Amazon, Snap, Xbox: Everything that matters this morning
Good morning and welcome to Marketing Week’s round-up of the news that matters in the marketing world today.
Amazon sales and profit up but growth slows
Amazon’s sales were up 17% to $59.7bn in the first quarter of the year, while profit more than doubled to $3.6bn, marking the fourth consecutive quarter of record profit.
Amazon’s cloud service division, which hosts data for companies including Netflix, Airbnb and Unilever, performed especially well with sales up 41%, although this was at a slightly slower pace than Q2 2018’s 49%.
Growth is also slowing across regions, with North America reporting a revenue increase of 17% compared with 46% in Q1 2018, while international growth was up just 9% compared with 34% last year.
Amazon is expecting net sales to grow between 13% and 20% year on year in the second quarter, sitting somewhere between $59.5bn and $63.5bn, while operating income is expected to be between $2.6bn and $3.6bn compared with Q2 2018’s $3bn.
The company also reports that its Fire TV now has more than 30 million active users.
READ MORE: Amazon makes $1bn a month as growth slows
Snap hires McDonald’s marketer for first CMO role
Snap has hired Kenny Mitchell as its first chief marketing officer as it looks to stem slowing user growth and bring in new users through advertising.
Mitchell, who joins from McDonald’s USA where he has been vice-president of brand content and engagement for just over a year, will lead all consumer and product marketing programmes at Snap from June.
He will report to CEO Evan Spiegel.
“Kenny’s consumer marketing expertise and his deep understanding of our products will be a great combination for Snap,” Spiegel says.
“Throughout his career, Kenny has demonstrated his ability to successfully execute innovative, global marketing campaigns, many of which have leveraged our own vertical video and augmented reality products. He’s a natural fit to join our team and lead marketing as we continue driving the positive momentum we have in the business.”
READ MORE: Snap hired its first CMO as it tries to lure new users through advertising
Pravha beer unveils debut UK campaign
Premium beer brand Pravha has launched its first national UK advertising campaign as it launches into major supermarkets and convenience stores and looks to tap into the premium market.
The campaign, which is the first for the brand from Molson Coors’ lead creative agency Havas London, will target key cities including London, Birmingham, Manchester and Edinburgh.
The campaign’s strapline, ‘A balance of bold flavour & light taste’, will be brought to life through a series of “visual metaphors” including a megaphone balanced on a bubble and a shark’s jaw balanced on a tulip.
It will run across video-on demand, pre-roll, out-of-home and social media, with further in-store, experiential and PR activations also planned.
“Despite being a relatively new brand to the market, Pravha is the fastest growing 4% ABV lager in the top 20 on-trade brands, proving to appeal to consumers looking for alternative options in the growing modern world beer space,” says Molson Coors’ marketing director Jim Shearer.
“Our ambition is to make Pravha the leading 4% world beer, and this distinctive, striking advertising campaign will be impossible to miss as Pravha rolls out into supermarkets and convenience stores up and down the country.”
Xbox promotes a ‘new type of travel’ in tourism campaign
Xbox is reinventing games as travel destinations in a new campaign built on the idea of virtual travel and exploring gaming beyond its traditional means.
Visit Xbox, a global campaign created by McCann London, will promote tourist destinations in Xbox games.
It will launch with a 70-second tourist board-style film and a dedicated website, which features locations shot by in-game photographers.
The site allows gaming tourists to find their next destination and buy a trip there by purchasing the game.
It also has a postcard generator and holiday-themed bundles, while Rough Guides will write and publish a guidebook to gaming worlds.
“With ‘Visit Xbox’ we want to inspire everyone to become a gaming tourist and explore breath-taking Xbox One X Enhanced worlds,” says Michael Flatt, global gaming marcom lead for Xbox.
“Our campaign offers destinations from the past, present, and future; on our world and beyond. Together with the Xbox community, we will continue to find, curate, and capture the most beautiful locations in games.”
Ryanair launches first podcast
Ryanair is flying into the podcast sphere with a new travel series called Try Somewhere New.
