Facebook ad revenue grows 10% as active users hit 2.7 billion
Facebook ad revenue grew by 10% to $18.3bn (£14bn) in the second quarter of 2020, defying the impact of the global coronavirus pandemic.
During the three months to 30 June, the social media company grew its total revenue by 11% to $18.7bn (£14.4bn), increasing its daily active user base by 12% to 1.79 billion and monthly active users to 2.7 billion, also up 12%.
The results for this period do not take into account the impact of the #StopHateForProfit campaign, which has seen high profile brands such as Coca-Cola, Unilever and Starbucks pull ad spend from all Facebook platforms for the month of July.
Yet, despite the boycott currently being in place, Facebook reports that ad revenue growth in the first three weeks of July “was approximately in-line” with the ad revenue growth rate of 10% seen during the second quarter. As a result the company expects ad revenue for the third quarter to be “roughly similar to this July performance”.
The brand said this outlook takes into account “the impact from certain advertisers pausing spend” on its platforms due to the boycott, which Facebook says is reflected in the July trends.
Other factors impacting the third quarter outlook will be the impact of continued macroeconomic uncertainty, including the pace of recovery, and “headwinds related to ad targeting and measurement” impacted by the implementation of the California Consumer Privacy Act, which came into effect on 1 July.
The social media group puts its 12% growth in users down to people turning to Facebook products to stay connected during the pandemic and therefore predicts that as lockdown restrictions ease, numbers of daily and monthly active users will be “flat or slightly down in most regions” during the third quarter.
Amazon sales surge by 40% amid ‘highly unusual quarter’
Amazon sales grew by 40% to $88.9bn (£68.2bn) during the second quarter of 2020, as the online giant capitalised on the growing switch to ecommerce as Covid-19 lockdowns were imposed globally.
Operating income increased to $5.8bn (£4.5bn) during the three months to 30 June, up from $3.1bn (£2.4bn) in 2019, while marketing spend rose to $4.3bn (£3.3bn). Third-party sales grew faster during the quarter than Amazon’s first-party sales.
Amazon founder and CEO, Jeff Bezos, described the period as a “highly unusual quarter”. He pointed to $4bn (£3.1bn) spent on Covid-19 related costs, including purchasing personal protective equipment, increasing the cleaning of its facilities and a $500m (£384m) contribution to frontline workers.
During the period, Amazon increased its grocery delivery capacity by over 160%, as online grocery sales tripled. Since March, Amazon has created over 175,000 jobs and invested $9bn (£6.9bn) in capital projects around delivery fulfilment, transportation and its Amazon Web Services business (AWS).
Looking ahead, Amazon expects net sales to grow by 24% to 33%, to reach between $87bn (£66.8bn) and $93bn (£71.4bn) during the third quarter of 2020.
Google sees revenues dip, as Apple hits new highs
Revenues at Google fell by 2% during the second quarter of 2020 to $38.3bn (£29.4bn), the first year-on-year decline in quarterly revenue since the search engine giant became a publicly-listed company in 2004.
Revenue generated by Google Search fell to $21.3bn (£16.4bn) during the three months to 30 June, from $23.6bn (£18.1bn) in the same period last year.
Overall, Google ad revenue declined from £32.5bn (£24.9bn) in the second quarter of 2019, to $29.9bn (£23bn), although YouTube ad revenue rose to $3.8bn (£2.9bn) from $3.6bn (£2.8bn).
Sales and marketing expenditure during the period dipped to $3.9bn (£3bn), compared to spending of $4.2bn (£3.2bn) during the second quarter of 2019.
However, elsewhere at fellow tech giant Apple there was a more positive picture. During the second quarter revenue rose 11% to $59.7bn (£45.8bn), 60% of which was driven by international sales.
Sales of the iPhone made the biggest contribution ($26.4bn/£20.3bn), followed by Mac sales ($7.1bn/£5.5bn), iPad ($6.6bn/£5.1bn) and wearables/home products ($6.5bn/£5bn). Apple’s services business contributed $13.2bn (£10.1bn) in sales.
