Uber, KFC, Nike: 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.

By Marketing Week Reporters 18 Mar 2019 7:50 am

Uber edges closer to billion dollar IPO

Uber has reportedly chosen to list on the New York Stock Exchange, as the ride hailing firm edges closer to its hotly anticipated initial public offering (IPO).

Expected to take place in April, the IPO could be valued at $120bn (£91.4bn).

The news comes as rival Lyft, the second biggest ride sharing firm in the US, prepares to go public on the Nasdaq stock exchange next week. Meanwhile, yesterday Levi Strauss returned to the stock market after 34 years. Shares in the denim brand shot up 31.8%, valuing the company at $8.7bn (£6.6bn).

Pinterest is reportedly also looking to debut on the New York Stock Exchange in April, according to reports in the Wall Street Journal, while Airbnb and Slack are expected to go public at some point this year.

KFC takes on the imitators in new campaign

KFC is taking a swipe at the “fried chicken pretenders” lurking on UK high streets with a new campaign designed to remind chicken lovers there is only one place to get the Colonel’s Original Recipe chicken.

Devised by Mother, the TV ad shows the original chicken Don, Colonel Sanders, hitting the streets to size up the imitators, who try to match the name and draw inspiration from the logo. However, the Colonel is clear that this legion of imitators will never be able to match the “iconic taste of KFC”.

The 60-second ad is set to a specially-commissioned Royal Philharmonic Orchestra performance of Love Theme by Nino Rota, which has been released by Decca Records.

For the out-of-home and press element of the campaign, KFC will feature images of the imitator chicken shop brands, alongside the line: “Guys, we’re flattered.” The ad will also run across cinema, social and digital.

“It’s flattering to have this entire legion of imitators, and we wish every chicken shop out there the best of luck. But there’s nowhere else you can get the Colonel’s Original Recipe,” says Meghan Farren, CMO of KFC UK and Ireland.

“We invest time, effort and skill into freshly hand-breading Kentucky Fried Chicken in our kitchens – all day, every day – and that’s why you can only get KFC at KFC.”

China continues to drive growth at Nike

The Chinese market continues to drive growth at Nike, despite the sportswear giant falling short of hefty analyst expectations for its US business.

During the third quarter ending 28 February, Nike’s revenues in China surged by 19% to $1.58bn (£1.2bn), rising by 19% in footwear and 21% in apparel.

By contrast, across North America revenue rose by 7% to $3.81bn (£2.89bn), down on analyst expectations of $3.87bn (£2.94bn). Revenue across the footwear business increased by 9% and on the apparel side by 2%. In Europe Nike grew revenue by 6% to $2.43bn (£1.84bn), with footwear up 7% and apparel rising by 5%.

Nike’s total brand revenues during the third quarter rose by 7% to $9.6bn (£7.3bn), with gross profit surging by 10% to $4.33bn (£2.93bn).

Looking specifically at Converse, revenue dropped by 2% to $463m (£352m), with double-digit growth in Asia and online offsetting some declines in the US and Europe.

Nike executive vice-president and chief financial officer, Andy Campion, praised Nike’s “Consumer Direct Offence”, for delivering growth driven by continued momentum in China. This strategy is focused on online sales, limited edition “drops” via its app and supply chain improvements to bring new products to market faster.

MillerCoors sues Bud Light over ‘misleading’ Super Bowl ad

MillerCoors is suing Anheuser-Busch over claims its Super Bowl advert for Bud Light made “false and misleading” claims about the Coors Light and Miller Lite beer brands.

In the advert the Bud Light king travels to “return some corn syrup to its rightful owners” in the Coors Light and Miller Lite castles.

MillerCoors claims the ad misleads customers into thinking its beers contain corn syrup, an ingredient which the brewer says is not present in the final product. The company has, therefore, asked for an injunction to stop Anheuser-Busch from continuing to air the advert.

“Anheuser-Busch is fearmongering over a common beer ingredient that’s used, by the way, in many of its own beers as a fermentation aid,” says Adam Collins, MillerCoors’s vice president of communications, as reported by the New York Times.

