Amazon, Google, Snap: 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.

amazon

Record profit for Amazon but shares fall

Amazon has reported a record profit of $2.88bn for the third quarter compared to $256m this time last year. It is the fourth consecutive quarter profit has been above $1bn.

However, shares in the company fell 8% due to revenue growth being lower than expected and a disappointing sales forecast for the Christmas season.

While sales grew 29% to $56.6bn in Q3, the online giant is forecasting growth of just 10% to 20% in the final three months of the year.

‘Other’ revenue, which primarily includes Amazon’s advertising business, grew 122% to almost $2.5bn, while online sales were up 10% year on year to $29bn.

Neil Saunders, managing director of GlobalData Retail says while Amazon remains a behemoth in the online market and isn’t under any real threat, others are now getting better at nibbling away at its dominance.

“First, there is a natural maturation curve that Amazon is now on, especially for well-established categories,” he explains.

“Second, consumers are less price sensitive than they once were and that means the number of people migrating to Amazon for low prices is not as pronounced as it was last year.

“However, by far the most significant reason is that there is more online competition in online retail than there has ever been, and that competition is more effective than it has ever been.”

READ MORE: Amazon slides on Christmas sales slowdown

Google reveals sexual harassment crackdown

Google

48 Google employees, including 13 senior managers, have been fired over sexual harassment claims over the last two years.

In a letter to employees, chief executive Sundar Pichai said the tech giant is “dead serious” about making sure it provides a safe and inclusive workplace and that it has been taking an increasingly “hard line” on inappropriate conduct by people in positions of authority.

The letter came following a New York Times report claiming Android creator Andy Rubin received a $90m exit package despite facing misconduct allegations.

Pichai said the story was “difficult to read” and that none of the 48 individuals received an exit package.

“We want to assure you that we review every single complaint about sexual harassment or inappropriate conduct, we investigate and we take action,” he added.

“We are committed to ensuring that Google is a workplace where you can feel safe to do your best work, and where there are serious consequences for anyone who behaves inappropriately.”

READ MORE: Google sacks dozens over sexual harassment

Snap posts record revenue but users plateau

Diageo Snapchat

Snap, the parent company of Snapchat, increased revenue by 43% to a record $298m in the third quarter of 2018, with the trailing 12 months up 53% to $1.1bn.

User growth, however, remains relatively stagnant, with daily active users up 5% year on year to 186 million and down 1% compared to Q2.

“We’re investing in long-term growth opportunities and driving operational efficiencies,” says Tim Stone, Snap CFO.

“We achieved record revenue and strong bottom-line results this quarter and expect a record fourth quarter, as we continue to invest in innovation for our community and scale our business.”

Snap is forecasting revenue to reach between $355m and $380m in Q4 – a 24% to 33% increase on Q4 2017.

READ MORE: Snap Inc. Announces Third Quarter 2018 Financial Results

Sainsbury’s to sell Oasis clothes

Sainsbury’s will start selling Oasis clothes in five of its stores as it looks to become a “leading fashion destination”.

The supermarket will open Oasis clothes outlets in two stores in London and Birmingham before Christmas and three more in the spring.

It is the first time Oasis has made its ranges available to customers in a supermarket setting.

Hash Ladha, CEO designate of Oasis, described the move as a “natural strategic partnership”.

“Trialling Oasis in Sainsbury’s is an exciting development for us,” he says. “This is about presenting the Oasis product proposition and brand experience to Sainsbury’s customers. The customer demographic of both brands is very similar and therefore it is a natural strategic partnership.”

James Brown, Sainsbury’s director of commercial, adds: “We are delighted to be welcoming Oasis to Sainsbury’s stores. Its on-trend fashion ranges will complement our high quality Tu clothing offer and support our strategy to make our stores leading fashion destinations.”

READ MORE: Sainsbury’s and Oasis announce new in-store partnership

The Entertainer to sponsor ITV’s This Morning

High street toy retailer The Entertainer will be sponsoring ITV’s This Morning and Phillip Schofield’s How To Spend It Well as part of a multichannel Christmas campaign.

