Ikea, Apple, Spotify: 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.

Ikea to roll out smaller format stores beyond London

Ikea is planning to roll out its city centre store format to other locations across the UK following the success of its debut London site. The new store format, which opened in October, allows shoppers to browse items and plan their interior design without visiting a large out-of-town location.

UK and Ireland CEO Javier Quinones described the store on Tottenham Court Road – known as a Planning Studio – as a “learning experiment” that caters to the fact more people live in cities and are less likely to own a car.

Ikea is now expected to trial its Planning Studios concept in New York, Shanghai and Riyadh, Saudi Arabia.

Quinones explained that while stores will always be an “important part of the Ikea brand when it comes to inspiration”, the business recognises that the role of the store is changing.

Ikea also announced that UK revenue in the year to 31 August rose by 5.9% to £1.96bn, with online sales up 14.4%. The Swedish retailer’s UK website received 199.3 million visits, up 13.4% on the previous year.

Quinones said that investment in its ecommerce, logistics and distribution arm was not a reaction to Amazon, or any other retailer, but a response to changing consumer demands, the BBC reports.

Ikea also extended its portfolio of UK stores to 21 with the opening of two new large-format locations in Sheffield and Exeter. The retailer is scheduled to open a new large store in Greenwich during the spring of 2019.

Apple drops under $1tr valuation despite revenue and profit growth

Apple’s shares fell 7% in extended trading after the technology giant warned that sales during the crucial holiday period would likely miss Wall Street expectations. The drop meant that Apple’s valuation briefly fell below the $1tr mark.

The downbeat outlook came despite the company posting revenue growth of 20% to $62.9bn (£48.4bn) for the fourth quarter, and a profit increase of 31% to $14.1bn (£10.9bn).

Services such as iCloud, Apple Music and the App Store performed particularly strongly, reaching record revenues of $10bn (£7.7bn).

Apple said it sold 46.9 million iPhones in the three months to the end of September, up slightly on the 46.7 million sold last year. However, in a sign the company may be shifting its focus away from products and towards services, Apple said it would stop disclosing the number of units sold each quarter.

The business also said that demand could be hit by “weakness in some of the emerging markets” during the crucial Christmas period.

“I can reassure that it is our objective to grow unit sales for every product category that we have,” Apple’s chief financial officer Luca Maestri told analysts.

“A unit of sale is less relevant today than it was in the past.”

Spotify hits 87 million paid subscribers

Spotify grew its base of paying subscribers by 40% – or four million people – to 87 million users during the third quarter. This figure is well above nearest rival Apple Music, which last reported 50 million paying subscribers for its app in April.

Monthly active users grew 28% year-on-year to 191 million, with growth in emerging markets such as Latin America outstripping Spotify’s more established markets. During the three months to 30 September the streaming service also grew its number of ad-supported monthly active users by 20% to 109 million.

Total revenue during the third quarter rose to €1,352m (£1,19m), up 31% year-on-year, with premium revenue up to €1,210m (£1,06m), an increase of 31%. The average revenue per user dropped 6% year-on-year to €4.73 (£4.16), which is however up on the 12% year-on-year decline reported during the second quarter.

Revenue from Spotify’s ad-supported customers rose to €142m (£125m), which the company credited to changes made to its data policies during the end of the second quarter aimed at improving its ability to measure performance and show advertising effectiveness.

Spotify experienced 44% global growth in its programmatic channel, while direct sold ad revenue accounted for 78% of all ad-supported revenue during the third quarter.

The company has also been working on identifying and removing “fake” accounts from its reported metrics.

During the third quarter the streaming giant struck a deal with smartphone maker Samsung to integrate Spotify into the setup of all its new phones, making it the preferred music partner for Samsung’s “multi-device ecosystem”.

While in the UK and Ireland, the business also joined forces with Sky to allow users to add Spotify payments directly to their Sky bill.

Waitrose to target ‘mindful’ consumers

Waitrose plans to target “mindful” consumers such as vegans and flexitarians in a bid to put quality over quantity.

