Diageo, Poundworld, Amazon: 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.

Diageo launches VR series to show dangers of binge drinking

Diageo has introduced a new virtual reality experience that will immerse consumers in a first person, interactive story about the dangers of binge drinking, as part of its commitment to reduce harmful drinking.

It builds on the drinks business’s 2016 launch of ‘Decisions’, a 360-degree experience that placed consumers in the front seat of a fatal drink-driving crash.

73% of people who viewed the film said they were more likely to stop other people from drinking and driving, while 75% said they would prevent drinking and driving by planning ahead with a designated driver.

“We’re continuing to use virtual reality technology for social responsibility initiatives because the immersive experience brings to life the terrifying realities and dangers associated with binge drinking,” says James Thompson, chief marketing and innovation officer, Diageo North America.

“While drunk driving and underage drinking are at historic lows, binge drinking rates have remained stable. Diageo has long been recognised as an industry leader in responsible drinking programming, and our hope is to build on our previous successes with virtual reality to reach our audience on an emotional level and prevent future detrimental impaired decisions associated with binge drinking.”

Online’s share of grocery growing at a’pedestrian rate’

grocery sales

Despite the fact that sales of groceries are growing at a much quicker rate online than they are in stores, online remains a very small part of the UK grocery market, according to Nielsen retail data released today.

Online grocery sales in Britain increased by 4.6% in 2017 to £6.6bn, a third faster than in-store sales which grew at 3.4%. However, online’s share only increased from 6.3% to 6.4% across the year.

Online shopping is dominated by the big shop and weekly trips, which account for twice the share of online trips (82%) than they do for in-store trips (44%).

“Despite the hype and attention given to online and its ability to change the way people shop, the reality seems rather different,” says Aylin Ceylan, Nielsen’s analytics business partner.

“Although online spend increased by around £300m last year, a 0.1% rise in market share is a rather pedestrian rate. Many will be surprised it’s not faster but online shopping in grocery, unlike many other sectors, is much more a complementary option to stores not an ‘instead of’ option.”

Poundworld CVA signals a ‘year of distress’

Poundworld is reportedly getting ready to launch a company voluntary agreement (CVA) in the coming weeks, which could result in 100 store closures and 1,500 job losses.

Following in the footsteps of New Look, Toys R Us and Carpetright, the move shows just how much pressure bricks-and-mortar stores are under in 2018 as they battle with weak sales and rising costs.

“The toxic mix of rising costs, softer consumer demand and the acceleration of seismic structural shifts are pushing many business models to breaking point,” says Richard Lim, chief executive, Retail Economics.

“Poundworld is by no means alone. The chasm between traditional retail operating models and what’s needed in today’s world of digitally driven shoppers has never been greater.  As retailers look to reshape their operations, managing transformation of outdated business models will be critical in order to thrive.”

READ MORE: 

Amazon ad business now worth $2bn

Amzon’s ad business is now worth more than $2bn, with CFO Brian Olsavsky calling it a “bright spot” in its Q1 results from both a product and financial standpoint. Speaking on an investor call last night, Olsavsky called advertising a “multibillion-dollar programme” that is a “strong contributor to profitability”.

He also outlined Amazon’s philosophy on advertising, saying Amazon wants to find ways to make ad better for customers by showing them new products, and helping new and emerging brands reach new customers. “The advertisers generally are all shapes and sizes, and their common theme is they all want to reach our customers generally to drive brand awareness, discovery and eventually purchase.”

Overall, Amazon’s profits doubled to $1.6bn in the first three months of 2018, while revenues were up 43% to $51bn.

ITV reviews ad strategy as it brings in new agency

ITV has appointed creative agency Uncommon to work alongside its in-house marketing and creative teams in an effort to bring in more viewers.

Uncommon will review ITV’s brand and advertising strategy to ensure the broadcaster’s programmes reach as many viewers as possible on TV and all other mobile devices, with a specific focus on light TV viewers.

