BT, Tesco, Fiat: 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.

BT

BT boss Gavin Patterson to step down this year

BT’s chief executive Gavin Patterson will step down later this year after five years in the role and more than 14 years at the telecoms giant.

Jan du Plessis, chairman of BT, thanked Patterson for his contribution but says the company needs a change in leadership.

“The board is fully supportive of the strategy recently set out by Gavin and his team,” he adds.

“The broader reaction to our recent results announcement has though demonstrated to Gavin and me that there is a need for a change of leadership to deliver this strategy.”

Patterson, who will remain in the role until a replacement is found, says: “It’s been an honour to lead BT since 2013, and serve as a member of the board for the last 10 years. Throughout that time I’ve been immensely proud of what we’ve achieved, in particular the transformation of the business in recent years with the launch of BT Sport, the purchase and integration of EE, and the agreement to create greater independence for Openreach.

“BT is a great business and with the new management team I’ve recently put in place, is I believe very well positioned to thrive in the future.”

READ MORE: BT chief executive Gavin Patterson to leave later this year

Tesco CEO blames high business rates for retail struggles

Tesco’s chief executive Dave Lewis says expensive business rates have played a “large part” in the collapse of some of the UK’s biggest retailers and has called for “fundamental reforms” to the “archaic” system.

Speaking to the BBC, Lewis said: “Are we allowing it to stay competitive, or are we by stealth lowering corporation tax and increasing business rates to a place which is creating an uneven playing field and forcing people to think about how it is they avoid that cost and find other routes to the market?

“You need a level playing field … between an online digital world and a traditional retail store base model like the one we have.”

Tesco spends more than £700m a year on business rates – the biggest tax the supermarket pays.

Lewis also accused ministers of ignoring retail and the food industry in the government’s industrial strategy.

READ MORE: Tesco boss blames business rates for retail woes

May’s high street sales drop to 12-year low

High street sales in May slumped to a 12-year low, down 2.2% year-on-year, making it eight months since in-store like-for-like sales have grown 1% or more.

During the third week of the month, which played host to the Royal Wedding on 19 May, there was a 5.1% year-on-year drop in in-store sales of discretionary items, figures from BDO’s High Street Sales Tracker reveal. The lifestyle sector was down 3.8% for the month, while homeware retailers were down 15.2%.

Sophie Michael, head of retailer and wholesale at BDO, says the volatility and unpredictability of consumer spending patterns are making it increasingly difficult for retailers to identify trends and act accordingly.

She adds: “Whether it’s falling discretionary income, unexpected weather or a growing preference to spend on experiences, the result is creating growing challenges on the high street which are clearly affecting retail performance.”

READ MORE: High street delivers worst performance in 12 years as retail crisis deepens

Channel 4 and BT launch new ad campaign

Channel 4, in partnership with BT, has unveiled a bespoke advertising campaign starring Clare Balding, George Clarke and Simon Rimmer.

Launching tonight at 8pm during George Clarke’s Amazing Spaces on Channel 4, the ads build on BT’s brand new ‘Be There’ campaign, with each story sharing how the use of communication technology has delivered “meaningful personal moments” in their lives.

The creative campaign will air across Channel 4’s portfolio of channels through to the beginning of next year, as well as 4Sales’ partner channels including UKTV’s portfolio, BT Sport, Box TV brands and PBS America.

It is the first time 4Sales has launched a BT brand partnership and builds upon previous work including the launch of the brand’s Champions League coverage and Family Sim Mobile campaigns.

Zaid Al-Qassab, BT’s chief brand and marketing officer, says: “Using Channel 4 personalities to tell their stories about technology helping them be there for the moments that matter is a perfect way to bring to life what our brand is all about.’’

Fiat takes car into the cinema for the first time

Fiat has launched an immersive, largescale cinema campaign to promote its Fiat Tipo range, that will see it bring a car into the cinema foyer for the first time.

Set to run for a period of three months, Fiat has collaborated with Cineworld, Starcom and Digital Cinema Media (DCM) in an effort to target a family audience in the cinema environment through a shareable, interactive experience.

