Uber, BA, Adidas: 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.

Uber sees growth slow as it reports record $5.2bn loss

Uber reported a $5.2bn loss and a slowdown in growth at its core taxi business in its second quarter results, raising questions about its ability to fend off competitors.

Revenue growth slowed 14% year on year to $3.2bn, its lowest ever level. At its core ride-hailing business, revenue was up by just 2% to $2.3bn although its food delivery service Uber Eats grew by 72%to $595m.

Uber’s loss was impacted by compensation expenses relating to its IPO earlier this year. But Uber had been expected to perform better, particularly after smaller rival Lyft raised revenue expectations and said the price war was easing.

Even without the expense, Uber lost $1.3bn, almost twice the $878m it lost last year. And it expects to lose between $3bn and $3.2bn this year.

“Our platform strategy continues to deliver strong results, with trips up 35% and gross bookings up 37% in constant currency, compared to the second quarter of last year,” says Dara Khosrowshahi, CEO. “In July, the Uber platform reached over 100 million monthly active platform consumers for the first time, as we become a more and more integral part of everyday life in cities around the world.”

British Airways under fire after IT glitch forces flight cancellations

British Airways (BA) is under fire once again after an IT glitch forced the airline to cancel more than 100 flights and delay hundreds more, right in the middle of the peak holiday season.

The cost to BA of another IT failure is likely to exceed £10m in lost revenue, care costs and compensation. And it is the latest in a line of issues, including a major data breach last year that led to a record £183m fine and a severe systems failure in 2017, raising questions over the company’s investment in IT.

BA is investigating the cause of the problem but says it is unrelated to the previous two incidents. A report in the Financial Times raises concerns over decisions to outsource IT work to India and the difficulty of laying new technology onto legacy systems.

Co-op pushes environmental credentials in new campaign

The Co-op is launching a marketing push that aims to promote how its environmental policies, the quality of its products and commercial strategy do good in the community.

The TV ad, created by Lucky Generals, shows how Co-op has replaced plastic bags with environmentally-friendly ones as it aims to tackle plastic pollution. It features two women, both open water swimming enthusiasts, enjoying a swim and explains how buying products such as ice cream from the Co-op, people can reduce the number of plastic bags.

Co-op was the first national supermarket chain to make compostable bags available, with 1,000 stores giving out the bags in communities where they are accepted in local household food waste collections. The compostable bags are the same price as normal single-use plastic bags.

Ali Jones, customer director at Co-op, says: “Building stronger communities by being a stronger Co-op is what we do and we are committed in helping our members and customers to make more ethical choices.

“Reducing the environmental impact of products is and always has been at the core of Co-op and the introduction of compostable bags in stores where local authorities accept them, is helping to reduce plastic contamination in a targeted way, as well as helping to divert household food waste away from landfill.”

The TV ad forms part of the Co-op’s new ‘It’s what we do’ marketing strategy, which launched in May. It aims to highlight the different way the Co-op does business compared to other grocery chains, focusing on areas such as sourcing of ingredients to giving back to the community.

Adidas sees double-digit growth as it commits to brand investment

Adidas saw strong sales in the second quarter but warned that any escalation in the trade war between China and the US could impact the global economy and its future performance.

Net profit in the the three months to the end of June was up 34% year on year to €531m, while sales rose 4.7% to €5.5bn. However, while profits were above analyst expectations, sales were a little slower as football revenues dived due to a tough comparable with last year, when the FIFA World Cup was running.

Speaking on an analyst call, CFO Harm Ohlmeyer said that while capex increased due to increased spending on marketing and its direct-to-consumer (DTC) channels, it believes investment is the best way to fuel growth. Marketing spend was up 5% year on year, in line with topline growth.

“We remain committed to the market and keep investing on the brand marketing side, but also our DTC network and our infrastructure overall, as we continue to invest in North America,” he added.

