Twitter, Diageo, M&S: 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.


Elon Musk completes takeover of Twitter

Elon Musk has completed his $44bn (£38bn) takeover of Twitter, hours before a deadline which would have seen a trial date set if he had not gone through with the deal.

Musk has reportedly already fired CEO Parag Agrawal, chief financial officer Ned Segal and legal affairs and policy chief Vijaya Gadde. US media sources say the three were at headquarters when the deal was completed and were escorted out of the building.

Earlier this week Musk published a video of himself entering Twitter headquarters carrying a sink. It raised speculation about his intentions for the business. ‘Kitchen sinking’ is a term sometimes used for undertaking radical action or change in a business.

The billionaire closing the deal to take over Twitter brings to an end months of uncertainty about the social media company’s future. In April, he made an offer to buy the platform, which he later retracted. Musk was being taken to court due to his decision to pull out of the deal until earlier this month, when he made an apparent U-turn.

Many had been cynical about whether Musk was sincerely planning to go through with the deal.

Earlier this week, before the close of the deal had been confirmed, he tweeted he was “acquiring” Twitter and claimed he did so, not for profit, but to “help humanity”.

Musk also addressed advertisers in the tweet, writing “low relevancy ads are spam, but highly relevant ads are actually content!”

“Twitter aspires to be the most respected advertising platform in the world that strengthens your brand and grows your enterprise,” Musk said.

He also seemingly sought to reassure those who believe he is a hard-line free-speech advocate and worry that he would tolerate hate on the platform.

“Twitter cannot become a free-for-all hellscape where anything can be said with no consequences,” he wrote.

READ MORE: Elon Musk completes $44bn Twitter takeover – and immediately sacks top executives

Phoenix Group launches first brand campaign

Phoenix Group has revealed its first brand campaign since launching a new business structure.

The savings and retirement business has launched ‘Let’s Get Ready’, a brand campaign advocating for improvements in the UK to allow people to live better and longer lives. It brings to life Phoenix Group’s purpose to ‘help people secure a life of possibilities’.

In March, group brand director Ben Rhodes told Marketing Week the introduction of a new multi-brand architecture was geared towards helping the business better reflect and communicate the business’s purpose.

Research from Phoenix Group’s longevity think tank shows people are daunted by the idea of their longer lives due to the unknowns and outdated stereotypes that exist around ageing. The campaign is designed to dispel these stereotypes and create conversation about the way we approach retirement.

The campaign is aimed at an industry audience and will initially roll out across national press, social, audio and web channels. It was created with design and creative agency Hello.

“This is a significant moment for Phoenix Group as we undertake our first brand campaign to demonstrate how we can advocate for our customers and help the UK rise to the opportunities and challenges of people living longer lives,” says Rhodes.

“Our Let’s Get Ready campaign aims to raise awareness and to progress some of the thinking that is needed if we want people to be able to enjoy their working lives and the time they spend in retirement. We need to look at things differently and get ready for some positive change.”

Marks & Spencer seeks to modernise its property portfolio

Source: Shutterstock

Marks and Spencer is midway through a £1bn property shake-up, which will see it take a greater focus on its food sales and out-of-town sites.

The retail chain is seeking to rejig its property portfolio and is halfway through a plan to modernise its stores by 2028, in response to a rise in costs and an increasingly digital world. The plan will cost the business more than £1bn but is already having an impact, says group property, store development and IT director Sacha Berendji.

“There’s opportunity in the market,” he tells the Financial Times. The collapse of rivals such as Debenhams has freed up retail space meaning landlords are more amenable to changes to contracts to keep stores in place.”

M&S currently has 247 full-line stores selling clothing, homeware and food. CEO Stuart Machin told investors earlier this month he wanted to speed up the retailer’s overhaul of its stores and will aim to complete it by 2026. The retailer is set to open 104 food shops and shut 67 full-line clothing stores in the next three years.

Berendji tells the Financial Times a focus on out-of-town shops does not mean M&S is abandoning the high street, stating the retail chain “is and will remain in plenty of town centres” such as Liverpool and Birmingham, where the company has relocated to vacant former Debenhams stores.

“Where we are staying put, we are operating a really good renewal programme,” he says.

READ MORE: Marks and Spencer bets on property shake-up to revive its fortunes

Diageo introduces inclusive design training for its marketers

Diageo is introducing an inclusive design training programme for its marketers to drive inclusivity across its products, campaigns and experiences.

The business, which owns brands like Johnnie Walker, Guinness and Baileys, is launching the design programme to help its marketers’ understanding of inclusive design principles and give them the tools to step away from unconscious bias in the design process. Across the next year, all 1,200 employees across Diageo’s marketing and innovation teams will complete the training before it is rolled out to its agency teams worldwide.