Speaking in The Telegraph, managing director Rob Collins said Waitrose “will not chase scale” and was “proud to be niche”, as this approach will set the business apart from its rivals. Collins added that “rather than worrying about having a 5% share of the UK grocery market, we are focusing on being the best 5%.”

He also noted a shift in consumer attitudes towards veganism, vegetarianism and flexitarian lifestyles, explaining that the company wanted to embrace these changes and address its use of plastics and waste.

Collins added that we had reached a “more mindful era of consumerism”, which should be “thoroughly embraced.”

The managing director’s comments come in the same week that William Sitwell, editor of the Waitrose Food magazine, resigned after leaked emails he sent to a freelancer suggested “killing vegans, one by one”.

Waitrose was forced to put out a statement assuring shoppers that Sitwell’s email did not represent its views about vegans or vegan food.

The IPA and ISBA partner on initiative to reframe client-media agency relationships

Advertising industry bodies the IPA and ISBA have announced they are working on a joint industry initiative to promote better, more “sustainable” relationships between clients and their media agencies.

Representatives from across the industry, including client-side marketers, media agency heads and senior marketing procurement specialists have been meeting over the last year to explore some of the issues affecting relationships and to discuss solutions.

The initiative comes amid huge change and disruption across the media buying landscape, which includes the impact of programmatic marketing and the rising influence of consultancies in the buying process.

Co-chaired by Nigel Gwilliam from the IPA and Phil Smith from ISBA, the initiative has three core aims: to improve commercial transparency and effectiveness for clients; to ensure agencies receive proper remuneration and are better aligned with advertiser marketing and procurement teams; and to establish a joint framework setting out the role of consultancies, intermediaries and auditors in the relationship.

It is expected that the first pieces of work will be shared with the industry at ISBA’s Annual Conference on 5 March 2019.

Commenting on the initiative, Paul Bainsfair, director general of the IPA, said: “We regard this as one of our most important initiatives and we are very pleased with the collaboration and discussions so far. We are looking forward to seeing a real improvement in the client/media agency relationship.”

Phil Smith, director general of ISBA, said: “I am really pleased with the level of engagement in the initiative from our most progressive members. There is a clear desire for mutually beneficial relationships and ISBA have already seen some positive examples of members who have rethought their relationships with their agencies with great success.”

Thursday 1 November

Channel 4 picks Leeds as its new ‘national HQ’

Channel 4 has picked Leeds as the location of its new ‘national HQ’, while Britsol and Glasgow will host its two new creative hubs. The moves are part of its ‘4 All the UK’ strategy, launched in March, which aims to significantly increase how much the broadcaster spends across the UK and increase commissions from areas outside London from 35% to 50% by 2023.

The new locations will be home to 300 Channel 4 employees when fully established, including key decision makers responsible for commissioning content and programming. The new offices are in addition to Channel 4’s London HQ.

Alex Mahon, CEO at Channel 4, says: “Diversity and inclusion have always been at the heart of Channel 4’s mission and the launch of our 4 All the UK plan is the biggest and most exciting change in the organisation’s 36-year history – as we open up Channel 4 to people from across the UK and supercharge the impact we have in all parts of the country.

“We will be spending up to £250m more on programming produced in the nations and regions and to catalyse that spend I’m delighted to confirm that we will be establishing a new national HQ in Leeds and new creative hubs in Bristol and Glasgow.”

The Home Office launches campaign warning online abuse can be a hate crime

The Home Office has launched a marketing campaign that aims to highlight that online, as well as verbal or physical, abuse that targets someone because of their race, religion, disability, sexual orientation or transgender identity can be a hate crime.

The campaign, created by M&C Saatchi London, focuses on criminal behaviour such as aggressive verbal abuse that are also hate crimes. In a 60-second ad, a variety of people are targeted including a woman in a hijab walking down the street and a man in a wheelchair on the bus. The ad finishes with one of the perpetrators being approach by police, while a voiceover explains that the abuse could be a hate crime.