Thursday, 8 August

Nike buys AI startup to boost direct-to-consumer strategy

Nike has acquired predictive analytics startup Celect for an undisclosed sum as it look to bolster its direct-to-consumer strategy.

The deal with the Boston-based AI business is the latest in a string of acquisitions made by the sportswear giant as it looks to get closer to customers in order to serve them “more personally at scale”.

Nike plans to integrate Celect’s technology into its mobile app and website to help it better predict what style of trainers and clothing customers want, as well as when and where they want to buy them, according to chief operating officer Eric Sprunk.

He says: “Our goal is to serve consumers more personally at scale. We have to anticipate demand. We don’t have six months to do it. We have 30 minutes.”

Celect joins a host of other acquisitions, including digital design studio Virgin Mega, which is backed by Richard Branson’s Virgin Group, consumer data analytics firm Zodiac and computer vision company Invertex.

Diageo acquires major stake in Seedlip

Diageo has acquired a majority stake in non-alcoholic spirit brand Seedlip, as the brand’s founder says it is “ready for scale”.

The drinks giant’s accelerator programme Distil Venture, which was set up to support entrepreneurs, made a minority investment in the brand in 2016. Seedlip becomes the first non-alcoholic drink to be acquired by Diageo through Distil Ventures.

The brand was launched by Ben Branson in 2015 to offer drinkers a more grown-up non-alcoholic alternative. Like gin, Seedlip has botanical notes and is designed to be mixed with tonic, so is not overly sweet or fruity like many alcohol-free drinks.

Seedlip is now available in more than 25 countries and in excess of 7,500 bars, restaurants, hotels and retailers.

Branson will remain actively involved as a shareholder and director and continue to work with the Seedlip team and Diageo.

Branson says: “We want to change the way the world drinks and today’s news is another big step forward to achieving this. Distill Ventures and Diageo’s shared belief in our vision has enabled us to build a business that’s ready for scale and I’m excited to continue working with Diageo to lead this movement.”

Twitter apologises for sharing users’ data with ad partners

Twitter admits it “may have” shared data about whether users viewed or clicked on an ad with measurement and advertising partners without people’s permission.

The platform also confirmed it may have shown users ads based on inferences it made about the devices they were on, even if permission to do so wasn’t given, although it claims the data involved stayed within Twitter and did not contain passwords or email addresses.

Both breaches happened in 2018, with the social platform assuring users in a blog post these issues have now been fixed.

“You trust us to follow your choices and we failed here. We’re sorry this happened, and are taking steps to make sure we don’t make a mistake like this again,” it says.

Twitter is currently investigating which users may have been impacted and how many people in total were affected.

Samsung takes on Apple with latest smartphone launch

Samsung has unveiled a range of new Galaxy Note smartphones as it looks to stave off competition ahead of Apple’s next iPhone launch in September.

The Korean tech giant revealed two sizes of the device, one of which, the Note 10+, features its largest ever screen at 6.8 inches, with a 5G-compatible version also available. The Note 10, meanwhile, has a 6.3-inch screen.

The new phones do not have a headphone jack, making way for wireless headphones as Apple did on the iPhone three years ago. Samsung first removed the headphone jack from the yet to launch Galaxy Fold. The Note 10 models also feature multiple cameras to improve long-range photos.

Prices for the Note 10 start at £899, with some versions of the model costing more than £1,000, all of which go on sale on 23 August.

Shingy exits Verizon Media after 12 years

David Shing, better known a Shingy, is leaving his role as Verizon Media’s digital prophet after more than a decade at the business through its various incarnations.

He confirmed his departure via a LinkedIn post, saying the time is right for him to “explore a new path”.

A well-known figure in the industry, Shingy says he wants to continue to work “autonomously” with brands.

“We inhabit a pivotal time at which much is at stake in how we practice media and marketing,” he adds. “I’ve had the rare privilege of speaking into the soul of our industry (as a futurist) for the past decade, and I believe it’s a critical time to preserve the tenants of human dignity, creativity and compassion as we engage the thrilling opportunities at hand.”