The initiative comes as part of the business’s ‘Progressive Marketing’ commitment, which was set out five years ago and aims to create an advertising and media environment where everyone sees themselves represented.

“Our vision for inclusive design is to unlock an explosion of creativity not only with our own brands but within the wider industry,” says global design director Jeremy Lindley.

“We’re learning every day and by empowering our marketing teams to challenge how they’ve traditionally approached design – from a deeper understanding of the end-user to how they commission a designer – we hope to bring us all closer to a more tolerant and inclusive world.”

Amazon predicts weaker Christmas sales

AmazonAmazon has seen its shares plunge as it predicted lower sales over Christmas during its third quarter results call.

The business expects net sales of between $140bn (£121.2bn) and $148bn (£128.1bn) in the fourth quarter, whereas analysts had been forecasting sales for the holiday quarter to come in at $155.15bn (£134.3bn). Shares in the ecommerce giant dropped almost 20% in after-hours trading last night in reaction to the news.

For the third quarter, Amazon reported sales of $127.1bn (£110bn), slightly less than analysts had expected. The company made a profit of $2.9bn (£2.5bn) after two quarters of losing money.

Sales and marketing costs for the business were up. In the three months to 30 September, the business spent $11bn (£9.5bn) on sales and marketing, compared to $8bn (£6.9bn) in the same period last year.

Amazon’s chief financial officer Brian Olsavsky told investors there had been a “step up” in Prime Video content and the marketing surrounding it in the third quarter. He cited The Lord of the Rings series Rings of Power and the NFL Thursday Night Football packages as driving costs in the area.

READ MORE: Amazon shares drop nearly 20% after company predicts weaker holiday sales

Thursday, 27 October

UnileverUnilever praises ‘strong pricing’ as sales surge

Unilever says “strong pricing” has helped the business increase investment behind its brands, as underlying sales surged 10.6% and turnover hit €15.8bn (£13.7bn) in the third quarter.

Describing “investment in growth” as its top priority, the FMCG giant pledged to increase spend in brand and marketing during the second half of the year.

Underlying sales rose 6.7% in the beauty and wellbeing division, delivering third quarter turnover of €3.3bn (£2.9bn), while sales in the personal care sector increased 8.9% to achieve turnover of €3.6bn (£3.1bn).

Growth was more pronounced in the home care division. Underlying sales increased 13.6% over the period, driving €3.2bn (£2.8bn) in turnover. Unilever’s ice cream segment grew 13.2% during the third quarter, with turnover of €2.4bn (£2.1bn). The company’s nutrition division saw underlying sales growth of 11.8%, achieving turnover of €3.3bn (£2.9bn).

Unilever’s price growth increased 12.5% in the third quarter, with volumes declining 1.6%. The company’s ‘billion+ Euro brands’ – which account for more than 50% of group turnover – grew 14% over the three-month period. Success was led by “strong performances” from OMO, Hellmann’s, Rexona, Magnum and Lux.

Europe accounted for 20% of Unilever’s third quarter turnover, with underlying sales up 5.4%. Growth was fuelled by strong performance in the ice cream and nutrition divisions, although the home care sector declined slightly. Price-driven growth was said to be broad-based across Europe, with negative underlying volume growth supported by strong summer ice cream sales.

The FMCG giant now expects to deliver underlying sales growth for the 2022 financial year of more than 8%.

The company claims to be reaping the rewards of a “simpler, more category-focused” organisation operating since 1 July. Unilever pointed to the continued reshaping of its portfolio following the sale of its global tea business and acquisition of hair wellness brand Nutrafol, completed in June.

“Strong pricing allows us to continue to drive increased investment behind our brands,” says outgoing CEO Alan Jope.

“Our organisation is now better structured to deliver consistent growth through a simpler, more category-focused operating model. The full benefits will be realised over time and we are seeing encouraging early signs of improved accountability and faster decision-making.”

While acknowledging the mixed global macroeconomic outlook and challenges of high inflation, Jope says the delivery of “consistent growth” is Unilever’s priority.

Meta profits halve as advertiser demand continues to slow

Profits at Meta fell 52% to $4.39bn (£3.8bn) during the third quarter, as the social media giant continued to grapple with weakening advertiser demand.

The company behind Facebook, WhatsApp and Instagram generated revenue of $27.71bn (£24bn) during the three months to 30 September, down 4% year on year. Meta did, however, arrest a decline in users. Facebook daily active users reached an average of 1.98 billion in September, up 3% compared to the same period in 2021, while monthly active users rose by 2% to 2.96 billion.

During the third quarter, ad impressions delivered across Meta’s app portfolio increased 17% year on year – driven by Asia-Pacific and the rest of the world – although the average price per ad fell by 18%.

The social media giant ramped up spend on marketing and sales over the quarter, up 6% to $3.78bn (£3.27bn) compared to the same period in 2021.

