Deliveroo, McDonald’s, Ryanair: 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.

Uber in talks to buy rival Deliveroo

Uber is in early talks to buy rival food delivery service Deliveroo in a deal said worth billions.

By acquiring UK-based Deliveroo, which was last valued at £1.5bn, Uber, which operates Uber Eats, plans to dominate the food delivery market across Europe.

Although the exact value of the deal is unknown, sources have told Bloomberg it will need to be considerably higher than its current valuation.

The deal could fall down, however, as Deliveroo and its investors are keen to retain independence.

Uber Eats has been a top priority for CEO Dara Khosrowshahi in the run up to a planned initial public offering in the second half of 2019.

Yesterday, Uber Eats drivers blocked London streets in protests over pay.

Workers at McDonald’s, Wetherspoon and TGI Friday to stage coordinated strike

Workers at JD Wetherspoon, TGI Fridays and McDonald’s have joined forces to stage coordinated protests next month to highlight the issue of low pay and insecure contracts, calling for a living wage of £10 per hour.

Staff at four McDonald’s outlets, three TGI Friday restaurants and two Wetherspoon pubs will walk out on 4 October. While small in scale, it marks the first time workers in the UK hospitality sector have grouped together to demand better pay and conditions, making it significant given the long-term impact it could have on each brand, particularly from an employer brand perspective.

Boni Adeliyi, a TGI Fridays waitress in Milton Keynes says: “We’re striking on 4 October to show the strength we have when workers come together. The movement is growing and change is coming. All young workers should join a union – it’s important to know your rights and how to fight for them when they’re being ignored. Together we are stronger.”

A spokesperson for McDonald’s says the company is “disappointed” to hear about planned UK strikes but brushed it off by saying the numbers of people involved represent an “extremely small proportion” of its 120,000 workforce.

French Connection’s losses widen in wake of House of Fraser administration

Retailer French Connection has seen its losses nearly treble partly as a result of House of Fraser’s demise, and it has indicated more store closures could be on the cards.

The fashion chain made a statutory loss before tax of £15.1m in the six months to 31 July, compared to a £5.9m loss in the same period last year.

Nearly £10m of this was provisions for bad debts partly related to the collapse of House of Fraser, while the cost of “onerous leases” contributed £6.4m to the decline.

The retailer has also been forced to close a number of stores at a cost of £400,000 and hasn’t ruled out further closures.

The company has seen growth in its wholesale business though, but overall revenues were down 2.4% to £58.1m.

Stephen Marks, chairman and chief executive says: “There is no doubt that progress has not been helped by the trading conditions in which we operate in the UK, although we can take great confidence from the performance of the wholesale business and the stability of the licence income.”

The business has said it is on track to turn a profit by the end of the year.

Ryanair boss to step down in next five years

Ryanair’s outspoken boss Michael O’Leary has indicated he may step down within the next five years, after saying he is reluctant to sign another long-term contract.

O’Leary’s current contract runs out in 2019 and while the board is keen for him to sign up for another five years, he is instead hoping to sign a two- or three-year deal, followed by a rolling 12-month contract.

He has been CEO for the past for 24 years and says “I’m not sure whether I want to sign up to another five years, that would take me up to 62”, adding “I’m not sure Mrs O’Leary would be happy”.

Inbetweeners star joins Kevin Bacon for latest EE ad

EE is marking the launch of the iPhone XS today with a new campaign starring The Inbetweeners actor Simon Bird alongside long-time brand ambassador Kevin Bacon.

The campaign, which will air during Coronation Street tonight, shows Bird playing a similar character to Will in The Inbetweeners looking on with disgust as his neighbour receives his new iPhone first. Not to be outdone, Bacon suggests the actor gets his from EE, highlighting the fact the network has been voted number one in the UK for five years.

The national campaign will run across TV, out of home, press, cinema and video on demand (VOD), as well as being digitally integrated on social, running across Facebook, Instagram, Twitter, Pinterest and other platforms, with edits and content developed specifically for digital and social channels.

Thursday, 20 September

Labour vows to ban TV gambling advertising

Labour has pledged to ban gambling advertising during live sports if it wins the next election as the party attempts to curb problematic gambling.

Deputy leader Tom Watson has defined problem gambling as a “public health emergency” and “Britain’s hidden epidemic”. He has also accused the opposition of not properly helping the UK’s estimated 430,000 problem gamblers.

As part of the proposal, the Labour party will introduce a £100m-a-year levy on gambling firms to fund addiction treatment, a ban on using credit cards to place bets, rules to allow addicts to ask their bank to block gambling transactions, as well as the introduction of new guidelines for treating problem gamblers.