Wednesday, 7 August

Disney disappoints as profits fall

Profits at Disney fell by 51% to $1.4bn (£1.2bn) during the third quarter, missing analyst targets and causing shares in the entertainment giant to fall by 5%.

This is despite the fact that revenues during the period rose by 33% to $20.2bn (£16.6bn) and Avengers: Endgame became the biggest grossing film of all time.

Chairman and chief executive, Robert Iger, put the profit decline down to efforts to “effectively integrate” 21st Century Fox, the TV and film assets of which Disney acquired in March for $71bn (£58.4bn)

Disney’s direct-to-consumer and international unit reported an operating loss of $553m (£454m), up from $168m (£138m) a year earlier, due to the consolidation of streaming site Hulu, and investment in new streaming service Disney+ and sports streaming service ESPN+, which launched in April 2018.

Disney plans to take on Netflix by offering a $13-per-month (£10.70) bundle of its three streaming services – Disney+, sports service ESPN+ and Hulu – when the Disney+ service finally launches in November. The Hulu streaming service will feature adverts.

Facebook sues developers over ad fraud

Facebook is suing two app developers for “click injection fraud” after they created apps that injected users’ phones with malware.

The malware on the apps, which were available on the Google Play store, created fake clicks on Facebook ads that appeared on the users’ phones, giving the impression that the users had clicked on the ads.

Facebook claims that Hong Kong-based developer LionMobi and JediMobi in Singapore generated “unearned payouts” from Facebook by misrepresenting that a real person had clicked on the ads. Not only were the ads part of Facebook’s audience network, but LionMobi also advertised its apps on Facebook, which is in violation of the company’s advertising policies.

Jessica Romero, Facebook’s director of platform enforcement and litigation, described the lawsuit as a “first of its kind” against this type of ad fraud.

LionMobi and JediMobi have now been banned from Facebook’s audience network and their accounts have been disabled. All the advertisers affected by the ad fraud were refunded by Facebook in March.

Virgin Media launches measures to help vulnerable customers get better deals

Virgin Media has unveiled a raft of measures to support vulnerable customers who may find it difficult to stay in touch with the company and take advantage of the best deals on offer.

The measures, which are designed to help overcome some of the obstacles vulnerable customers face, include annual package reviews and a more tailored approach to engineer visits.

The company’s actions come in the wake of an investigation by the Competition and Markets Authority (CMA) into ‘loyalty penalties’, where disengaged customers are charged excessive prices on essential services by remaining stuck on uncompetitive deals.

The CMA found there is a total loyalty penalty of around £4bn a year across five key markets, including mobile phone contracts and broadband. It also found that vulnerable people, including the elderly and those on a low income, may be more at risk of paying the loyalty penalty.

Under Virgin Media’s new measures, customers who have not made contact with the company for a prolonged period of time will have their prices frozen and automatically receive an annual package review.

Other measures include enabling customers to more easily choose a friend or family member to manage their account on their behalf and improved bill management services to support vulnerable customers and address unexpected monthly bill variations.

Jeff Dodds, chief operating 0fficer at Virgin Media, says: “Businesses shouldn’t be sitting on their hands about this important issue, which is why we are going the extra mile to break down the barriers and make sure those who might need a helping hand can get it from Virgin Media.”

Bumble inks sponsorship deal with first all-female Fortnite team

Female-focused social networking and dating site Bumble is getting into esports by sponsoring the first all-female Fortnite team.

Bumble is partnering with global esports organisation Gen.G to sponsor Team Bumble, an all-female team who will compete professionally in Fortnite competitions.

CNBC reports that the social platform will also officially partner with Kristen Valnicek, also known as KittyPlays, who is an esports influencer on Amazon-owned esports streaming site Twitch and Gen.G’s head of new gaming initiatives.

