Tesco, Burberry, Thomas Cook: 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.

Tesco

Two former Tesco directors acquitted over alleged profit scam

Two ex-Tesco directors have been acquitted of fraud and false accounting charges in relation to a £250m overstatement of profits by the supermarket giant after a judge dismissed the case due to lack of evidence.

Chris Bush, Tesco’s former UK managing director, and John Scouler, ex-food commercial director, have since criticised the Serious Fraud Office (SFO).

They were originally accused of having knowledge of income that was being wrongly included in the company’s financial records after the issue came to light in 2014.

Bush and Scouler have denied all charges.

On Thursday (6 December) the trial, which was being held at Southwark Crown Court, was officially ceased after the jury was informed the judge had thrown out the case and the decision had been upheld at the Court of Appeal.

According to Sky News, trial judge Sir John Royce told the court: “I concluded that, in certain crucial areas, one in particular, that the prosecution’s case was so weak that it should not be left for a jury’s consideration.”

Meanwhile, in a statement from Bush he claims he and Scouler are delighted to have been found innocent but that the SFO “wholly failed to investigate this case thoroughly”.

“Put simply, these charges should never have been brought, and serious questions should be asked about the way in which the SFO has conducted this investigation. In my view, the SFO wholly failed to investigate this case thoroughly, independently or fairly from the outset,” he said.

READ MORE: Ex-Tesco directors cleared over £250m profit scandal

Thames Water profits sink following extreme weather

Thames Water has reported a huge decline in half-year profits, falling from £129m to £67.7m year on year.

The company says extreme weather, such as the Beast from the East, delayed its ability to repair leaks and infrastructure after the weather conditions caused pipes to burst. The summer heatwave has also been linked to supply problems.

Thames Water has described the extreme weather conditions as having an “enduring impact” on leakage problems, receiving more than 11,000 complaints about supply interruptions in the six months to 30 September, up from 8,242 in the same period a year earlier.

BBC reports that since 2017 Thames Water has been fined more than £128m for poor management of leaks.

“During the intense summer heatwave, we worked tirelessly to protect our customers from supply restrictions,” the company’s chief executive Steve Robertson says.

“However, along with the impact of the Beast from the East, it has delayed our progress on leakage and other performance measures.”

READ MORE: Thames Water leak woes hit profits

Brits both in fear and optimistic about AI

Majority of the British public (84%) say they should be informed when they’re dealing with an artificial intelligence (AI) rather than another person, according to a new report from Incorporated by Royal Charter (IPA). 

The research also found 74% of respondents found AI should not pretend to be human or act as if it has a personality while 67% believe AI should have the right to report you if you are engaging in illegal activity.

Meanwhile some 64% of respondents agree we should be polite when interacting with AI, while 57% feel that children should respect virtual assistants as they would real adults. According to the report, 27% of Brits feel ‘robot rights’ should be introduced to ensure humane treatment of AI. This figure jumps to 61% in the ad industry.

Nigel Gwilliam, director of media affairs at IPA says: “The first thing that struck me from these results was the strange juxtaposition of fear and optimism: the future of AI is exciting, helpful, scary job losses that save time.”

Burberry teams up with Vivienne Westwood for joint campaign

Luxury fashion houses Burberry and Vivienne Westwood have joined forces for a new campaign which aims to celebrate British style and heritage.

The campaign is fronted by Kate Moss and marks the first collaboration for Burberry under its new chief creative officer Riccardo Tisci.

Westwood and Tisci decided to work together to support and promote Cool Earth, a UK based non-profit organisation that works alongside rainforest communities to stop deforestation and climate change.

Featured in the collection is an oversized T-shirt dedicated to the charity. It features a handwritten message from Vivienne Westwood herself, reading: “Cool Earth has a plan to save the rainforest”.

The campaign was shot by fashion photographer David Sims and stars a number of LBGT advocates. The collection encompasses a checkered theme and contains products from jackets, to laced boots and hats.

