M&S, Airbus, Intel: 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.

M&S and Microsoft launch strategic partnership

Marks and Spencer (M&S) and Microsoft have signed a strategic partnership focused on testing the integration of Microsoft AI technologies into the retailer’s customer experience, stores and wider operations.

As part of the partnership the pair will work closely together to explore how technologies such as AI can be used within the retail environment with the aim of improving customer experience and optimising operations.

The move is part of M&S’s wider drive to become a fully digital-first business, also building on its ‘new technology’ approach which was announced earlier this year.

“We want to be at the forefront of driving value into the customer experience using the power of technology,” says M&S CEO Steve Rowe.

Microsoft UK’s CEO Cindy Roses adds that the company believes AI has the power to amplify human ingenuity.

“The retail sector is one of the most challenging landscapes in the UK right now and we are thrilled to be working with M&S to explore how AI can help such an iconic brand transform the customer experience and improve wider operations,” she says.

Sir David Attenborough says advertisers should pay for conservation

Sir David Attenborough is calling on companies to pay into a new wildlife conservation fund when they use animals in their advertisements.

The naturalist and broadcaster is now an ambassador for The Lion’s Share Fund – a new United Nations Development Programme (UNDP) – designed to urge advertisers to use some of their media spending to tackle conservation.

The fund aims to raise more than £75m a year by getting companies to contribute about 0.5% of any spending. The money will be invested in a range of wildlife conservation and animal welfare programmes run mainly by the UN.

Sir David says animals feature in 20% of all advertisements we see yet they don’t always receive the support they deserve.

“The Lion’s Share shows that by making a small difference today, we have an opportunity to make an unprecedented difference tomorrow,” he says.

Mars’s CMO Andrew Clarke, who is soon to become global president of Mars Wrigley Confectionery, says the company is urging other brands to join it by helping build a movement to tackle these issues.

He says: “The Lion’s Share is exactly the sort of ambitious initiative we need to take in order to ensure we foster a healthy planet on which everyone – including animals – can thrive.”

READ MORE: Sir David Attenborough backs animal welfare fund for advertisers

Airbus threatens to leave UK over ‘no-deal’ Brexit

Airbus is threatening to leave the UK if a “no-deal” Brexit goes ahead – meaning the nation would leave the European Union single market and customs union without a transition deal.

Currently the company employs more than 14,000 people at 25 locations across the UK including Bristol, Stevenage and Portsmouth. Britain also supports 110,000 jobs in the wider supply chain meaning a no-deal could have “catastrophic” consequences.

Prime Minister Theresa May has ruled out staying in the customs union, with the UK due to leave the EU on 29 March 2019.

Tom Williams, chief operating officer of Airbus Commercial Aircraft, says Brexit will have “severe negative consequences” for the UK aerospace industry and Airbus in particular before citing that immediate mitigation measures would need to be accelerated.

“While Airbus understands that the political process must go on, as a responsible business we require immediate details on the pragmatic steps that should be taken to operate competitively. Without these, Airbus believes that the impacts on our UK operations could be significant,” he adds.

It is understood Airbus also has 4,000 suppliers in the UK.

READ MORE: Airbus warns no-deal Brexit could see it leave the UK

Intel boss quits over relationship with employee

Intel’s CEO Brian Krzanich has stepped down over a “past consensual relationship” with one of the company’s employees.

The alleged relationship, which is currently under investigation, goes against the tech company’s strict fraternisation policy which applies to all managers.

He will also resign from Intel’s board of directors. Krzanich was named chief executive in 2013 after serving as chief operating officer. He will be temporality replaced by chief financial officer Robert Swan while the company searches for a permanent replacement.

Intel chairman Andy Bryant said in a statement: “The board believes strongly in Intel’s strategy and we are confident in Bob Swan’s ability to lead the company as we conduct a robust search for our next CEO. Bob has been instrumental to the development and execution of Intel’s strategy, and we know the company will continue to smoothly execute. We appreciate Brian’s many contributions to Intel.”

While details of the relationship remain unclear, reports suggest it happened some time ago.

READ MORE: Intel CEO Brian Krzanich quits over relationship with employee

UK ad spend to grow 4.2% this year

UK ad spend is predicted to grow 4.2% this year reaching £20.4bn, according to Dentsu Aegis Network’s annual forecast.

It also reveals global ad spend growth will climb from 3.3% in 2017 to 3.9% in 2018 which is higher than the 3.6% forecast in January 2018. This is likely due to a better than expected performance in the first quarter coupled with higher investment expectations around the FIFA World Cup.