The hit to profits and revenue saw shares in Meta slide 15% yesterday, despite already being down 60% on the start of the year.

However, CEO Mark Zuckerberg claims that while the business is navigating “some challenging dynamics”, including increasing competition and “ads signal loss”, the trends are better than reports suggest.

Speaking to analysts, CFO Dave Wehner said weak advertising demand was being driven by the uncertain and volatile macroeconomic landscape. The healthcare and travel sectors made the largest contribution to ad growth during the third quarter, offset by weak demand from ecommerce, gaming, financial services and consumer packaged goods brands.

“On an advertiser size basis, revenue growth from large advertisers remains challenged while we’ve seen more resilience amongst smaller advertisers,” said Wehner.

On a more positive note, Zuckerberg pointed to the success of click-to-messaging ads, which allow businesses to run ads on Facebook and Instagram that start a thread on Messenger, WhatsApp or Instagram Direct. This is one of the company’s fastest growing ad products, generating $9bn (£7.8bn) annually.

Going forward, Meta expects hiring to “slow dramatically”. The firm made 3,700 net hires during the third quarter, versus 5,700 in the second quarter, despite it typically being Meta’s busiest hiring period. With changes underway, Zuckerberg insisted he is confident the business is heading in the right direction.

“I believe the tougher prioritisation, discipline and efficiency that we’re driving across the organisation will help us navigate the current environment and emerge an even stronger company,” he added.

READ MORE: Facebook owner Meta profits hit by ad sales slowdown

UK ad market expected to hit £35bn in 2022

The UK advertising market is set to grow by 9.2% in 2022 to £34.9bn, a downgrade of 1.7 percentage points from the previous forecast in July.

The revision, published in the latest Advertising Association/WARC Expenditure Report, reflects high levels of inflation and squeezed margins amid the cost of living crisis. The media sector is bearing the brunt of these pressures, the report notes, causing advertisers to face higher costs.

UK ad spend rose by 8.8% during the second quarter of 2022 to £8.6bn, while ad spend during the first half of the year was up 14.4% at £16.7bn.

The UK’s ad market is forecast to grow by a further 3.9% in 2023 to £36.2bn, a downgrade of 0.5 percentage points on the July forecast.

Online advertising’s share of total ad spend is set to grow by 74% in 2022, according to the AA/WARC figures.

The data suggests a “strong” post-pandemic recovery in out-of-home (up 46.4%) and cinema (up 2,208.2%). The report notes IAB figures showing online classified advertising – representing the likes of recruitment advertising and property listings – rose by almost a third during the second quarter.

TV was the only medium to witness a decline in investment, down 0.6%, although broadcaster video-on-demand continued to grow, up 9.3%, as audiences turned to catch-up and streaming platforms.

Positive second quarter results were also recorded across the publishing sector, including national newsbrands (up 9.1%), magazine brands (up 3.3%), and regional newsbrands (up 0.6%).

According to the report, ad spend for the final quarter of 2022 will be up 4.5% on last year’s record high at £9.5bn, setting a record level of investment during the Christmas period as festive advertising combines with World Cup fever.

Search advertising, including ecommerce, is forecast to become one of the fastest growing media over the fourth quarter, rising by 7.3% to £3.4bn. At £1.7bn, TV advertising spend is expected to remain flat during the quarter, but video-on-demand is set to rise ahead of the wider market with growth of 4.2%.

“It is encouraging to see strong figures in Q2, with media channels continuing their recovery from the Covid-19 pandemic,” says Advertising Association chief executive, Stephen Woodford.

“Looking forward, political and economic stability is much needed, given the inflationary and recessionary forces impacting all businesses. As companies navigate these pressures, we see them continuing to prioritise advertising investment to protect their brands in exceptionally challenging market conditions.”

Kraft Heinz hails ‘modernised’ marketing approach amid volatility

Kraft Heinz claims its “modernising” marketing approach is helping the FMCG giant “advance” its transformation despite recent economic volatility.

Net sales rose 2.9% to $6.5bn (£5.7bn) during the third quarter to 24 September, compared to the same period last year. The company made $1.84bn (£1.62bn) in gross profit in the third quarter, down 9.1% on the profit achieved in 2021, while net income fell 40.8% to $435m (£382m).

According to CEO Miguel Patricio, Kraft Heinz delivered a strong quarter and going forward intends to leverage the power of its brands to deliver value “at a time when consumers need it most.”

Claiming demand remains strong, Patricio told analysts the company will continue to invest in its portfolio of “iconic brands”. While noting the impact of supply chain challenges and inflation, the Kraft Heinz CEO said the business will advance its transformation by “modernising” its marketing and “transforming” its portfolio.