The £1.5m campaign, which celebrates ‘Little Festive Moments’, includes the sponsorship and activation of the campaign across PR, social media and in-store marketing from the end of October.

Phil Geary, chief marketing officer at The Entertainer says: “Christmas is naturally a key time of the year for us.

“The sponsorship of these hugely popular TV programmes, which are loved by families across the UK, is a great opportunity for us to remain at the forefront of our customer minds, by reaching almost half of British parents as they prepare for the festive season. It’s also great to further strengthen the relationship we have with ITV following our CITV sponsorship.”

The investment follows The Entertainer’s successful mid-year results which revealed a 25% increase in total sales, while online sales were up 21% year on year.

Thursday, 25 October

Debenhams-Watford-

Debenhams to close 50 stores amid widening losses

Debenhams is to close 50 of its 166 stores over the next three to five years in the wake of a £491.5m loss.

This is a significant increase on the 10 stores previously earmarked for closure over the next five years and is likely to affect 4,000 jobs according to BBC reports.

Profit posted by the department store chain also plummeted, falling 65% to £33.2m in the year to 1 September. Like-for-like sales during the period declined by 2.3% due to volatility in the UK market during the second half of 2018.

Debenhams admitted that while its core fashion and beauty markets were “weak”, the retailer held share and saw 10% growth in its UK food arm, across both owned and concession formats.

Digital growth accelerated 16%, with mobile sales up 20% driven by “significant improvements” in speed and filtering.

CEO Sergio Bucher said that while Debenhams had been hit by a tough year for retail, the company is taking “decisive steps” to strengthen the business. He explained his intention to achieve profitable growth, which has involved taking tough decisions on stores “where financial performance is likely to deteriorate over time”.

Bucher added: “Our transformation strategy is gaining traction, with positive results from new product and new formats, general acclaim for our store of the future in Watford and digital growth that is outpacing the market.”

The retailer plans to focus future investment on delivering the principles of its Debenhams Redesigned strategy at up to 100 stores and developing a new “lower-cost approach” for around 20 stores.

Looking ahead, Debenhams says in needs to find at least £30m of further cost savings and will assess the performance its new format stores during the Christmas period before announcing roll-out plans in April 2019.

READ MORE: Debenhams makes record annual loss and plans up to 50 store closures

Ab InBev revenue up 4.5% following World Cup sponsorship

Budweiser

Drinks giant Ab InBev saw revenue rise by 4.5% during the third quarter of 2018 as its global sponsorship of the 2018 FIFA World Cup paid off.

EBITDA was also on the up, rising by 7.5% as total volumes sold grew 0.2% during the quarter.

The combined revenues of its global brands – Budweiser, Stella Artois and Corona – rose by 7.7% globally and 10.6% outside their home markets. Budweiser alone grew by 6.4% globally and 9.3% outside the US as the brand benefitted from its biggest ever campaign as the global sponsor of the World Cup in Russia (June-July).

Stella Artois’ revenues rose by 5.7% globally during the third quarter, with notable sales coming from Brazil, Canada and South Korea. Corona, however, posted the largest revenue gains of AB InBev’s global brands. Revenues for the brand rose by 10.6% globally and 18% outside Mexico driven by demand from China, Colombia and the UK.

Jason Warner, AB InBev president for Northern Europe, described it as a strong third quarter for the company’s UK business, which was boosted by a “summer of sport and big campaigns from our global brands”.

He added: “As the official beer of the FIFA World Cup, Budweiser lit up the globe’s biggest sporting event with our most ambitious campaign to date. Even post-tournament, Budweiser remained the number one contributor to volume and value growth across total trade.”

WPP poised to sell Kantar data division

WPP

WPP is poised to sell a stake in Kantar, its data investment management division.

A source close to the board told The Telegraph that the advertising giant will detail plans to sell the division when it reports its third quarter results and its decision to retain a majority stake in Kantar will depend on “several factors”.