The first series, which will be hosted by TV presenter Julia Bradbury, will feature three 25-minute episodes covering popular destinations across Europe.
Episode one focuses on the vineyards and rural areas of Alentejo in Portugal, while episode two explores food and fiestas in the Spanish city of Murica and episode three goes on the trail of Vikings and Scandi noir fiction in the Vestfold region of Norway.
The podcast is the latest addition to the airline’s Try Somewhere New travel content platform.
It will be released every Thursday and appear on all major podcast hosting platforms. It will also be shared with customers who book Ryanair flights to the featured destinations.
Thursday, 25 April
Sainsbury’s and Asda ‘mutually agree’ to terminate merger after CMA blocks bid
Sainsbury’s, Walmart and Asda have “mutually agreed” to terminate their proposed merger after the Competition and Markets Authority (CMA) concluded it would leave shoppers “worse off” due to increased prices in store and online.
The CMA found the merger of the two supermarkets would lead to a reduction in the quality and range of products available, and deliver a poorer overall shopping experience.
The investigation also concluded that if the two supermarkets merged it would lead to motorists paying more at over 125 locations where Sainsbury’s and Asda petrol stations are located close together.
Furthermore, the CMA panel found that the deal would result in a “substantial lessening of competition at both a national and local level” for people shopping in supermarkets across the UK, not just where Sainsbury’s and Asda stores overlap.
Despite having taken into account the competition from discount stores like Lidl and Aldi, and the ways in which new or expanding competitors could affect the retail market, the CMA concluded that such developments did not allay its “serious competition concerns” about the merger.
“Following our in-depth investigation, we have found this deal would lead to increased prices, reduced quality and choice of products, or a poorer shopping experience for all of their UK shoppers,” stated Stuart McIntosh, chair of the inquiry group.
“We have concluded that there is no effective way of addressing our concerns, other than to block the merger.”
Reacting to the news Sainsbury’s chief executive, Mike Coupe, said the specific reason for wanting to merge was to offer lower prices for customers.
“The CMA’s conclusion that we would increase prices post-merger ignores the dynamic and highly competitive nature of the UK grocery market. The CMA is today effectively taking £1bn out of customers’ pockets,” Coupe stated, adding that he is still confident in Sainsbury’s strategy.
READ MORE: CMA blocks merger between Sainsbury’s and Asda
Facebook sets aside $3bn to cover cost of data scandal probe
Facebook is setting aside $3bn (£2.3bn) to cover the costs of the US Federal Trade Commission probe into its privacy practices, although the social media giant admits the final amount could reach $5bn (£3.8bn).
Despite the investigation Facebook is committed to a “privacy-focused vision for the future of social networking”, according to chief executive Mark Zuckerberg.
Furthermore, despite the various scandals to hit the social media company around data lapses and the speed at which offensive content is removed from its sites, Facebook saw sales rise 26% to $15.08bn (£11.6bn) during the first three months of 2019.
Advertising revenue rocketed to $14.9bn (£11.5bn) in the three months to 31 March, up from $11.7bn (£9bn) during the same period last year. Mobile ad revenue represented 93% of the company’s advertising revenue for the first quarter of 2019, up from approximately 91% in the first quarter of 2018.
The number of daily active users rose by 8% year on year in March to 1.56 billion, while monthly active users also rose by 8% to 2.38 billion. Facebook estimates more than 2.1 billion people use Facebook, Instagram, WhatsApp, or Facebook Messenger every day and around 2.7 billion people use at least one of its services a month.
READ MORE: Facebook sets aside $3bn for privacy probe
Airbnb plots original content push
Airbnb is planning to invest in creating original content as it looks to set its brand apart from the competition ahead of a potential IPO next year.
Reuters reports that the home rental startup has ambitions to develop original travel shows to get consumers excited about exploring new cities and countries. It is thought that Airbnb chief executive Brian Chesky is behind the plan, arguing that creative content is important for the brand even if the business case is not always clear.
The Reuters story suggests that Airbnb has been considering creating mini-series and documentaries about travel for the past three years, as well as potentially opening its own studio.