“The ITV brand must remain strong as the business moves forward,” says Rufus Radcliffe, ITV’s group marketing and research director.

“Working alongside our award-winning internal agency, ITV Creative, Uncommon will help to ensure that our marketing continues to cut-through, get talked about, and drive viewers to all our channels and services, both now and in the future.

“We are also building direct to consumer relationships focused around the ITV Hub and our Studios business is a global player.”

ITV Chief Executive Carolyn McCall embarked on a strategic refresh of the business after joining in January. It is focused on defining a clear strategy and priorities that will highlight the opportunities and address the challenges that the business faces in an increasingly competitive media landscape.

Thursday, 26 April

Supermarkets and big brands commit to 100%  recyclable plastic packaging

Brands including Coca-Cola, Procter & Gamble and Britvic have joined major UK supermarkets to launch a voluntary pledge to cut plastic packaging.

Currently 42 businesses are supporting the UK Plastics Pact, which includes an aspiration that by 2025 all plastic packaging can be reused, recycled or composted.

The Pact members are responsible for over 80% of the plastic packaging on products sold through UK supermarkets and is a response to the growing consumer conscious about the issue.

Environment Secretary, Michael Gove, says: “Our ambition to eliminate avoidable plastic waste will only be realised if government, businesses and the public work together. Industry action can prevent excess plastic reaching our supermarket shelves in the first place.”

Government faces pressure to crackdown on junk food promotions

The government is under renewed pressure to impose tougher restrictions on junk food marketing, including a ban on buy-one-get-one free deals and social media advertising for food and drinks high in fat, salt and sugar (HFSS).

Opposition leaders sent a joint letter yesterday to the prime minister – co-ordinated by the chef, Jamie Oliver – calling for 13 measures, including a ban on buy-one-get-one free deals.

According to the Times, Labour, the Liberal Democrats and the Scottish National Party have called for restrictions on junk food marketing including a 9pm watershed for food and drink advertising for HFFS products, and a ban on using cartoons or celebrities to promote unhealthy products.

Public Health England said that the impending restrictions on promotions would stop people being tempted into buying unnecessary food but the industry has dismissed the claims. But government sources suggest an announcement will be made before the end of June.

£ READ MORE: Ban on junk food deals as obesity drive unites MPs

Channel 4 becomes the first UK broadcaster to use voice to promote a TV show

Channel 4 has become the first UK broadcaster to use voice to promote a TV show with the new marketing campaign for its Humans series.

The broadcaster has created an app specially for smart home hubs, like Google Home and Amazon Alexa, which brings to life the drama’s storyline about the blurred lines between humans and machines by testing whether a user is human or not.

‘The Human Test’ is inspired by the Turing test and was developed in consultation with a psychologist. It asks questions such as, “If a robot can feel, should it be granted human rights?”. Users who take the test will be directed to a website with synth and human profiles.

Car production falls as industry body calls for UK to remain in customs union

Car output in Britain has experienced a double-digit slump with car output in the UK falling by more than 13% compared to the same month last year.

According to figures by the Society of Motor Manufacturers and Traders (SMMT) manufacturing for the domestic market dropped by 17.7% last month, while the number of vehicles made for export fell by 11.9%.

The figures have prompted SMMT to once again call for the UK to stay in the EU customs union after Brexit. Chief executive Mike Hawes said: “Maintaining free and frictionless trade is an absolute priority – it has been fundamental to our past success and is key to our future growth.”

The figures were also a result of poor weather as some companies were hit by the ‘Beast from the East’ storm which disrupted car production because some staff were unable to get to work.

READ MORE: UK car production falls on Brexit fears and diesel sales slump

Facebook’s pledges to vet political ads for UK local elections

Facebook’s will vet political ads ahead of the local elections in May 2019 in a bid to make political advertising more transparent.

Chief technology officer Mike Schroepfer is to promise MPs that the social network will authorise ads in time for England and Northern Ireland’s May 2019 local elections.

