Nestlé, Facebook, Diageo: 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.

Brands and publishers brace to lose traffic in Facebook News Feed reshuffle

Last year, Facebook said it was testing a separate News Feed for media and brand posts. And unfortunately for publishers, this news has now been confirmed in a blog post by Mark Zuckerberg.

The move means that the social media platform will be downgrading posts from media outlets and brands in favour of posts from friends and video content.

In a post to Facebook today, Zuckerberg said he is instructing the company’s product teams to focus on helping using find relevant content that leads to more meaningful social interactions despite the move being likely to reduce users’ time spent on the site.

For news outlets that rely heavily on Facebook for traffic, the move is likely to have drastic consequences.

He wrote: “The first changes you’ll see will be in News Feed, where you can expect to see more from your friends, family and groups.

“As we roll this out, you’ll see less public content like posts from businesses, brands, and media.”

Nestlé set to sell confectionary business to Ferrero

Ferrero, which is most well-known for its Ferrero and Nutella brands, is nearing a deal to acquire Nestlé’s confectionery business for about $2.8bn, according to Bloomberg.

An agreement could be signed as early as Sunday, a source said. The business, which includes the Butterfinger and Baby Ruth brands, is suffering a decline in revenue and had sales of about $915m in 2016.

Ferrero, which has traditionally shied away from acquisitions, is expanding its portfolio beyond Nutella hazelnut spread, Tic Tac sweets and Ferrero Rocher chocolates. For Nestlé, the world’s largest food company, this marks CEO Mark Schneider’s first major divestment and an initial step away from chocolate.

Smart meter rollout to be investigated by watchdog

Plans to install smart meters in millions of British homes will be reviewed by the government spending watchdog after complaints around inaccurate bills have surfaced, the BBC has learned.

The National Audit Office (NAO) says it will investigate whether the planned £11bn rollout will save customers money. The Department for Business, Energy and Industrial Strategy said it will work with the NAO to “help review the progress of this important programme”.

Smart meters show how much energy is being used and the cost in real time. The technology is projected to save £16.7bn through reduced energy use, with the cost of the scheme funded through energy bills.

But some users have experienced problems with installations, inaccurate bills or loss of the meter’s ‘smart’ features when they switch suppliers.

The study will “assess the current economic case for the rollout of smart meters and look at whether the government is on track to achieve its target to rollout meters by 2020”.

80% of working people fear falling real pay

Anxiety over future job and pay prospects has become increasingly common among UK workers against a backdrop of falling living standards and Brexit uncertainty, a report has warned.

Four out of five working people are concerned that inflation will outstrip their pay in future, despite high levels of employment, the Royal Society of Arts (RSA) said.

The thinktank said anxiety about falling real pay was widespread across all income bands as it warned the link between employment and economic security had been “fundamentally broken” since the 2008 financial crash.

“Having a job is no longer a guarantor of economic security: more than seven million people in working households live in poverty, wage growth lagged behind inflation for most of the last decade, and close to eight million people in the UK live with problem debt,” says Atif Shafique, a senior researcher at the RSA.

Diageo looks to smaller retailers to grow alcohol sales through UberEats tie-up

Diageo is offering convenience retailers across the UK the opportunity to grow their alcohol sales with an online solution through its new partnership with delivery app UberEats.

They will be invited to work alongside Diageo as supply partners to fulfil orders of its beverages, as well as mixers and snacks, via the UberEats app.

Diageo says the initiative will provide a significant opportunity to increase alcohol sales among new customers, while also offering loyal customers an innovative new way to enjoy the company’s products.

It owns a range of spirits brands, including Captain Morgan, Tanqueray and Johnnie Walker.

A previously established partnership with London convenience chain Portlands 24/7 is said to have “generated an 8% increase in alcohol sales over the last eight weeks”.

Thursday 11 January

Data breach costs Carphone Warehouse £400,000

Carphone Warehouse has been fined £400,000 by the Information Commissioner’s Office for a data breach in 2015, affecting more than three million customers.

Hackers accessed names, addresses, phone numbers, dates of birth and the marital status of customers via a data breach of Carphone Warehouse’s online division, which operates the OneStopPhoneShop.com, e2save.com and Mobiles.co.uk websites. The breach included historical payment card details of more than 18,000 customers.

Staff were also hit by the hack, with names, phone numbers, postcodes and car registrations of employees being accessed.

Carphone Warehouse accepted the £400,000 fine, one the largest ever issued by the ICO, apologising for any distress caused.