The style is echoed in a series of posters and digital ads and is accompanied by the end line “It’s not just offensive. It’s an offence.”

Andy Tighe, director of communications at The Home Office, says: “Through this bold multimedia campaign, the Home Office wants to show members of the public what a hate crime is and that it is unacceptable. It is important to reassure communities that the government is taking hate crime seriously and this innovative campaign will help address the attitudes and beliefs that foster hate crime.”

Kellogg plans price rises as profits take a hit

Kellogg is planning to increase prices on brands such as Pringles as it looks to boost profits amid a shift to single-serve packaging.

The FMCG firm saw adjusted operating profit fall 2.6% in the third quarter. While sales were up, the cost of producing single-serve options hit profits, as did planned investment in advertising and promotion. Kellogg now expects adjusted operating profit to be flat in the fourth quarter, it had previously projected between 5% and 7% growth.

“In the third quarter, we boosted investment behind our brands, capabilities, and new pack formats. This investment, along with our expansion and acceleration in international markets, has returned us to top-line growth this year. Despite their near-term impact on profit, we’ll continue making these investments in the fourth quarter because we know they are putting us on a path for sustainable growth over time,” says Steve Cahillane, Kellogg’s CEO.

BBC Sounds launches first marketing campaign to promote new personalised app

The BBC has launched its first marketing campaign for BBC Sounds, a new app that offers users access to personalised music, radio and podcasts.

The campaign, created in-house and which will run on the BBC’s own channels and in cinema, outdoor, experiential and social, follows a user as she listens to the app throughout the day. Called ‘Listen without limits’, it shows her being joined by a range of talent across music, BBC radio and podcasts such as BBC presenters, musicians like Rita Ora and scientist Brian Cox.

Laurent Simon, executive creative director at BBC Creative, says: “Sounds is the BBC’s biggest product launch since BBC iPlayer over a decade ago. Coupled with the heritage of great music ads like Perfect Day and God Only Knows, we had to make a big statement of intent. The idea of Listen Without Limits focuses on the benefit of the app offering music, radio and podcasts all in one place: expanding your audio bubble leads to richer and more interesting experiences”

The BBC Sounds app will carry thousands of hours of BBC content both live and on-demand, offering a single destination for all BBC audio content for the first time. It is the BBC’s attempt to compete with the rise of digital audio services such as Spotify, as well as the growing popularity of podcasts.

Claire Jullien, BBC Portfolio head of marketing, says: “In a world of expanding on-demand audio and streaming services, our younger listeners are spending less time with BBC Radio. Our ambition for BBC Sounds is to create the listening habit of the future. The campaign ‘Listen Without Limits’ targets under-35s, light and lapsed listeners through a range of channels and activity taking place across the UK.”

Gambling companies face crackdown on ‘misleading’ small print

Gambling companies face tougher action if they mislead customers by using unfair small print under tighter rules brought in by the Gambling Commission.

The industry trade body says the moves are necessary after growing customer complaints about small print allowing companies to withhold winnings. It hopes the steps will help restore public confidence in the sector, which is says is at a “low ebb”.

Ian Angus, programme director of consumer protection at the Gambling Commission, says: “If a customer thinks they have been treated unfairly, they can complain to the operator. If they are not making any headway on that front, and if customers believe a company has broken our rulebook, we want to hear from them.

The Gambling Commission is also cracking down on advertising, with companies facing a fine if they break the rules, including through ads created by third-party affiliates. Gambling companies will now have to respond to customer complaints within eight weeks (previously there was no limit), while they have been banned from sending spam texts or customers.

Wednesday, 31 October

Amazon launches ‘try before you buy’ fashion service

Amazon Fashion has launched Prime Wardrobe, its ‘try before you buy’ shopping service, which allows Prime members to order items with no upfront charge and have them delivered for free. Users can then try items on at home and only pay for the pieces they decide to keep.