Reflecting on Apple’s “record June quarter”, CEO Tim Cook said the performance was testament to the “important role” the company’s products play in consumers’ lives and its “relentless innovation”. He also pointed to Apple’s $100m Racial Equity and Justice Initiative, and wider commitment to become carbon neutral by 2030, as ways the company is seeking to make a difference.
Sky ad revenue plunges 43% as loss of live sports takes its toll
Sky revenues plummeted by £575m in the second quarter of 2020, as 214,000 customers walked away from the service in the space of three months.
The broadcaster reported a 15.5% year on year decline in revenues to $4bn (£3.1bn), as TV ad revenues plunged by 43% to $321m (£246m) and subscription revenues fell by 9.4% to $3.5bn (£2.7bn).
Sky blames the ad revenue decline on a weak market made worse by brands cutting spend as key live sports and entertainment events were postponed, coupled with tighter laws restricting gambling ads in the UK and Italy.
The company has lost 5% of its sports subscribers since the onset of the pandemic, which it blamed on the postponement of fixtures across the Premier League, Germany’s Bundesliga and Italy’s Serie A. Sky also experienced an overall decrease in the number of customers receiving its services, such as broadband and mobile.
In addition, revenue generated by sub-licensing programming to other broadcasters fell by 38% to $234m ($180m), again due to the postponement of sporting events.
Santander and TfL celebrate 10 years of London’s cycle hire scheme in new campaign
Santander and Transport for London (TfL) are marking the 10th anniversary of the capital’s cycle hire scheme with a new campaign channelling the public’s renewed enthusiasm for cycling.
Running across digital, social and out-of-home, the campaign highlights the various benefits of the Santander Cycles scheme, from the low cost of use, to the convenience of having more than 780 docking stations across London.
The campaign, developed by creative agency BJL, features recreations of 10 different locations in the capital, such as Spitalfields Market and St Dunstan’s, all built using miniature papercraft sets.
Over the course of the campaign the messaging will target different audience segments, including students and fitness fanatics. The campaign will use triggers, such as the time of day or day of the week, to deliver contextualised messages.
TfL launched the cycle hire scheme in 2010 with sponsorship from Barclays. Santander became the sponsor in 2015. The scheme is now being extended with the addition of 1,700 more bikes and new docking stations to meet rising demand from the public. The belief is that cycling will be central to London’s recovery from the coronavirus pandemic.
“As people start to venture out and rediscover all that London has to offer, and as more and more people turn to cycling as their preferred means of transportation, it’s exciting to be able to launch this fun, positive campaign and remind everyone about the benefits of Santander Cycles,” says Santander UK marketing director, Dan Sherwood.
“For the last 10 years the scheme has played a significant role in the way millions of people experience the city, with hire records consistently being broken along the way.”
Thursday, 30 July
UK ad spend to drop 15.6% before 2021 rebound
UK ad spend in 2020 is predicted to tumble by 15.6% compared to last year to £21.4bn, before rebounding to £25bn in 2021, according to the latest Advertising Association/WARC Expenditure Report.
The drop in this year’s figures has been revised from a more serious decline of 16.7% predicted in April. But the fall still demonstrates the impact of Covid-19 on advertising and the wider UK economy. The prediction includes an estimated 39% decline in the second quarter of this year.
Although growth is predicted in 2021, it is not expected until the second quarter, due to the possibility of a second wave of Covid-19 cases this winter, and an expected increase in unemployment levels.
“It is vital that our industry continues to do all it can to support the recovery, most pertinently by joining the ‘Enjoy Summer Safely’ coalition to help mainstream essential public health messages,” says Advertising Association president Keith Weed.
“It has been incredibly impressive to see how our industry has so quickly rallied together to carry public health campaigns and other initiatives to inform and assist people across the country.”
Aldi recruits staff to buck retail job loss trend
Supermarket group Aldi is to take on 1,200 new employees as it opens a store per week from now until Christmas, reports The Guardian. The tactic is bucking the current industry trend of shedding roles and closing shops.
