Google, Deliveroo, Odeon: 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.

Deliveroo

Deliveroo grows ahead of expectations following brand building push

Food delivery service Deliveroo has grown “materially ahead of expectations” during the first half of 2021, with orders and average order value proving resilient despite the easing of Covid-19 restrictions.

The business recorded revenue growth of 82% compared to the first half of last year, which it says is primarily a result of increased gross transaction value (the total value spent by consumers on the marketplace) driven by a rise in monthly active users. Revenues totalled £922.5m for the six month period.

Nevertheless, Deliveroo posted an operating loss of £27m, broadly flat compared to H1 2020. A 75% increase in gross profit to £264m was largely offset by increased investments to “support future growth”, including brand-building marketing spend to drive awareness and recruiting employees in tech.

In the UK and Ireland alone, however, operating profit reached £55.4m, up from £34.5m last year.

Earlier this summer, Deliveroo launched its ‘Full Life’ campaign, in which the brand committed to work with restaurant and grocery partners to deliver 1 million meals to communities in need by early 2022.

Deliveroo now claims to offer the most food merchants in the UK of all the food delivery platforms, while it has exceeded its UK expansion target by reaching 72% population coverage by the end of June.

“We are seeing strong growth and engagement across our marketplace as lockdowns continue to ease. Demand has been high amongst consumers,” says founder and CEO Will Shu.

“We have widened our consumer base, seen people continuing to order frequently and we now work with more food merchants than any other platform in the UK. At the same time, more riders are choosing to continue to work with the company because they value the work we offer.

“As reflected in our guidance, whilst we expect that consumer behaviour may moderate later in the year, we remain excited about the opportunity ahead and our ability to capitalise on it.”

Earlier this week Deliveroo’s shares jumped 11% to its highest level since going public in March, as online food delivery firm Delivery Hero took a 5% stake worth £284m in its UK rival.

Google and YouTube to block advertisers from targeting under-18s

Google has announced a raft of changes to its advertising and privacy policies, which are designed to keep under-18s safe across its platforms.

Over the coming months, Google is to begin blocking ad targeting based on the age, gender or interests of people under-18, while also expanding its safeguards to prevent age-sensitive ad categories from being shown to teenagers.

Location history will be automatically turned off for all under-18 users globally, while apps will be required to disclose how and why they collect data in greater detail to help parents to decide which apps are appropriate for their children.

On YouTube, the default upload setting for teens aged 13-17 will be set to the most private option available, and users will be provided with safeguards and education about commercial content. Google will also make ‘Safe Search’ the default setting for users under-18, to filter out explicit results.

Among a number of other updates, the digital giant will be rolling out wellbeing filters that allow users to block news, podcasts and access to webpages on Google Assistant-enabled smart devices. On YouTube, users under-18 will be automatically opted into ‘take a break’ and ‘bedtime’ reminders, with the autoplay function turned off by default.

However, writing in a blog post, Google’s general manager of kids and family, Mindy Brooks, called child safety a “complex challenge” for the platform.

“It will require input from regulators, lawmakers, industry bodies, technology providers, and others to address it – and to ensure that we all build a safer internet for kids,” she says.

John West promises ‘Strength for Life’ in new positioning

Canned fish business John West is hoping to drive reappraisal of its brand by repositioning itself as a health and nutrition company.

Kicking off the ‘Strength for Life’ positioning is a new TV campaign, ‘Girl on the Move’, in which a teenage girl fuels herself with John West foods as she goes about her everyday life.

The brand is hoping to bring in a younger customer with the campaign, which introduces a new tagline: ‘Eat Strong, Go Strong’.

The new brand positioning and TV ad were developed by creative agency Havas London, while media planning and buying was handled by Havas Media. The campaign will run across TV, video-on-demand, social media and on gym TVs.

John West describes the new strategy as a “radical departure” for the brand, which has traditionally focused on its 160-year heritage and the origins of the product.

Explaining the shift, John West’s international marketing director, Jon Burton, says: “Eat Strong, Go Strong enables John West to own both physical and mental ‘strength’, and underlines our products’ many health benefits.

“We want to remind consumers about the nutritional benefits of fish and make John West more modern and relevant to people’s lives, across different life stages.”

As part of the brand repositioning, the ‘Eat Strong, Go Strong’ tagline will be activated in-store and across all consumer touchpoints, supported by an enhanced product offering focused on functional health.

Odeon to accept Bitcoin as payment

AMC, the US-owner of UK cinema chain Odeon, is going to allow customers to pay for tickets and concessions in Bitcoin by the end of the year.