Executive vice-president and North America president, Carlos Abrams-Rivera, explained Kraft Heinz has invested in “renovating” its brands by improving the quality of its marketing communications. He pointed to the team’s ability to “unlock” the capacity in key brands such as Lunchables and Capri Sun, driving event-based promotions around the recent back-to-school period to deliver “phenomenal” results.

“We have continued to invest in the equity of our brands,” said Abrams-Rivera. “The investments we have made with the quality of the marketing we have improved here at Kraft Heinz, and the commitment we have to continue to invest in our brands going forward, also gives us some confidence as we continue to manage through the current environment.”

Patricio described the company as “cautiously optimistic” looking ahead to the end of the year, the plan being to “unlock efficiencies and reinvest in the business.”

M&S to take Sparks loyalty scheme global

M&S Anything But OrdinaryMarks & Spencer is to roll out its Sparks loyalty scheme globally, launching across India and 25 online markets including the US and Australia.

Every international customer signed up will have access to the core Sparks offer, including a personalised programme of deals and rewards. The retailer is also offering Sparks members shopping in its 94 stores across India the chance to win their shopping for free instantly, an incentive already live in the UK.

Sparks will continue to be a “digital first experience”, M&S insists. In the UK the scheme has more than doubled its base to 16 million plus members since it was “reset” in 2020.

As well as launching in India, the Sparks rollout will take place across 25 M&S international websites serving target markets. The retailer claims to have “custom built” its international online Sparks platform to be scalable across multiple markets, enabling M&S to better understand its global customer base.

“Over the last 18 months we’ve got on with the job of building and expanding the global reach of M&S,” says co-chief executive Katie Bickerstaffe.

“But to become a truly global brand we need to make shopping at M&S rewarding no matter where you shop. The reset of Sparks in the UK in 2020 delivered a step-change and we’re now taking those lessons into international markets, so that we can better understand and serve our global customer base.”

Wednesday, 26 October

Source: Shutterstock

Google growth slows as YouTube ad revenue falls for first time

Slowing demand from advertisers is hitting growth at Google, which saw sales rise just 6% to $69.09bn (£60.7bn) during the third quarter.

By comparison, revenues at parent company Alphabet soared 41% to $65.12bn (£57.2bn) during the same period last year.

Third quarter profits fell almost 30% to $13.9bn (£12.2bn), hit in part by the slide in YouTube ad revenues, which declined for the first time since being publicly reported.

Overall advertising revenue rose 2.5% to $54.48bn (£47.9bn) in the third quarter compared to 2021 levels.

Breaking this down, sales generated from search and other advertising revenues increased 4.3% to $39.54bn (£34.7bn). YouTube ad revenues fell 2% to $7.1bn (£6.2bn) compared to the same period in 2021, while network advertising revenues also decreased by 2% to $7.9bn (£6.9bn).

During the third quarter the company ramped up spend on sales and marketing, rising to $6.93bn (£6.1bn) from $5.52bn (£4.8bn) in 2021.

Reflecting on the slowing advertising business, CEO Sundar Pichai notes unfavourable comparisons to the elevated growth levels seen in 2021 and the “challenging macro climate”.

He claims the business is “sharpening” its focus on a clear set of product and business priorities, pledging “significant improvements” to its search offering using AI and new ways to monetise YouTube.

Senior vice-president and chief business officer Philipp Schindler says lower revenues relate to ad promo spend on YouTube, network and Google Play ads within search.

“On the second quarter earnings call, we noted a pullback in spend by some advertisers in YouTube and network, and these pullbacks in spend increased in the third quarter,” Schindler told analysts.

“In search and other, the largest factor in the deceleration in Q3 was lapping the outsized performance in 2021. In the third quarter, we did see a pullback in spend by some advertisers in certain areas and search ads.”

The areas in question include financial services, specifically insurance, loan, mortgage and crypto categories.

The company notched up operating expenses of $20.8bn (£18.3bn) over the third quarter – a rise of 26% – reflecting higher R&D spend and growth in sales and marketing investment, driven primarily by increased spending on ads and promotions.

Alphabet continued to grow its workforce during the third quarter, adding 12,765 people to the team. However, hiring will slow in the fourth quarter, the focus being on “critical roles” such as top engineering and technical talent.

READ MORE: Google and Microsoft hit by slowing economy

Adidas braces for €250m hit as it cuts ties with Kanye West

Adidas expects to suffer a “short-term” €250m (£218m) dent in net income this year after severing ties with rapper and fashion designer Kanye West.

In a statement the German sportswear giant referred to recent antisemitic comments made by West, also known as Ye, stating the company “does not tolerate” any form of hate speech.

“Ye’s recent comments and actions have been unacceptable, hateful and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect and fairness,” Adidas said in a statement.

The brand is terminating the partnership with West immediately, ending production of Yeezy branded products and stopping all payments to Ye and his companies. Adidas will close the Yeezy business with immediate effect. The brand claims to be the “sole owner” of all design rights to existing products, as well as previous and new colourways under the partnership.