The retailer says there are still towns and cities where shoppers cannot easily reach one of its stores. New store locations will include Sandhurst, Bristol and Edinburgh.
“To meet our goals of making Aldi accessible to even more shoppers, we will need thousands more amazing colleagues across the country,” says Aldi UK chief executive Giles Hurley.
“I look forward to welcoming each and every one of the them to the team.”
Radio listeners are becoming more connected says Global
Radio group Global has seen a 40% year-on-year increase in connected listening sessions across its stations, with a 59% increase in listening hours through its Global Player.
The group, which includes radio stations Capital, Heart, LBC, Smooth and Classic FM, reported an initial audience boost in March as more listeners began to work from home. It now says the trend continued into the second quarter of the year, from the end of March. Smooth saw an especially large boost as customers sought comforting and nostalgic music.
“Over the past four months, as the world has gone through incredibly challenging times, people’s daily habits have shifted and we have all made huge adaptations in our lives,” says Global founder and executive president Ashley Tabor-King.
“However, radio has remained a constant source of information, entertainment, company and comfort.”
GSK Consumer Healthcare partners with Gay Times for new campaign
GSK Consumer Healthcare is specifically targeting the LGBTQ+ community with a new ad campaign developed in partnership with Gay Times Group, in a bid to keep the spirit of Pride events alive during the Covid-19 lockdown.
A series of short brand marketing films has been described as the first of many partnerships between the brands, brokered by Publicis Media. The films highlight brands including Sensodyne and Voltarol, the latter using user-generated content from members of community group Pride Sports. The content will run exclusively across the Gay Times website and social channels throughout August.
“We believe good marketing starts by putting the consumer at the heart, and that also means reflecting the diversity of modern society,” says GSK Consumer Healthcare senior media director EMEA, Jerry Daykin.
“We also believe in the power of diversity to cut through to broader audiences and the power of positive representation to tackle stereotypes. Representation matters at GSK and we are committed to driving this change across our business, through individual partnerships like this, and more broadly in our role co-leading the WFA’s Inclusion & Diversity Task force.”
Could home working save the high street?
The BBC reports that a massive scaling back in office space could be good news for UK high streets, quoting a Royal Institution of Chartered Surveyors (RICS) survey that finds companies looking at relocation to smaller towns and suburbs.
The RICS found 93% of its members plan to scale back their office space in the next two years and that a fundamental rethink of suitable locations might result. There could be knock-on effects for businesses such as shops and restaurants, and for office space that could become available for housing.
“A lot of businesses they are thinking about that opportunity to move towards suburban locations,” says RICS chief economist Simon Rubinsohn.
“We’re looking at a very different model going forward: there may still be a central location but it may just be a lot smaller.”
Wednesday, 29 July
BT launches virtual event to help inspire young jobseekers
BT has is to host ‘BT Work Ready Live’, a virtual event that will be streamed live on the company’s YouTube page on 3 August.
Hosted by football and Esports presenter Spencer Owen and with guests including TV and radio presenter Maya Jama, young entrepreneur Jack Parsons, TV presenter Chelcee Grimes and the CEO of BT’s consumer division Marc Allera.
With young people having been particularly hard hit by the current unemployment crisis and the effects of the Covid-19 pandemic on work opportunities, BT is launching the event to inspire and help young people to secure a job and kick-start their careers.
BT Work Ready Live will be streamed live on the BT YouTube page on Monday 3 August at 3pm and will feature a panel of talented young people who will share their personal experiences along with top tips for job seekers.
“Our BT Work Ready programme has already helped thousands of young people gain the skills and experience they need to take the first step on the career ladder and there has never been a more important time for us to help drive a sustainable, inclusive economic recovery in the UK,” said Allera.
Gucci owner Kering admits future uncertain amid falling sales
French luxury group Kering, owner of Gucci and Yves Saint Laurent, has reported a second-quarter 43.7% drop in sales and said in a statement that it could not provide an accurate forecast for the second half of the year.