According to Chelsea Maclin, Bumble’s vice president of marketing, the partnership is aimed at connecting and empowering female gamers, which she believes will help grow gaming and esports as a whole.

Maclin adds that the brand’s research showed gamers were already using Bumble BFF, the friendship arm of the app, to find fellow gamers which is why Bumble has introduced a “gaming” tag to help them connect faster.

Victoria’s Secret CMO departs as brand signs first trans model

Ed Razek, CMO of Victoria’s Secret’s parent company L Brands, has announced his departure from the company in the same week that the lingerie brand signed up its first transgender model, Valentina Sampaio.

The news comes a year after Razek, who the Wall Street Journal reports will retire in mid-August, told Vogue that “transsexual” models should not appear on the annual Victoria’s Secret catwalk “because the show is a fantasy”. He claimed that the company had considered casting trans and plus-size models for the catwalk but concluded that the brand “did not market to the whole world”.

His comments sparked a severe backlash at the time and Razek issued an apology, but refused to step down.

Since then, sales have slumped and last week the 2019 catwalk show was cancelled for the first time since it was launched in 1995.

Razek joined Limited Stores as vice-president of marketing in 1983, before becoming vice-president and director of marketing for Limited Inc in 1993, working across all L Brands businesses including Victoria’s Secret.

Senior vice-president of brand and creative, Ed Wolf, will serve as interim head of brand and creative reporting to L Brands CEO Les Wexner.

Tuesday 6 August

Coca-Cola updates Premier League ad for the new season

Coca-Cola has updated its ‘Where Everyone Plays’ campaign that promotes its sponsorship of the Premier League for the new season. The revamped as, created by M&C Saatchi, features the three newly-promoted clubs – Aston Villa, Norwich City and Sheffield United – as well as their celebrity fans.

Coca-Cola, which is the official drinks sponsor of the league, is using its sponsorship to celebrate the diverse range of football fans.

The new version of the 90-second ad features various celebrities to highlight promoted clubs, including TV chef Delia Smith who is a long-standing supporter of Norwich City and whose face is hidden in a fish pie.

Meanwhile, Sheffield United’s return is marked by Brian Deane, who scored the first ever goal in the Premier League for Sheffield United, surprising excited fans in a local bar. Aston Villa fans are featured in a barbers getting a haircut with a difference in tribute to current star Jack Grealish.

Kris Robbens, Coca-Cola Great Britain and Ireland’s marketing director, says: “Coca-Cola has always been a passionate supporter of football and we’re excited to celebrate three new clubs to the league ahead of the launch of what looks set to be another action-packed season.

“Football has this incredible power to bring people of all ages, backgrounds and cultures together, united by the love for their team and the game, and these fans are at the heart of our campaign.”

The campaign will run throughout the football season, premiering last night on ITV.

Jack Wills bought by Sports Direct

Mike Ashley’s Sports Direct business has bought Jack Wills for £12.8m, after the troubled fashion chain went into administration.

The high street giant has acquired all 100 of Jack Wills’ stores across the UK and Ireland after beating Edinburgh Woollen Mill Group to the business.

Suzanne Harlow, Jack Wills chief executive, says: “For the past year, we have been focused on improving the Jack Wills proposition and the group’s financial performance.

“Despite significant progress, the challenging trading environment led us to conclude that the company’s long-term future would be best served as part of a larger group and Sports Direct will enable us to do this.”

Jack Wills reported an operating loss of £14.2m for the year to 28 January 2018. It is the latest acquisition from Ashley, who has bought a number of struggling companies in recent years although he previously admitted Sports Direct regretted acquiring House of Fraser.

Jack Wills will be housed in a new division at Sports Direct that will focus on buying and building fashion and sports brands.

Just Eat and Takeaway.com to merge

Takeaway.com and Just Eat have reached an agreement on a merger deal that creates one of the biggest companies in the fast consolidating sector.