The news comes after reports made in April that Kantar CEO, Eric Salama, was mulling a £3.5bn management buyout of the data consultancy and had been in talks with banks and private equity firms.

Founded in 1993, Kantar employs approximately 30,000 people and last year posted revenues of £2.7bn and an operating profit of £350m.

READ MORE: WPP board approves plan to sell its Kantar data division

Gourmet Burger Kitchen to close 17 outlets putting 250 jobs at risk

Gourmet Burger Kitchen

Gourmet Burger Kitchen (GBK) is planning to close 17 of its UK stores, putting 250 jobs at risk. The news comes after the company posted a £47m loss earlier this month.

GBK’s owner, the South African company Famous Brands, has filed for a company voluntary arrangement (CVA), an insolvency process used by rivals such as Jamie’s Italian, Byron and Carluccio’s to close unprofitable stores.

Managing director Derrian Nadauld said the chain was having to take “tough but necessary actions” to restore long-term profitability in a “challenging casual dining” market, where rental payments are “too high”.

GBK currently operates 80 restaurants in the UK and employs 2,000 people. While 17 sites are earmarked for closure, its other 68 restaurants are expected to continue to trade as normal and none will close immediately.

The business has already taken steps to reduce head office costs, refurbish 30 restaurants and update its branding in a drive towards profitability.

READ MORE: Gourmet Burger Kitchen plans to close 17 stores to stay afloat

DMA launches campaign to promote neurodiversity

neurodiversity

The DMA is launching a new initiative to get neurodiverse people into marketing roles.

DMA Talent, which provides a pathway for talent entering into the data and marketing industry, hopes to educate employers about how to make adjustments that will ensure their business environments and recruitment processes are ‘neurodiverse friendly’.

The training workshops will be led by Matthew Trerise, a specialist with 15 years’ experience working with individuals on the autism spectrum.

Paying attention to the need for neurodiverse environments could be crucial in helping employers access untapped talent, as statistics from the National Autistic Society show that of the 700,000 people on the autism spectrum in the UK, just 16% of adults are in full-time, paid employment.

The DMA also believes more can be done by marketers to support individuals with autism spectrum conditions (ASC) to ensure they feel welcome and are encouraged to take up roles where their specialised skills will be valued.

Wednesday 24 October 

McDonald's

McDonald’s speeds up restaurant upgrades as sales growth slows

McDonald’s is speeding up plans to upgrade its restaurants, particularly in the US, after sales growth slowed and fell behind other countries including the UK, Australian and France. The company says it will now spend $2.5bn in capital expenditure this year, mostly in the “very competitive” US market.

Sales at its international business was up 4.2% year on year in the quarter, but in the US were up just 2.4%. The number of people visiting McDonald’s outlets was up in most international markets but declined in its home US market.

The increased spend will see more restaurants upgraded to its ‘experience of the future’ design. This includes new décor, self-ordering kiosks and the ability to order on mobile and have food brought to the table. The company originally wanted to upgrade 4,000 US sites this year but is now on track to complete more than 12,000 by the end of next year.

Overall, revenues in the third quarter were down 7% year on year to $5.37bn. Net income fell 13% to $1.64bn.

READ MORE: McDonald’s speeds restaurant upgrades as US sales lag (£)

Ad regulator cracks down on unsafe driving ads

Ford, Fiat and Nissan have all had ads banned for encouraging unsafe driving as the ad regulator cracks down on such ads.

Two ads for Ford Mustang were banned by the Advertising Standards Authority (ASA) after viewers companied they depicted driving as a way of releasing anger. Ford says it intended to show the Mustang as an “antidote to a dull life”. But the ASA ruled the ad, which quoted a Dylan Thomas poem with the words “rage against the dying of the light” and showed office irritations such a spilt coffee, showed characters releasing their anger through driving and should be banned.

The ASA also rules against a Nissan Micra ad that showed a car braking when a pedestrian steps in front. While Nissan says the aim was to demonstrate the car’s safety features, the ASA says the ad suggested the person driving was going fast because they were in a rush and should be banned.