“The loss in revenue experienced in the first six months of the year should not be offset in the second half,” the company said.
Kering announced that it was cutting costs, while not canning investments in its brands altogether, which usually spend on marketing campaigns and events like fashion shows that give them visibility.
Sales at Kering’s top brand Gucci in the April to June period declined by 45% on a like-for-like basis, while Yves Saint Laurent suffered an even bigger fall of 48% and Bottega Veneta by 24.4%.
Rap artist Tiny Tinie performs on Burger King Whoppers
Burger King Whoppers will be providing the stage for an augmented reality performance by the UK rapper Tiny Tinie until the end of August.
For a limited time, Burger King UK customers will be able to scan a special QR code on their Whopper, which will generate a miniature of Tinie, performing his latest hit ‘Whoppa’, with the burger as his stage.
From today, anyone who purchases a Whopper can interact with a hyper-realistic, digital Tinie, in an intimate 360 performance.
“When we made this song, the vibe was all about summer time and bringing that Latin heat and energy to the UK music scene – not so much about burgers!” said Tinie. “But when Burger King reached out on Twitter, we immediately knew we just had to collaborate.”
Burger King UK marketing director Katie Evans explained: “As soon as we heard about Tinie’s ‘Whoppa’ song, we couldn’t help but dream up innovative ways to get involved.
“Of all of the ideas, this was the one that really brought a smile, and we’re so glad we’re able to offer our Whopper as a stage at a time when we could all do with a bit of fun and frivolity.”
Reckitt Benckiser half-year results show strong performance
The consumer goods multinational Reckitt Benckiser has posted its half-year results for 2020, with figures showing overall growth of 11.9%.
The company’s range of hygiene and health products include Dettol, Lysol and Sagrotan, were all in high demand during lockdown, with e-commerce growing by over 60% and estimated to be around 12% of net revenue during the first six months of the year.
“The world has changed beyond recognition in 2020,” said CEO Laxman Narasimhan. “COVID-19 is likely to be with us for the foreseeable future and, as a society, we are embedding new hygiene practices to protect our way of life.
“Our largest brands are trusted by our consumers, as evident in their performance. Our supply chain has withstood the challenge of unprecedented demand, demonstrating agility and flexibility, albeit with additional costs and investments.”
It wasn’t all good news however, with a weaker global demand for Durex blamed in part on social distancing regulations.
Foot Locker and Adidas reveal community murals
Sportswear retailer Foot Locker has teamed up with Adidas to commission the London-based art collective Last Night in Paris (LNiP) to create a mural at Brixton’s Canterbury Estate basketball court.
The work is the latest in a series of artistic collaborations and forms part of the ‘Change is a Team Sport’ campaign, set up by Foot Locker and Adidas Originals to inspire and facilitate positive change in local communities across the globe.
LNiP is made up of musicians, artists, fashion designers and tattoo artists residing in Brixton and the surrounding area.
In Saint-Denis, Paris, another local art collective, NSK (Never Stop Kolouring) produced a similar street-art influenced piece.
Both murals were inspired by conversations with local residents and neighbours about the culture of their district, translating it directly into an art piece.
Foot Locker Europe’s director ommnichannel marketing Giuseppe Mele said: “We hope that the murals and re-claimed spaces inspire local residents in both London and Paris and bring communities together through their love of sport.”
Tuesday, 28 July
Greggs posts a loss as lockdown hits sales
Greggs swung to a loss in the first half of 2020 after a number of years of unbroken growth as coronavirus restrictions forced the closure of its shops and hit sales.
Total sales in the first half fell to £300.6m, down from £546.3m in the same period in 2019, while like-for-like sales at company-managed shops fell by 49%. The company posted a pre-tax loss of £65.2m, compared to a profit of £36.7m a year before.
Despite the results, Greggs CEO Roger Whiteside believes the strength of its brand and business model positions it for long-term growth.