The cinema company joins an increasing number of businesses beginning to accept the cryptocurrency as payment, including Microsoft, Wikipedia and US telecommunications business AT&T.

According to the BBC, Bitcoin’s price has been wildly temperamental recently, trading at about $45,000 (£32,500) on Tuesday after dropping below $30,000 last month.

Meanwhile, AMC’s revenues for the first six months of 2021 plummeted almost 40% to £593m, as cinema demand remains slow to recover following the easing of Covid restrictions.

Lovehoney encourages consumers to ‘Love How You Love’ in new TV ad

Sexual wellness brand Lovehoney has launched a new TV ad in the UK as part of its global ‘Love How You Love’ marketing campaign.

Created by ad agency Virtue, the 30-second spot shows couples and singles in various scenarios alongside a range of Lovehoney products. Words on screen reveal ways to discuss the role that sex toys and lingerie play in people’s sexual happiness.

In 2011, Lovehoney became the first sexual wellness brand to advertise on TV in the UK.

“Our vision is to become the world’s leading sexual happiness brand, synonymous with a healthy, happy sex life,” says global brand director Helen Balmer.

“We undertook extensive quantitative and qualitative research with consumers to understand their motivations and attitudes towards sex and the role of sex toys. This identified that there is a big opportunity with current active users and potential considerers, and that the Lovehoney brand is well placed to spark a conversation between couples.”

Tuesday, 10 August

PaddyPower

Return of sport sees profit surge 221% at Paddy Power owner Flutter

The return of sport following a Covid-induced hiatus caused group revenue to surge 99% to £3.1bn at Paddy Power owner Flutter Entertainment during the six months to 30 June. Over the same period the company, which also owns SkyBet and Betfair, experienced a 221% rise in pre-tax profit to £77m.

In the UK and Ireland alone revenue grew by 30% to £1.1bn, despite Paddy Power stores being closed for the entirety of the first quarter and a proportion of Q2. Online revenue rose by 37% across the UK and Ireland business, with the Euros tournament helping to drive a 44% increase in average monthly players across the SkyBet, Betfair and Paddy Power brands.

Flutter says its gaming business also performed well, despite the fact such products typically claim a lower share of consumer spend during summer football tournaments.

The company praises SkyBet, Paddy Power and Betfair for continuing to deliver a “differentiated proposition to recreational and more engaged customers alike”, with the team pursuing a ‘complement and compete’ strategy.

Flutter claims targeted marketing campaigns have helped to enhance the SkyBet in-play experience, while Paddy Power and Betfair have benefitted from improved ‘Bet Builder’ products. The popularity of the ‘Bet Builder’ functionality has allowed the business to reinvest in enhanced rewards to acquire and retain customers.

Improvements to the product offering across the three brands have been brought about by creating “centres of excellence”, sharing insights on areas like pricing and risk management. As a result of the improvements, all three brands achieved “record high engagement” during the six months to 30 June, with sports betting average monthly players up 24% compared to 2019.

Flutter also claims to have improved the proposition of its gaming products over the past 12 months, leveraging the expertise of the Sky Vegas team to successfully launch daily engagement products such as ‘Paddy’s Wonder Wheel’ and ‘Betfair’s Prize Pinball’. The business says these changes have led to improved customer engagement and retention.

The results show the integration of the SkyBet, Paddy Power and Betfair brands is “progressing well” and benefits are being found from shared learnings across product and operations, according to Flutter Entertainment chief executive Peter Jackson.

He describes the company’s first half performance as exceeding expectations, indicating “substantial progress” is being made towards the group’s strategic objectives.

Retail sales remain strong despite rising high street vacancy rate

high street

Retail sales remained strong in July, rising by 6.4% on a total basis compared to growth of 3.2% in July 2020.

However, a combination of wet weather and a smaller than anticipated boost to in-store sales following the lifting of restrictions means this figure is well below the three-month average growth of 14.7% and the 12-month average growth of 10.4%. The British Retail Consortium (BRC) figures show that, compared to July 2019, total retail sales grew by 9.1% in the four weeks to 31 July.

UK retail sales increased 4.7% on a like-for-like basis compared to July 2020. However, these sales are below the three-month average growth rate of 9.7% and the 12-month average growth of 11.1%. The slowing of growth in retail sales is thought to have been affected by the reopening of hospitality and leisure, which has diluted consumer spending.