Earlier this month, Adidas said it was putting its Yeezy partnership under review after the rapper featured a ‘White Lives Matter’ T-shirt on the catwalk at his Paris Fashion Week show, following “repeated efforts to privately resolve the situation”.

West claimed – in a since deleted Instagram post – the fashion brand “stole” his designs and in June accused Adidas of making a shoe that appeared similar to the Yeezy trainer design.

In another since deleted Instagram post, West alleged it would cost Adidas “billions” to keep him and billions to let him go. In September, he posted pictures of the Adidas board on social media, singling out senior vice-president and general manager Daniel Cherry and outgoing CEO Kasper Rorsted.

Gap, which announced it was ending its tie-up with West in September, also confirmed it was taking immediate steps to remove Yeezy Gap product from stores and has shut down the accompanying website. In an Instagram post, the retailer said West’s “recent remarks and behaviour further underscore” why this stance has been taken.

“Antisemitism, racism and hate in any form are inexcusable and not tolerated in accordance with our values,” Gap added.

Last week fashion house Balenciaga announced it had cut ties with West following the antisemitic posts, which saw him suspended from Twitter and Instagram, adding the brand has no relationship with rapper or “any plans for future projects”.

JP Morgan Chase has already severed all links with Ye, who criticised the bank’s leadership online and demanded access to chief executive Jamie Dimon.

Reckitt praises ‘market-leading brands’ as sales rise

Reckitt claims its portfolio of “market-leading brands” in high-growth categories is helping to drive sales and set the company on track to meet its full year goals.

Group like-for-like revenue during the third quarter rose 7.4% to £3.73bn, with 70% of the portfolio less sensitive to Covid-related comparisons growing by high-single digits over the period.

Sales fell 1.2% on a like-for-like basis within the hygiene segment to £1.53bn, as sales of Lysol disinfectant spray continued to normalise post-Covid. Excluding the Lysol brand, Reckitt’s hygiene division grew by 3.3%, led by the performance of brands such as Finish, Harpic and Vanish.

The health segment grew 10.7% to £1.53bn, driven by the “strong momentum” of brands including Nurofen, Strepsils and Durex. Reckitt experienced “strong growth” within its intimate wellness portfolio during the third quarter, particularly in Europe, which the business attributes to its Durex lifestyle campaign driving distribution gains across multiple channels.

Growth was more pronounced within nutrition, as like-for-like sales rose 24.7% to £675m, driven by mid-single digit growth in developing markets and sales rising by 40% in the US.

Ecommerce like-for-like net revenue grew 5% during the third quarter, up 14% on a year-to-date basis, and now represents 12% of group net revenue.

Noting the “challenging market conditions”, CEO Nicandro Durante claims the business is continuing to “innovate and improve” its in-market execution.

“We have an excellent portfolio of trusted, market-leading brands in high margin, high-growth categories and a strong culture of ownership and delivery,” he says.

“My priority is firmly focused on continuing to execute on our strategic path, to deliver sustainable mid-single digit growth and mid-20s adjusted operating margins by the mid-2020s.”

Digital ad market up 15% as growth hits pre-pandemic levels

The UK’s digital ad market grew by 15% year-on-year in the first six months of 2022 as spend reached £12.52bn, according to the latest IAB Digital Adspend update.

The report, co-authored by PwC, gives the first indication the digital ad market is returning to a rate of growth in line with pre-pandemic levels, when the market expanded 15% in both 2018 and 2019. During the first six months of 2020 ad spend dipped by 5%, only to rebound by 55% in the first half of 2021.

Search continues to drive most digital advertising spend, representing 53% of the total digital ad market. The search sector was worth £6.66bn during the first six months of 2022, up 16% year on year. Display has grown by 8%, with spend on video display increasing by 6% and non-video increasing by 10% year on year.

Mobile continues to attract the majority of all spend (57%) from a device perspective, although spend on non-mobile ads is up 38% year on year. Classified ads also saw strong growth during the first half of 2022, up 42%.

IAB UK chief executive Jon Mew notes digital ad market growth in 2022 has fallen more in-line with pre-Covid levels following the “socio-economic turbulence” of the pandemic, which supercharged growth in digital advertising.

While both video and search revenue grew by 80% over the past two years and continue to grow, Mew explains this growth rate could not be sustained in the long term.

“Today’s results indicate that we have returned to a point where growth is strong but more sustainable. Looking to the future, we have Christmas and the World Cup coming up, which will likely see spend peak in 2022, but digital advertising won’t be immune to tightening budgets as the cost-of-living crisis takes hold,” he adds.

“Continuing to invest in marketing throughout challenging times is well documented and digital has the benefit of offering advertisers a powerful combination of proven results and flexibility.” on the brink of collapse as acquisition talks fail is on the brink of collapse after failing to find a buyer, causing the value of the retailer’s shares to plunge 90% on the London Stock Exchange.