He says: “Greggs is now well prepared to deal with the challenges of social distancing and operate through the conditions we are faced with. Greggs remains a much-loved brand with long-term growth opportunities and the business is better placed to adapt to new conditions than ever before.”
Amazon takes on the grocers with move to offer free food delivery
Amazon is to offer its food delivery service for free as part of benefits to Prime subscribers as it looks to serve millions of shoppers by the end of 2020.
Previously, shoppers had to subscriber to Prime and pay an additional monthly fee or delivery charge per order for food. It is not offering this at no additional cost for those living in areas where it offers delivery on orders above £40.
Amazon currently offers grocery delivery in London and the Home Counties, but says it plans to extend this to “multiple cities” by the end of the year.
“Grocery delivery is one of the fastest growing businesses at Amazon and we think this will be one of the most-loved Prime benefits in the UK, ” says Russell Jones, country manager of Amazon Fresh UK.
The move comes as growth of online grocery shopping accelerates amid coronavirus. It was worth around 8% of the market pre-Covid but now accounts for around 15%.
LVMH sales hits by closure of shops and reduction in tourism
LVMH’s revenues fell by 38% in the three months to the end of June to €78bn, while sales were down 37%, hit by the closure of boutiques and drop in international tourism.
Profits from recurring operations were €1.67bn (£1.52bn), well down on the €2.32bn expected by analysts and 67% down on a year ago.
The company says revenue was down in the US and Europe in particular, while Asia saw “marked” improvements and there was a strong rebound in China. And while there was a swing to online, this only partially offset store closures.
“Our big brands have proven quite resilient, often more than the smaller ones, in terms of top and bottom line,” says CFO Jean Jacques Guiony. “But travel restrictions have hit parts of our business, such as [airport duty free stores] DFS quite hard.
“We cut costs by about 30% in the second quarter but we do not want to cut too deeply so as to be ready for the recovery when it inevitably comes.”
Tesco Mobile leans on being part of Tesco in new campaign
Tesco Mobile is launching a marketing campaign that aims to talk up its links with Tesco by offering a grocery deal as part of its latest promotion.
The campaign, created by BBH London, aims to reach money-conscious shoppers with a message of how Tesco Mobile customers can feed their family “for less”. It offers customers who sign up for eligible monthly contracts six months of access to Clubcard Plus, Tesco’s subscription loyalty service which offers savings of up to £40 a month on grocery shopping.
Tesco Mobile CMO Rachel Swift says: “At Tesco Mobile, we’re so proud to be part of the Tesco family and with this campaign we’re leaning into the unique benefits our network can offer, more than we’ve ever done before.
“We understand the difficulties many are facing right now and we’ve put the money-saving opportunities at Tesco at the heart of our message – all with a touch of magic to bring our proposition as ‘the only mobile network to help feed the family for less’ to life.”
Retailer industry pushes back against possible online sales tax
The retail industry is pushing back against a possible online sales tax under consideration by the government, warning it would push up prices for consumers.
The chancellor Rishi Sunak is reported to be exploring the levy amid rising retail job losses and store closures as the coronavirus pandemic accelerates the shift to ecommerce. It is thought to be being considered as a potential replacement for business rates, which taxes companies based on the premises they occupy.
However, the British Retail Consortium says it would lead to higher prices, which could hit consumer spending.
Its director of business and regulation Tom Ironside says: “Taxing the sale or delivery of online goods would simply be another burden on an already overtaxed industry, one that would ultimately hit consumer spending through higher prices.
“Throughout the pandemic, many of us have been relying on retailers to ramp up their online services to ensure we can all get the goods we need. The government should not harm these efforts by further taxing the businesses providing these services, and the people they serve.”
Monday, 27 July
TUI cancels holidays to mainland Spain
TUI has cancelled all mainland Spanish holidays until 9 August as a result of the government’s 14-day quarantine on people arriving to the UK from Spain.
The UK’s biggest holiday operator, TUI said it would contact affected customers and offer them the right to cancel or amend their holidays. The company has also urged the government to “work closely” with the industry, adding that this level of “uncertainty and confusion is damaging for business”.