Global events such as the Winter Olympics and the US mid-term elections also play a huge part.

In terms of regions, Asia Pacific and North America are experiencing the most growth – contributing 41% and 32% of the global increase respectively. While Western Europe accounts for 13% followed by Latin America (8%) and Eastern Europe (5%).

Meanwhile, the UK’s TV market outperformed expectations in the first quarter of 2018 with year-on-year revenues soaring to 5.1%. Video growth on the mobile first social platforms will be the biggest drivers of growth for digital with mobile (+24%), video (+16%) and social (+20%), all experiencing the highest increases year on year.

On a global scale, digital is expected to overtake TV for the first time to reach 38.5% of global share. TV accounts for 35.5%.

Thursday, 21 June

Fox set to accept Disney’s improved offer

Disney is set to win the ongoing bidding war for 21st Century Fox after it upped its offer to more than £54bn – a huge jump from its previous £39.8bn – for the entertainment company.

The new bid trumps its rival Comcast’s £49.4bn hostile offer tabled last week. Fox said in a statement the new Disney deal “is superior to the proposal” made by the American cable company earlier this month.

Rupert Murdoch, the executive chairman of Fox, says: “We are extremely proud of the businesses we have built at 21st Century Fox and firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace at a dynamic time for our industry.”

Dixons Carphone see 28% profit fall

Dixons Carphone has seen a 28% fall in annual profits as the retailer faces store closures, shrinking market and a hacking scandal.

Statutory pre-tax profits for the 2017/18 financial year fell to £289m, from £404m the previous year.

New chief executive Alex Baldock, who joined in April, says: “Recent events have underlined that we have plenty of work to do, and it will take time, but I’m even more confident than the day I took the job in our long-term prospects”.

The drop comes after the company admitted a huge data breach last week involving 5.9 million payment cards and 1.2 million personal data records. This came after Baldock revealed the retailer would close 92 of its stores in the face of a tricky market admitting “nobody is happy with our performance”.

READ MORE: Dixons Carphone sees big profits fall

Instagram launches standalone video app to rival YouTube

Instagram

Instagram has released a long-form video app which allow users to post hour-long clips, as the platform hits a billion monthly active users.

IGTV, which will sit within Instagram as well as outside, allows users to create and watch content exceeding the current maximum 60-second limit.

Kevin Systrom, Instagram’s chief executive and co-founder, wrote in a blog post: “Instagram has always been a place to connect with the people who inspire, educate and entertain you every day. With your help, IGTV begins a new chapter of video on Instagram. We hope it brings you closer to the people and things you love.”

Kim Kardashian, Kevin Hart and Selena Gomez are among the stars already on the platform which will most likely generate revenue through advertising that is then split with creators — much like YouTube.

CO2 shortage could hit beer supplies during World Cup

Britain is facing a shortage of beer as stocks of carbon dioxide used by the food and drink industry run low.

Wetherspoon, which has nearly 900 pubs across the UK, has said it will be forced to pull some beers and soft drinks from its menu if the nation’s CO2 stocks are not updated within the next few days.

A spokesperson for the pub chain, which has nearly 1,000 veues across the UK, says: “There’s a good chance that some drinks won’t be available very soon”.

Chicken and ready meals could also be affected with trade bodies already meeting with the government to work out a backup plan. The shortage comes as pubs and alcohol brands are expecting an influx of customers due to the World Cup and soaring temperatures across the UK.

READ MORE: CO2 shortage could hit UK beer and chicken supplies during World Cup 

Volkswagen Truck & Bus to be renamed Traton

VW

Volkswagen will rebrand its Truck & Bus division changing the name to Traton Group as it prepares to raise funds for global expansion.

The official name change is expected to come into effect by the third quarter and allows the business to become independent from its parent company ahead of a potential listing.

VW Truck & Bus CEO Andreas Renschler says: “The new name Traton is a major milestone on our road to become ‘global champion’ of the transportation industry. Traton provides us with more independence. It will further strengthen our group’s joint identity and uniqueness. The new name will also foster our visibility as the leading group for innovative transportation solutions. It will increase our attractiveness for new talents as well as for capital markets.”

The MAN, Scania, Volkswagen Caminhoes e Onibus and RIO brands will retain their identities under the new umbrella brand.

Wednesday 20 June 

Asos

Asos to stop selling feathers, silk, cashmere and mohair

Asos has pledged to stop selling products on its website which contain feathers, down, silk, cashmere and mohair by January 2019, as well as bone, teeth and shell.