Fiat’s ad, meanwhile, shows cars driving on a track in a bid to “emulate” the Hot Wheels children’s toy cars game and defended it by saying it wasn’t targeted at UK consumers and was “fantastical”. However, the ASA says the Hot Wheels association was not immediately obvious and that the ad encouraged unsafe or irresponsible driving.

Facebook revamps Messenger to reduce clutter

Facebook Messenger

Facebook is revamping its Messenger app to make it “simpler” to use and put the focus back on messaging and connecting with friends and family.

The changes aim to make it “easier” to find the features people use most often. It replaces the nine tabs the app currently has with three and puts conversations back at the heart with a ‘chats’ tab. The ‘people’ tab enables users to find friends, view ‘Stories’ and see who is active on the app. Finally, the ‘discover’ tab is where users can connect with brands and businesses.

The update also includes more ways for users to personalise their messages, offering custom nicknames, emojis and chat colours. Old features such as conducting polls, sharing live location and gaming will remain.

We believe Messenger 4 delivers the closeness and authenticity that you’ve been asking for — through simplicity of design and powerful features that put the focus back on messaging and connecting, says Facebook in a blog post.

Rimmel tackles beauty cyberbullying in new campaign

Rimmel has launched a campaign aimed at tackling the growing issue of beauty cyberbullying, which it says affect millions of people, mostly girls, around the world.

The campaign, called ‘I will not be deleted’, aims to tackle societal issues that make people feel unable to express themselves fully on social media due to fear of negative or abusive comments. Through a long-term partnership with Cybersmile, the campaign aims to spark a conversation about the issue and help to tackle the problem.

The launch comes after research by the brand’s parent company Coty found that one in four women have experienced beauty cyberbullying. Some 57% of those didn’t tell anyone, 76% experienced lost confidence and 46% have gone on to self-harm.

Sara Wolverson, vice-president of Rimmel global marketing, says: “Rimmel is about championing self-expression in beauty. We have always been against narrow definitions of beauty and people being judged because of the way they look. As a global beauty company, Coty wants to contribute solutions that can positively impact prejudice and discrimination that stand in the way of self-expression and to raise awareness to affect positive changes in behaviour.”

The work with Cybersmile will include the creation of an AI tool that will recommend local resources, helplines and organisations for anyone looking for help. It will launch in English in early 2019, before being rolled out in other languages.

Oath revenues fall following downturn in desktop and search

Oath, the content and ad subsidiary of Verizon and which includes Yahoo! and AOL, saw revenues in the third quarter fall 6.9% year on year to $1.8bn. Verizon attributed the decline to lower desktop and search advertising revenue and said the business would remain flat in the short-term.

Verizon no longer expects Oath’s revenue to hit $10bn by 2020. However, the company still sees Oath as strategically important. And it didn’t impact Verizon’s business, which saw revenue rise 2.8% to $32.6bn and is focused on building out its 5G network so it can win streaming deals, which would offer it more opportunities to win digital ad spend without having to invest in further ad tech tools.

“We are investing in networks, creating platforms to add value for customers and maintaining a focused, disciplined strategy,” Vestberg said.

Nevertheless, the results are disappointing for Oath, which has attempted to position itself as the third force in digital advertising behind Facebook and Google. It faces growing competition for that title from Amazon, as well as Snapchat.

Tuesday, 23 October

Morrisons could face ‘vast’ compensation bill for data breach

Morrisons could be forced to pay a “vast” compensation bill to staff who were affected by a data breach in 2014.

The supermarket lost a key court ruling yesterday (22 October) having appealed against an earlier decision that it was responsible for an ex-employee leaking more than 100,000 staff members’ personal information, including names, addresses, bank details and salaries.

More than 5,500 employees are now seeking compensation from the supermarket in the first ever class action over a data leak in the UK.