Just Eat shareholders will receive shares in Takeaway.com in the deal, which values the group’s equity at around £5bn. The combined group will be one of the biggest food delivery providers globally — the two companies handled 355 million orders worth €7.3bn (£6.7bn) in 2018. Just Eat shareholders will own 52% of the merged group, with Takeaway.com shareholders holding 48%.

The merger comes amid increasing deal activity in the sector as companies push for ever greater scale. Mike Evans, chairman of Just Eat, says: “This is the beginning of the long talked about consolidation in the sector.”

The two companies do not have any significant geographical overlap, with Just Eat focusing on the UK and western Europe while Takeaway.com holds a dominant position in Germany and eastern Europe.

The new group will be headquartered in Amsterdam, although the companies plan to maintain a number of Just Eat’s current headquarter functions in London.

UK consumer spending falls to record low

UK spending hit a record low in July amid Brexit uncertainty and slow real wage growth.

Despite the heatwave earlier in the month, average retail sales in July increased by just 0.3% year on year, according to figures compiled by the British Retail Consortium and KPMG. This is the lowest level since their records began in 1995.

Retail sales were up just 0.1% on a like-for-like business (which strips out the effects of store openings and closures).

The report says a “challenging retail environment” is taking its toll on both the high street and online. Despite the hot weather causing people to head online to update their wardrobes, total non-food sales for the three months to the end of July were down 2.1%.

Grocery sales, which normally rise in hot weather, were described as “lacklustre”, with food sales decreasing 0.3% year on year – the lowest growth since December 2014.

Boohoo to bid on Karen Millen and Coast

Online fashion retailer Boohoo has made a bid for British brand Karen Millen, which was put up for sale in June. The move could see Boohoo buy Karen Millen and its sister brand Coast as part of a pre-pack administration.

Boohoo says: “The Group believes that the online business of these brands would represent highly complementary additions to its scalable multi-brand platform [and] extend the group’s offer as part of its vision to lead the fashion e-commerce market globally.

However, the company admits that “these discussions may or may not result in agreement of a transaction”. And there are concerns about the future of hundreds of retail jobs, with Boohoo not planning to keep the brands’ high street stores.

Karen Millen and Coast employ around 1,100 people across 30 shops and 175 concessions in the UK.

Monday 5 August

Facebook is rebranding Instagram and WhatsApp

Facebook is rebranding Instagram and WhatsApp by attaching its name to the company-owned apps.

The social media giant plans to put its name front and centre, branding them ‘Instagram from Facebook’ and ‘WhatsApp from Facebook’, in a move that has been met with criticism considering both apps were launched before being acquired by parent company, Facebook

They also have different corporate structures and their own unique identity with consumers.

“We want to be clearer about the products and services that are part of Facebook,” a spokeswoman for the company said.

The new name will appear in app stores and inside the apps themselves, but they won’t be displayed on the app icon in users’ home screens.

The move is also considered controversial given Facebook’s brand has been tainted during the last few years by consistent scandals, while Instagram and WhatsApp remain relatively untainted.

Meanwhile, The Times reports that The Federal Trade Commission is looking into whether Facebook has monopoly powers, and whether it obtained the two platforms to remove competitive threats and seek dominance in the industry.

Uber’s quest for London licence likely to be rejected

Uber’s quest for a long-term licence to operate in London is likely to be rejected by Transport for London (TfL), with the ride-sharing company set to be offered a temporary short-term extension.

Uber was awarded a short-term permit last year after successfully overturning an outright ban in court but had hoped to be granted a five-year licence when its term ends next month, according to Sky News.

The British capital is one of Uber’s most profitable markets outside the US. It is used by millions of Londoners and has 40,000 drivers in the city alone.

Sources told Sky News that it’s predicted Uber’s temporary licence will only last two years.

Uber was initially stripped of its licence in September 2017 after TfL warned of “public security and safety implications”, with city officials suggesting that the company was failing to conduct sufficient background checks on its drivers.