Furthermore, MillerCoors claims the ad is “triggering” to consumers because high-fructose corn syrup has been linked to obesity and therefore the brewer believes its rival featured the ingredient to “frighten consumers” into switching to Bud Light.

Anheuser-Busch hit back, with vice president of communications Gemma Hart saying in a statement that the campaign is “intended to point out a key difference from Miller Lite and Coors Light”. She adds: “Those beers are brewed with corn syrup; Bud Light is not. These are facts.”

Booking.com unveils first employer branding campaign

Booking.com has launched its first global employer branding campaign in a bid to attract a wave of new talent.

Shot at its offices in Amsterdam, Toronto and Shanghai, the ‘Expand Horizons’ campaign features more than 100 employees working across the travel business. Designed by MediaMonks, the creative is intended to show how Booking.com is expanding as a business, evolving its product from attractions to transportation options.

Employer brand manager, Emily Firth, explains that every element of the campaign was created with the Booking.com internal community, from the way the strategy developed, to refining the concept and writing the script.

“A big part of growing the diverse global community we’ve built over the years has been creating an environment where everyone is empowered to explore, grow and learn,” adds Yvonne Agyei, chief people officer at Booking.com.

“Whether this is through working alongside a variety of different cultures and personal perspectives or being given the opportunity to learn a wide range of skills – not only those related to one’s job role – or being given freedom to impact and innovate on a product that shapes the way people travel.”

Thursday, 21 March

Sainsbury’s pledges commitment to disability inclusion

Sainsbury’s has become a member of The Valuable 500, a global campaign which is striving to place disability at the top of business agendas.

The Valuable 500 was launched by disability activist and founder of Valuable, Caroline Casey, in January 2019.

It is urging global business leaders to become accountable for disability inclusion in their companies by signing up to the campaign, which has already received support from ex-Unilever CEO Paul Polman, Sir Richard Branson, executive vice president of the Omnicom Group Janet Riccio and EY chairman and CEO Mark Weinberger.

“As part of our vision to be the most inclusive retailer, we are always looking for ways to improve and adapt to meet our customers’ and colleagues’ needs, as evidenced by our ongoing focus on inclusion and diversity at Board level,” says Tim Fallowfield, company secretary, corporate services director and board sponsor for disability age and carers for Sainsbury’s.

“We want to continue to demonstrate best practice in this area and would encourage other companies to join us by leading from the top and taking action, to create an accessible environment for all.”

Next profits down as polarisation of retail and online continues

Next’s profit before tax was down -0.4% following another tough period for the high street, which the retailer says will remain “challenging” this year.

To the year ending January 2019, profit before tax fell from £726.1m in January 2018 to £722.9m in January 2019. While online profit was up 13.8%, retail profit was down -21%.

Similarly, online sales were up 14.7%, while retail sales were down -7.9%, meaning total sales were up 2.5% to £4.2bn.

“As anticipated, the year to January 2019 was challenging for Next as we continued to experience a structural change in our business, with sales continuing to transfer from our stores to online,” says chairman Michael Roney.

“Even though the High Street looks set to remain challenging our online business continues to increase its contribution to sales and profit of the group. Our core strategy remains unchanged; focus on our customers, products and profitability, continuing to build on the capabilities of our brand and online platform.”

Levi’s returns to stock market at $6.5bn

Levi Strauss has returned to the stock market after 34 years with a valuation of $6.5bn (£5bn).

Shares have been priced at $17 each, slightly higher than the $14-$16 target range.

The 166-year-old company, which first went public in 1971 but has been private since 1985, says it wants to continue to grow from men’s jeans to more products for women, as well as expanding its tops business.

It believes there is “significant opportunity” to deepen its presence in emerging markets such as China, India and Brazil, “to drive long-term growth”.

Co-op to build pop-up store at Glastonbury

Co-op and Glastonbury have announced an exclusive partnership that will see it become the first national shop to build a retail space at the festival in June 2019.