YouTube cuts ties with prominent vlogger

YouTube has cut business ties with high profile US vlogger Logan Paul after he posted a video showing the body of an apparent suicide victim in Japan on 31 December.

In the video Paul is seen in the Aokigahara forest at the base of Mount Fuji, a frequent site of suicides, where he comes across the body of a unnamed man and is filmed making jokes.

All Paul’s channels have been removed from YouTube’s Google Preferred programme, where brands sell ads on the top 5% of the platform’s content creators, and the company has halted production on all original projects with the US vlogger.

Logan Paul apologised to his more than 15 million YouTube subscribers on 2 January following the backlash.

The Sun suffers £24m loss in the face of dwindling ad sales

Declining print advertising and legal charges relating to phone hacking caused The Sun to make loss of £24m last year.

Analysis by the Guardian shows that the tabloid newspaper also registered a 5% fall in total revenues, from £446m to £424m, attributed to the tough print ad market and general decline in popularity amongst consumers for buying newspapers. The data also shows that The Sun spent £75m on sales and marketing last year alone.

In a statement, the tabloid blamed the decrease in turnover on challenging market conditions, declining newspaper circulation and failing revenue from print ads as spending shifts from print to digital.

News UK stablemate the Times saw its pre-tax losses increase from £4.5m to £6.5m in the year to 2 July, figures attributed in part to a £7m redundancy bill.

Kodak embraces crypto-currency

Camera manufacturer Kodak is to launch a new crypto-currency called KodakCoin open to photographers using blockchain technology.

The service, supported by the new KodakOne blockchain, will allow photographers to licence their photographic work using KodakCoin and then scan the web to track down any copyright violations.

A blockchain is a digital ledger that enables organisations to record data in a highly secure fashion that is both fully verifiable and decentralised. Once encrypted, any data put into the blockchain can only be changed if all the stakeholders empowered to amend the data have reached a consensus. Any changes made on the blockchain are registered.

This level of security means that photographers using the KodakOne blockchain would be able to trace how their work was being used.

Kodak plans to hold an initial coin offering (ICO) on 31 January, the announcement of which caused the camera company’s share price to more than double on 9 January.

Marks & Spencer launches Curve plus-size range

Retailer Marks & Spencer has unveiled a new plus-size collection designed in collaboration with customers and influencers.

Launching in full on 23 January, the Curve collection will be available in sizes 18 to 32, extending the retailer’s current 18-24 plus-size offering.

The first 26 pieces of the 100 piece collection are on sale now, designed in collaboration with 2,000 British women sized 18-32 and bloggers like Danielle Vanier who is fronting the first phase of the campaign. M&S is already the UK’s biggest plus-size fashion retailer.

Focused on good quality everyday essentials, the Curve collection includes stretch denim, soft blouses, knitwear, little black dresses, trench coats and biker jackets.

Wednesday, 10 January

Virgin Trains stops selling The Daily Mail after concerns about its ‘editorial position’

The Daily Mail has accused Virgin Trains of “censoring” consumer choice after it made the decision to stop selling the newspaper on its services, as it was “not compatible” with its brand or beliefs.

The train operator sells a limited selection of newspapers and magazines on-board its services and did offer first class passengers a free copy of the paper.

However, employees at the train company raised concerns about the newspaper’s “editorial position on issues such as immigration, LGBT rights and unemployment”, according to an internal memo.

Virgin Trains operates the west coast mainline, including trains from London to Manchester, Liverpool, Birmingham and Scotland.

The Daily Mail called the move “disgraceful” and argued that the company was “censoring the choice of newspapers it offers to passengers”.

Just Eat slammed for introducing 50p surcharge

Just Eat has been criticised for introducing a 50p service charge on all orders, just days before a ban on card payment surcharges comes into effect.

The food ordering firm previously added a 50p charge to all orders paid by credit or debit card, but a Government ban on these fees will begin on Saturday.

Now customers will have to a 50p surcharge on all orders, prompting accusations that Just Eat is trying to circumvent the law.

The Weeknd ends H&M partnership following ‘racist’ ad

Musician The Weeknd has cut ties with H&M after it launched a ‘racist’ advert featuring a black boy wearing a sweatshirt with the slogan ‘Coolest monkey in the jungle’.

The star, who has created a number of collections for H&M and modelled for the retailer, said he was “deeply offended” by the ad and felt “shocked and embarrassed” by the image.

woke up this morning shocked and embarrassed by this photo. i’m deeply offended and will not be working with @hm anymore… pic.twitter.com/P3023iYzAb

— The Weeknd (@theweeknd) January 8, 2018

H&M has apologised for the image, saying in a statement that it is “deeply sorry ” for the picture an the print. “Therefore, we’ve not only removed the image from our channels, but also the garment from our offering.”

