Pepsico, Unilever, Netflix: 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.

PepsiCo to invest in marketing after sales boost

PepsiCo is promising to invest more in marketing after a strong performance that saw the FMCG giant beat analysts’ estimates.

The company’s shares skyrocketed, reaching their highest price since 1980, with the brand citing marketing as a key component to its success.

The boost is thanks to higher demands for its low-sugar drinks, sparkling water and classic snacks. Sales growth in its North American beverage business was 2.15%, while sales in its Frito-Lay snacks unit were up 5.5%.

PepsiCo says it will increase marketing investment to try to sustain growth in the key North American beverage unit, which faces pressure from less-sugary options.

The results are the first since chief executive officer Ramon Laguarta took over in October.

Unilever growth boosted by eco-conscious home brands

Unilever has reported stronger-than-expected sales growth of 3.1% for the first quarter, ahead of analysts’ expectations of 2.8%.

The FMCG giant’s boss Alan Jope says the company is on track for the full year and it is anticipating similar sales growth to this quarter. He adds that accelerating growth will require “a continued strategic shift into faster growth segments and channels”.

Unilever, which owns brands including Dove and Ben & Jerry’s, reported strong performance in its home-care business, driven by its eco-conscious brands Seventh Generation and Omo.

“Growth was led by emerging markets and was balanced between volume and price,” says Jope. “Accelerating growth is our number one priority. It requires both great execution and a continued strategic shift into faster growth segments and channels. We saw good performance in key growth channels including out of home and e-commerce and benefited from stronger global innovations and faster and more relevant local innovation.”

Netflix to show list of most popular programmes to increase engagement

Netflix will start showing UK users a list of the most popular programmes in the hope of sparking more online discussion. This will include a weekly top 10 most watched films, a first for the streaming platform.

In a call to investors, company executives said they expect this to encourage users to engage in a “public conversation” about shows. Netflix was clear that the number of people watching specific shows would remain under wraps.

Some analysts believe the platform will use the lists to promote Netflix original programmes over other content.

Tom Harrington, a researcher with Enders Analysis, told the BBC: “The list will disguise what is actually watched on the service, which is predominantly acquired content. It will likely be dominated by newly-released originals, the demand for which often quickly declines soon after release.”

The trial is expected to start in the next two months, with further roll-out across other countries expected in due course.

Nestle promises more innovation after better-than-expected results

Nestle has reported the strongest start to the year since 2016, largely driven by shoppers snapping up more of its pet food.

Revenue climbed 3.4% on an organic basis in the first quarter, ahead of analyst predictions of 2.8%. The company claims the growth is a sign that its strategy is working after it raised prices on key products.

Chief executive Mark Schneider says: “Our increased speed, innovation for a changing world and execution focus are clearly paying off. We confirm our outlook for the year.”

Nestle admitted that consumers’ appetite for fresh organic foods has hit sales of packaged goods, a trend that it is looking to offset by focusing on innovation in fast-growing categories like infant formula and coffee. It also is reducing sugar and fat in current products.

The North Face tells people to ‘Stop scrolling. Start exploring’ in new campaign

Clothing brand The North Face is encouraging people to spend time away from technology and more time connecting with their surroundings.

As part of its ‘Stop scrolling. Start exploring’ campaign the brand has launched a petition to recognise Earth Day, which is on 22 April, as a national holiday.

In addition to the petition, The North Face will host a weekend of free #ExploreMode events in 10 European cities across Germany, the UK, France, Italy and Sweden. Events include a mountain top film premiere and urban cycling.

Citing data that shows average person with a smartphone checks their phone 47 times per day, The North Faces hopes the events will help people connect with nature.

Global general manager of lifestyle at The North Face, Tim Bantle, says: “We believe that when people take time to appreciate the Earth, they feel more connected to it and are more likely to protect it. Explore Mode urges us to unplug from our digital lives to connect in real life to the world, each other, and ourselves in the effort to move the world forward.”