The online fashion retailer – which has already banned fur, angora and other rabbit hair products – follows closely in the footsteps of H&M, Zara and Topshop, which announced they would stop selling mohair last month.

Elisa Allen, UK director of animal rights group Peta, says Asos’s decision reflects a “profound shift in public attitudes towards the rearing and killing of animals for fashion”.

She adds: “Consumers are changing the face of the industry by demanding that designers and retailers offer clothing and accessories that look beautiful without harming animals.”

READ MORE: Asos pledge to ban mohair, cashmere and silk from 2019

Ford and VW planning joint venture

Car rivals Ford and Volkswagen are investigating a number of joint projects, including the development of a range of commercial vehicles, in an effort to increase competitiveness and adapt to a “challenging” business environment.

“Ford is committed to improving our fitness as a business and leveraging adaptive business models – which include working with partners to improve our effectiveness and efficiency,” says Jim Farley, Ford’s president of global markets.

“This potential alliance with the Volkswagen Group is another example of how we can become more fit as a business, while creating a winning global product portfolio and extending our capabilities.”

Dr Thomas Sedran, head of Volkswagen Group strategy, says: “Markets and customer demand are changing at an incredible speed. Both companies have strong and complementary positions in different commercial vehicle segments already. To adapt to the challenging environment, it is of utmost importance to gain flexibility through alliances.”

The businesses say any strategic alliance will not involve any share swaps or cross-ownership deals, with developments to be shared in due course.

READ MORE: Ford and VW in talks about developing range of vans

UK advertising to surpass £20bn for the first time in 2019

UK advertising is expected to increase 6.1% to £19.9bn in 2018, up from £18.8bn in 2017, according to GroupM’s latest media and marketing forecasts. In 2019, it is set to grow 5.1% to surpass £20bn for the first time.

The UK remains the fastest-growing mature advertising market in the world, with growth matching the Asia-Pacific average rate. While sterling is worth 7% less today against the US dollar than it was at the time of the vote to leave the EU, the UK remains the world’s fourth-largest advertising economy in dollar terms.

The combination of fast-paced growth and scale sustains the UK as the third-largest contributor to GroupM’s global ad growth forecast in 2018, behind China and the USA.

“UK advertising investment is growing faster than the economy, defying Brexit chaos and bouts of consumer fatigue,” says Adam Smith, futures director, GroupM.

“One reason is colossal digitisation in media and in marketing practice, driving up competition, standards and innovation. Another is the scale of the tail. We must, however, beware of diseconomies of excessive specialism and short-termism. We need more technology but fewer technicians. Automation including AI must increase to liberate human brains for advertising strategy.”

Heineken targets retailers with ‘Dr Shop’ film series

Heineken has launched a new series of films offering advice to retailers through a fictional ‘retail guru’ called Dr Shop.

Each of the six videos focuses on the brand’s newly-launched category strategy – The Greenpaper – which claims retailers can unlock an incremental £670m in value for the off trade over the next three years.

“Category advice comms can often be perceived to be a little dry – but it shouldn’t have to be,” says Toby Lancaster, Heineken’s category and shopper marketing director.

“We wanted to shake things up and Dr Shop will do just that. From installing a gym in Raj’s shop, to initiating a rave by the fridges, Dr Shop’s advice has good intentions, but the fact is, it doesn’t have to be complicated.”

The Sun unveils World Cup campaign

The Sun has rolled out its World Cup campaign to mark the launch of its new online World Cup Hub.

Created by Pulse Creative and The&Partnership, the video campaign claims to be a “loud, proud ode to the UK’s love of football”, and will run across social, digital display, press, email and events for the duration of the tournament.

Features of The Hub include news from the England camp, videos, a dedicated fan zone and daily quizzes.

Tuesday, 19 June

p&g

P&G ramps up gender equality commitment

Procter & Gamble is stepping up its commitment to gender equality through a number of partnerships, through which it hopes to hire more female directors, while delivering a more accurate and positive portrayal of women in advertising.

Making the pledge at Cannes Lions yesterday (18 June), P&G chief brand officer Marc Pritchard said: “Gender equality is good for society and business. Some of P&G’s best performing brands have the most gender-equal campaigns – Always Like a Girl, SKII Change Destiny, Olay Live Fearlessly…as well as Tide, Ariel, Dawn and Swiffer, which show men sharing the load in household chores. It’s clear that promoting gender equality is not only a force for good, it’s a force for growth.”