Andrew Skelton, a former internal auditor, was jailed for eight years in 2015 after leaking the data online and to several newspapers after being caught using Morrisons’ mailroom at its Bradford headquarters to run his own ecommerce business.

READ MORE: Morrisons could face “vast” compensation bill after court upholds data leak ruling

UK and US bodies unite on industry standard to prevent ad fraud

The Trustworthy Accountability Group (TAG) and Joint Industry Committee for Web Standards (JICWEBS) will introduce the TAG ‘Certified Against Fraud’ programme in the UK from 1 January 2019, marking the next stage of the partnership between the two bodies.

The programme is already live in the US where it is reported to have delivered an 83% reduction in fraud in TAG certified channels.

By joining forces and providing the same set of standards in two of the biggest digital advertising markets, TAG and JICWEBS hope it will help achieve their joint goal of delivering “global standards for local markets” and show government the industry is capable of self-regulation.

In the UK it will be mandatory for participating companies to be independently audited by a third party.

The TAG Certified Against Fraud programme in the UK also demands that companies employ specific technology and appoint an internal compliance officer.

Richard Foan, executive chairman of JICWEBS says: “The battle against online ad fraud is global, and it’s best tackled with an aligned approach. By adopting TAG’s Certified Against Fraud programme, the UK market will benefit from a proven approach that has delivered impressive results in the US.”

Phil Smith, director general at ISBA adds: “UK advertisers need to see a step change in the way digital ad fraud is tackled to ensure their budgets are being protected. They expect transparency in the advertising chain, and this announcement is an important step forward in achieving that.”

TAG is also planning to merge its Inventory Quality Guidelines (IQG) with JICWEBS DTSG Brand Safety Standards in 2019.

O2 postpones IPO amid Brexit uncertainty

O2

O2 has postponed its plan to float on the London Stock Exchange amid Brexit uncertainty.

The brand, which is owned by Spanish firm Telefónica, had been planning a £10bn IPO this year, but it has been delayed until after Brexit in light of the shaky stock market.

Both Funding Circle and Aston Martin struggled when they floated earlier this year, which is thought to have convinced bosses at Telefónica to wait.

It follows comments by the firm’s CEO Jose Maria Alvarez-Pallette in August that the markets were not yet ready for an O2 float.

READ MORE: O2 postpones stock market float over Brexit fears, according to report

Costa Express unveils new identity to push quality message

Costa Express has revealed a new brand identity that centres on the message ‘Real milk. Real beans. Real quick’ as it looks to highlight the quality of its product and the fact it uses fresh coffee beans and milk to encourage trial.

The new look, which has been developed in-house by the Costa Express marketing team alongside Costa Coffee’s agency BBH, will be rolled out across its more than 7,000 self-serve machines.

To support the new look, Costa Express is launching a marketing campaign that will run until 4 November across print and radio.

Kirstey Elston, marketing director at Costa Express, says: “The new visual identity for Costa Express helps highlight and reinforce the coffee quality and expertise.”

HSBC supports business in latest Richard Ayoade ad

HSBC has launched a campaign supporting UK businesses, the third in its series starring comedian Richard Ayoade.

The campaign, the first to be developed by Grey London, sees Ayoade deliver a monologue about why businesses need to be open, during which he suggests the only place you don’t hear the term ‘mind your own business’ is in businesses.

Sarah Mayall, HSBC’s head of campaigns, says: “The advert translates what our brand promise ‘together we thrive’ means for businesses and the message is simple: in times of uncertainty, being open and connected is key for businesses to thrive and grow.”

The ad will run throughout the UK across TV, print, outdoor, digital and social, as well as via a podcast sponsorship.

The first two ads in the series were produced by JWT London.

Monday, 22 October

Philip-Morris-Iqos-

Tobacco company Philip Morris launches stop smoking campaign

Philip Morris is launching a new campaign to encourage smokers to give up cigarettes. The Hold My Light campaign aims to persuade smokers to go smoke-free by encouraging friends and family to offer rewards in the first 30 days of quitting.