Elsewhere, British Airways accused the government of “throwing thousands of Britons’ travel plans into chaos”. EasyJet plans to maintain a full schedule of flights, as does Jet2, while Wizz Air said it would re-evaluate its flight schedule “in light of potential diminished demand”.
Speaking to the BBC, Rob Griggs of Airlines UK described the quarantine period as a “big blow” to the aviation sector.
As it stands, the government is advising against all but essential travel to mainland Spain and the 14-day quarantine applies to those returning from mainland Spain, the Canary Islands and the Balearic Islands.
Ryanair reports €185m loss amid 99% fall in traffic
Ryanair made a €185m (£168m) loss in the three months to 30 June, as 99% of its fleet was grounded due to the Covid-19 pandemic. This is compared to net profit of €243m (£221m) during the same period last year.
Passenger numbers fell by 99% from 42 million to 500,000 during the period, which Ryanair describes as the “most challenging” in its 35-year history. The airline’s revenue has fallen by 95% to €125m (£114m) as a result of the crisis.
On 1 July, Ryanair resumed flights across the majority of its network and expects to be operating 40% of its normal July schedule, rising to 60% in August and 70% in September. The company currently estimates passenger numbers for the full 2021 financial year will fall by 60% to 60 million.
The airline’s customer service teams returned to the office in June and are said to be working through an “unprecedented volume” of customer emails and other communications related to flight changes and Covid-19 cancellations, while clearing a record backlog of refunds. Ryanair says it expects to have cleared more than 90% of customer cash refund requests by the end of July.
Aside from the impact of Covid-19, the airline is still warning about the “challenge of Brexit” and in particular a no-deal.
The company says it hopes that by the end of the transition period in December the UK and Europe will agree a trade deal for air travel which will allow the “free movement of people and the deregulated airline market between the UK and Ireland to continue”. Ryanair said it still expects “adverse trading consequences to arise”.
Debenhams puts itself up for sale in fight for survival
Debenhams has put itself up for sale in a bid to save the chain and secure a buyer by the end of September.
The department store says it is exploring a range of possibilities, including that the current owners retain the business or a sale to a third party. It is also open to a new joint venture agreement with existing and potential investors.
In April, Debenhams called in administrators for the second time in a year and is working under what The Guardian describes as a “light touch” administration with directors running the business.
In a statement, the department store said it had reopened 124 stores across the UK following lockdown and was “trading ahead of expectations”, the administrators had initiated a process to assess ways to exit its “protective administration”.
To date, Debenhams has shut 18 stores and cut 1,000 jobs across its shops and headquarters. The business entered lockdown with debt of £600m.
Global ad spend to fall by 9.1% as Covid-19 accelerates shift to digital
Global ad spend is expected to fall by 9.1% in 2020, although a 5.8% recovery is forecast for 2021, according to Zenith’s advertising expenditure forecast. To put this into context, ad spend shrank by 9.5% during the 2009 recession.
While the pandemic has put the breaks on spending in general, the crisis has accelerated a wider shift to online, prompting Zenith to predict digital advertising will increase to 51% of global spend in 2020 and 55% in 2022. In fact, digital ad spend is forecast to shrink by just 2% during 2020 and there is no expectation any of this share will return to traditional media as the crisis eases.
According to Zenith, the US has remained “relatively resilient”, benefiting from record political spending in the run-up to the presidential election in November and is therefore expected to see ad spend decline by 7% this year.
Elsewhere, ad spend across Asia Pacific is forecast to shrink by 8% thanks to the success of some markets in keeping the virus under control. It is in Western Europe where ad spend has been hit hard and is therefore forecast to contract by 15%.
While the steepest declines in ad spend took place between March and May, these appear to have eased and are expected to gradually moderate over the rest of the year. The 5.8% recovery in global ad spend predicted for 2021 will be boosted by the rescheduled Tokyo 2020 Olympics and UEFA Euro 2020 football tournament.