Thomas Cook shares plunge further after experiencing short-lived growth

Struggling travel company Thomas Cook’s shares have plunged by more than 13% as the form is continually hounded by profit warnings and debt concerns.

The news comes after just last week Thomas Cook issued its third profit warning of the year, associating its lack-lustre results with extreme weather. However concerns are also attributed to the company’s net debt of £389m.

Additionally, during the last few weeks the travel agent has seen its shares fall to their lowest level since 2013. However, shares had bounced back 50% yesterday (Thursday 6 December) after chairman Frank Meysman bought more than £80,000 of shares in the company.

However, the climb was short-lived.

The City AM reports Stuart Gordon, senior analyst at Berenberg, says the spike was likely to be an exception in a general downward trend for the firm.

READ MORE: Thomas Cook’s shares plummet further as volatile travel firm’s misery continues

Thursday, 6 December

facebook

Leaked emails claim Facebook discussed selling user data

Facebook staff, including CEO Mark Zuckerberg, discussed the idea of selling user data to major advertisers in 2012, according to a series of internal emails published by Parliament.

The emails, which were obtained by the House of Common’s digital, culture, media and sport (DCMS) committee as part of American software developer Six4Three’s lawsuit against Facebook, show the social network ultimately decided to restrict such access two years later.

However, the emails show staff debating whether to trade user data for revenue, trademarks or cash payments.

Facebook has responded by saying Six4Three, developer of the Pikinis app, has “cherrypicked” these documents that “by design” only tell one side of the story and omit “important context”.

“We still stand by the platform changes we made in 2014/2015, which prevented people from sharing their friends’ information with developers like the creators of Pikinis. The extensions we granted at that time were short term and only used to prevent people from losing access to specific functions as developers updated their apps. Pikinis didn’t receive an extension, and they went to court.

“The documents were selectively leaked to publish some, but not all, of the internal discussions at Facebook at the time of our platform changes. But the facts are clear: we’ve never sold people’s data.”

READ MORE: Facebook discussed cashing in on user data, emails suggest

UK shoppers to spend £21.6bn of Christmas groceries

UK shoppers are expected to spend £21.6bn on food and drink over the festive period, creating 2.4% growth in the grocery market this Christmas, according to the latest forecast from research organisation IGD.

Nearly half (48%) of shoppers say food and drink is the most important part of Christmas Day, and just over a third (35%) say they are tempted to buy products they’ve seen in adverts, up from 29% in 2016.

Shoppers expect to spend an average of £90 for their household’s main Christmas meal this year, with 33% likely to spend over £100.

The majority of people (65%) are planning to have turkey this year, while nearly one in 10 will opt for a vegetarian alternative.

Vanessa Henry, shopper insight manager at IGD, says: “Although Christmas is very much wrapped up in tradition, we’re starting to see some new and interesting trends emerging in the run-up to the festive period. In particular, and similar to a trend we’ve seen emerging over the past year or so, there is a greater focus on vegan or vegetarian options for the main Christmas meal centrepiece.

“Growing media and social media coverage, coupled with greater investment by both retailers and suppliers in these products, means more shoppers are considering these meat-free alternatives this year.”

Google mistakenly shares dummy ads at a potential cost a $10m

A Google employee hit the wrong key during a training exercise and accidentally flooded web pages with a dummy ad, which will cost the internet giant an estimated $10m.

The fake ad, a blank yellow rectangle, appeared on many websites and apps in the US and Australian for around 45 minutes.

Google confirmed the error and said it will “honour payments to publishers for any ads purchased”. The company would not confirm the cost of the error but one industry source estimates it could cost the firm $10m, according to the Financial Times.

READ MORE: Google mistakenly floods internet with dummy ads (£)

Study ranks key countries by programmatic maturity

The UK, US, France and Australia are the most mature markets for programmatic advertising, according to a study by the World Federation of Advertisers and Infectious Media.