The startup has already created a docuseries featuring unique homes around the world for Apple’s forthcoming streaming service. Senior vice president of global policy and communications, Chris Lehane, has also confirmed that Airbnb is considering streaming films and shows through its app.
READ MORE: Exclusive: Behind Airbnb’s bet on show business to hook travelers
Uber drivers plan ‘poverty wage’ shutdown
Uber drivers in seven US cities will stage a 12-hour shutdown to protest against low wages and poor working conditions as the startup plans to go public next month.
The drivers will log off the app at 12pm on 8 May, while those in San Francisco plan to stage a protest outside the Uber headquarters. The drivers are calling for a number of changes, including receiving a living wage, transparency in Uber’s decision-making, employee benefits and a voice in company decisions.
Shona Clarkson, an organiser with Gig Workers Rising, which supports the action, says that Uber’s IPO will line the pockets of executives, but leave drivers with nothing. She adds: “Uber is paying drivers poverty wages and continues to slash wages while executives make millions.”
Uber maintains that its drivers are “independent contractors” who can choose when and where to work, which is why it is difficult for them to offer rights like paid holidays or sick leave.
READ MORE: Uber drivers plan shutdown over ‘poverty wages’ as company goes public
Dating app Bumble rolls out AI tool to block lewd content
Dating and social networking app Bumble is introducing new AI technology to capture and block lewd content in real time.
The “Private Detector” AI tool, which can capture lewd images with 98% accuracy, will automatically blur the image and alert the user that they have been sent something inappropriate. The user can the decide whether to view the image, block the image or report it to the moderation team.
The feature will be rolled out in June to all users of Bumble, as well as dating sites Badoo, Chappy and Lumen. Bumble founder and CEO, Whitney Wolfe Herd, has teamed up on the new technology with Andrey Andreev, founder of the dating group that includes Badoo, Bumble, Chappy and Lumen.
Andreev describes the sharing of lewd images as a “global issue of critical importance”, adding that it is the responsibility of social networking sites to lead by example and refuse to tolerate inappropriate behaviour.
Wolfe Herd adds: “The digital world can be a very unsafe place overrun with lewd, hateful and inappropriate behaviour. There’s limited accountability, making it difficult to deter people from engaging in poor behaviour.”
She is now working on developing a bill with Texas lawmakers to make the sharing of lewd photos a punishable crime.
Wednesday 24 April
Most of UK ad spend is on smartphones for the first time
Digital advertising spend hit £13.4bn last year as smartphone advertising overtook desktop for the first time, new figures reveal.
Data from digital advertising body IAB and PwC show UK ad spend jumped 15% in 2018 as brands increase their focus on video and move away from traditional formats.
“Seeing mobile now account for over half of all digital ad spend is a significant milestone,” says Tim Elkington, chief digital officer, IAB.
“In a decade of reporting these figures separately, we’ve seen spend rise from £38m in 2009 to a staggering £6.88bn in 2018.”
The figures show video continues to be a driving force and accounted for 51% of all digital spend, up from 45% in 2017. This is a year on year increase of £1.65bn.
Beyond mobile, an additional driver of growth continues to be video, which accounts for 44% of the total display market. For the second year running, outstream has exceeded pre-roll video, accounting for 57% of all video advertising.
The research also found growth for display advertising is up 22% year on year to £5.25bn. Growth is faster than paid-for search, which is up 14% to £6.66bn. However, digital classified spend has shrunk by 1% to £1.45bn.
Separate YouGov research, commissioned by IAB UK, finds more than half of marketers use online advertising for longer-term brand building, not just short-term sales activation.
Pernod Ricard promotes UK head of marketing
Pernod Ricard has promoted its UK head of marketing Toni Ingram to become of global brand director of its gin innovation hub.
Ingram, who has headed up UK marketing since 2015, will be responsible for the global growth of Plymouth Gin and Seagram’s Gin (outside of the US), both of which are currently experiencing global growth.
Pernod Richard UK’s current head of experiential, Kenny Hyslop, is also taking on a new role at The Gin Hub as head of brand homes.