Over the three months to July, in-store sales of non-food items grew 64.9% on a total basis. During the same period food sales increased 2.9% on a total basis and rose 0.8% on a like-for-like basis. Non-Food retail sales increased 24.6% on a total basis and 17.6% on a like-for-like basis.

Online sales remained strong as social events like weddings began to ramp back up, registering notable improvements in sales of formalwear and beauty. Furthermore, the end to mandatory work from home rules caused sales of home office equipment to finally begin to decline, although consumer appetite for furniture and household appliances held up.

The BRC data indicates online non-food sales increased by 0.6% in July, against a growth of 41% in July 2020. The non-food online penetration rate fell to 48.4% last month from 54% in July 2020. While down on last year, the penetration rate was significantly up on the 29.7% seen at the same point in 2019.

Perhaps more worrying is the rising vacancy rate on UK high streets. Given the impact of the pandemic many high streets are crying out for investment, says BRC chief executive Helen Dickinson.

“Unfortunately, the current broken business rates system continues to hold back retailers, hindering vital investment into retail innovation and the blended physical-digital retail offering,” she says.

“The government must ensure the upcoming business rates review permanently reduces the cost burden to sustainable levels. Retailers want to play their part in building back a better future for local communities and government must give them the tools to do so.”

Looking ahead, UK head of retail at KPMG Paul Martin expects the retail sector to grow at a much slower rate as retailers face a growing set of challenges. “Staffing pressures, increases in commodity and component costs, rising inflation eating into households’ spending power and stalling consumer confidence could lead to a slowdown in retail sector growth as we head into autumn.”

Instagram tests adding adverts to Shops tab

Instagram

Instagram is looking to bring adverts to its Shop tab as the social media site investigates new ways to monetise its platform.

The ads, which will be either a single image or carousel, are being tested in the US with brands such as Fenty Beauty and DTC luggage company Away. It is reported ads appearing in the Shop tab will only appear on mobile and will launch with an auction-based model, while the frequency of adverts shown to users will be based on how they use Instagram and consumer sentiment will be monitored to strike the right balance with the content.

Instagram introduced Shops in May last year, saying at the time it offered a way for brands to pivot to selling online during the Covid crisis, creating an “immersive full-screen storefront” through which to tell their brand story and drive product discovery.

The site has been experimenting with other new ad formats. In March Instagram rolled out ads on IGTV to UK users, designed to appear when people click to watch an IGTV video from previews in their feed. The video ads are built for mobile and intended to last up to 15 seconds. Instagram describes the ads as “immersive, mobile-first”, with the ability to reach “high-intent, engaged audiences”.

Ads were also introduced to the video Reels feature in June, despite the functionality itself only being launched less than a year earlier, and Instagram has been testing sticker ads, which allow brands to add stickers to their stories advertising a product.

Ivy restaurant chain pulls ad amid claims of ‘racist stereotyping’

The Ivy has pulled a social media ad for its Chelsea restaurant and is launching an internal review amid claims of “racist stereotyping”.

The advert for the chain’s The Ivy Asia restaurant, which has since been deleted, showed women dressed as geishas riding in a rickshaw before falling through the doors of the restaurant and being stared at by the diners. Restaurant critic Jay Rayner described the advert as act of “premeditated racist stereotyping”.

In response, The Ivy apologised for the video, calling it “naïve” and “culturally insensitive”. The restaurant chain claims to have launched an internal review into its marketing processes and publication guidelines, to ensure this kind of situation does not happen again.

The Ivy says it wants to work with relevant external bodies to “review concept, culture and all internal and external processes”, adding: “We must learn lessons and move forward in a totally new and appropriate way.”

Harvey Nichols branches out into second hand fashion with resale deal

Harvey Nichols is hoping to create a “circular model” for luxury fashion consumption through a tie-up with resale service Reflaunt.

The premium department store will allow shoppers to sell handbags, fashion, accessories and watches via the Reflaunt space on its website, enabling them to earn up to 80% back on the original price of the items.

The Guardian reports that consumers will be able to drop items off at Harvey Nichols stores in London, Birmingham, Bristol, Manchester, Edinburgh or Leeds, while London-based sellers will also be given the option to have a Reflaunt concierge pick up the garments from their house.

Harvey Nichols chief executive Manju Malhotra sees the partnership as a means of ensuring luxury fashion items are “given the longer lifespan that they deserve”.

The department store follows rival Selfridges, which in 2019 opened a permanent space dedicated to second hand fashion both online and in its Oxford Street store, carried out in partnership with luxury fashion resale site Vestiaire Collective.