Mayor of London Sadiq Khan has supported TfL’s reluctance to award a licence last year on the grounds that Uber was “not a fit and proper” operator. However, magistrates overturned the ban before outlining a number of changes that should take place across the organisation.

Screwfix nails sponsorship deal with Sky Sports Football

Screwfix has become the maiden sponsor of Sky Sports Football after signing on for the 2019/20 season, reinforcing its six-year relationship with the broadcaster.

As part of the seven-figure deal, Screwfix will exclusively sponsor Sky Sports’ broadcast and digital coverage of the English Football League (EFL).

In a new and broader deal, the omnichannel retailer will also sponsor ‘whistle-to-whistle’ Sky Sports coverage of the Carabao Cup and Scottish Professional League. Screwfix will also sponsor 190 live games on Sky Sports Football, with the package including exclusive sponsorship of the weekly EFL highlights show on free-to-air channel, Quest.

Screwfix will have the rights to use the Sky Sports Football logo in its owned and bought media.

The package includes 15- and five-second idents, digital display takeovers and video bumpers, aligned to sponsored content.

Caroline Welsh, director of brand and marketing at Screwfix, says: “We are proud to be the first official partner of Sky Sports Football. With over 80% of customers watching or attending games, this partnership gives us the opportunity to talk to them every week.”

“After a fantastic six years of working together and with Screwfix celebrating its 40^th birthday this year, this landmark deal is the perfect way to celebrate,” she adds.

Warning message attached to gambling ads does little to change behaviour

Attaching a warning message to gambling adverts has done little to change behaviour and curb gambling, a new study has found.

The research was conducted by academics in the psychology department at the University of Warwick, who measured the impact of the industry’s responsible gambling slogan, ‘When the fun stops, stop’. However, they found it did not have any significant effect on gambling behaviour.

Researchers asked more than 500 Premier League fans who had experience with sports betting to place small wagers after viewing the adverts – some had the warning label, and some did not.

The study found that those who had seen the responsible gambling message bet more often than those who had not, even though the difference was only marginal, according to The Guardian.

However, researchers say the message failed to promote more responsible gambling behaviour.

Dr Lukasz Walasek, one of the authors of the report, says: “The purpose of the ‘When the fun stops, stop’ warning labels is to encourage more responsible gambling behaviour. Yet there is hardly any evidence suggesting that such labels are effective.”

Love Honey names ex-Sainsbury’s and Heineken marketing boss as CEO

Former Sainsbury’s and Heineken marketing director Sarah Warby has been named CEO of sexual wellbeing brand Lovehoney.

The company says Warby will lead the business on its next phase of growth following the acquisition of a majority stake by Telemos Capital in 2018.

“Lovehoney is a company with an enviable brand reputation both in the industry and with its customers. I’m excited to be part of the next chapter of this amazing growth story and believe we can fulfill Lovehoney’s ambitions for global category leadership,” Warby says.

She adds: “I’m looking forward to joining and getting to know the many talented people that have helped Lovehoney achieve its impressive growth so far.”

Lovehoney founders Richard Longhurst and Neal Slateford will step down from the day-to-day running of the business but will remain as directors on the Lovehoney board alongside Philippe Jacobs and Jacob Polny from Telemos Capital.

ILonghurst and Slateford comment: “When we started Lovehoney 17 years ago, we never imagined it would grow to be a £100m turnover business and help so many people around the world have more fun in the bedroom. We’re thrilled that Sarah is joining Lovehoney to take the business to the next level. Having someone with her quality and breadth of experience is a real asset to our company and we look forward to watching Lovehoney develop further under her leadership.”

Lovehoney was launched in 2002 and has since grown revenues to more than £100m. Warby will join the retailer in mid-September.

Warby served as Heineken’s marketing director between 2007 and 2011 before moving to Sainsbury’s where she was marketing boss until 2017.