Costa Coffee and budget hotel chain Premier Inn are two very distinct businesses and that splitting off Costa would boost Whitbread’s shares, which are viewed to have underperformed in recent years.

Costa was acquired by Whitbread in 1995 and has since expanded to 2,400 stores and 7,100 Express machines in the UK. The chain is also being rolled out in China.

Despite a 1.5% drop in Costa’s like-for-like sales reported in its latest trading update, which covered the 13 weeks to 30 November, Whitbread chief executive Alison Brittain expressed her confidence that the UK coffee shop boom would continue.

READ MORE: Hedge funds pressure Whitbread to spin off Costa Coffee

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