The study, which looked at 13 of the world’s biggest ad markets, analysed key factors including spend per capita, private marketplace penetration and the prevalence of key industry types, to split countries into one of four categories. It suggests brands need to tailor their digital media strategy and approach according to market development.

Behind the ‘programmatic-first’ markets listed above come Germany, Japan and Brazil, which are classed as ‘maturing markets’. These are followed by ‘mobile-first markets’ China, Indonesia and India, and ’emerging markets’ Russia, South Africa and Malaysia.

Matt Green, global media lead at the WFA, says: “Media buying is ultimately a local business and demands a local approach. But there are considerable opportunities to consolidate and simplify this, avoiding the need for a unique programmatic stack per market. ‘Media transformation’ is the focus for many WFA members and this report supports that ambition, helping marketers to define their global programmatic strategy with local executional tactics.”

Avon reveals extent of non-physical abuse against women as part of #EmbraceTheChange campagn

Research by cosmetics brand Avon reveals nearly half (47%) of British women say they or someone close to them have been the victim of gender-based violence, as it looks to raise awareness and help combat the non-physical abuse experienced by women around the world.

#EmbraceTheChange has been launched in partnership with domestic abuse charities Women’s Aid and Refuge, and aims to reach 10 million women. It hopes to draw attention to the different types of abuse women are subjected to, including online harassment, coercive control and emotional abuse, as well as raise awareness of where to get support.

As part of the campaign Avon has created a video to illustrate one survivor’s story; every time it is shared on social media the brand will donate £1 to the charities.

Avon’s research, which is based in the views of 14,400 women across 15 countries to establish the extent of gender-based violence in the UK, also shows 36% British women have experienced psychological abuse, but 59% don’t know where to seek help and 73% fear seeking help might make the abuse worse.

Jan Zijderveld, CEO of Avon Products says: “We’ve been tackling gender abuse for over a decade, but the alarming findings of our research show that there is still a lot of work to be done. Awareness is a critical first step towards creating a world where women can live free from the fear of violence, and through our #EmbraceTheChange campaign, we’re challenging everyone to think about the different forms of abuse and spread the word.“

Sandra Horley, CEO of Refuge, adds: “One woman in four in the UK will experience domestic abuse at some point in her lifetime, and it is important to recognise that domestic abuse is not always physical, it can be emotional, economic or sexual.”

Wednesday, 5 December

KFC

KFC ad banned for ‘encouraging’ people to dance on the edge of a rooftop

KFC has been rapped by the ad regulator over an ad that featured a woman dancing on the edge of a rooftop that it said could encourage “an unsafe practice”.

In the TV ad a woman is shown dancing on a wall then leaning forwards and sliding back on the wall, then twirling around on the wall while another woman danced in front of her on the rooftop. A complainant questioned whether the ad’s depiction of a person dancing on the edge of a rooftop encouraged an unsafe practice.

In defence, KFC said the intention of the ad was to capture the carefree spirit associated with the product and depict its philosophy of “living bonelessly”. It also said it seemed reasonable to assume that the choreography shown in the ad could not easily be emulated by viewers, that it wouldn’t be shown to children because it is high in fat, salt or sugar (HFSS) and that the dancer was on a plinth in the centre of the roof, which was visible in the first scene of the ad.

However, the Advertising Standards Authority said because of the camera angles and shots and location of a rooftop, and the fact the choreography shown was likely to be popular among young people, it could be something they would like to emulate as an “act of dexterity and daring”.

KFC has been told the ad must not appear again in its current form and that its advertising must not condone or encourage unsafe practices.

P&G looks to create more targeted advertising with online hair test launch

P&G is launching an online test for hair that aims to match people with one of its 120 products by hair type and connect them to other people with similar types on social networks so they can share styling tips.

The new site, called HairCode, is launching in North America this week with a social media push on Facebook and Instagram. It has been brought to market in about eight weeks, according to AdAge, as P&G looks to up the speed of its marketing and explore how it can do more targeted advertised based on people’s personal data.