The board had been hoping to secure a new owner by the end of October, however all interested parties are unable to meet the deadline.

In a statement, the furniture retailer confirmed these discussions have been terminated and the company is no longer “in receipt of funding proposals or possible offers”. The board conceded there is no certainty an offer will be made or what the terms of any possible deal might be.

The business therefore warns that if further funding cannot be raised or a firm offer secured before cash reserves are “fully depleted”, the board will “take appropriate steps to preserve value for creditors.” has been scrambling to secure its future in recent months, reporting in September a reduction in demand driven by the “fast changing macro-economic climate since Q2 2022”. This is a far cry from when the brand listed on the London Stock Exchange in June 2021 with a market value of £775m.

Last month, the retailer reported a 19% decline in gross order value and a pre-tax loss of £35.3m in the six months to 30 June, versus losses of £10.1m during the same period in 2021. Previously one of the success stories of the lockdown homewares boom, has been forced to clear excess stock through “targeted discounting”.

The business is chasing cost savings of £7m by reducing its warehouse and showroom space, while job losses are already underway in a bid to save a further £6m.

Speaking last month, CEO Nicola Thompson claimed the transformation plan was making the business more agile and resilient, calling out the company’s “strong brand”, product range and “large and loyal customer base” across the UK and Europe.

READ MORE: close to collapse as rescue talks end without buyer

Tuesday, 25 October

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Industry asks for ‘clarity’ and ‘certainty’ as Rishi Sunak takes charge

Rishi Sunak was yesterday named as prime minister, replacing Liz Truss who was in the role for just 45 days.

He has warned the UK faces a “profound economic challenge” while promising to lead the country with “integrity and humility”.

His appointment has been welcomed by the IPA’s director general Paul Bainsfair who hopes it brings an end to the “political turmoil that has caused so much damage to the country”.

“We hope… he will be able to provide the financial acumen, clarity, certainty and confidence that we are seeking from government,” he adds. “Firm foundations that allow our agencies to make more solid, longer-term plans to build and grow their businesses and those of their clients.”

Bainsfair is keen to work with the government further on “significant issues” facing the industry, such as the incoming HFSS regulation, the Online Advertising Programme and the plans to privatise Channel 4.

Likewise, Sue Eustace, director of public affairs as the Advertising Association is keen to work with Sunak to “address immediate and long-term issues affecting our sector”.

“We are keen to learn more about the government’s plans to stabilise market conditions to set the ground for future growth,” she says. “The advertising and marketing sector, with its creativity, dynamism and export success – is an important component of that growth story, and our previous research has demonstrated that every £1 spent on advertising can generate £6 for the wider economy… If we can get the right policies, we can unlock those barriers to fulfil that potential and do our part to get the UK back on a path of sustainable and green growth.”

Meanwhile, Helen Dickinson, CEO of the British Retail Consortium, urges Sunak to “provide certainty to households” during one of the most challenging economic periods in history.”

“To support consumers at this difficult time, government should freeze business rates and reform the broken transitional relief system, or it will be households that pay through higher prices,” she says.

“Retailers are playing their part in supporting their customers, shielding them from the worst of rising costs resulting from a weaker pound, tight labour market and war in Ukraine. However, these efforts are threatened by the £800m bombshell of additional business rates that will hit retailers in April – a 10% rise that far outstrips sales growth over the last year.”

Premier Inn credits brand ‘strength’ as profit surpasses pre-pandemic levels

Whitbread, the owner of Premier Inn, has credited the “strength” of the brand, as well as its scale and customer proposition for driving profit above pre-pandemic levels.

In the UK the brand’s total accommodation sales increased by 25.9 percentage points in the first half of its 2023 financial year, which it claims is ahead of the midscale and economy market. Whitbread suggests the brand’s direct distribution model and “operational excellence” have also driven this rise.

Total UK accommodation sales were up 101% compared to the first half of its 2022 financial year, and 35% ahead of H1 2020, which covers the period prior to the pandemic hitting.

The Premier Inn brand in the UK saw its adjusted profit before tax rise by more than 1,000% to £317.1m in the six months to 1 September, up from a loss of £17.8m in the same period last year. It is 21% higher than the £261.2m profit it made in the first half of its 2020 financial year, which covered the six months to 29 August 2019.

Looking forward, the brand says market demand “remains robust” despite macroeconomic uncertainty.

The brand says Premier Inn’s market recovery in Germany is also continuing following the easing of restrictions in April, with its more established hotels becoming profitable for the first time in the second quarter of FY23.