Working with creative agency Flying Object and Magic Camera – the model makers who have designed sets for a number of Hollywood films – the car’s interior and boot will be filled with a model landscape including volcanoes, helicopters, mysterious statues, giant ants.

Cinemagoers will be able to to become part of the scene by poking their head through the car window and posing as a monster looming over the miniature world.

Kate Barrett, Fiat’s brand communications manager says: “We wanted to stand out and push the limit of how people see the Fiat Tipo. Through an engaging experience that brings our unique proposition to life, we hope to shift people’s focus to highlight the Tipo’s key qualities while sparking conversation and driving brand difference.”

Thursday, 7 June

World Cup Russia2018

World Cup to boost global ad spend by $2.4bn

The World Cup, which is set to get under way in Russia in a week’s time, will add $2.4bn to global ad spend this year, according to Zenith. In the UK, it will account for an extra £40m, taking into account both the extra money spent by advertisers seeking to reach World Cup audiences and reductions by advertisers looking to avoid this competitive period.

Zenith says the opportunities lie both in the size of the audience – typically 3.5 billion people from 200 countries tune in to watch – and the demographics, with the World Cup attracting young, upmarket and mobile consumers, typically hard to reach on TV. There is also an opportunity in social media, as brands seek to join the conversations around the games, as well as in increased traffic to news and sports sites, more internet searches and higher sales of newspapers.

China is expected to see the biggest increase in dollar terms, with the World Cup generating $835m in extra ad spend, or 1% of the entire market. Host nation Russia will also benefit, seeing a $64m boost, equal to 2.1% of ad expenditure in 2018.

“The World Cup provides a reliable boost to the global ad market every four years, and will be responsible for 10% of all the growth in ad dollars this year,” says Jonathan Barnard, Zenith’s head of forecasting and director of global intelligence. “This year’s tournament will showcase the brand-building powers of both traditional television and social media.”

Instagram considers move into longer-form video content

Instagram

Instagram is reportedly set to make a move into longer-form video content as it looks to attract more creators to the platform and up ad revenues. According to a report in TechCrunch, Instagram has been meeting with social media stars and content publishers to bring content such as scripted shows and music videos to the platform, although it is not looking to make a move into TV shows.

The move would see the length of video increase from the current limit of 60 seconds, with most content expected to be between five and 15 minutes. An announcement with launch partners is expected at the end of the month.

Offering longer content would enable Instagram to provide a new way for advertisers to reach its growing audience. While details of an ad offering haven’t been finalised, it could introduce pre-roll or mid-break ads as it has done on Facebook. There is also the opportunity to allow content creators to feature a link that could drive traffic to a website or ecommerce store.

READ MORE: Instagram plans to launch Snapchat Discover-style video hub

House of Fraser to close 31 stores in rescue deal

House of Fraser is planning to close 31 stores, including its flagship on Oxford Street, as part of a deal aimed at saving the struggling high street retailer.

If approved, the plan would result in the loss of 2,000 jobs at the retailer, as well as 4,000 brand and concession roles. House of Fraser needs the approval of 75% of its creditors to be able to go ahead with the plan. The stores scheduled for closure will stay open until early 2019.

House of Fraser chairman Frank Slevin says: “The retail industry is undergoing fundamental change and House of Fraser urgently needs to adapt to this fast-changing landscape in order to give it a future and allow it to thrive.

“Our legacy store estate has created an unsustainable cost base, which without restructuring, presents an existential threat to the business.”

House of Fraser is not the only retailer struggling to stay afloat amid mounting challenges on the high street. The future of discount retailer Poundworld is in doubt as the company struggles to find a buyer.

Alteri Investors was in advanced talks with Poundworld’s owner TPG but has now pulled out, according to Sky News. Meanwhile, US firm Flacks has also wound down its interest, although the chain’s founder Chris Edwards could still bid for the company.

Poundworld has 355 stores and employs 5,300 people. At least 100 of those outlets are under threat of closure if a buyer cannot be found. The discounter has been hit by falling consumer confidence and the weaker pound driving up the cost of imports.