There are thousands of fashion products available as part of the service, which covers women’s, men’s and children’s clothing, shoes, bags and accessories.

Members can select between three to eight items for free delivery and once they receive their order they then have seven days to decide whether or not they want to keep them. Any items they don’t want can be returned for free using a resealable bag with a prepaid address label.

Fashion brands available as part of Prime Wardrobe include Calvin Klein, Tommy Hilfiger, Levi’s, Esprit, Miss Selfridge, Lacoste, New Look, Aldo and French Connection, as well as Amazon’s own fashion brands Find, Iris & Lilly, Truth & Fable, Meraki and Aurique.

Facebook misses user targets as growth slows in its most profitable markets

Facebook has missed its targets for user growth and revenue as a spate of scandals hit demand.

The social network’s third quarter results show an average of 1.49 billion people used Facebook on a daily basis in September, up 9% on last year but below its target of 1.51 billion. Growth fell in Europe, however, and remains flat in the the US and Canada.

Likewise, sales failed to hit forecasts. Despite rising 33% to $13.7bn (£10.7bn) in Q3, it fell short of expectations and was lower than the 42% increase seen in Q2.

Facebook’s co-founder and CEO Mark Zuckerberg says he’s confident the company’s ad sales will catch up to meet the change in users’ behaviour, but has warned investors that 2019 will be another year of “significant investment”, suggesting it will “take some time”.

The firm did warn investors in July that growth would slow, following a spate of data breaches and users’ concerns over fake news.

Evans Cycle faces multiple store closures as part of Mike Ashley rescue deal

Sports Direct’s Mike Ashley is set to close half of Evans Cycles’ 62 stores as part of his deal to buy the struggling bike retailer resulting in hundreds of job losses.

Ashley says: “In order to save the business, we only believe we will be able to keep 50% of stores open in the future.”

That means a significant proportion of the retailer’s 1,300 employees risk losing their job.

The bike retailer, which went into administration last month, has had a difficult year given the particularly cold weather at the start of 2018 and lack of cash to invest in stores and online.

Evans is the second retailer Ashley’s firm has rescued from administration in recent months, after it bought House of Fraser for £90m in August.

Monzo hits £1bn valuation to become the UK’s latest ‘unicorn’

Digital bank Monzo has raised £85m in venture capital funding, making it the latest UK tech firm to be valued at more than £1bn and be given ‘unicorn’ status.

The challenger bank now has more than one million customers, and says it accounts for 15% of all new bank accounts being opened in the UK.

Monzo’s latest investment comes from VC firms General Catalyst and Accel Partners, and it is also planning another crowdfunding round of £20m in the near future.

Next partners with Marie Claire for premium beauty offer

Next is partnering with Marie Claire to offer customers access to hundreds of premium beauty brands via its Fabled by Marie Claire business online.

Next Beauty in partnership with Fabled by Marie Claire will offer brands including Benefit, GHD, Dermalogica, Elemis, Burberry, Gucci, Emporio Armani and Boss via next.co.uk, with ranges available across all categories.

As part of the partnership, the dedicated Fabled by Marie Claire editorial team will also create exclusive and bespoke content.

Amanda Scott, managing director of Fabled by Marie Claire says: “Our new venture creates a powerful partnership combining the complementary capabilities of each business: Fabled’s beauty expertise and brand relationships, the unrivalled authority of Marie Claire, with the ecommerce expertise of Next.”

Tuesday, 30 October

WACL calls to end ‘leadership gap’ in marketing

Women in Advertising and Communications London (WACL) is calling on the industry to tackle gender inequality in senior roles.

The networking organisation, partnering with LinkedIn, found that women only make up 36% of leadership roles in marketing and communications despite comprising of 50% of the workforce in the UK.

This 14% “leadership gap” has led WACL to launch a guide on how to get more women into senior roles, by encouraging businesses to set out gender equality goals and implement proactive recruitment processes and policies. It has been welcomed by industry trade bodies including the Advertising Association.