Alison Brittain, CEO of Whitbread, says: “Our UK hotels traded well-ahead of the market, benefiting from our ‘investing to win’ commercial and operational initiatives that are continuing to drive growth… The strength of our balance sheet underpins our success and has given us the confidence to continue to invest, even through the periods of great uncertainty that we have seen over the past few years.

“Our investment in growing our estate, our customer proposition, commercial initiatives, IT systems and Force for Good sustainability programme has meant we have been able to take advantage of improved market conditions and extend our market leading position.”

She adds that despite the difficult economic environment the company’s current trading performance is “strong” and the business has “proven its resilience in previous downturns”.

“With a robust balance sheet and significant growth potential in both the UK and Germany, we remain confident in the full-year outlook and our ability to deliver long-term value for all our stakeholders.”

Puma and Modibodi join forces to stop women leaving sport due to periods

Sportwear giant Puma and period wear brand Modibodi have teamed up to develop a period activewear collection, the launch of which is being supported by a series of films featuring female athletes designed to encourage women and girls to stay in sport.

It comes as research shows one in two girls quit sport due to periods. The patent-pending range, which features leggings and cycle shorts in two colours, is designed to help women, girls and people who menstruate feel more comfortable when playing sport.

“With 50% of girls experiencing discomfort from disposable menstrual products like pads and tampons when participating in sport or physical exercise, we felt it was important to design a range of leak-proof activewear that would make playing sport on your period more comfortable, more protected and more possible,” says Erin Longin, global director of the running and training business unit at Puma.

The two brands first launched a range of leak-proof underwear earlier this year.

The accompanying series, Period Pep Talks, features NRLW star Tiana Penitani, European sprinter Jodie Williams, and former professional race car driver Naomi Schiff, who share their own experiences to help normalise discussions and encourage girls to keep playing sport.

“The data from our global report in May 2022, showed women and girls believe periods need to be more openly discussed in the sports world,” says Sarah Forde, Modibodi head of sustainability and public affairs.

She hopes working with Puma on the launch of the period activewear and spreading the word via its athletes will “raise this issue in our global consciousness”.

Aston Martin looks to ‘challenge’ sector norms in product campaign

Luxury car marque Aston Martin says it is looking to “inject emotion and intensity” into its latest product-focused campaign, something the brand’s marketing boss believes challenges the category norms.

The ‘Power.Driven’ film plays up to the brand’s British heritage and features actress Felicity Jones delivering a monologue to camera as an Aston Martin DBX707 SUV in racing green drives across Dartmoor National Park.

Renato Bisignani, global head of marketing and communications at the car maker, describes the short film is an example of “Aston Martin’s drive to inject emotion and intensity [in] to our product marketing”.

By doing so he believes this “[challenges] the creative conventions that customers have become accustomed to from the automotive sector”.

The film is the first major product marketing campaign Aston Martin has launched since it unveiled its ‘Intensity.Driven’ creative identity earlier this year, its most significant investment into brand in more than a decade.

At the time Bisignani told Marketing Week it marked the beginning of a “new era” for Aston Martin as it looks to “reach a wider customer base”.

Big tech firms should face tougher penalties, MPs say

Big tech firms, such as Meta, should face harsher penalties for abusing their market power, a group of MPs has insisted, urging government to publish legislation that could allow companies to be fined up to 10% of global annual income.

The Business, Energy and Industrial Strategy Committee says the draft Digital Markets Bill, which was outlined in the Queen’s Speech in May, should be published “without delay”.

MPs suggest the current fines are viewed by firms simply as a “small business cost”, which is putting consumers at risk.

READ MORE: Competition regulator needs teeth to curb big tech, MPs say

Monday, 24 October


Deliveroo struggles with acquisition after cutting marketing

Deliveroo has continued to struggle with “weaker” customer acquisition and retention in the third quarter of its fiscal year, attributing this to both the challenging macroeconomic environment and its decision to reduce consumer marketing spend last quarter.

Deliveroo had planned to increase marketing spend over 2022. However, last quarter CFO Adam Miller said the food delivery firm had made “conscious decisions to pull back on marketing spend”, as part of its stance not to “chase” top-line growth against a backdrop of consumer headwinds. The decision had an immediate impact on the service’s customer base, with active customers in Q2 declining “slightly” compared to Q1.

In Q3, Deliveroo’s customer base was broadly stable year on year, with the business claiming an average of 7.3 million monthly active consumers (MACs) over the quarter, a 1% increase. However, the business said total active customers continued to decline sequentially.

Nevertheless, the business has given no indication that it will change its strategy, stating that it will continue to focus on “more efficient” marketing investment next quarter.

The number of orders Deliveroo took over the period also dropped, down 1% year on year to 72.8 million. However, gross transaction value (GTV) was up 5% in constant currency to £1.7bn, while GTV per order rose 6% to £23.40, driven by inflation at an item level.