The FA unveils new branding for women’s football

FA women's football

The FA has unveiled new branding for the top four tiers of women’s football as it looks to unify the sport and offer a more consistent brand experience. Created by brand studio Nomad, the tiers include the Super League, Women’s Championship, Women’s National League – northern and southern premier division, and National League, which will have four divisions.

The branding will be visible across all digital and physical facets of the leagues from the start of the 2018/19 season. The hope is that it will help attract both fans and brands to the game.

Marzena Bogdanowicz, the FA’s head of marketing and commercial for women’s football, says: “It was really important for us to create a new brand identity that is dynamic, modern and has a broad audience appeal that also unifies the top four tiers of the women’s game. Throughout the process we listened to the feedback we received from players, clubs and supporters and we’re confident we have an identity that will resonate with both the current audience but also to the next generation of fans.”

Sainsbury’s puts focus on digital customer experience with new chief digital officer role

Sainsbury’s has promoted its online director Clodagh Moriarty to the newly-created role of group chief digital officer as it looks to develop a digital strategy across its Sainsbury’s, Argos, Sainsbury’s Bank and Nectar businesses. The new role will see Moriarty join the retailer’s operating board and gives greater importance to the role of the digital customer experience.

Moriarty has been as Sainsbury’s for eight years, most recently running its online grocery operation. She has introduced same-day and one-hour delivery, as well as its SmartShop service that lets customers scan products themselves.

Sainsbury’s group CEO Mike Coupe says: “The creation of the new group chief digital officer role demonstrates the importance we place in giving customers outstanding and seamless digital shopping experiences. Investment in this area is vital to our future success.”

Wednesday, 6 June

sky

Rivals cleared to buy Sky leading way for bidding war

The government has cleared two rival bids for Sky sparking the prospect of a multibillion-pound bidding war over the media company.

Matt Hancock, the culture secretary said yesterday he would approve 21st Century Fox’s £18.5bn bid for Sky if it sold Sky News to Disney, or another third party, and could ensure at least 10 years of funding.

He also approved a rival bid of £22bn by Comcast, the US broadcast cable giant as the deal did not raise any concerns over public interest. 

Fox is attempting to buy the 61% of Sky that it does not already own but the bid has raised concerns that it would leave media mogul Rupert Murdoch with too much control over the UK media.

Hancock’s decision came after a detailed report by the Competition and Markets Authority (CMA) on both bids .

READ MORE: Sky takeover: Murdoch must offload Sky News to get green light

Coca-Cola launches global World Cup campaign

Coca-Cola has unveiled its global FIFA World Cup campaign ‘Being Ready’, which has been two years in the making.

The campaign contains four TV ads, including ‘Stock Up’ to inspire football fans to purchase enough Coca-Cola before each match and ‘Ready For’, which sees Coke employees talk to the bottles and prepare them for the emotions they may experience during the World Cup.

The first ad, dubbed ‘Uplifted Alex’, sees the star of EA Sport’s FIFA ’18, Alex Hunter, sign a sponsorship deal with Coca-Cola to become the brand’s first virtual ambassador. Players of the game will be able to watch him shoot a commercial.

The campaign is supported by a special edition of Coca-Cola cans with the numbers 0 to 9 printed on them. The idea behind ‘Score Packaging’ is for fans to share predictions before each match with their friends on social media platforms.

Kraft Heinz reviews iconic salad cream’s name amid potential rebrand

Kraft Heinz is considering changing the name of Salad Cream to Sandwich Cream after research shows consumers mainly use it on sandwiches.

The food giant say it is reviewing the brand’s name after research found only 14% of consumers use the sauce on salads. Instead it is viewed as an alternative to mayonnaise, and generally used for sandwiches.

Joel Hughes, UK sauces brand build lead at Kraft Heinz, says: “We are reviewing the brand’s name to reflect how the product is enjoyed by consumers every day, and with the majority usage currently with sandwiches, we can confirm that ‘Sandwich Cream’ is one of the names being considered. There are consumers now who haven’t grown up with the brand in the household and just don’t know about the iconic zingy flavour, or what to eat it with.”