“We essentially take broad data and map behaviour patterns to create lookalike smart audiences to better target our portfolio’s ads,” says P&G.

HairCode includes features such as quizzes about hair type, styling needs and product preferences and then classifies people into one of 144 hair personalities. These are then matched with products sold online by retailers including Amazon, Walmart and Target.

READ MORE: P&G plays matchmaker

Boohoo under fire for breaking ad rules around ‘misleading’ promotions

Boohoo has been accused of breaking the ad rules after running “misleading” promotions and flash sales that did not end when the countdown clock reached zero.

According to an investigation by Watchdog Live, the company ran promotions that encouraged people to make purchases within a specific timeframe or miss out on the deals. But in reality the deals did not end when the clock stopped counting down, with the clocks simply resetting and the offers continuing.

The Advertising Standards Authority has rules in place that ensure time-limited sales are just that because flash sales put pressure on consumers to buy quickly. But between August and November Watchdog Live recorded 14 separate occasions when sales had a countdown clock attached tothem, including for Black Friday.

Boohoo says it was never its intention to offer misleading promotions and that offers were extended in some cases due to customer demand.

“Boohoo is breaking rules around sales promotions that we have investigated and ruled against previously, which is why this has been passed straight to our compliance team. Our team will work with the advertiser to ensure they bring their ad into line,” the ASA tells Watchdog.

“Compliance have various tools at their disposal to make sure advertisers adhere to our rulings and the precedent set in previous cases where we’ve upheld on the same issues. In this specific instance, the use of a countdown clock is problematic if it misleadingly implies the offer is time-limited when that is not the case.”

Morrisons and Tesco raise concerns over merger between Sainsbury’s and Asda

Morrisons and Tesco have both raised concerns about the proposed £12bn merger between Sainsbury’s and Asda, the second and third biggest grocers in the UK.

In hearings released by the UK’s competition watchdog, Tesco claims the deal is a “challenge in terms of economics” because it has few customer benefits and says the merger so only go ahead if “extensive” remedies are offered.

Morrisons, meanwhile, raises concerns that the merger would create a duopoly in the grocery sector comprising of Tesco and the newly-formed Asda and Sainsbury’s businesses. This could mean higher prices, particularly around online deliver charges, says Morrisons, particularly in some parts of the UK where there is less competiion.

Other grocers including Lidl and Waitrose have previously raised concerns with the Competition and Markets Authority. The watchdog launched an investigation into the deal over the summer and is looking into whether the merger would reduce competition and squeeze suppliers.

Lastminute.com launches Visa card

Lastminute.com is launching a multi-currency Visa card that will allow travellers to pay in local currency (as long as that currency is British pounds, euros or US dollars). Working with Visa and Wirecard, the card will be reloadable via a companion app and allow travellers to exchange British pounds for dollars or euros at any time.

It can be used to pay for goods anywhere Visa is accepted, as well as to take out money. It also claims to offer better rates than most high street bureau de change and banks.

Sergio Signoretti, Lasminute.com’s CFO, says: “This financial product perfectly embodies our pink brand, not only in colour but as part of our ‘whatever makes you pink’ philosophy – which at its heart wants to enable our customers to enjoy fuss-free holidays. Now travellers no longer need to worry about converting currency in a foreign country, or whether their foreign credit card will be accepted at ATMs abroad.”

Tuesday, 4 December

Mike Ashley calls for ecommerce tax

Mike Ashley, the founder and chief executive of Sports Direct, has called for a tax on online retailers in order to save the high street.

Ashley, who bought Debenhams and House of Fraser this year, argued that retailers with more than a fifth of sales online should have to pay a 20% tax on those sales, forcing companies to invest in the high street.

The businessman was speaking before a select committee of MP’s investigating how to support the future of the high street. Ashley argued that many high streets were “already dead” and government intervention was the only solution to preventing more from dying.

“It is not my fault the high street is dying; it’s not House of Fraser, not Marks & Spencer or Debenhams’ fault. It is very simple why the high street is dying. It is the internet that is killing the high street,” he said.