As part of the drive, P&G will be joining the ‘Free the Bid’ movement, as it looks to bring more gender diversity to the teams behind its advertising. The world’s biggest advertiser has also committed to helping expand Free the Bid worldwide over the next three years in partnership with HP and Publicis Groupe to double the number of directors on the initiative and expand to 20 countries.

P&G will also be partnering with the The Queen Collective, which is run by actress Queen Latifah and her production company Flavor Unit and aims to accelerate gender and racial equality behind the camera, as well as Katie Couric Media, run by journalist Katie Couric, who was on the advisory board of #SeeHer, and is collaborating with major brands on content that reflects their mutual values and commitment to important issues.

The #SeeHer study by the Association of National Advertisers shows women and girls are inaccurately or negatively portrayed in 29% of ads and media activity. Women continue to be underrepresented internally too, with female execs accounting for just 32% of CMOs, 33% of chief creative officers and 10% of commercial directors.

This is despite the same study showing gender-equal ads perform 10% better in trust and 26% higher in sales growth.

P&G will also partner and co-host the first #SheIsEqual Summit on 28 September in New York during UN General Assembly Week. The event will bring together governments, private sector companies, and influencers from advertising, media and entertainment to share perspectives on gender equality, women’s economic empowerment, girls’ education and advocacy.

Pritchard added: “We are committed to do our part with meaningful actions to advance gender equality in advertising, media and the creative pipeline in the next five years. We also know no company can do it alone, so we hope to inspire others to be agents of change to accelerate momentum.”

AB InBev trials first blockchain-enabled campaign

Budweiser
Budweiser is one of the beer brands owned by AB InBev.

AB InBev has launched its first blockchain-enabled ad campaign to see whether the technology can make measurement more transparent.

The mobile campaign for Budweiser, Bud Light, Michelob Ultra, Limeatrita and Estrella is being run through mobile advertising platform Kiip.

Data such as impression, engagement, time stamps, creative and price are all written to the Ethereum blockchain, which the brand can download and review every hour.

READ MORE: AB InBev Puts Beer on the Blockchain With Summer Mobile Campaigns

YouTube launches subscription service in UK

youtube

YouTube has launched its music and video subscription service in the UK, following its US release earlier this year.

YouTube Premium offers customers ad-free content that can be be downloaded as well as streamed, alongside exclusive music and videos. YouTube Music, a new app, is also available.

The music app alone costs £9.99 a month, and is priced similarly to competitors such as Spotify and Apple Music, but the overall subscription, including video content, is significantly higher than rivals Netflix and Amazon Prime at £11.99 a month for individuals or £17.99 for a family plan.

Around 65 series are currently included in the package, with several exclusives featuring YouTube stars and the promise of new additions on a weekly basis.

The subscription-based music and video service will be expanded to a further 11 countries at the same time as the UK launch.

READ MORE: YouTube’s paid music and video services come to UK

Google invest £415m in JD.com

Google is set to buy $550m (£415m) of shares in Chinese ecommerce giant JD.com, as it looks to expand its presence in south east Asia and ramp up its position in retail services.

Google will receive 27.1m newly-issued Class A shares in JD.com at $20.29 per share, which reportedly equates to less than a 1% stake in the business. It joins existing investors Tencent and Walmart.

As part of the deal, JD.com’s own products will be sold through Google Shopping worldwide, but the main ambition is to offer “personalised and frictionless” customer experience combining JD’s supply chain and logistics background with Google’s tech.

“Consumers in Asia Pacific are ready to buy, but hard to please,” says Google’s Karim Temsamani, president of its Asia-Pacific operations.

“The growth of access to the internet and online retail has led to rising expectations for top-notch experiences at every step of the shopper’s journey.”

READ MORE: Google to invest $550m into Chinese e-commerce site JD.com

Heineken to plough £44m into UK pubs

Heineken

Heineken plans to invest £44m into the UK pubs and bars it operates as part of its Star Pubs & Bars division, creating 1,000 jobs.

The brewing giant is expected to invest an average of £170,000 into each outlet, taking its total investment in UK pubs over the past five years up to £140m.

The money will be spent on improving its food menus, providing better service and creating a more enjoyable environment.

READ MORE: Heineken to create 1,000 jobs after investing £44m in UK pubs and bars

Monday, 18 June

Unilever to ditch follower-buying influencers

Unilever will refuse to work with influencers who buy followers, as part of a wider plan to help fight fraud and “toxic content” in the digital ecosystem.