Gambling adds will also be banned from “whistle-to-whistle” during live sporting events.

Watson says: “Gambling companies have to take more responsibility for harm caused by their products and contribute more to research and treatment. We must also face up to the negative effect the explosion in gambling advertising has had and act accordingly.”

The advertising watchdog, the Advertising Standards Authority (ASA), has weighed in on the call, with its chief executive Stephen Woodford suggesting gambling operators should be allowed, within a framework of responsibility, to advertise freely.

“The funding from these businesses contributes greatly to the high quality sports programming enjoyed by millions of viewers across the UK,” he adds.

Amazon believed to have plans for 3,000 cashier-less stores by 2021

Reports suggest online retail giant Amazon is considering a plan to open as many as 3,000 new Amazon Go cashier-less stores by 2021 in a move that would threaten convenience store chains and quick-serve sandwich shops or eateries.

It is understood Amazon’s CEO Jeff Bezos believes offering grab-and-go meals in busy cities will help reinvent the bricks-and-mortar shopping experience.

The store format could be similar to the Pret A Manger franchise, which sells freshly prepared foods and offers a small grocery selection.

Amazon revealed its maiden cashier-less store in Seattle in 2016 and has since expanded to Chicago. Amazon has declined to comment on reports.

Alzheimer’s Research UK enlists Game of Thrones star to voice new campaign

Alzheimer’s Research UK has called on Game of Thrones star Lena Headey to help voice a new film, which aired on ITV last night (19 September) ahead of World Alzheimer’s Day tomorrow.

The spot titled ‘Make Break Through’s Possible’ is designed to challenge audiences with thought-provoking visuals of a baby, which acts as a metaphor for mankind’s innate survival instinct. Alzheimer’s Research UK adds that the film aims to challenge the feeling of hopelessness that still exists around dementia – the UK’s leading cause of death.

Additionally, it calls on the public to help make life-changing breakthroughs in research possible. The launch comes as the charity pledges to commit a £250m to dementia research by 2025.

“In the same way medical research has overcome other diseases in the past, we can make the same breakthroughs for people affected by dementia and their families,” says Hilary Evans, chief executive of Alzheimer’s Research UK.

The film has been directed by award-winning director Aoife McArdle whose Paralympics advert for Toyota aired at the Super Bowl this year.

Stoptober encourages smokers not to quit ‘cold turkey’ in new campaign

Stoptober has unveiled a new TV and digital campaign encouraging England’s 6.1 million smokers not to go ‘cold turkey’ while showcasing a new digital tool designed to provide smokers with a personal quit plan.

According to Stoptober, the personal plan asks smokers a number of questions about their habit before providing them with a suggested combination of support based on their level of tobacco dependency.

The campaign is also designed to highlight how almost 400,000 Brits successfully quit smoking last year.

Commenting on this year’s campaign, Sheila Mitchell, marketing director at Public Health England says Stoptober has inspired 1.7 million quit attempts to date. She adds that someone quits smoking every 80 seconds in England.

“However, there are still over 6 million smokers in England – with six in 10 of those wanting to quit – so we need to do what we can to help those quit,” she says.

The campaign launches today (20 September) and will run across TV, digital and social.

Smartphone and tablet sales slow as summer comes to an end

Online retail sales increased 12.8% year on year during August, down 1.7% from July, notably lower than last year’s drop of 4.8%, according to IMRG Capgemini’s e-Retail sales index.

Smartphones and tablets have copped the brunt of slowing sales, having hit an all-time low, up just 10% year on year. While smartphone growth alone came in at +26.7%, it was the lowest growth since September 2014, and a significant drop on last August’s +53.6%.

Multichannel mobile retail only just maintained growth, up 1% year on year, while online-only mobile retail growth was up 15% for the same period.

“We were expecting a much bigger downturn in August than we got given the effect of the hot summer and events boosting sales in the previous months,” says Capgemini’s principal consultant of retail consumer engagement Bhavesh Unadkat.

He adds that categories such as beers, wines and spirits and electricals had a poorer month, demonstrating underlying revenue is coming more from core and necessity products as a trend rather than luxurious items.

Wednesday, 19 September

Kinder website banned for promoting junk food to children

A website, app and YouTube channel that promote Kinder chocolate have been banned for advertising to children

The homepage of the Kindernauts website featured cartoons of a sun and rainbow, a Kinder chocolate branded video showing children playing and “fun activities and prizes”. The website magic.kinder/en also had Kinder branding alongside games and videos that were labelled as suitable for children above the age of three, including animations of Kinder Surprise toys.