He will make the pledge while giving evidence to of the Department of Culture, Media and Sport Select Committee’s inquiry into fake news.

READ MORE: Facebook to vet UK political ads for May 2019 local elections

Wednesday 25 April

Costa

Whitbread to spin off Costa Coffee

Whitbread plans to spin off its Costa coffee chain into a separately listed company within two years as it responds to activist investors’ demands for a split. Whitbread, which also owns Premier Inn and restaurant chains including Beefeater, says the split will happen “as fast as practical and appropriate”. It will have to undertake work on its IT systems, international expansion and its pension deficit before the spin-off can occur.

Adam Crozier, chairman, says: “The board fundamentally believes this is the best course of action to optimise value for shareholders over the longer term and will ensure both Premier Inn and Costa are positioned well to thrive as independent companies.”

Costa coffee is the market leader in the UK, and the second largest coffee chain globally. There have also been calls for Whitbread to spin off Premier Inn, but Whitbread plans to retain ownership for now.

READ MORE: Whitbread to spin off Costa chain as a separate firm

Amazon teams up with Volvo and General Motors for car delivery

Amazon has signed a partnership with General Motors and Volvo that will enable it to deliver packages to the boots of people’s cars.

The service makes use of connected technologies found in many modern cars, allowing couriers to access a vehicle and leave a delivery inside. It is currently rolling out in 37 cities in the US, but will only be available to Amazon Prime subscribers and those with GM or Volvo cars with a model year of 2015 or newer and with active GM OnStar and Volvo on Call accounts. There are also package weight, size and value restrictions.

The move comes after the success of Amazon’s in-home delivery service, which used smart locks and a cloud-connected camera to give its couriers access to people’s homes to deliver packages even if they aren’t in.

“We were really happy with the response to in-home delivery,” Peter Larsen, vice president of delivery technology at Amazon, told The Verge. “What we wanted to do — and it was part of the plan all along — is how we take that beyond the home.”

READ MORE: Amazon will now deliver packages to the trunk of your car

TSB online banking back up and running but bank faces scrutiny over what went wrong

TSB’s mobile app and online banking service are both back up and running after they went down due to a botched IT upgrade and possible data breach. The IT meltdown meant TSB’s five million customers were unable to access their accounts online, leading to concerns that payments would not go through and customers could go overdrawn.

But CEO Paul Pester tweeted at 4.30am: “Our mobile banking app and online banking are now up and running. Thank you for your patience and for bearing with us.”

The issue has left the bank and its boss facing intense scrutiny from the government, customers and regulators. TSB has pledged that no customers will be left out of pocket, but the Financial Conduct Authority and Information Commissioner’s Officer are in contact with the bank, while the Treasury Committee has written to Pester to seek answers.

READ MORE: TSB digital banking back online after daylong upgrade failure

Half of marketers still unaware of full implications of GDPR

With just a month to go until the deadline for GDPR compliance, half of marketers are still not aware of the full implications of the new data regulations and have major knowledge gaps.

According to a survey of marketers at major brands by the WFA, while 98% of respondents now believe that marketers in their organisation are either aware or actively working on GDPR, up from 76% in the last survey in July 2017, just 41% think their organisations are fully aware of the implications of GDPR on future marketing campaigns. 52% believe there are still major knowledge gaps.

Nevertheless, marketers are among the most engaged on GDPR. 95% say implementing GDPR is important for their organisation, with 70% describing it as “critically important”. The top three priorities are reviewing procedures to handle individuals’ requests related to their personal data; reviewing third parties such as agencies; and reviewing and updating record of data processing activities.

To do this, nine in 10 companies are carrying out internal training or communications and half are planning to recruit more data protection specialists or get external help.

“GDPR is challenging marketers and indeed many other roles to change their data culture and their systems of managing consumer data. But GDPR represents a great opportunity to adopt a mindset of ‘people first’ rather than ‘data first’ across the entire organization. Adopting a more respectful approach to personal information can only build trust,” says Stephan Loerke, CEO at the WFA.