Gender equality has improved over the past decade with overall figures showing female recruitment into the marketing, media and communications has increased by 10%. It is at a similar level to other industries like finance which has 37% of roles filled by women and manufacturing (24%), but lags behind education at 53%.

Syl Saller, chief marketing and innovation officer at Diageo says: “Today we are calling on the marketing, media and communications industries to invest in female talent and close the leadership gap.

“The evidence is clear, diverse teams produce more creative work and diverse businesses perform better. It’s time for everyone to work together to create more gender equal workplaces, because when we do, all boats rise.”

Lisa Thomas, vice-president of WACL and chief brand officer of the Virgin Group, adds: “We need to ensure our creative output, and our internal culture, mirrors the diverse world we live in…. This isn’t simply about closing the gender gap, it’s about a fundamental shift in attitudes for the future.

The research was conducted by LinkedIn which used the anonymous profiles of 597,000 UK members across a broad range of marketing and communication jobs including newspapers, publishing, public relations, marketing and advertising.

The Restaurant Group to bid £600m for Wagamama

The owner of Frankie & Benny’s, Chiquito and Garfunkel’s is reported to be buying restaurant chain Wagamama for £600m.

The Restaurant Group (TRG) is now the preferred bidder to acquire the Asian fusion restaurant. A sales process for the restaurant was initiated in June by Goldman Sachs on behalf of Wagamama’s private equity backers Duke Street and Hutton Collins.

TRG had a tough year in 2016 and was forced to close venues after multiple profit warnings. The group is is only valued at £600m but is said to be planning to use an equity issue and debt package to fund the acquisition.

The purchase of Wagamama would add just under 200 restaurants to the group’s portfolio which currently has has 509 venues.

HMV overtakes Amazon for physical music

HMV has overtaken Amazon to become the largest physical music retailer in the UK.

Based on music sales for the 12 weeks to 23 September, HMV increased its market share to 28% and moved ahead of Amazon which has 21.1%, according to data published by Kantar Worldpanel yesterday (29 October).

This was boosted by physical sales of soundtracks such as Mamma Mia 2, and the release of album Now That’s What I Call Music 100.

However, for overall physical entertainment, Amazon remains the market leader expanding its overall market share to 23.2% share compared to HMV’s 18.5%.

Subscription services also did well, with the number of people with access to a Netflix account rising 31% year on year. This beat rival Amazon Prime which increased 24% by comparison.

Music subscription has also increased with the number of subscriptions to streaming services rising to an all-time high with 16.3% of the population using them.

BP profits soar to five-year high

BP’s profits more than doubled in the third quarter reaching a five-year high.

The British energy company was boosted by stronger oil prices and new projects in 2017 with oil and gas production in the fourth quarter rising by 18% to the equivalent of 2.58 million barrels of oil a day.

Bob Dudley, the group chief executive of BP, says: “This has been a really, really good year and it sets us off very well to enter into 2018. We enter the second year of our five-year plan with real momentum, increasingly confident that we can continue to deliver growth across our business, improving cash flows and returns for shareholders out to 2021 and beyond.”

Clipper Teas launches ‘world’s first’ plastic-free tea bag

Clipper Teas is launching a plastic free, non-GM tea bag which it says is a “world first” for tea.

The brand it rolling out the tea bags from today (30 October) but will allow a transition period to let old products run out to avoid waste. From January all packs containing the new tea bags will feature a notice explaining the change.

Clipper Teas says the innovation took time with extensive trials in order to find the right materials to fit with its organic principles. Each tea bag contains “natural” plant-based material, including a blend of abaca (a species of banana) and plant cellulose fibres.

Rebecca Vercoe, Clipper Teas brand controller at Wessanen UK, says: “We are incredibly proud to be the first tea brand to introduce a plastic-free tea bag that’s also non-GM and unbleached. Guided by our founding principles of natural, fair and delicious, we have always strived to do the best we can for people and the planet. Now we’ve created and implemented a plastic-free bag, we won’t be going back.”