An accompanying app also featured Kinder branding and again included activities aimed at young children, such as interactive stories, educational games and quizzes. Kinder’s YouTube channel also featured the animations.

The complaint was lodged by the Children’s Food Campaign, which is lobbying for tighter rules to protect children from junk food advertising. And it raised concerns that content was directed at children, and that content directed at pre-school and primary school children included promotions and licensed characters.

The Advertising Standards Authority ruled that the sites and “advergames” broke the ad rules on promoting food high in fat, salt or sugar (HFSS) to children under the age of 16. Kinder has been told to ensure its HFSS product ads are not directed at children through the selection of media or the context in which they appear and that content targeted at pre-school or primary school children does not include a promotional offer or licensed character popular with children.

Sainsbury’s and Asda merger faces in-depth competition investigation

The £15bn merger between the UK supermarkets sectors second and third biggest players, Sainsbury’s and Asda, faces an in-depth competition investigation.

The Competition and Markets Authority (CMA) says the deal “raises sufficient concerns” to be referred for a more in-depth review. Despite the supermarkets saying grocery prices will fall as a result of the merger, the CMA remains concerned that the overlap of their stores in hundreds of local areas could lead to shoppers facing higher prices or a worse quality of service.

The investigation will also consider other issues raised with the CMA including those relating to fuel, general merchandise and increasing buying power over suppliers. Full details of the issues to be investigated will be published in the coming weeks.

It is expected that Sainsbury’s and Asda will have to sell of at least some of their stores to assuage the competition authorities. Estimates suggest that figure could be anywhere between 73 and 300 stores.

P&G tests crowdfunding as a consumer research tool

P&G is looking for help from consumers on a new heated razor via crowdfunding. The FMCG company is allowing people to buy the new Gillette razor via IndieGogo, and asking them to “help us improve our latest innovation”.

The razor features a warming that heats up in less than a second, which P&G claims delivers a similar experience to a hot towel shave. The razor is available in limited quantities from IndieGogo at a cost of at least $109 for the handle, two razor cartridges and a charger.

“GilletteLabs is reinventing and elevating the everyday shave as we currently know it into an unexpectedly enjoyable and luxurious experience,” says Donato DiezGuerrero, P&G’s brand manager for GilletteLabs, according to Cincinnati Business Journal.

“We’re thrilled to unveil the Heated Razor by GilletteLabs on Indiegogo, which provides us the opportunity to test the product with consumers and gather valuable intel in this ongoing co-creation journey.”

Mastercard moves into esports with first global sponsorship

Mastercard has signed a multi-year deal with Riot Games to become the first global sponsor of League of Legends, the biggest esport in the world. The tie-up will see Mastercard focus on three annual global tournaments – the mid-season invitational, the all-star event and the world championship.

As part of the deal, Mastercard will create ‘Priceless’ experiences and offer on-site activations, as well as promoting the sponsorship on its website. The first activation will take place at the world championship this autum in South Korea, with Mastercard planning a behind-the-scenes tour of the opening ceremony and the opportunity to watch a game with a League of Legends pro and test the gaming PCs the pros use.

The deal signifies the growing appeal of esports to brands and will diversify Mastercard’s sponsorship portfolio, which includes the UEFA Champions League, Rugby World Cup and PGA Tour.

“Esports is a phenomenon that continues to grow in popularity, with fans that can rival those at any major sporting event in their enthusiasm and energy,” says Raja Rajamannar, chief marketing and communications officer, Mastercard. “Our Priceless platform is built around connecting with people through their passions. We are excited about the experiences and benefits we can bring to the world’s largest esport – both in-game and to the millions of League of Legends fans that watch and attend the tournaments each year.”

Nestle, Unilever and Coca-Cola in the running for $4bn deal to buy Horlicks

Nestle, Unilever and Coca-Cola are among the top bidders for GlaxoSmithKline’s Horlicks business, with the deal expected to be worth up to $4bn.

A report in the Financial Times says companies have submitted non-binding bids for the nutrition business, with GSK expected to produce a shortlist over the next two weeks. GSK announced in March that it was launching a strategic review of Horlicks and its other consumer healthcare nutrition products to “support the funding” of its $13bn acquisition of Novartis’s stake in their consumer health joint venture.

GSK CEO Emma Walmsley has described Horlicks as a “terrific brand with a long history”. Sales of Horlicks nutrition products were about £550m in 2017. GSK sold its Horlicks franchise in the UK last year.