Wednesday, 17 April

Netflix adds 10m subscribers in Q1 but warns price hikes will hit growth

Netflix added 9.6 million new subscribers during the first quarter but has warned this growth will slow between April and June as it rolls out price rises.

Price hikes will impact the US, Brazil, Mexico and some parts of Europe as the streaming giant looks to fund the production of its own content.

While it expects to see some “modest short-term churn” in subscriber growth as it gets set to compete with new rivals Disney and Apple, it doesn’t expect these new entrants to “materially effect [its] growth”.

Netflix saw profits rise to $344m during the first three months of the year, compared to the same period in 2018, with sales up 22% to $4.5bn. It expects total revenue to rise to $4.9bn in the second quarter, although income growth is forecast to slow to $249m.

Mastercard faces £14bn lawsuit

Mastercard is facing a £14bn class action lawsuit, the biggest in British legal history.

The legal action, taken by former financial ombudsman Walter Merricks, claims 46 million UK consumers paid higher prices in shops between 1992 and 2008 because of excessive transaction fees charged by Mastercard. The Competition Appeal Tribunal initially ruled it would not grant the order for the case to continue to trial two years ago, but the court of appeal has ordered the tribunal to reconsider.

If found guilty, anyone effected will receive a payout of up to £300 from Mastercard.

Mastercard was keen to play down the ruling, saying in a statement: “This decision is not a final ruling and the proposed claim is not approved to move forward, rather the court has simply said a re-hearing on certain issues should happen. Mastercard continues to disagree fundamentally with the basis of the claim and we believe UK consumers receive real value from the security, convenience and consumer protection of our payment services.”

Grey Goose rebrands as it looks to be seen as ‘accessible and relatable’

Vodka brand Grey Goose has rebranded as it admits its luxury positioning has “impaired [its] ability to fully connect with consumers” who tend to save it for special occasions.

Through its new global brand platform ‘Live Victoriously’, it hopes to be seen as a more “accessible and relatable” luxury brand and take on the market leaders, which it accuses of dumbing down the category through price compression and clever “but often misleading marketing”.

As part of the launch, which has been developed by MullenLowe, Grey Goose has created a series of videos featuring characters committing to unexpected moments of celebration using taglines including ‘live like your phone doesn’t exist’, ‘live like you own the place’, and ‘live like the world is your stage’, to encourage consumers it is a drink for all occasions. The 15- and 30-second ads will air later this month and in May across Sky, All4 and Amazon platforms.

Lee Applbaum, global CMO at Grey Goose, says: “At its core, Live Victoriously recognises that you are the special occasion, and that every moment – big and small – is an opportunity to create a lifelong memory. It’s ironic that today’s consumer values product quality and brand transparency more than ever, but their purchase behaviour suggests a willingness to compromise on both.

“‘Good enough’ has become a norm in the category, which has been dumbed down through price compression and clever, but often misleading, marketing. Grey Goose is a luxury product, but this positioning has also impaired our ability to fully connect with consumers; more often, they reserve Grey Goose for very special occasions. Live Victoriously seeks to change this perception and encourage consumers to recognise that they are the special occasion and that every moment is an opportunity to create a lifelong memory.”

Co-op Bank focuses on ‘co-operative values’ in purpose-led campaign

The Co-operative Bank is launching a marketing campaign to illustrate how the brand’s approach to banking is “based on the values of the co-operative movement”.

‘People With Purpose’, which has been created by MullenLowe London and is due to launch on 21 April, looks to demonstrate how the bank’s customers and colleagues are united by these values. Through the TV ad, Co-op Bank aims to highlight the work it has been doing with local communities for 145 years, which it believes sets it apart as a financial brand.

It was filmed in the North West of England, local to where Co-op Bank is headquartered, and shows a woman balancing a busy working life, being a parent and volunteering, to show the difference people can make to their local communities.

It also features Manchester skate park Projekts MCR, an organisation that has received support from The Hive, a free development service for co-operative businesses run by Co-operatives UK and funded by Co-op Bank. Additionally, it highlights the work the bank has been doing to tackle youth homelessness alongside charity Centrepoint.