His suggested tax for online sales would affect his own businesses, with Sports Direct, which has £400m of online sales annually, having to pay it if introduced.

He suggested the payments could be channelled to local authorities to help them fund business rate cuts. “You have to grab the bull by the horns,” he told MPs. 

“I want to make it crystal clear: the mainstream high streets as we think about [them] today, not Oxford Street or Westfield, are already dead. The patient has died.”

READ MORE: Mike Ashley calls for online sales tax to revive high street

ITV ups Love Island sponsorship as it looks for new partner

ITV has upped the cost of sponsoring Love Island by 50% to £3.5m as the main sponsor from last year, Superdrug, drops out. 

Superdrug has been the headline sponsor of the hit reality TV show for the past three series but has decided not to sign up for a fourth season. Superdrug is estimated to have paid between £2m and £2.5m to sponsor last year’s show.

Love Island has earned its status as a cult TV show among many Britons with viewing figures at times surpassing 5 million. Despite the price rise, ITV is said to have received several dozen expressions of interest.

“We’ve seen unprecedented demand for this unique opportunity to become the headline sponsor of the biggest breakout TV show of recent years,” says ITV’s commercial director, Kelly Williams.

The headline advertiser will not be the only sponsor, with ITV working with 11 commercial partners on the last series of Love Island. This spanned product placement, brand licensing, podcast sponsors, in-store branding and exclusive product lines and merchandise.

READ MORE: ITV looks to lure new £3.5m Love Island sponsor

Consumer spending growth falls as high street struggles

Consumer spending growth fell year on year to its lowest level in eight months as the high street continues to struggle.

British consumer spending grew in November at its slowest pace in more than a year with online Black Friday sales failing to offset a lack of confidence.

Total retail spending was up 0.5% in November compared with the same month last year, according to the British Retail Consortium.

Barclaycard also released figures that showed broader growth in consumer spending was just 3.3%, dragged down by poor sales in the retail sector.

The research shows spending that large Black Friday discounts did not help department stores who saw their spending shrink by 7.1%.

However, entertainment remained strong, with ticket sales rising 30.5%, helped by the Spice Girls reunion tour.

Barclaycard director Esme Harwood says: “November was a mixed month, with department store and clothing spending contracting but entertainment remaining strong.

“It seems shoppers are yet to make their main Christmas purchases for friends, family and loved ones, despite many retailers offering Black Friday discounts to try and boost sales.”

READ MORE: UK consumer spending slows in run-up to Brexit – industry data

Unilever beats Nestlé and Coca-Cola to Horlicks buy

Unilever is to acquire Horlicks and a clutch of other health drink brands in India from drugs maker Glaxosmithkline (GSK) for £2.94bn.

The purchase was decided on Monday, with Unilever beating Coca-Cola and Nestlé, which also expressed interest in the brand.

The deal is likely to be the last major mark left by Unilever’s chief executive Paul Polman before he retires in January.

GSK chief executive Emma Walmsley says: “Horlicks has made a significant contribution to GSK and to the health of consumers across India for many decades and we believe Unilever is well placed to maximise its future potential.

£ READ MORE: Unilever agrees €3.3bn deal for GSK’s consumer nutrition business

Chelsea launches campaign ahead of ePremier League

Chelsea is launching a new campaign to support the ePremier League. The campaign will see former Chelsea striker Gianfranco Zola try to find a new star signing. However, he is not looking for someone “on the pitch” and instead wants the best FIFA player.

The launch video, produced by We Are Social Sport, features Chelsea stars Eden Hazard, Ruben Loftus-Cheek and others who are shown playing against a mystery gamer for the chance to represent Chelsea in the ePremier League.

The ePremier League tournament, which launches on 5 January 2019, will be promoted by Chelsea across social, with a focus on YouTube, Twitch and Instagram.