Digital ad spend hits record high as smartphone use booms

Digital ad spend hit a record high of £11.55bn in 2017, driven by an increase in mobile as advertisers followed consumers onto their smartphones.

The latest figures from the Internet Advertising Bureau (IAB) UK and PwC show advertisers spend £5.2bn more on smartphone ads last year. That makes mobile the fastest growing online ad format and means it now accounts for 45% of total digital ad spend, up from just 9% five years ago. And with smartphones now accounting for 59% of consumers’ online time, the IAB suggests there is room for more growth.

“People are spending more time online – specifically on smartphones. Digital has led to a change in consumer behaviour as people use their smartphone for a wider variety of things, be it listening to podcasts, learning a new skill or following stories on the likes of Snapchat and Instagram,” says IAB UK’s chief digital officer Tim Elkington. “The ad community has responded to this change – particularly the growth of mobile and video – by developing dynamic ad products that fit seamlessly into their environment.”

Video ad spend also saw big growth, rising 69% year on year to £1.17bn across phones, computers and tablets. 73% of that spend goes on smartphones. Social media spend was up 38% to £2.39bn – or £1 in every £5 – while in-feed advertising rose 9% to £950m.

The increases come despite growing concerns among some advertisers about issues such as brand safety, measurement and viewability on digital.

Elkington acknowledged, “There have been growing pains within the industry so we’re focused on building a sustainable future for advertising through initiatives such as the IAB Gold Standard, which aims to reduce ad fraud, improve the digital ad experience and increase brand safety. These and other industry initiatives clearly indicate the desire for the whole sector to work together to address the key issues.”

GoCompare agrees to ad watershed over concerns it could encourage children to eat coins

A GoCompare ad that features a small animated monster eating cash has been hit with a 7.30pm watershed after it was accused of encouraging children to swallow coins.

In the ad, the monster, known as ‘Monster Bill’, is seen rifling through a women’s purse and then eating her cash. A neighbour explains the monster is her home insurance bill, exclaiming ‘It’s eating all your money’.

GoCompare says the aim of the ad was to depict the annoyance of a home insurance renewal notice in a comedic and fantastical manner, using a fictional character to demonstrate the negative potential impact of not shopping around for a good deal. However, a complainant had challenged whether the ad would encourage children to emulate the monster’s behaviour after their four-year-old child swallowed coins after watching the ad.

While GoCompare points out that the monster swallows fake paper ‘vouchers’ rather than coins, the company says it is concerned by the complainants experience and would apply a restriction so the ad is not transmitted during or adjacent to programmes aimed at or likely to appeal to children under 16.

The ASA went one step further, ruling that the ad can only be shown after 7.30pm.

Tuesday, 24 April

European Commission probes Apple’s Shazam deal

Apple’s planned acquisition of UK music recognition app Shazam is being investigated after seven countries asked the European Commission to review the deal.

The European Commission said an initial probe found the tech giant may encourage Shazam users to switch to its music streaming service following a takeover, meaning a merger could have a negative effect on competition.

Shazam lets users identify songs via their smartphone and already offers links to buy songs from Apple’s iTunes, which along with advertising is how Shazam generates revenue.

Apple announced in December that it intended to buy Shazam for $400m, making it its biggest deal since it acquired headphone maker Beats for $3bn in 2014.

READ MORE: Apple’s Shazam deal faces European probe

Profits soar for Google-owner Alphabet as it shrugs off GDPR concerns

Google memo

Profits at Google-owner Alphabet rocketed by 73% during the first three months of 2018, as revenues from advertising increased rapidly.

Net income rose to $9.4bn (£6.7bn) during the quarter, up from $5.4bn during the same period last year. Revenue, meanwhile, jumped 26% to $31.1bn from $24.8bn.