The company promises a decision by September on whether it will change the name after 104 years but is adamant the recipe will remain the same.

READ MORE: Salad Cream may be renamed Sandwich Cream

Former WPP chief Sorrell risks losing million-pound exit package

WPP CEO Sir Martin Sorrell

Martin Sorrell risks losing his multimillion pound exit package from WPP if he breaches a confidentiality agreement that restricts what he can say about his former company.

Sorrell outlined plans last week to build a new marketing and communications company called S4 Capital, however the WPP board has been advised by its law firm that the ex-CEO would be in breach of his exit agreement if he shared any of his knowledge about the group while creating the new venture.

The ad industry veteran is understood to be committing £40m of his own money to S4 Capital, with institutional investors initially providing £11m to become shareholders.

Sorrell was the longest-serving FTSE-100 executive with 33 years running the world’s biggest advertising group but was forced to step down when the firm hired a law firm to investigate allegations of improper behaviour.

The 73-year-old denied the allegations but in a letter to WPP staff published when he departed, he said the “current disruption” was “putting too much unnecessary pressure on the business”. WPP discontinued the investigation after Sorrell quit.

READ MORE: Sorrell could lose millions if he breaks WPP confidentiality clause

Finance watchdog to investigate TSB over IT outage and warns it could have damaged industry

TSB

TSB has been criticised for its response to the IT outage by the Financial Conduct Authority (FCA) which warns that the bank’s poor communication may have hit customers’ trust in banking.

The watchdog will investigate the April computer failure which caused up to 1.9 million people to lose access to online banking services such as making transactions and viewing balances.

The Financial Conduct Authority (FCA) said the bank’s boss, Paul Pester, had given an “optimistic view” of services. FCA chief executive Andrew Bailey says: “We do not normally make this information [the investigation] public, but given the level of public interest, I want to be clear that we will be conducting this work.”

Nicky Morgan, chair of the committee, says: “I am deeply concerned by TSB’s poor communications about the scale and nature of the problems it has faced; by its response to customer fraud; and by the quality and accuracy of the oral and written evidence provided by Dr Pester.”

Pester is due to appear before MPs for a second time on the crisis later today. “We continue to focus on doing whatever it takes to put things right for our customers, and ensuring that no customer will be left out of pocket as a result of the recent IT issues,” said a TSB spokesperson.

£ READ MORE: FCA to launch formal investigation into TSB’s IT failure

Tuesday, 5 June 

Starbucks digital

Starbucks boss quits coffee chain after 36 years

Starbucks executive chairman Howard Schultz is leaving the US coffee giant after 36 years.

Schultz officially retired as chief executive in December, but will now step down from the Starbucks board, which he has led since 1985, on 26 June.

His resignation comes a week after Starbucks closed more than 8,000 of its US coffee shops so staff could receive racial bias training after two black men were wrongfully arrested in April for trespassing in a Philadelphia Starbucks branch. Schultz described the incident as “reprehensible at every single level”.

Since starting out as director of operations and marketing in 1982, Schultz has overseen the global growth of the coffee chain from 11 outlets to more than 28,000 stores worldwide and seen the company’s share price increase by 21,000%.

Unafraid to take a stand, as CEO in January 2017 he pledged to hire 10,000 refugees globally over the next five years in response to Donald Trump’s proposed immigration ban. However, he was also in charge in 2015 when Starbucks launched it’s much mocked #RaceTogether campaign, which encouraged baristas to write the slogan on customers’ cups in a bid to spark conversations about race.

Schultz’s resignation has raised questions about his potential political ambitions after he refused to rule out running for president in an interview with the New York Times.

READ MORE: Starbucks boss leaves firm after 36 years 

Apple reveals plans to cure ‘smartphone addiction’

Apple is tapping into the trend for digital wellbeing with the launch of a range of apps to help cure “smartphone addiction”.

Speaking at the Apple Worldwide Developers Conference 2018 yesterday, the smartphone giant responded to fierce criticism that its products are harming children’s mental health by creating a suite of apps intended to limit time spent on iPhones, restrictions that can be set by parents.