Toyota to offer Amazon Alexa in cars

Amazon’s ambition to extend use of Alexa beyond the home could very soon be a reality, following a deal with car marque Toyota that will see it add the voice assistant to some Toyota and Lexus models this year.

Alexa will enable drivers and passengers to ask for directions, control entertainment, get the news and add items to a shopping list. It will also let users control their smart home, giving them the ability to adjust the temperature in their house, for example, while on the road.

John Scumniotales, head of product for Amazon Alexa Automotive, said: “Our vision for Alexa is that she should be everywhere a customer might need her – at home, in the office, on phones and in cars. This integration means that customers can interact with Alexa, virtually anywhere they drive.”

‘Frightening’ Asda Halloween ad escapes ban

Asda has escaped an ad ban, despite its Halloween ad receiving 62 complaints from parents reporting their young children had been “distressed” by the ad, challenging whether it had been scheduled appropriately.

The TV ad for the supermarket, shows a young girl dressed as a witch standing in front of a mirror. When a bolt of lightning strikes her house a radio starts playing music, her eyes glow green and she starts dancing with jerky motions while staring ahead and lip syncing to the song.

The ad was cleared by Clearcast with no scheduling restriction following discussions with the grocer’s agency. Asda said Clearcast did discuss the scene with the girl’s eyes turning green and took the view that the shot was “tame, and would not cause any harm, fear or distress to children”.

The Advertising Standards Authority said that while the ad referenced scary movies, it was presented in a fun way so unlikely to cause fear or distress to older children. It did note that the darkness of the ad and the fact the girl appears to be possessed and not in control of her movements could be frightening to very young children though, despite of the light-hearted tone.

However, it did not seen any evidence that the ad had been broadcast during programming aimed at, or of strong appeal to, very young children. It therefore concluded the ad had been appropriately scheduled and did not breach the Code.

Tuesday, 9 January

Samsung on course for record profits

Samsung expects to deliver its highest ever profits for the final quarter of 2017, fuelled by its memory chip business. The South Korean company says operating earnings will come in at 15.1 trillion won (£10.4bn) for the final three months of 2017, up 64% year on year. However, that is slightly below analyst expectations as the strong currency in South Korea impacted results.

The expected record profits come despite a high-profile scandal at the top of the firm that has seen the expected heir to the business, Lee Jae-yong, jailed for bribery and corruption. Samsung’s reputation was also impacted by the global recall of its flagship Note 7 smartphone in 2016 after a number of devices overheat and batteries exploded.

The surging price of memory chips is boosting Samsung, but many expect those rises to end in 2018. And there is growing competition in the smartphone market, as well a slowdown in sales growth more mature markets such as the UK.

Consumer spend on clothes, food and online rises

Consumers increased spending on clothing, food and online purchases in the final quarter of 2017, despite weakening consumer confidence and economic worries. According to the British Retail Consortium, retail sales between 16 November and 30 December were up 1.4% year on year.

Separate figures from Barclaycard say nominal spending was up 4% between 19 November and 23 December, faster than inflation which increased 3.1%. Online spending was up 14.1% according to Barclaycard, compared to a 0.3% rise in in-store spending.

The figures indicate that clothing and grocery brands may have performed better than expected over the Christmas period, with clothing in particular helped by colder weather. However, results from retailers have so far been mixed; Next, which has a strong online operation, saw sales rise but other firms, including Mothercare, Debenhams and House of Fraser have struggled.

Matt Hancock promoted to culture secretary in government reshuffle

The advertising industry has a new Secretary of State after Matt Hancock, who was minister for digital at the department of culture, media and sport, was promoted to Secretary of State for the department in the latest cabinet reshuffle. Previous culture secretary Karen Bradley, who was appointed in July 2016, has been moved to Secretary of State for Northern Ireland.

The appointment was broadly welcomed by the advertising industry, with IAB CEO Jon Mew tweeting his support and Advertising Association CEO Stephen Woodford commenting: “Matt is an enthusiastic and engaged supporter of the creative industries and has a keen awareness of advertising’s vital importance to the UK economy and the global lead the UK enjoys. We look forward to working with Matt as Secretary of State for the continued success of our industry and the wider UK creative sector.”

A new minister for digital is expected to be appointed today as part of Prime Minister Theresa May’s ongoing reshuffle.

H&M apologises over ‘racist’ advert

H&M has apologised after an advert showing a black child in a green hoodie that featured the words ‘Coolest monkey in the jungle’ appeared online. The ad sparked accusations of racism on social media, with many calling the image inappropriate and negligent. H&M has now removed the ad.