The pop-up will sell a range of food and drink as well as “festival essentials”, including sun cream and rain ponchos, a move designed to attract festival-goers looking to pack light.

“This is such an exciting and unique opportunity to build on our expertise of running festival stores and work with a partner to bring to life our shared values,” says Amanda Jennings, Co-op’s director of marketing live and local.

“Glastonbury is the ultimate live music festival and we can’t wait to welcome existing and new customers, young and old to our pop-up shop. Music festivals create a happy, weekend community which we are perfectly placed to serve, getting closer to customers with our unique convenience offer, providing high quality and value for money essential items to help festival goers make the most of their Glastonbury experience.”

In addition to the on-site shop, Co-op has submitted a planning application for a new store in the village of Pilton, adjacent to the festival site.

Jennings adds: “As the first national food retailer to work in this way with Glastonbury, we are developing exciting and unique plans together for the festival store. Equally, if the planning application is approved, opening a Co-op in Pilton would give us the opportunity to continue to serve the local community once the music has stopped and the tents have been packed away’.”

Amazon launches own-label skincare brand

Amazon has launched its very first line of own-brand skincare products, called Belei.

The range will include moisturisers, eye cream and spot treatments, ranging in price from $9 (£7) to $40 (£30).

“Our goal is to help customers spend less time and money searching for the right skincare solutions,” says Kara Trousdale, Amazon’s head of beauty for private brands.

“We took a simple, no-nonsense approach when creating Belei, developing products with ingredients that are both proven to deliver results and also offer customers great value for the quality.”

Amazon is thought to have close to 140 private label brands, with the latest move pushing the e-commerce giant further into the retail space and multi-billion dollar beauty industry.

Wednesday, 20 March

Disney completes $71bn 21st Century Fox deal

The Walt Disney Company has closed its $71bn (£54bn) acquisition of Rupert Murdoch’s entertainment business 21st Century Fox as it looks to take on streaming giant Netflix.

As part of the deal, Disney will absorb the Fox film and TV studios, the FX networks, National Geographic and Indian TV network Star India. It will also bring together franchises such as The Simpsons, X-Men, Star Wars and Marvel under the same roof for the first time, supercharging its content and creating a media company of unprecedented scale.

The business will launch its Disney Plus streaming service later this year, which given its souped-up content offer puts it in a better position to rival Netflix and Amazon Prime.

In a statement, Robert Iger, chairman and CEO of The Walt Disney Company, describes the deal as an “extraordinary and historic moment”.

“Combining Disney’s and 21st Century Fox’s wealth of creative content and proven talent creates the preeminent global entertainment company, well positioned to lead in an incredibly dynamic and transformative era.”

However, the merger is likely to result in job cuts, with experts predicting as many as 4,000 positions could be on the line.

Sainsbury’s and Asda commit to £1bn in price cuts

Sainsbury’s and Asda stand to save around £1.6bn if their merger is to go ahead and have promised to pass £1bn in price cuts on to customers.

To deliver £1bn of lower prices annually, which it aims to do by the third year following completion of the merger, it has committed to investing £300m in the first year and a further £700m over the following two years, as the cost savings flow through the business. This will reduce the price of everyday items by around 10%.

Sainsbury’s will also cap the level of profit in makes on petrol to no more than 3.5p per litre for five years, while Asda will guarantee its existing fuel pricing strategy.

The pledge comes as the two supermarkets look to convince the Competition and Markets Authority (CMA) to allow the merger. Last month, the CMA said it could halt the merger if it was likely to result in higher prices and less choice.

The deal will see the combined business overtake Tesco as the UK’s biggest supermarket, so if it is approved the CMA could still force a number of stores or one of the brands to be sold.

The price commitments made by the supermarkets will be independently reviewed by a third party, which will publish an update on performance each year, holding the merged business to public account.

The CMA’s final decision is due on 30 April.

H&M, Nike and MAC trial Instagram checkout feature

Instagram has launched a checkout feature that is being trialled by 20 brands including H&M, Nike and MAC which allows users to complete a purchase in the app for the first time instead of being redirected to the retailer’s own website.