The tools are designed to warn iPhone and iPad users if they are spending too much time on their devices, while the new iOS 12 operating system will also have a timer to lock users out of apps after a set period. In addition there will be a new ‘do-not-disturb setting’ that helps prevent the distraction of constant notifications popping up on your phone.

Apple also waded into the data privacy debate, appearing to take a swipe at Facebook with the launch of a new feature on its web browser Safari that will alert users when a plugin such as the “Like” or “Share” buttons are being harnessed to track the user online and mine their data.

READ MORE: WWDC 2018: Apple brings out timer to cure ‘smartphone addiction’ for iOS 12, Memojis and group Facetime

More jobs at risk as Mothercare considers closing Children’s World subsidiary

Mothercare

A further 300 Mothercare employees risk losing their jobs after creditors rejected a plan to save part of the struggling retailer’s business.

The baby products specialist said rent reduction proposals for Children’s World, a subsidiary that houses 21 of its stores, had been turned down following a vote by landlords.

Mothercare confirmed it would now consider all options for the subsidiary, including shutting the stores. Children’s World employs a total of 336 people.

The news comes shortly after Mothercare agreed a deal with creditors to close 50 underperforming stores, including Early Learning Centre shops, with the potential loss of 800 jobs.

These closures will take place through a company voluntary arrangement (CVA), whereby the business has agreed to close loss-making shops in exchange for rental discounts. However, its specific plans for Children’s World were rejected by creditors.

Mothercare’s store closure programme is part of a wider restructuring plan that will see the business receive a refinancing package worth up to £113.5m.

READ MORE: Children’s World setback puts 300 Mothercare jobs at risk

Superdrug teams up with Three to launch mobile service for members

Three is teaming up with Superdrug on the launch of a new mobile service targeted at the beauty retailer’s 12 million loyalty card members.

Superdrug Mobile will offer exclusive deals for members of Superdrug’s Health and Beautycard Loyalty scheme. There is no contract and customers receive unlimited calls and texts, as well as 4GB of data for a monthly cost of £10.

Available across Superdrug’s 807 UK stores and online from 20 June, Superdrug Mobile customers will also receive double loyalty points on all Superdrug purchases.

Three describes the deal as part of its “multi-brand strategy” to incrementally target segments that are “not specifically the focus of the Three brand”.

“We are very excited about Superdrug Mobile which is a great example of an already strong brand further strengthening its customer engagement model through a mobile offering,” explained Three director of wholesale, Lynda Burton.

“We worked closely together on the complex task of integrating their loyalty scheme into a mobile offering to deliver a great product.”

Tia Maria signs partnership with Virgin Atlantic

Tia Maria

Tia Maria has signed a deal to offer its coffee cocktails on Virgin Atlantic flights in a bid to engage trade and consumer audiences.

Running throughout June, the partnership will see Tia Maria’s Espresso Martini and Tia & Tonic drinks served during five upper class transatlantic flights, while the Tia & Tonic will also be available in premium economy. On some flights drinks will be served by in-flight bartenders and mixologists.

While the cocktails will only be on offer to around 400 passengers on the flights, Tia Maria’s advert will be aired ahead of every entertainment feature, reaching a potential audience of 600,000 passengers. The Tia Maria Coffee Cocktails menu is also being made available at nine Virgin Atlantic Clubhouse Lounges worldwide.

“As the trend for coffee cocktails continues to grow our partnership with Virgin Atlantic is well-timed to tap into this and reach a new audience of coffee lovers,” said Gemma Monaghan, Tia Maria on trade marketing manager.

“With more than 2,000 daily Virgin Atlantic Clubhouse Lounge customers, there is a huge opportunity to drive awareness.”

Monday, 4 June

Vauxhall champions British roots in new campaign

Vauxhall is celebrating its British roots through its latest campaign which champions its Astra model’s heritage and credentials.

Titled the ‘True Brit’, the campaign makes reference to the home of the Vauxhall Astra Sports Tourer, Ellesmere Port which has been making successive versions of the British-built car for more than four decades.