Unilever’s chief marketing and communications officer Keith Weed says he understands influencers are an important way to reach consumers and grow Unilever’s portfolio given their “deep, authentic and direct connection with people” but “certain practices like buying followers can easily undermine these relationships”.

The move is part of consumer goods giant’s promise to rebuild trust in the digital ecosystem. Weed says the Unilever will not to work with influencers who buy followers, that it will never buy followers and that it will prioritise partners who increase transparency and help eradicate bad practices throughout the ecosystem.

Social media stars can earn thousands for promotional posts, with the influencer marketing industry one of the fastest growing parts of the advertising sector.

Weed will bring together a group at Cannes Lions Festival of Creativity, including the World Federation of Advertisers, Instagram and Richard Edelman, president and CEO of communications agency Edelman, to guide the industry into bringing increased trust, transparency and integrity to the influencer space.

John Lewis to reduce waste by buying back clothes

Retail giant John Lewis is planning to buy back unwanted and worn clothing from its customers in order to help reduce waste.

Customers can use an app to arrange a pick-up of unwanted items they purchased from John Lewis from their home.

Consumers must list the items they want to sell and will be shown the amount they can receive for them. A courier will only collect the products once the seller has £50 worth of clothes up for grabs.

Customers will be paid regardless of items’ condition, with those bought back either resold (not at John Lewis), mended for resale or recycled into new products.

As part of the scheme, the retailer is joining forces with social enterprise Stuffstr to help reduce the 300,000 tonnes of fashion waste that goes to landfill each year.

John Lewis’s sustainability manager Martyn White says: “We already take back used sofas, beds and large electrical items such as washing machines and either donate them to charity or reuse and recycle parts and want to offer a service for fashion products.”

He adds the average UK household owns about £4,000 worth of clothes and almost a third have not been worn in the last year.

READ MORE: John Lewis to buy back clothes to cut waste

Coca-Cola considers £3bn bid for Horlicks

Coca-Cola

Coca-Cola is expected to offer £3bn to buy malted milk drink Horlicks.

However, the drinks giant may not be the only big brand showing interest in the beverage with reports suggesting Kraft Heinz and Nestlé have also discussed potential deals.

According to reports, Glaxo-SmithKline (GSK) has said it is considering selling the 145-year-old brand to fund the acquisition of another company.

Horlicks was first produced in 1873 by two brothers and was given to British and US soldiers during the Second World War in the form of a supplement. The instant version of the drink was launched in 1982.

It is particularly popular in India where it is served to children in the morning to give them an energy boost before they go to school.

READ MORE: Coca-Cola and Heinz in £3bn battle for Horlicks

M&S could scrap Per Una label

Marks and Spencer (M&S) could axe its womenswear brand Per Una over fears the label has lost its credibility and failed to help stem plummeting sales.

Per Una is one of several brands under review by M&S’s chief executive Steve Rowe as the company looks for avenues to cut costs after revealing its annual pre-tax profits slumped by 62% for the year ending March 2018.

The struggling retailer then unveiled plans to close more than 100 stores by 2022 as part of a restructure.

Per Una, which launched in 1999 and means ‘or one woman’ in Italian, generated about £750m for the high street giant during its earlier days.

M&S is also reviewing its other labels Autograph, Limited Edition and Blue Harbour.

According to reports, M&S says it is “continuing to review” its sub-brands, confessing some have “lost their identity in recent years”.

READ MORE: Per Una fashion range faces the axe from M&S

UK economy faces slowest growth rate since 2009

The UK economy is growing at the slowest pace since 2009, according to the British Chambers of Commerce (BCC).

BCC forecasts GDP growth of 1.3%, down from a forecast of 1.4%. It has also slashed the forecast for 2019 from 1.5% to 1.4%, while the prediction for 2020 is 1.6%.

The amended forecast means Britain’s economic growth rate is facing the weakest level in almost a decade.

Analysts say this is likely due to a “lack-lustre outlook” over consumer spending, business investment and slower trade.

“A decade on from the start of the financial crisis, the UK now faces another extended period of weak growth amid a backdrop of both domestic and global uncertainty,” BCC director-general Dr Adam Marshall says.

“Our forecast should serve as a wake-up call to government – as it demonstrates that ‘business as usual’ is not an option when it comes to the economy.”

He also urged politicians not to let Brexit hinder their agenda.

According to the BCC, business investment is also expected to slow from 2.4% growth last year to just 0.9% in 2018.

READ MORE: UK’s economic growth weakest since financial crisis

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