The Gin Hub was created in 2017 in order to innovate and foster all of Pernod Ricard’s gin brands under one roof.
Head of The Gin Hub, Louise Ryan, says: “With over 25 years experience at Pernod Ricard UK between them, I look forward to working more closely with both Toni and Kenny on their respective strategies over the coming months.”
Pernod Ricard UK is currently seeking a replacement UK head of marketing.
Primark profits surge as it invests in retail
Primark-owner Associated British Foods has announced sales of £7.5bn in the first half of its financial year, in large part thanks to Primark.
Primark’s profits grew by 25%, which the company said reflected “continued selling space expansion and improved margins, which were driven not only by favourable exchange rates but also by better buying”.
While many retailers on the high street are suffering, the company said it invested over half of its £382m capital expenditure on expanding Primark, including its new store on Birmingham High Street which opened in April.
Earlier this week newspapers reported that a Primark click-and-collect was “on the horizon” but the fast-fashion retailer is yet to confirm.
“This is a robust set of results. Profit at AB Sugar was substantially reduced but, from this period, we expect our sugar profitability to improve,” says George Weston, chief executive of Associated British Foods.
“The strong underlying growth in Grocery profits demonstrates good momentum. Primark delivered excellent profit growth, driven by further development of our customer experience and selling space expansion.”
Virgin Trains call for rail travel overhaul to mimic airlines
Virgin Trains has called for an overhaul of railway travel to improve customer experience.
The company, which is no longer eligible for to continue operating West Coast Main Line services, listed key recommendations for the service which included an airline style model for long-distance operators which would mean strict reserved seats to prevent overcrowding.
It also called for ticketing to be simplified by introducing dynamic pricing, which would lead to higher prices for popular trains and lower prices for less popular trains.
The rail operator, which is the largest provider of long distance train journeys in the UK, has submitted the plans to the Department for Transport which is currently reviewing how train companies make money and sell tickets.
Virgin is also calling for better stations and a creation of a single independent and strategic regulator.
Virgin’s comments reflect the thoughts of the chair of the review and former British Airways boss, Keith Williams. He told the Guardian last week that it is clear that franchising cannot continue in its current form, and that it is “stifling innovation”.
He also said he envisaged different models for long-distance trains to the commuter markets and that there is no “one-size-fits all solution”.
Adding that ticketing should change, Williams said: “In the future, do we really see a world of volume paper ticketing, split fares? Passengers look for fairness of fares…I’m not sure they see that today.”
READ MORE: Virgin Trains calls for airline-style fares and seating for all
Refuge creates emotional film as it begins Picturehouse partnership
Refuge has launched an emotional short film to mark the beginning of its national partnership with Picturehouse.
The domestic abuse charity will show ‘Hide and Seek’, created by BBH London, in the hope it will raise awareness that 90% of domestic abuse that takes place in the family home is witnessed and experienced by children.
The film flicks through various scenes of children counting with their eyes covered. It soon becomes apparent the ‘game’ is not innocent fun but a coping mechanism to mask the abuse happening in the background. The final scene offers hope, showing a mother playing the game with her child, having been rescued from domestic abuse.
Sandra Horley, chief executive of Refuge says: “Never before in Refuge’s history has such a major campaign been launched. The unprecedented exposure that Hide and Seek will receive by being aired before all ‘15’ certificate films that run day in, day out, across all the screens housed in the 25 Picturehouse cinema locations is phenomenal.”
She adds: “I have no doubt that the impact of this campaign will save and change many lives.”
Tuesday 23 April
TK Maxx takes musical approach with new campaign
TK Maxx has unveiled a new campaign designed to encourage shoppers to get the most out of the retailer.
The company acknowledges many consumers consider the TK Maxx shopping experience to be time-consuming and overwhelming; however, the campaign plays to those who enjoy the store’s “treasure hunt experience”.
Titled ‘TK Maxx the Right Way’, the new spot features shoppers who were previously “TK Maxxing wrong” being converted by brand evangelists who offer tips on how to ‘TK Maxx the right way’ through a musical-inspired production.