When users tap to see a product from a brand’s shopping post, a ‘Checkout on Instagram’ button will appear on the product page. If selected various options such as size and colour will pop up before users are directed to make a payment, all within Instagram.

To streamline the process, users will only have to enter their name, email, billing information and shipping address the first time they check out.

Customers will then receive notifications about shipment and delivery via Instagram.

Sara Spännar, head of marketing and communications at H&M, says: “We believe this is a great way to offer fashion fans an inspiring and convenient shopping experience. Instagram is such an important channel and we look forward to exploring this new way of shopping.”

Checkout on Instagram is currently being tested in the US only, with other brands involved including Burberry, Uniqlo, Zara, Dior and make-up brand ColourPop.

Growth slows for Asos in Europe, while sales slip in US

Asos has had another tough quarter with “challenging” conditions in France and Germany slowing the pace of growth in the EU, while sales slipped in the US, causing its shares to fall sharply.

Overall, the online fashion retailer saw sales rise 11% to £658.5m for the three months to 28 February compared to the same period last year, with UK sales up 14%.

The pace of growth in the EU slowed to 8%, while US sales fell by 3%. CEO Nick Beighton admits the retailer’s US performance fell short, blaming in part changes to its warehouse in the US.

He says: “As our Atlanta warehouse went fully online, demand far exceeded our expectations. While very encouraging for the longer term, this caused a significant short-term dispatch backlog, which we have now cleared.”

Newspaper and magazine readership rises across print and digital

News brands’ total market reach across print and digital increased 3.5% to 47.7 million in 2018, according to the second annual figures from PAMCo, the audience measurement currency launched by the publishing industry last year.

Looking at digital readership alone, the rise is steeper at 12%, which equates to an additional 1.8 million people accessing news through digital channels each day.

Collectively, news brands reach 44.5 million people a week in total, which is more than Facebook and Google’s total UK weekly reach of 38 million and 38.5 million respectively, according to Newsworks, the marketing body for national newspapers.

In total, 17 million people are reading news brands’ content via digital platforms every day, with 14 million consuming via mobile daily.

Magazine brands, meanwhile, saw a 14.7% lift to 41.3 million across both print and digital compared to 2017.

Tuesday, 19 March

McDonald’s UK ridicules coffee competitors in satirical homage

McDonald’s has mocked its coffee competitors in the UK with a simplistic tongue-in-cheek ad that aims to highlight the simplicity of a good drop while insulting the ways coffee is often marketed.

The fast-food giant’s coffee brand McCafe’s new ad, ‘We Could’, takes inspiration from its 2017 spot ‘Madness’ and mocks the creative work often seen in the coffee industry.

The 60- and 30-second versions reveal how the brand “could” communicate the quality of McCafé coffee by using models, interpretive dance or slow motion footage.

During the spot a narrator can be heard suggesting: “We could show you models holding coffee cups up to their faces. We could use slow, no, slower shots of arabica beans. We could show a trendy artisan taking coffee way too seriously. We could use an abstract dance routine to romance our milk…. But we don’t. What we do do is using freshly ground arabica beans and organic milk.”

“The McCafé work has always rung true with customers—people who just want a great coffee,” says Michelle Graham-Clare, marketing director for McDonald’s UK. “This campaign is no different, tackling the world of coffee advertising in a funny and relatable way. The campaign highlights the fact that we know people want to feel assured they are going to get a good cup of coffee, but they don’t always enjoy the pretentiousness that comes with it.”

Sainsbury’s to outline price cuts ahead of merger

Sainsbury’s and Asda are to provide more detail about their dedication to slashing price in response to a negative provisional review about their anticipated merger by the UK’s competition watchdog,

The Competition and Markets Authority (CMA) dealt a serious blow to the deal last month, putting the merger in jeopardy by suggesting the takeover of Asda by Sainsbury’s would be halted without the sale of a large number of stores, or even one of the brands.