These figures were boosted by a $3bn change to accounting rules, as well as a $1.1bn uplift from currency exchange movements.

The strong results beat analyst expectations, many of whom thought rising costs and regulation could undermine the search giant’s performance.

Investors have raised concerns about the impact of the EU General Data Protection Regulation (GDPR) going forward, given people will have more control over their data and may choose to reject personalised ads online, which would hit Google’s sales. But Google boss Sundar Pichai has played down these fears.

“GDPR is a fairly new public topic, but for us it is not new – we started working on it 18 months ago,” he said.

“We are working very closely with our publishers and our partners… It is a big effort, we are very committed to it and to getting it right.”

READ MORE: Google owner Alphabet sees profits soar

Co-op’s Nisa deal approved by the competition watchdog

Coop

The Co-operative Group’s £137.5m takeover of corner shop chain Nisa has been approved by the UK’s competition watchdog.

The Competition and Markets Authority (CMA) launched an investigation but no concerns were raised about the proposed tie-up.

A number of Nisa members tried to block the deal last year but it was approved by the brand’s shareholders in November.

READ MORE: Competition watchdog backs Co-op’s £137.5m takeover of Nisa

YouTube removes 8.3 million videos in three months as it responds to criticism

YouTube removed 8.3 million videos that breach its community guidelines between October and December last year, as it tries allay fears and curb the spread of objectionable content on its site.

The video sharing platform, a subsidiary of Google-owner Alphabet, is coming under increased scrutiny over its perceived inability to tackle extremist and abusive content, with many high profile advertisers pulling spend as a result. It is also under pressure from national governments and the EU to remove such videos.

YouTube said 6.7 million videos were initially flagged for review by machines and of those, 76% were removed before they received a single view.

It shared these results in its first quarterly moderation report, which YouTube believes is an important step in addressing the problem as it helps to “show the progress we’re making in removing violative content from our platform”.

It said in a blog post that the majority of videos it removed were spam or people attempting to upload adult content and “represent a fraction of a percent of YouTube’s total views during this time period”.

READ MORE: YouTube reveals it removed 8.3m videos from site in three months

Vodafone voted the UK’s worst mobile provider

Vodafone

Vodafone might be the UK’s most valuable brand, but it is also the nation’s worst performing mobile network, according to consumer group Which?.

It is the seventh year running the mobile giant has come bottom of the annual survey, which looks at how happy UK consumers are with their mobile operator.

Vodafone got a score of 49%, which is based on a combination of satisfaction and likelihood to recommend to a friend. It was the only brand to score below 50%.

EE did share the bottom spot with Vodafone last year but with a score of 56% moved up one place this year.

At the other end of the spectrum, energy and communications company Utility Warehouse is the provider with the happiest mobile customers.

Giffgaff, which is owned by O2 parent company Telefonica, came second with 81%, while Sky Mobile, which launched at the beginning of last year, ranked third with a score of 79%, followed by Asda Mobile (77%) and Tesco Mobile (75%) which make up the rest of the top five.

READ MORE: Vodafone named UK’s worst mobile phone provider by Which?

Monday, 23 April

Google

Health Secretary takes swipe at social media giants

Health Secretary Jeremy Hunt has warned social media companies they could face tough new laws if they fail to do more to protect children online.

In a letter, Hunt accuses companies including Facebook and Google of “turning a blind eye” to their impact on children and gives them a deadline of the end of April to outline action they will take to cut underage use, prevent cyber bullying and promote healthy screen time.

He writes: “I fear that you are collectively turning a blind eye to a whole generation of children being exposed to the harmful emotional side effects of social media prematurely.”

Hunt also expresses concern that thousands of users are breaching the terms and conditions of social media by using such sites below the minimum user age of 13 as set by Facebook, Instagram, Twitter, Snapchat, WhatsApp and YouTube.

In response, both Google and Facebook say they share Hunt’s commitment to safety.