Gary Twelvetree, marketing director, Chelsea Football Club’, says: “Gaming and sport go hand-in-hand; both have passionate communities that often overlap with one another. There are some incredibly talented gamers out there and this campaign will bring our fans closer to the club and give them the unique opportunity to win a title for Chelsea FC.”

Monday, 3 December

Ted Baker investigates harassment claims

Staff at Ted Baker have accused the retailer’s founder and boss of creating a culture of ‘forced hugging’, as well as inappropriate comments and behaviour including kissing ears and giving shoulder massages.

A petition launched by an employee calling for an end to forced hugging, which has been signed by 1,000 people, said: “It is part of a culture that leaves harassment unchallenged”.

It says complaints to Ted Baker’s HR department have been “wilfully ignored” and calls for new procedures to allow employees to report harassment to an independent, external body.

Ted Baker says it will investigate the allegations made against 62-year-old Ray Kelvin.

“While the claims made are entirely at odds with the values of our business and those of our CEO, we take them very seriously,” it said.

“Ray greets many people he meets with a hug – be it a shareholder, investor, supplier, partner, customer or colleague. Hugs have become part of Ted Baker’s culture, but are absolutely not insisted upon.”

READ MORE: Ted Baker staff complain of ‘forced hugs’ by company founder

Uber eyes up electric scooter startup

It looks like Uber is making moves to tap further into the electric scooter rental business, with reports suggesting there could be a “multibillion dollar” takeover of scooter-sharing startup Bird.

As a fallback, the taxi app is reportedly also in talks with another smaller competitor, Lime, in which it already owns a minority stake. Uber users can hail a Lime e-scooter straight from the Uber app.

Bird’s CEO, Travis VanderZanden, has told reporters that the business is not for sale, however it is possible that this is a negotiating tactic.

READ MORE: Uber said to be negotiating a multibillion-dollar takeover of scooter-sharing startup

Refuge uses reversible poetry to raise awareness of domestic abuse at Christmas

Domestic violence charity Refuge has unveiled its latest campaign to show women and children affected by domestic abuse where they can turn to at Christmas.

Created by McCann Bristol and inspired by reversible poetry, each ad begins by conjuring up a positive and cosy picture of family life at Christmas. But when invited to read each poem from the bottom line up, a very different scenario unfolds.

The call-to-action is: ‘If your partner turns on you, turn to us’.

“Domestic abuse is the biggest issue affecting women and children in this country today – it really is a life and death issue,” says Sandra Horley, chief executive of Refuge.

“Yet still too few women know how to spot the signs of domestic violence, realise that domestic abuse is a crime or know that Refuge is here to support them.  We want women to know that no matter what time of year, no one should suffer in silence and they should ‘turn’ to us for support.”

The campaign will appear in press, TV, cinema, interactive radio, posters and social media throughout the festive period.

GroupM downgrades global ad forecasts for this year and next

A combination of tighter spending and a slowdown in growth in China has caused GroupM to slightly downgrade 2018 growth expectations from 4.5% to 4.3%, while 2019 growth projections are also whittled from 3.9% to 3.6%. Total new investment is anticipated to reach $19bn instead of the $23bn earlier predicted.

Stress on the auto category stood out in feedback from GroupM’s worldwide network, as did the absence of any rebound in CPG investment with traditional media.

GroupM’s futures director, Adam Smith explains: “GroupM’s still strong but slightly fraying 2018 view ties to macro questions: tighter money, China’s slowing growth, and the potential for pricey trade wars. Real interest rates are edging up globally, but serious potential problems remain limited to a fragile five – Argentina, South Africa, Brazil, Turkey and Venezuela.”

Ten countries are expected to provide 83% of all growth in 2019. China remains the largest contributor, followed by the US, India, Japan and the UK.

Despite fears of Brexit calamity and consumer fatigue, UK advertising investment remains propelled by massive advertising digitisation (61% of predicted investment in 2019), and GroupM’s UK forecast remains buoyant. This is partly because of the market’s characteristic flexibility; in an emergency, advertisers know they can turn off the tap.

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