Additionally, the CMA said the merger could lead to a “worse experience for in-store and online shoppers across the UK through higher prices, a poorer shopping experience, and reductions in the range and quality of products offered”. The news comes after the watchdog also shared concerns that prices could rise at a large number of Sainsbury’s and Asda petrol stations.

Now the pair is expected to publicly detail its commitment to annual savings for shoppers.

The Financial Times (FT) reports that the supermarkets will also recalculate a key indicator of consumer harm using what they consider to be more realistic criteria before submitting another proposal for store sales. The FT says analysts previous said between 100 to 150 stores would need to be sold.

Neither supermarket giant has yet commented on the matter.

Cadbury removes Freddo campaign that ‘promotes looting’

Cadbury has pulled its Treasure Island ad campaign for Freddo after archaeologists and the government accused the confectionary giant of promoting looting to children, which is illegal.

The ads suggest children should “grab your metal detector and go hunting for Roman riches” across a number of locations in the UK and Ireland.

Cadbury removed the campaign material from its website after receiving a number of criticising messages, suggesting the campaign is “irresponsible”, with arts minister Michael Ellis saying the ad challenged the rules designed to protect heritage, The Guardian reports.

The Advertising Standards Authority (ASA) also received about 30 complaints.

Historic England, the nation’s heritage agency, plans to write to Cadbury complain about the ad, saying: “Unfortunately Cadbury’s PR campaign encouraging digging for treasure potentially puts people at odds with the law. There are strict rules that protect England’s archaeological heritage, including laws governing metal detection. We are glad to see the campaign website is no longer live and would be happy to advise Cadbury to make sure any future campaign doesn’t have unwelcome results.”

Cadbury has also released a statement saying it was “not in our intention” to encourage children or families to break laws and is glad the matter had been bought to its attention.

GoDaddy launches campaign aimed at British entrepreneurs

GoDaddy, one of the world’s largest domain name registrars, has launched a campaign aimed at inspiring a new cohort of entrepreneurs to start their own business online.

The campaign, titled ‘Harry’s Roly Polys’, features former football manager Harry Redknapp, who is determined to share his favourite dessert (jam roly polys) with the UK public using GoDaddy.

The tongue-in-cheek spot, created by VCCP, shows Redknapp baking and explaining how taking his business online has allowed his dream venture to grow. The football great has adopted the domain name harrysrolypolys.co.uk where his baked goods will be available to purchase with all proceeds going toward Hope Housing.

The campaign also looks to harness the British entrepreneurial spirit while encouraging people with a passion to think about starting their own business online.

“Harry’s roly poly’s is a bit of fun, but it’s got a serious message. GoDaddy champions the entrepreneur in everyone, and we hope this campaign will inform British entrepreneurs that it doesn’t matter whether they are digital experts or total novices, GoDaddy can help you succeed online,” says GoDaddy brand marketing manager James Eadie.

The campaign, which is GoDaddy’s biggest outside the US, will run across TV, digital, out of home and social media.

JD Sports to buy Footasylum for £90m

JD Sports has revealed plans to purchase struggling retailer, Footasylum for £90.1m.

JD, Britain’s largest sports retailer, already owns 18.7% of its smaller rival after buying a stake last month, and has agreed to pay 82.5p in cash for each share in the footwear and hoodie chain.

Last September, Footasylum warned about weaker-than-expected profits, causing its share value to more than half. Shares in the retailer jumped 74% to 81.5p following the news, although that is still well below its flotation price of 164p in November 2017, when Footasylum was valued at £171m.

“We believe that there will be significant operational and strategic benefits through the combination of the very experienced and knowledgeable management team at Footasylum and our own expertise,” says Peter Cowgill, executive chairman of JD Sports.

The Guardian reports that the company has declined to comment on potential job losses as a result, saying decision would be made following a strategic review.

Monday, 19 March

M&S plans shift to bigger food stores

Marks & Spencer is planning to dedicate more retail space to its food offering as it targets the weekly family shop.

The strategy involves converting more space in existing stores to food. In a letter to suppliers first reported by The Mail on Sunday, M&S says it is not getting its full range in front of enough customers.