READ MORE: Jeremy Hunt threatens social media with new child-protection laws

Money guru Martin Lewis sues Facebook over fake ads

TV presenter and money-saving expert Martin Lewis is suing Facebook for defamation after the social media site published dozens of fake adverts featuring his face and name.

Lewis claims Facebook failed to prevent or swiftly remove false advertising that as a result has tarnished his reputation and tricked victims into “get rich quick” scams. Many of these schemes relate to Bitcoin Code or Cloud Trader, which were reportedly operating as fronts for trading firms based outside the EU.

The founder of MoneySavingExpert.com claims he was receiving five messages a day from people saying, ‘I’ve just seen your Bitcoin ad and wanted to check it’. On one occasion a woman reportedly spent £100,000 in a scam with Martin Lewis’ name attached to the advertising.

Lewis claims Facebook failed to stop the ads despite his complaints and repeated attempts to remove them. He confirmed any damages won will be donated to charities committed to combating fraud.

READ MORE: Martin Lewis sues Facebook over fake ads with his name

Luxury brands slammed for hidden supply chains

Chanel

Luxury brands including Christian Dior, Dolce & Gabbana and Chanel are among the least transparent businesses when it comes to labour conditions in their supply chains, according to a new report.

Christian Dior discloses virtually nothing about where its clothes are made, according to the Fashion Transparency Index, which also scores Dolce & Gabbana, Chanel, Marc Jacobs, Versace and Giorgio Armani with less than 10% of the total available points.

Matalan, Sainsbury’s Tu and Sports Direct emerge as the least transparent British brands, with Marks & Spencer and Asos the best performing UK businesses. Overall, the most transparent companies are sportswear brands Adidas, Reebok and Puma.

The Fashion Transparency index ranks brands based on how open they are about where their clothes are made, who is responsible for conditions in their supply chain and how they deal with trade unions.

The findings are published by campaign group Fashion Revolution, which was set up in response to the collapse of the Rana Plaza garment factory complex in Bangladesh in 2013, which killed more than 1,100 workers.

READ MORE: Luxury fashion brands under fire for hidden supply chains 

UK ad viewability hits record high

UK ad viewability levels have hit their highest level since records began in 2014, according ad verification firm Meetrics.

During the first quarter of 2018, the proportion of banner ads served that met minimum viewability guidelines rose from 56% to 59%, the first time levels have risen for four consecutive quarters. Ads are deemed viewable if they meet the IAB and Media Ratings Council’s recommendation that 50% of the ad is in view for at least one second.

Meetrics CEO Max von Hilgers also reports a drop in the number of impressions, suggesting campaigns are being placed more carefully and optimised towards viewability.

However, despite a rise to 59% viewability the UK still ranks fifth among the seven other European countries measured by Meetrics, with Austria leading the way (71%) and Switzerland at the bottom of the pack (50%).

Wayne Rooney turns teacher for Premier League Primary Stars campaign

Wayne Rooney is joining forces with a host of famous footballers on a new campaign to support the Premier League’s primary school education programme, Premier League Primary Stars.

In the first of three films, Rooney and his Everton teammates Theo Walcott and Davy Klaassen teach a surprise Maths lesson to a group of primary school children. Meanwhile Stoke City striker Peter Crouch takes on the role of a PE teacher and Newcastle United manager Rafa Benitez teaches an English lesson with players from his current squad.

The star-studded ‘Best Lesson Ever’ campaign is aimed at driving deeper levels of engagement among parents and teachers, resulting in the media spend being focused on YouTube, Facebook and Instagram alongside digital display, skins and search. The Premier League has also entered into media partnerships with Bauer Media’s Magic Radio and regional network, as well as parenting network Mumsnet.

The new campaign is designed to build on the previous Premier League Primary Stars marketing campaign that ran across TV, cinema, radio, digital and social media during spring and autumn in 2017. The campaign engaged 15,000 schools in its first year, exceeding the original target of reaching 10,000 schools in three years.

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