Tuesday, 18 September

Instagram expands shopping to Stories and Explore

Instagram is broadening its Shopping features across its app as part of a broader ecommerce push.

The social media site is expanding its ecommerce capabilities so users can now shop directly from Stories. Businesses can add Shopping ‘stickers’ to their Stories content, which users can click on to be taken through to the brand’s website and buy items.

Instagram has been testing this since June but the feature will now be rolled out globally. The social media platform will also soon be introducing a dedicated shopping category within its Explore tab where users will be able to discover shopping-related posts from brands they follow as well as brands that are relevant.

Instagram introduced shoppable posts in March, allowing brands to tag items and links to websites to create a “seamless experience” from post to purchase.

House of Fraser causes upset over gift cards

House of Fraser is failing to reply to consumers who are inquiring about the validity of gift cards.

Consumers were told to send in gift cards to be replaced after the department stores was bought by Sports Direct in August, but have still yet to here from anyone, the BBC reports.

The gift card market is estimated to be worth more than £6bn annually but if stores go bust the cards become worthless.

Despite the promise of a replacement, many are sceptical as Sports Direct is already taking a hard line with consumers, last week telling those who had yet to receive gifts bought online before the chain changed hands that they won’t receive a refund.

Adam French, consumer rights editor at Which? says: “This is appalling. It’s worrying that House of Fraser has gone silent on this.”

House of Fraser did not respond when asked to comment by the BBC.

Trust between media agencies and advertisers declines

Trust between media agencies and advertisers has declined in the last two years, according to a new report.

The ID Comms media transparency survey, which collects the views of marketing, media and procurement professionals, finds 40% believe levels of trust between advertisers and their media agencies is ‘low’. That is an increase of 11 percentage points from 2016.

According to the report, some of those surveyed say the decline is a symptom of the changing nature of the relationship between the two, arguing that agencies have become more like suppliers and less like strategic partners.

Despite the decline, the importance of trust between agencies and marketeers has risen, with the vast majority of both agencies and advertisers agreeing that a close, trusted relationship is likely to lead to better marketing performance.

In 2016, more than 20% of advertiser respondents disagreed that trust leads to better performance, however, this year it stands at just 10%. Those who agree or strongly agree have also increased by 4% in the past two years to almost 80% in 2018.

Marketeers are also optimistic about the future, with 46.3% of advertisers saying they believe the level of trust between advertisers and their media agency will increase a little or a lot in the future – up from 38% of advertisers in 2016.

It is worth noting that trust doesn’t just relate to transparency. Despite 80% of advertisers and 75% of agency respondents rating transparency as having high or very high influence over trust issues, many say it is one of several factors, including performance, that play a key role in gaining advertisers’ trust.

Former Primark executive joins Boohoo as CEO

Boohoo has appointed a Primark executive as its new CEO to drive the brand’s global expansion, which includes a pay package that could earn him almost £50m in five years.

John Lyttle is currently chief operating officer at Associated British Foods, the business that owns Primark, and has also worked for Matalan and Philip Green’s Arcadia Group.

He oversaw the expansion of Primark’s overseas business, which saw a steep rise in sales from £2.7bn in 2010 to £7.1bn in 2017.

Lyttle, who starts in March 2019, will only receive the bonus if Boohoo increases its market value by 180% over the next five years.

The move will see Boohoo’s co-founders and joint CEOs, Mahmud Kamani and Carol Kane, step back from the day-to-day running of the business.

They put out a joint statement, saying: “We are thrilled to have secured a candidate of John’s calibre as our chief executive. We have got to know John over a number of years and are convinced he has the necessary skills to complement what we already have and take the group on to its next stage of growth. Both of us remain totally committed to the business and will ensure a measured and careful handover.”

Coca-Cola explores cannabis market

Coca-Cola is considering developing a range of marijuana-infused beverages to help ease physical problems such as inflammation, pain and cramps.

The drinks giant is in talks with Canadian marijuana producer Aurora Cannabis but stressed that it was interested from a health rather than pleasure perspective.

Regulated cannabis for medicinal purposes has been legal in Canada since 2001 but next month cannabis for recreational use will be legalised as well.

Coca-Cola said it was monitoring the industry and was interested in developing new drinks infused with the non-psychoactive ingredient found in cannabis plants which alleviates pain.

Cannabidiol, or CBD, does not produce the high normally associated with marijuana.

Coca-Cola says: “Along with many others in the beverage industry, we are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world. The space is evolving quickly.”

As sales of fizzy drinks decline Coca-Cola is rapidly expanding its portfolio as part of its global strategy to become a “total beverage company”.