Monday 30th October

Debenhams closure plans to hit Arcadia

Debenhams’ plans to close almost a third (50) of its 165 department stores has put dozens of concessions belonging to Sir Philip Green’s Arcadia group at risk. According to the Sunday Telegraph, Arcadia has about 350 concessions in Debenhams stores, with around 100 of those at risk.

It is thought the Wallis, Miss Selfridge, Dorothy Perkins and Topshop brands could all be affected. Combined annual sales at these concessions total as much as £100m.

The impact of the Debenhams’ closures is a fresh blow to Green after he was named by Lord Peter Hain in the House of Lords as the businessman behind an injunction preventing media from reporting allegations of sexual harassment and racial abuse.

The 10 biggest online grocery markets to create a $227bn opportunity by 2023

The 10 biggest global online grocery markets are predicted to contribute to a combined growth of $227bn by 2023, according to IGD.

China is leading the way with a predicted growth of 31% over the next five years, taking its market share from 3.8% to 11.2%. The Chinese online grocery market is forecast to grow by the same amount as the entire combined market of all 10 countries in 2018.

The US is primed to experience similar growth, with its online market set to more than double from $23.9bn to $59.5bn, creating an additional $37bn opportunity for American retailers and manufacturers.

Meanwhile, in the UK, online will increase its market share from 6% to 7.9%, while Spain, Canada and Germany are also leading the way.

According to IGD’s research, the online grocery market growth is being driven by the twin enablers of rapidly evolving shopper expectations and exciting tech innovations.

Ryanair investors call for chairman to stand down

Ryanair investors are calling for the airlines’ chairman David Bonderman to stand down after more than two decades with the company. On top of this, the Local Authority Pension Fund Forum (LAPFF) has asked Ryanair to replace Michael O’Leary, who has been chief executive since 1994.

According to The Guardian, Ian Greenwood, LAPFF chair, wrote a letter to the chair of the Irish airline’s nomination committee Michael Cawley on 12 October to explain it will file the resolutions in favour of the changes at the Dublin-listed firm’s next annual meeting, to be held in September next year.

LAPFF, which holds about 1% of Ryanair’s shares, has not received a response to the letter. However, only investors holding at least 3% of shares can introduce a resolution, which means LAPFF would require backing from larger investors, according to Irish law.

“Ryanair shareholders recently passed all AGM resolutions by a large majority, including the nomination of directors and chairman. They appreciate how fortunate we are to have an outstanding chairman like David Bonderman [to] guide the board and the airline,” says Ryanair in a statement.

Ikea champions diversity in holiday campaign

https://www.youtube.com/watch?v=URJHee3kePs

Ikea US is championing diversity in this year’s holiday advert by showcasing families of various ages and ethnicities.

The 60 and 30-second spots which adhere to the tagline, “our holidays don’t all look the same, maybe that’s what makes us great”, features families celebrating both Hanukkah and Christmas while others are seen eating their version of a traditional holiday meal whether it be noodles or hot coco.

Christine Whitehawk, external communications manager at Ikea US, says: “Ikea knows the importance of life at home and that the holidays look and feel different for everyone”.

Created alongside Ogilvy, the campaign isn’t the first of its kind. In fact, last year Ikea Canada ran a spot that also featured a diverse group of individuals, including a refugee family and two women attending prom together.

Huel launches first UK TV ad

Huel has launched its first TV advert featuring its 100% vegan shakes. The 30-second spot showcases a number of people living an active lifestyle from rock-climbing to cycling and how Huel can provide an on-the-go meal alternative

Using the tagline ‘Eat complete’, Huel claims to offer nutritionally complete foods while having minimal impact on animals and the environment. The company also aims to combat food waste by 30%.

The advert will appear across a number of lifestyle channels including Comedy Central, Dave, Sky News, E!, Fox and Lifetime. It was produced alongside creative agency AndRising.