Just 12 stores offer all the 6,500 products in its food line-up, although its full range will go online with Ocado following a deal between the two to offer M&S food for home delivery for the first time.

“This must change, and it will. The full range will go online with Ocado and we are starting a store renewal programme that will get more products in front of more customers with bigger, better M&S Food Halls in new and existing sites,” the letter said.

Currently, M&S is used more as a convenience and top-up grocery shop. On average, people spend £13 per shop, compared to more than £100 at Ocado.

This is the latest attempt by M&S to broaden the appeal of its food business. It recently inked its first TV deal to become headline sponsor of Britain’s Got Talent.

S4 Capital pulls in big-name clients as revenues hit £54.8m

S4 Capital, former WPP CEO Sir Martin Sorrell’s new business, saw revenue rise 58% year on year in 2018 to £54.8m following its acquisition of MediaMonk.

Billings came in at £59.1m, while gross profit was £37.2m. The company, which formed in May 2018, now has 1,200 people in 16 countries. It has also attracted some big-name clients, with Procter & Gamble, Nestle, Avon, Electronic Arts and Electrolux using its services.

Sir Martin Sorrell, executive chairman of S4 Capital, says: “It is clear that the company’s purely digital model based on first party data fuelling digital content and programmatic is resonating with clients. Our tag line ‘faster, better, cheaper’ and unitary, one P&L structure also appeal strongly.

“The imperatives will be to broaden and deepen relationships with existing and new clients; to broaden and deepen geographical coverage; and to attract additional data, content and media talent and resources through direct recruitment, acquisition and/or merger.”

Government set to ban junk foods from TV and online before 9pm

The government is launching a consultation that will look at the impacts of banning junk foods ads from TV and online before 9pm in a bid to tackle growing childhood obesity.

Currently, ads for foods and drinks that are high in fat, salt or sugar (HFSS) cannot be shown during programming specifically aimed at children. But the Department for Health and Social Care is proposing new rules that would ban such ads before TV screens and extend the restrictions to social media and streaming sites such as Facebook and YouTube.

The move aims to tackle childhood obesity in the UK, which is among the highest in Western Europe. The British Medical Association (BMA) says one in three British children are overweight or obese when they leave primary school.

Dame Parveen Kumar, chair of the BMA’s board of science, says: “The current restrictions on advertising of unhealthy foods during children’s daytime TV programmes are no longer fit for purpose. Young people’s viewing extends well beyond these parameters, including family-oriented programmes and viewing content online.

“A 9pm watershed on TV, and equivalent protection online, is crucial to really limit the amount of marketing children and young people are exposed to and influenced by.”

However, the Advertising Association has questioned how effective a junk food ad ban would be, pointing to data that shows while children’s exposure to ads for HFSS foods has declined in recent years, this has had little impact on obesity rates. It instead suggests the government tackles the root causes of the problem, such as a decline in physical activity.

CEO Stephen Woodford says: “The way to address the problem is through local, targeted interventions that address key lifestyle factors including exercise and economic issues such as children growing up in poverty. Advertising can play a critical role in supporting this, as already seen through initiatives such as ITV’s support for The Daily Mile which is having a positive and measurable impact on people’s lives.

“Any actions being considered must be proportionate and without a long-term, damaging effect on the UK media landscape.”

Burger King offers coffee subscription

Burger King is looking to appeal to coffee lovers in the US with the launch of a coffee subscription.

The fast food chain is charging $5 a month for one small coffee a day. To get the deal, customers have to download the Burger King app and pay the monthly fee. It only applies to regular hot coffees and can’t be paired with a delivery order.

The move is part of plans to increase foot traffic at its stores, with growth flatlining amid a wider slowdown in growth across the sector. Companies such as Starbucks and Dunkin’ offer loyalty programmes that reward spend but the flat-rate model launched by Burger King is new for the sector.

“We continue to leverage technology to enhance our guests experience in our restaurants,” says Burger King’s North America president Chris Finazzo. ”We are proud to launch our own subscription service where guests can now enjoy a hot cup of coffee every day for just $5 a month.”