The news from Harvey Nichols comes the same day as climate activist Greta Thunberg appeared in the debut issue of Vogue Scandinavia. Sharing her cover image, Thunberg posted a Twitter thread criticising the “greenwashing” of the global fashion industry and the damaging ecological impact of its supply chain.

She described fashion as a “huge contributor to the climate-and ecological emergency”, noting the impact fast fashion has on workers and communities “being exploited” globally.

Thunberg also called out the marketing campaigns used to make the fashion industry appear sustainable: “Many make it look as if the fashion industry is starting to take responsibility, spending fantasy amounts on campaigns portraying themselves as ‘sustainable’, ‘ethical’, ‘green’, ‘climate neutral’ or ‘fair’. But let’s be clear: This is almost never anything but pure greenwash.”

Monday, 9 August

Virgin Atlantic planning surprise flotation

A reported initial public offering (IPO) of Virgin Atlantic shares could see Sir Richard Branson’s stake drop below 50% for the first time.

The surprise flotation on the London Stock Exchange, possibly to take place in the autumn, according to Sky News, would come shortly after the airline receives a £160m capital injection and could coincide with a reopening of transatlantic flights.

It would be the first time since Virgin Atlantic’s launch in 1984 that it has sold shares to the public and would see Branson give up overall control of the business.

Currently, Branson’s Virgin Group owns 51% of the airline, with the remaining 49% owned by Delta Air Lines.

Klarna hoping to educate consumers on influencer ads

Fintech brand Klarna is hoping to educate consumers on UK social media advertising guidelines, as part of a push to raise awareness about influencers being paid to promote products and services.

Research by the brand find 46% of consumers are unaware ‘#ad’ means that an influencer has been paid to post something on social media involving a product or brand – that it’s an advert, in other words.

Using a double-decker bus parked in Manchester city centre, Klarna is staging a pop-up activation that includes various ‘Instagrammable moments’ with an educational focus, in a bid to encourage responsible marketing practices across the industry.

“We are excited to return to Manchester and continue a conversation that’s becoming increasingly important in modern day life – responsible advertising on social channels,” says head of UK marketing at Klarna, AJ Coyne.

“As social media plays an increasingly present role in our lives, it’s vital that consumers are fully aware of when they are being advertised to.”

There will be a series of side events, including talks and various audio experiences.

Boohoo Group opens up supply chain to the public

Boohoo

The Boohoo Group is to open the door to its supply chain and invite customers to take a look behind the scenes.

The fashion company was criticised earlier this year for failing to improve working conditions among its suppliers based in Leicester, including low wage payments.

“We are committed to transparency and this initiative is another demonstration of this,” says Boohoo Group CEO John Lyttle.

“Customers can be confident in our operations and the way in which we are working with suppliers to drive positive change, as we help rebuild a vibrant manufacturing base in Leicester that offers good employment and great prospects for the city and its workers.”

Interested customers can email the company explaining why they want to “meet the makers”.

Their request will be considered and a select group from the company’s consumer base will be invited to take a look behind the scenes at factories in Leicester, getting an overview of the whole supply chain.

ITV Hub enjoys record month

ITVhub

ITV Hub had its most successful month ever during July, boasting 93.3 million viewing hours (up by 221% on the same time last year) and a 119% year-on-year increase in monthly active users. There were also 219 million live streams throughout the month.

The figures were significantly buoyed by both the Euros football tournament and the return of Love Island. Soap operas Emmerdale and Coronation Street both had episodes premiering on the platform during the football too.

The ad-free subscription service ITV Hub+ reached 567,000 during the same month, a 16% year-on-year increase.

“We knew this summer was going to be a big TV moment, but these figures show just how successful ITV Hub has been in bringing those ‘can’t miss’ occasions to viewers,” says ITV managing director, on demand Rufus Radcliffe.

Sky Broadband campaign celebrates the need for speed

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A 30-second hero spot is the centrepiece for a campaign promoting Sky Broadband’s Ultrafast Plus package.

Running across television, video on demand (VoD), radio, out of home (OOH) and digital out of home (DOOH), the campaign has been put together by Engine Creative and features characters being literally blown away by the high speeds offered by Sky’s latest package.

A series of special build OOH ads will also appear in Westfield shopping centres, with one of the minion characters having his dungarees blown off by the broadband’s speed.

“Our campaign is designed to feel as disruptive as our new game-changing speeds will feel to broadband customers across the UK, and to inject a sense of humour and fun to the market at a time we all sorely need it,” says Sky Broadband marketing director Dave Stratton.

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