The campaign suggests four ways to give up cigarettes, including going cold turkey, using nicotine patches, vaping and using heated tobacco products.

The £2m campaign will run across digital and print media and has its own website, www.holdmylight.co.uk, which suggest ways to support those who want to quit such as cooking dinner.

Peter Nixon, managing director of Philip Morris, says: “This campaign breaks new ground, which is an important next step in our company going smoke-free and ultimately stop selling cigarettes.”

Hold My Light is part of the company’s new strategy to encourage the world to go “smoke-free” and to achieve its aim to “ultimately stop selling cigarettes”. However, the campaign has already received criticism, with Cancer Research UK accusing the company of “staggering hypocrisy” and pointing out that Philip Morris still promotes cigarettes in countries that have not banned tobacco and advertising promotion.

Netflix personalisation causes controversy

netflix

Netflix personalisation is causing controversy as black users accuse the streaming service of using artwork to mislead them about the level of diversity in films.

For one film, Like Father, the artwork fails to show its two white leads and instead shows some subscribers a poster featuring two of the films African-American actors. Love Actually is another example of a movie with a predominantly white cast but the actor Chiwetel Ejiofor is spotlighted on the artwork despite playing a minor role.

It is thought the posters are designed to encourage black users to watch films thinking they will be more diverse but some have hit back arguing that the move is deceptive.

READ MORE: Netflix angers black subscribers with targeted posters

Hamleys could be put up for sale

Hamleys could be put up for sale as the toymaker deals with poor results. The company’s owner, C.banner International, bought Hamleys in 2015 but it is said to have started a strategic review after being approached by potential buyers. However, there is no guarantee a sale will go ahead.

The toymaker replaced its head of finance last week after reporting a £9.2m loss.

According to Sky News, corporate finance firm Vermillion Partners has been hired to advise C.banner and hold discussions with potential buyers but it is unlikely to sell before the Christmas period.

A sale would mark the fourth time Hamleys has changed owners since 2003 and be another sign of a struggling British high street.

READ MORE: Hamleys reaches endgame under ownership of China’s C.banner

Ryanair reports poor profits amid race controversy

Ryanair has blamed strikes by pilots and cabin crew for a decline in profits but is optimistic about its future. The airline reported a 7% fall in profits for its half-year results, which chief executive Michael O’Leary blamed on a number of factors including strikes and “the worst summer of air traffic control disruptions on record”.

However, O’Leary cited a 6% rise in traffic and 96% capacity on planes as reasons to be optimistic. The company says it maintains its forecasts for the full-year after warning that profits would be 12% lower earlier this month.

The news comes amid controversy as the airline dealt with a media storm this weekend. A video has appeared online showing a white passenger racially abusing a black woman in her 70s with many accusing the company of failing to take action and failing to remove the passenger from the flight.

READ MORE: Ryanair warns fares to remain soft as summer profit falls 7 percent

Addison Lee plans self-driving taxis by 2021

Premium taxi firm Addison Lee plans to use self-driving cars across London by 2021. The company has joined forces with Oxbotica, an autonomous vehicle software company, to provide self-driving cars for ride-sharing services in the capital.

The two companies will begin creating detailed digital maps of London’s roads ahead of the move, which will pit it against Uber which is also planning to roll out driverless cars.

Addison Lee boss Andy Boland says he wants the firm to be at the “forefront” of the shift to self-driving cars. He explains: “Urban transport will change beyond recognition in the next 10 years with the introduction of self-driving services, and we intend to be at the very forefront of this change by acting now.”

He adds that the technology will help the firm “address congestion, free space used for parking and improve urban air quality”.

READ MORE; Addison Lee plans to put self-driving cabs on London’s streets by 2021

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Comments
  • Pete Austin from Fresh Relevance 22 Oct 2018 at 12:45 pm

    Why would people be accusing Americans of choosing films based on the race of the actors? That’s strange and rather insulting. It’s also obviously not true, because Crazy Rich Asians did great over there, despite having a largely SE Asian/British cast.

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