A spokeswoman for the retailer said: “This image has now been removed from all H&M channels and we apologise to anyone this may have offended.”

The image was part of a series of ads for hoodies sold by the retailer. The two others included the words ‘Mangrove jungle’ and ‘Official survival expert’ and featured outlines of various animals. They were modelled by white children.

Jaguar Land Rover sales hit record high

Jaguar Land Rover, the UK’s biggest car maker, saw sales hit a record high last year. Jaguar sold 178,601 cars, up 20% year on year, while Land Rover sales were up 2% to 442,508.

The increases mean that in total Jaguar Land Rover sales have tripled since 2009. The car company credited its seventh successive year of growth to the introduction of new models and the growing popularity of its clean diesel and petrol engines. China and the US in particular saw strong growth, helping to offset “difficult market conditions” in Europe and the UK.

Monday, 8 January

CES opens amid gender row

The annual Las Vegas showcase of new technology, the Consumer Electronics Show, starts today, but its opening has been overshadowed by a failure to shake off criticisms about the diversity of its speaker line-up. All of its headline speakers for 2018 are men.

On Friday, CES’s organiser, the Consumer Technology Association, wrote a letter to its chief critic Gina Glantz, founder of the not-for-profit group Gender Avenger, promising to “redouble” efforts to bring female speakers on board – but not until next year.

Glantz originally voiced objections in November, and was followed up by numerous CMOs, including HP’s Antonio Lucio and Twitter’s Kristen Lemkau. The show said headline speakers must be CEOs or presidents of well known technology brands, saying “we feel your pain” that more of these are not women, but Glantz countered that it was up to the show to change its criteria.

Tesco expected to win Christmas retail war

This week will be a crucial bellwether for the state of the UK retail sector, as more than 20 brands release financial figures for the Christmas period. Analysts expect to see little growth, given the many predictions leading up to December that consumer spending would be held back by inflation and stagnant wages.

Tesco is thought to have performed well, with retail analyst Clive Black telling the Guardian the supermarket had “stabilised the business and got the basics right on availability and store standards”. The same can’t be said of Marks & Spencer, however, with analyst Richard Hyman arguing: “The M&S customer is not interested in getting more inferior product for lower prices.”

Next was the first brand to announce its sales figures last week, posting better than expected results, but this was followed by a profit warning from Debenhams. The remaining supermarkets and department stores John Lewis and House of Fraser are among those brands with results out this week.

Pubs had a good Christmas period

While retailers might not feel much Christmas cheer this week, good tidings are expected from the pub sector. Private pub groups such as Stonegate have already announced positive performance, with the Slug & Lettuce owner recording like-for-like sales growth of 5.5%, compared with 5.3% last year. Brokerage Peel Hunt also forecast good results from publicly owned pub groups, with companies such as Marston’s, JD Wethespoon and Revolution Bars due to announce results in January.

Longer Christmas Day opening hours, along with increased demand for premium drinks, were credited for the sales success at Stonegate by chief executive Simon Longbottom.

Volkswagen still number one car brand despite ‘dieselgate’

German car brand Volkswagen is likely to increase its lead over Toyota as the top-selling car manufacturer in the world, even though it continues to suffer repercussions from the ‘dieselgate’ scandal, when it admitted to building technology to help its cars cheat emissions tests. The reputation damage continues, with costs of buying back and refitting US diesel cars increasing, but that has not prevented it selling 10.7 million cars in 2017.

That internal estimate would stretch its lead over second-placed Toyota, which is forecast to have sold 10.35 million cars. It also represents an increase over VW’s 2016 sales of 10.3 million, when Toyota sold 10.2 million.

If the estimates, seen by German newspaper Bild Am Sonntag, are correct, VW will report revenue of €220bn (£195bn) for 2017, its highest ever and a €3bn improvement year on year.

Molson Coors buy Aspall cider

The demand for premium drinks is benefiting not only pub sales but also drinks brands themselves, judging by Molson Coors’ purchase of Aspall cider, revealed on Sunday. The Suffolk-based producer was started in 1728 and was still family-owned prior to the acquisition, worth £40m.

In its most recent figures from 2016, Aspall sales rose by 15% to £27.1m, and Molson Coors is now expected to drive further growth, both in the UK and and international markets. The brewer has promised investment in the company and its facilities, with the two heads of the family run Aspall business, Barry and Henry Chevallier Guild, remaining on board to provide “strategic direction” and “conscience” for the brand under its new ownership.