“Not everyone knows how to ‘TK Maxx The Right Way’, so we’re championing the very best tips and tricks from our loyal shoppers on getting the most out of the TK Maxx experience – from shopping with an open mind, to starting in easier-to-shop categories like kids or homeware or online,” says Deborah Dolce, senior vice-president and ground brand and marketing director at TJX Europe.
The ad ends with a chorus highlighting the store’s bargain offerings and will be supported by social, in-store and online activity across six key European markets.
It forms part of TK Maxx’s wider strategy to reinforce its position as a shopping destination for consumers looking for big brands at smaller prices.
Kraft Heinz replaces CEO with AB InBev veteran
Kraft Heinz has hired former AB InBev marketing veteran Miguel Patricio as its new CEO as the company looks to combat a lack-lustre start to the year.
Patricio, who spent two decades at AB InBev – including global chief marketing officer between 2012 and 2018 – will take over the top job from current CEO Bernardo Hees in July.
He has been brought in following a decline in the stock market value of the business and just two months after Kraft Heinz took a $15.4bn charge to write down the value of assets including the Kraft and Oscar Mayer trademarks.
The company also posted a $12.6bn loss and cut its dividend by 36%.
Hees had been CEO of Kraft Heinz since the company was created with the 2015 merger of Kraft Foods Group and HJ Heinz Co.
Shares in Kraft rose slightly following the news of Patricio’s appointment, having fallen by more than 40% over the past year.
READ MORE: Kraft Heinz replaces CEO with AB InBev marketer Miguel Patricio
Huawei’s revenue jumps 39% amid intelligence fears
Huawei’s first quarter revenue climbed 39% to $26.8bn (179.7bn yuan) while its net profit margin rose to about 8% for the quarter, according to the Chinese tech firm.
However, the company did not disclose its actual net profit.
Last month Huawei said it had signed 40 commercial 5G contracts with carriers and had shipped more than 70,000 5G base stations to various markets across the globe. It predicts it will have shipped 100,000 base stations by May.
The news comes despite US pressure on other countries to ban its equipment from 5G networks. The US believes Huawei’s equipment could be used for espionage but the company has repeatedly denied the claims.
The company’s networking equipment is already banned in the Canada and Australia and the British government is believed to be considering restrictions, according to the Telegraph.
The revenue growth was higher than the predicted 19.5% gain, meaning the results suggest the US had little influence on Huawei’s performance.
READ MORE: Huawei revenue jumps 39pc to more than £20bn despite espionage fears.
UK’s craft beer industry slows amid growing competition from multinationals
The UK’s craft beer industry has slowed, with new figures revealing just eight new breweries open in the last 12 months. This is down from 390 during the previous year as more and more drinks giants enter the craft beer sector.
At the end of 2018 there were 2,274 breweries in Britain, up from 1,352 in 2013, with the sector still in its “gold rush” phase, the Guardian reports.
However, it is becoming increasingly hard for new brewers to start up as the industry continues to advance and mature and multinational businesses begin to buy and invest in existing craft and artisan breweries.
In 2015 Camden Town Brewery was sold to AB InBev for a suspected £85m, while Heineken has purchased stakes in Beavertown and Brixton breweries.
READ MORE: British craft beer boom stalls as big drinks companies muscle in
Easter sunshine triggers struggle for DIY stores and shopping centres
The unusually warm weather over the weekend has seen shopping centres and DIY stores struggle during the Easter break, while giving a welcome boost to high street footfall.
Indoor shopping centres were hardest hit, seeing a 11% decline in footfall for Friday and Saturday compared to the year prior, according to figures from retail data company Springboard.
Research from Ipsos Retail Performance also revealed a 10.4% decline year on year in footfall in non-food stores on Easter Saturday.
Additionally, retail parks, whose garden centres and DIY shops usually experience strong Easter results, also saw footfall decline by 2.4% and 1.3% on Friday and Saturday respectively.
However, the data from Springboard indicates footfall on the high street climbed by almost a fifth on Friday and by 8.8% on Saturday. It was up 15.6% during the first half of Sunday.
Last year heavy rain kept shoppers at home.