Monday, 17 September

Salesforce co-founder buys Time magazine

The billionaire co-founder of Salesforce Marc Benioff and his wife Lynne are buying Time magazine for $190m.

The global multimedia brand, which is owned by US media group Meredith Corporation, reaches a combined audience of more than 100 million readers in print and online – including 80% of US millennial women.

Meredith, which bought Time’s parent company Time Inc in January, says the Benioffs will not be involved in the day-to-day operations or journalistic decisions.

“We can’t imagine better stewards for Time than Marc and Lynne Benioff,” says Time editor-in-chief Edward Felsenthal. “The team is inspired by their commitment to high-quality journalism and by their confidence in the work we have done to transform and expand the brand in new directions.”

As part of the transaction, Meredith will provide services such as consumer marketing, subscription fulfillment, paper purchasing and printing. It will also be able to include the Time brand in large corporate advertising buys.

Meredith sold Time’s news and sports brands Time, Sports Illustrated, Fortune and Money earlier this year. The business plans to use proceeds from the latest transaction to pay down debt.

Sports Direct denies Debenhams collapse claims

Sports Direct has called reports “irresponsible and incorrect” for suggesting it wants Debenhams to fail so it can buy it cheaply.

According to the reports, Sports Direct boss Mike Ashley – who recently bought House of Fraser and owns a 29.7% share of Debenhams – could block the struggling retailer’s attempt to raise money by selling its Scandinavian department store chain Magasin du Nord.

A Sports Direct spokesperson says it has discussed various opportunities for business collaborations to support Debenhams over the last year but that Debenhams has chosen not to move forward with the proposals.

Eight in 10 people trust digital news sites

Consumers place high-levels of trust in the content from established media brands, with 81% of people who often visit digital sites trusting what they read.

The digital engagement figures, released by The Published Audience Measurement Company (PAMCo) for the first time today, measure readers’ levels of trust and engagement across both digital and print platforms.

91% of participants agreed reading or looking at their chosen publication is time well spent; 70% agreed they feel a close connection to their chosen publication; and 68% believe it offers something they can’t get elsewhere.

“Our new engagement metrics show the high levels of trust readers place in established media brands and despite the proliferation of content available to consumers, that they still place great value in curated content from trusted brands,” says Simon Redican, chief executive of PAMCo.

“This, together with recently published findings from other industry bodies, demonstrates that quality of content delivers true value for both readers and advertisers.”

Unilever and Walmart unveil forest sustainability initiatives

Unilever has committed to supporting work in Sabah in Malaysia as part of its strategy to achieving a deforestation-free supply chain and further reducing emissions.

This will include covering 60,000 hectares with Roundtable on Sustainable Palm Oil (RSPO) certification, benefitting between 200 and 300 palm oil farmers and helping to restore two ecological corridors and two riparian reserves – areas of habitat connecting wildlife population.

According to WWF, this will help to reduce 17 million metric tonnes of CO2e in greenhouse gas emissions by 2030.

Meanwhile, Walmart is developing a platform within one of its key emission reduction initiatives, Project Gigaton, to link its suppliers who are sourcing commodities from regions with deforestation risk to create and support place-based partnerships.

Unilever’s chief sustainability officer, Jeff Seabright says: “At the COP 21 climate negotiations we pledged to support a jurisdictional approach of production and protection. This means we are moving our sourcing to areas that have good forest management and work in partnership to reconcile competing, social, economic and environmental objectives. Our ultimate ambition is to help drive a sustainable palm oil industry.”

Holiday season gives boost to UK eating-out market

Thanks to the good weather and school holidays, the UK pub and restaurant groups saw collective like-for-like sales edge up 0.6% in August. Year on year, pub sales were up 0.2% while restaurant sales were up 1.4%, according to figures from business insight consultancy CGA.

Regionally, London performed better than the rest of the country with August like-for-like sales up 1.5% compared to trading outside of the M25 at 0.4%.

“These latest figures will come as a huge relief for restaurant operators, who have been under the cosh of late, not least because of the early summer heatwave which was great news for Britain’s pubs as the public headed outdoors, but little help for the country’s restaurant chains,” says Karl Chessell, director at CGA.

“More mixed weather during August and a damp bank holiday weekend will have helped the casual dining market. The school holidays will also have helped as parents looked to keep their families occupied.”

Total sales growth across the pub and restaurant cohort, which includes the effect of new openings, was 3.2% in August, reflecting a slowdown but not a halt in brand roll-outs, and was running at 3.7% for the 12 months to the end of the month.