Deliveroo’s core market in the UK and Ireland performed better than its international business, with GTV growth of 11% compared to a decline of 2%. The UK’s 37.7 million orders over the quarter amounted to a GTV of £944m, again a result of inflation driving up GTV per order by 5% and “continued optimisation” of consumer fees.

The firm is now anticipating GTV growth in the lower half of its previously announced 4% to 12% range.

Deliveroo’s spend-cutting strategy marks a stark contrast to the marketing strategy of rival Just Eat, which bumped investment up by 40% over the first six months of 2022 as it also pursues profitability.

Company profit warnings jump to highest level since 2008

The number of UK FTSE-listed companies to issue a profit warning in the third quarter of this year soared to its highest level since the 2008 global financial crash, the FT reports.

A total of 86 profit warnings were issued over the three-month period, compared to 51 during the same quarter in 2021, according to analysis by EY-Parthenon. Firms issue profit warnings to shareholders to indicate their full-year earnings will not meet analyst expectations.

Those sectors facing consumers, including retail and hospitality, accounted for over half of warnings, while technology companies and “pandemic winners” have also suffered.

More than half of warnings related to rising business costs amid the ongoing inflationary environment, jumping to 70% of consumer-facing sector warnings, where businesses face the challenge of passing on price increases to customers.

A quarter pointed to labour shortages, while changing buying behaviour and falling consumer confidence were highlighted in half.

Companies to have issued profit warnings in Q3 include Next, Saga, Royal Mail and Boohoo.

READ MORE: Profit warnings soar as UK companies struggle with costs (£)

Tesco raises meal deal price for second time

tescoTesco has increased the price of its lunchtime meal deal for the second time this year, with the cost rising from £3.50 to £3.90.

The deal, which includes a sandwich, snack and drink, first rose from £3 in February, the first price hike in more than 10 years. The price remained £3 for Clubcard members at the time, but that will now rise to £3.40.

Tesco is blaming the price increase on rising inflation, with food prices scaling at their fastest rate in 42 years. Grocery inflation reached 14.6% in the 12 months to September. However, the supermarket says the deal still represents “great value”.

Tesco’s meal deal is far from the only one to have undergone a price increase this year. Boots increased the price of its meal deal from £3.59 to £3.99 outside London and from £4.19 to £4.99 in London earlier this month, while Co-op’s price jumped to £3.75 in February from £3.50.

READ MORE: Tesco raises meal deal price as food costs soar

Frasers Group increases stake in Asos

Sports Direct owner Frasers Group has increased its stake in Asos following the online fashion giant’s lacklustre earnings report last week, now claiming a 5% share in the business.

Owned by billionaire Mike Ashley, Frasers Group is now Asos’s fourth largest shareholder, the Sunday Telegraph reports. However, it remains without any control over the business or a position on its board.

Frasers Group has a history of snapping up struggling UK retail businesses, having bought Missguided out of administration for £20m in July. The group also owns Game, Jack Wills, Flannels, Evans Cycles and, and has built significant stakes in fashion brands Mulberry and Hugo Boss.

The firm said increasing its shareholding in Asos was part of the “ordinary course of business”.

Asos swung to a loss before tax of £31.9m in its full-year results for 2022, down 118% on 2021, as it battles with the challenging macroeconomic environment. Active customers grew 2% to 25.7 million, but customer growth “slowed” in the second half of the year, particularly in the US.

Asos’s new CEO José Antonio Ramos Calamonte blamed “insufficient” brand investment and an over-reliance on promotions with driving the slowdown in customer acquisition. More than 80% of the online fashion giant’s marketing investment has been focused on performance marketing.

Asos promoted Calamonte from chief commercial officer to CEO in June, following the exit of former CEO Nick Beighton in October 2021. Last week he laid out a turnaround plan consisting of four key action points for the next 12 months, including embedding a “culture of innovation and creativity” within the business.

READ MORE: Mike Ashley snaps up stake in struggling Asos (£)

Government launches Covid and flu vaccine campaign as cases rise

A UK-wide marketing campaign will urge millions of people to get their flu and Covid booster vaccines this winter, as data indicates an earlier-than-normal start to flu season and continued high rates of Covid.

Launching today (24 October), this year’s campaign will build on the success of the Covid vaccination campaign by underscoring that vaccine protection wanes over time. Ads will run across TV, radio, social and digital media, with targeted communications for people with long-term health conditions, pregnant women, and those with low vaccine confidence, including some ethnic minority communities.

The NHS Winter Vaccines chatbot will make a return to guide those searching for information online, while campaign ambassadors will engage in community activity.

Around 33 million people are eligible for the flu vaccine, and 26 million eligible for the Covid-19 booster. However, vaccination for flu is currently lagging last year for pre-schoolers (12.1% among two-year-olds, 12.8% among three-year-olds), pregnant women (12.4%) and those under-65 in a high risk group (18.2%).