According to the car manufacturer, the campaign embodies Vauxhall’s new “confidently British” attitude which will be exploited and defined in all communication going forward.

A stalwart on the British roads, one in four Brits has either owned or driven a Vauxhall Astra.

Stephen Norman, group managing director, Vauxhall Motors and Opel Ireland, says: “Over the course of the next few weeks and months, people will witness a distinct change in how we communicate. The Vauxhall Astra has been one of Britain’s best-selling and loved cars for almost four decades. Our campaign demonstrates our confident British attitude in an innovative and creative way.”

The campaign will launch across digital, social, press, point-of-sale and out-of-home.

Fresh crackdown on junk food advertising in supermarkets

junk food

The UK government is considering banning two-for-one junk food deals as well as the sale of sweets at supermarket checkouts across the nation, in its latest move in the fight against childhood obesity. Unlimited refills on sugary drinks at eateries are also expected to be reviewed.

The government has proposed a 9pm watershed for adverts showing foods high in sugar and salt, which has been criticised by the industry. While ministers are said to be considering canning the use of cartoon characters and celebrities in promoting junk food.

The move follows the release of sobering statistics which revealed half of television food and drink adverts seen by children are for HFSS products or fast food chains. This is despite the fact junk food advertising during children’s programmes has been banned since 2007.

READ MORE: Junk food deals and adverts face fresh restrictions

Amazon faces employment case over drivers’ rights

amazon prime

A trade union is launching legal action against Amazon on behalf of delivery drivers working at three firms used by the retail giant.

According to the union (GMB), drivers are fighting for better employment rights because the firms “used the bogus self-employment model to wrongly deny” holiday pay and national minimum wage to delivery drivers.

It also suggests staff were underpaid and worked excessive hours to meet their delivery quota.

Reports suggest one driver was so exhausted he was driving “half-asleep at the wheel”.

“The day-to-day reality for many of our members who deliver packages for Amazon is unrealistic targets, slogging their guts out only to have deductions made from their pay when those targets aren’t met and being told they’re self-employed without the freedom that affords,” GMB general secretary Tim Roache says.

An Amazon spokesperson claims delivery providers are contractually obligated to ensure their drivers receive the national living wage and are expected to pay a minimum of £12 per hour, follow all applicable laws and driving regulations and drive safely.

READ MORE: Union to take Amazon to court over driver rights

House of Fraser enters battle for financial rescue

House of Fraser

Struggling department store House of Fraser has dismissed claims it is on the brink of collapse, with its CEO insisting the firm is on the road to recovery.

The retailer said it is “inaccurate and unhelpful” to suggest it is struggling to secure the support of its banks.

House of Fraser is currently seeking a company voluntary arrangement (CVA) which would allow it to restructure its store portfolio and avoid administration, as part of which the chain could be forced to close more than half of its 59 stores putting 17,000 jobs at risk.

C.banner, the owner of toy shop Hamleys, has agreed to buy a majority stake in House of Fraser.

“If we are to deliver a sustainable, long-term business supported by new liquidity then we need to make difficult decisions about our underperforming legacy stores,” said chief executive Alex Williamson.

He said the current “inaccurate speculation” was feeding “ongoing uncertainty for my colleagues”.

READ MORE: House of Fraser rejects collapse reports

British Gas to feel financial pinch of price cap

British Gas is predicted to cop the brunt of the UK government’s crackdown on energy prices put forward by the regulator and ministers who claim they will end “rip off” energy tariffs.

Britain’s largest energy supplier is predicted to lose £300m of its earnings as a result of the crackdown while rival SSE is also in the firing line.

According to AB Bernstein’s calculations share prices for British Gas’ parent company Centrica could fall by as much as 28%.

A spokesperson for the company says: “We continue to believe price caps can damage competition and result in poor outcomes for customers. However, we are now reviewing the document in more detail and welcome the opportunity to engage constructively with Ofgem through the consultation process.”

READ MORE: British Gas to feel £300m burn of price cap

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