Alastair Pegg, marketing director at Co-op Bank, says: “Our approach to banking is based on the values of the co-operative movement, and the benefit of bringing like-minded people together to make a positive difference; we believe in the power of ‘we’, and our bank has done so for over 145 years.

“We have always been for People With Purpose at The Co-operative Bank; demonstrated through our customer-led ethical policy, our campaigning and support of social enterprises and credit unions among many other things. Our new campaign will put our brand difference at the heart of the creative acknowledging that ‘it’s hard to do good, but it’s good when you try’.”

Burger King looks to entice younger consumers with ‘Whopper Day’ campaign

Fancy a Burger King today? Well, unless you’re in the mood for a Whopper you’ll be out of luck. Because today is ‘Whopper Day’ and the fast food chain will only be serving Whoppers as it looks to “reignite the nation’s love” for the burger, particularly among younger consumers.

The stunt, which was developed by BBH, will be supported by two 20-second TV ads – which show customers being turned away from Burger King outlets when they try to order anything else – and a large-scale print and OOH campaign, as well as activity across social and in-store, where menu boards will only feature the Whopper.

Burger King will also be giving away free Whoppers, which can be claimed by downloading the Burger King UK app or ordering on Deliveroo.

Katie Evans, marketing director at Burger King UK, says: “We are so excited to treat the nation to our iconic Whopper. The Whopper is Burger King’s pride and joy, and for one day only we think everyone deserves to get involved, tuck in and savour that flame grilled goodness on us. Burger fans have no choice, but in a good way. Hope you understand. After all, Burger King is not called home of the cheeseburger.”

Tuesday, 16 April

Amazon swamped by ‘fake’ five-star reviews

Amazon’s product review system is being inundated with “fake” five-star reviews for unfamiliar brands, according to an investigation by Which?.

The consumer group analysed the listings of popular tech products in 14 categories including fitness trackers, smartwatches and headphones. It found that items with the best reviews were dominated by brands such as Aitalk, Vogek and Itshiny, none of which are well known.

In many cases the reviews were unverified – meaning there is no evidence the reviewer had bought or used the product – and posted within a short period of time. For example, a set of headphone from the brand Celebrat had 439 five-star reviews all unverified and posted on the same day.

“Our research suggests that Amazon is losing the battle against fake reviews, with shoppers bombarded by comments aimed at artificially boosting products from unknown brands,” says Natalie Hitchins, the head of home products at Which?.

“Amazon must do more to purge its websites of unreliable and fake reviews if it is to maintain the trust of its millions of customers. To avoid being misled and possibly buying a dud product, customers should always take reviews with a pinch of salt and look to independent and trustworthy sources when researching a purchase.”

Amazon responds: “[We] invest significant resources to protect the integrity of reviews in our store because we know customers value the insights and experiences shared by fellow shoppers. We have clear participation guidelines for both reviewers and selling partners and we suspend, ban and take legal action on those who violate our policies.”

Publicis makes biggest ever acquisition with deal for Epsilon

Publicis Groupe has made its biggest ever acquisition – and one of the largest ever in the ad industry – with a deal to buy Alliance Data Systems’ Epsilon unit for $4.4bn.

The purchase is part of Publicis’s strategy to become the “preferred transformation partner for our clients” and will give the agency holding group access to a lot more first-party data. Epsilon specialises in loyalty and CRM and has data on more than 255 million people, as well as employing a huge number of data scientists.

Publicis CEO Arthur Sadoun tells the Financial Times: “With the acquisition of Epsilon, Publicis Groupe is bringing the necessary technology, expertise and the talent to complement our offer in creativity, media and business transformation.

“The new market imperative is to deliver personalised experiences at scale. There is no way our clients will continue to grow and reduce costs if they can’t deliver this in their own markets.”

Publicis believes the acquisition will boost a number of its businesses. On creative, it claims Epsilon will offer customer insights that can help brands build more relevant campaigns. On media, the data will help improve segmentation and maximise media ROI. And on digital transformation it claims the deal will allow Publicis to deliver deeper insights to optimise business models.

Social media sites may be forced to turn off ‘like’ function

Social media sites including Facebook and YouTube may be forced to turn off the ‘like’ function for children in the UK over concerns the buttons keep young users online for longer.

The proposed guidelines, drawn up by the Information Commissioner’s Office, suggests 16 online standards that social media companies should meet, including settings defaulting to ‘high privacy’. It also suggests location-tracking should be off my default, more robust age-verification systems and informing children if parents are monitoring their online activity.

Information Commissioner Elizabeth Denham says: “This is the connected generation. The internet and all its wonders are hardwired into their everyday lives. We shouldn’t have to prevent our children from being able to use it, but we must demand that they are protected when they do. This code does that.”

Monsoon Accessorize joins retailers launching CVA

Monsoon Accessorize is gearing up to launch a company voluntary arrangement (CVA) as it considers ways to restructure the business that could include the closure of up to 50 stores.

The retailer has appointed Deloitte to look at options to reduce its costs, including on rent and leases. Stores across the UK could be closed, although a report in Drapers says a list of target stores has not yet been decided.

Monsoon Accessorize has almost 270 stores in the UK and around 4,000 employees. It has already closed 40 stores as it fights falling high street footfall and weak consumer spending.

A spokesman for Monsoon Accessorize says: “The UK retail trading environment is tough and we are continuing to look at options to reduce our overall costs as we restructure the business in the UK and internationally. We have made no secret of the fact that we have steadily reduced our store portfolio in recent years and shall continue to do so as leases expire. We are looking at options to accelerate these store closures.”

Monsoon Accessorize is the latest in a growing list of retailers looking for ways to cut store numbers amid tough conditions on the high street. Deloitte is also reviewing Topshop-owner Arcadia’s business, while Debenhams brought in consulting firm Alvarez & Marsal’s MD to restructure the business.

JD Sports sees off high street challenges to report record performance

JD Sports has seen off the challenges on the high street to report record profits as it benefited from acquisitions in a difficult retail market.

Headline pre-tax profit jumped 15.5% to £355.2m for the 53 weeks to 3 Feb, while revenue was up 49.2% to £4.72bn. Both were ahead of analysts’ expectations of profits of £349.2m and revenue of £4.56bn.

The company has bought firms including US-based Finish Line and Footasylum in the past year. It has also benefitted from a trend among consumers for ‘athleisure’ and a more international footprint.

Its performance is in stark contrast to much of the rest of the high street, which as been hit by lower consumer spending and higher costs.

ASA wins judicial review over use of the term ‘fibre’ in broadband advertising

The Advertising Standards Authority (ASA) has won a judicial review into its decision to allow companies to use the term ‘fibre’ in broadband ads even when the service offered was only part-fibre.

The review was instigated by CityFibre, which believed the term should only be allowed to be used when providers were offering a full fibre broadband service. The ASA had based its decision on research which found that consumers did not identify the term ‘fibre’ as one of the priorities when choosing a broadband package, did not notice it in advertising, and did not change their decision on which broadband package to purchase when they knew the meaning of fibre.

The ASA says: “We welcome the court’s decision which finds in the ASA’s favour on all grounds and dismisses CityFibre’s arguments.

“The review of the evidence we undertook to arrive at our position on the use of the term ‘fibre’ to describe part-fibre services in ads was based on robust methodology and open minded analysis of all of the arguments. The process we followed to test if the average consumer is being misled by the use of the term ‘fibre’ to describe part-fibre services is the one we have used to protect UK consumers from misleading advertising for many years and we are pleased that the Court has supported our approach after a hard fought legal process.”

Monday, 15 April

L’Oréal launches AI-powered spot-scanning tech

L’Oréal skincare brand La Roche-Posay is launching the first spot-diagnosis tool engineered by artificial intelligence to provide skin diagnosis and recommendations for spot and acne-prone skin.

The free Spotscan tool, available on Boots.com, contains extensive data sourced by dermatologists, including more than 6,000 dermatologist patient photos of all ethnicities, sourced and graded by acne experts.

Using an iPhone or Android device, Spotscan will take three images of the user’s condition. The user will receive their grade and a total count of the number of blackheads, inflammatory spots and brown marks left by spots.

Following this the tool will educate with tailored skincare advice as well as La Roche-Posay product recommendations based on their skin type and grading. Where appropriate the tool will redirect patients with more serious acne to a specialist.

The results can be saved as a screenshot and the tool re-visited at any time, allowing users to track their skin progress as they incorporate the Spotscan tool’s recommendations.

Diageo to remove plastic from Guinness multipacks

Diageo is removing plastic from multipacks of its Irish stout brand Guinness as part of a £16m initiative to reduce its plastic footprint.

The plastic will be replaced with 100% recyclable cardboard in Ireland from August and in the UK and across the world next year.

The global drinks giant is also ditching plastic ring carriers and shrink wrap from its beer brands Harp, Rockshore and Smithwick’s.

“Managing our environmental impact is important for the planet and the financial sustainability of our business,” says Oliver Loomes, country director of Diageo Ireland.

“We already have one of the most sustainable breweries in the world at (Dublin’s) St James’s Gate and we are now leading the way in sustainable packaging. This is good news for the environment and for our brand.”

Manchester United unveils diversity campaign

Manchester United is building on its commitment to equality, diversity and inclusion with a new campaign that launched for the weekend’s Premier League home game.

The #allredallequal campaign, which was first developed during the 2016/2017 season, includes a film featuring members of the men’s and women’s teams addressing the message, showing the players’ reaction to discriminatory opinions and social posts.

The club’s website and social media will feature messaging around the club’s opposition to discrimination and promoting the #allredallequal commitment to its diverse global fan base.

Banners were also displayed on the Old Trafford East Stand, outlining United’s promise to equality, and a centre-circle flag was placed on the Old Trafford pitch to mark the occasion.

“The club has worked closely with equality stakeholders to ensure our inclusion and diversity work supports a wide range of initiatives,” says Manchester United’s Group managing director, Richard Arnold.

“We’re privileged to have players, staff and supporters from diverse backgrounds, and embrace the responsibility we have to make a positive impact on everyone who visits Old Trafford and supports the club, no matter where they are in the world.”

TSB to refund fraud victims

TSB has become the first British bank to promise to refund customers who become victims of fraud.

Under the fraud refund guarantee, TSB will reimburse customers who are tricked into authorising payments to fraudsters, as well as unauthorised transactions. Currently customers who move money to fraudulent accounts are less likely to be reimbursed because they carried out the transaction themselves.

The bank’s acting chief executive says it is “about giving piece of mind” to customers and “doing the right thing”.

“It’s a major societal blight. Innocent customers are being tricked,” he says. “If you [crooks] come for one of my customers, we will hunt you down.”

The guarantee comes into effect from 14 April. TSB is also investing in education for customers and staff about fraud.

Better weather puts spring in high street footfall

High street footfall increased by 2.5% over the five weeks between 24 February and 20 March, a marked change from the 8.6% decline for the same period last year.

According to the latest figures from the British Retail Consortium, overall footfall increased 1.4% compared to a 6% decline in March 2018. On a three-month basis, it dropped by 0.3%, with the six and 12-month averages both at 1.4%.

Retail park footfall was up 1.5%, while shopping centre footfall entered its 24^th month of consecutive decline, down 1%.

“Retailers will be relieved to see footfall up from last year though this is was heavily influenced by the weather: while shoppers in 2018 were contending with the “Beast from the East”, this March has been mild by comparison. Unfortunately, the higher footfall has not translated into higher spending,” says Helen Dickinson, chief executive of the BRC.

“The data also showed that shopping centres continue to suffer, with 24 consecutive months of decline in footfall. It is vital that all different shopping locations are fit for the future, offering the mix of retail and experience-led opportunities that generate the necessary footfall to succeed. Furthermore, Government can support this transformation by reforming the outdated business system which holds back firms from investing in physical space.”old