Cutting Edge: Our Weekly Analysis of Marketing News

Cutting Edge: Our weekly analysis of marketing news

28 February 2018 Welcome to our weekly analysis of the most useful marketing news for CIM and CAM members. Quick links to sections

Marketing trends and issues Agencies UK B2B heads across the pond Advertising One of the findings of the UK B2B Marketing The changing depiction of women Agencies Benchmarking Report 2018 is that UK B2B The use of women in ad campaigns has stood the agencies are expanding to the US. Out of the top 20 test of time. Dove’s “Campaign for real beauty”, agencies in the latest league table, 60% now have launched over ten years ago, was the moment when at least one listed office in the US. The figure is 45% women could be themselves rather than an for the top 40 agencies. In contrast, very few US airbrushed image. Fourteen years later Sport B2B agencies have set up shop in the UK, the most England’s “This girl can” campaign only featured real successful being gyro and Stein IAS. This is women. However, Kate Dale, head of brand and surprising because the US, long regarded as the digital strategy at Sport England, believes that, “home” of B2B marketing, has traditionally although women are no longer being depicted as understood B2B better. In fact, much of the simply housewives, their image is still unrealistic: technology and terminology derives from the US. “women just simply will not stand for being told that The expansion of B2B agencies across the Atlantic they should have a perfect body”. The “body- reflects the growing confidence of the B2B sector. positivity” movement is more than just a passing B2B Marketing, Winter 2018, p50 trend and the ad industry must transform itself accordingly or accept the backlash. Relationships – McDonald’s-Leo Burnett Campaign, February 2018, pp78-82 (Kemp) Leo Burnett and McDonald’s have one of the longest-standing relationships in British advertising Sex sells – even for monkeys history. McDonald’s has achieved over 11 years of Sex sells, even if the audience is a monkey! continuous growth in the UK, a state of affairs that Research conducted for the journal, Plos One, found Alistair Macrow, its senior-VP and CMO, wants to that macaques (a species of monkey) preferred maintain. This article records a discussion between brands that were represented by an attractive Macrow and Chaka Sobhani, chief creative officer of female macaque. The monkeys were shown a brand Leo Burnett, which took place in a McDonald’s logo alongside a low-status monkey, a dominant restaurant in Essex! monkey, a sexy one and a neutral picture. When the Campaign, February 2018, pp54-55 (Macrow and pictures were taken away they chose the brand that Sobhani) had either been associated with a high-status or sexy monkey. However, the males, rather than the WPP horizontal as tech companies muscle in females, also seemed to like the low-status Keith Weed, CMO of Unilever, has said that social monkeys. The researchers note that “the origins of media is “at times little better than a swamp in the effectiveness of sex and status on advertising terms of transparency” and has warned Facebook remain a puzzle”! and Google that that he will remove his ad money The Times, 24 February 2018, p40 from their platforms unless they take remedial steps. However, the scandal in which brands were appearing alongside terrorist content online has had

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Cutting Edge: Our weekly analysis of marketing news

a greater impact on large ad groups, such as WPP, to events. Observing people provides the greater whose market value has fallen by a quarter over the granularity of data that is sometimes lacking in big past year. The biggest threat to these ad groups data. A brief case study of Lego is included. comes from the likes of Google and Facebook who eventindustrynews.com, 23 February 2018 (Desai) control around 60% of the ad market and can afford to employ lots of ad sales staff. There is a possibility Customer relations that WPP and other big groups – Publicis and Targeting customers at high risk of churn Omnicom – could be squeezed out. They are also Companies increasingly manage customer churn facing competition from professional services proactively, often by identifying customers that are companies. WPP’s Sir Martin Sorrell wasn’t to rely on at highest risk and fine-tuning their retention “horizontality”, whereby his agencies collaborate to strategies accordingly. So far, no research has been sell more services, but is he being too laid back? done on whether the optimum strategy is to target The Sunday Times (Business & Money), 25 February individuals at high risk of churn. Through two field 2018, p8 experiments, the authors show that customers who are at the highest risk of defection are not always Brands and branding the best targets for churn programmes. They Corporate brand association indicate that retention programmes might not work This study looks at the effect of corporate brand because they don’t use the right targeting rules. associations on consumers’ cognitive (product They suggest an alternative approach which involves attitude and purchase intention) and affective targeting customers based on their sensitivity to the (corporate commitment) responses across the communication, regardless of how high their risk of durables, services and FMCG sectors. It finds that churn is. corporate brand associations fall into two categories: Journal of Marketing Research, Vol 55 February 2018, universal associations which are influential in all pp80-98 (Ascarza) sectors; and sector-specific associations, which have varying effects on consumers according to sector. It Initial price discounts and customer retention also shows that a corporate brand story does not Discounts are often offered to new customers in the work across all sectors. In addition, corporate hope of building sustainable relationships. However, associations do not always have a positive influence there is inconclusive evidence when it comes to the on the consumer. It concludes that there are two long-term effectiveness of initial discounts on routes through which corporate brand associations customer retention. The authors hypothesise that can influence consumers: either through their moderate initial discounts (5% to 35%) have cognitive or affective responses. positive effects on customer retention while low Journal of Marketing Communications, Vol 24 (3) April (less than 5%) and high (more than 35%) discounts 2018, pp230-249 (Mann and Ghuman) have negative effects. Two studies are carried out in the insurance industry which support the authors’ Brand engagement behaviours theories. Another experiment reveals that moderate This study examines the role of perceived value and discounts lead customers to have higher innovativeness in promoting customer brand expectations of future benefits. engagement behaviours and brand loyalty. A Journal of Marketing, Vol 82 January 2018, pp115-131 conceptual model was tested on customers of Uber (Olivares et al) in Australia. It concluded that, when promoting brand loyalty, service innovation needs to have the Direct marketing right characteristics (perceived value, service Influence of economic and relational DM concept newness and relative advantage) and B2B companies spend significant amounts on direct practices to encourage customer brand engagement marketing to manage relationships with customers behaviours. but there is limited understanding about how the Journal of Services Marketing, Vol 32(1) 2018, pp70-82 effectiveness of direct marketing varies according to (Leckie et al) value propositions. Direct marketing initiatives are generally designed to convey economic or relational Conferences and events values. However, firms need to understand how The value of small data customers evaluate these marketing The event industry is intent on measuring the communications because these will affect their effectiveness of the experiences it creates for buying behaviours. Analysing data from a Fortune attendees. It relies on big data to analyse patterns 500 B2B services firm, the authors arrive at three of attendee behaviour, to identify trends and devise main conclusions. future strategies. However, this should include an Journal of Marketing Research, Vol 55 February 2018, analysis of people’s behaviour first-hand, something pp48-68 (Kim and Kumar) known as “small data capture”. Small data is important to all marketing disciplines, but especially

Direct mail – innovation and measurement Marketing Direct marketing, particularly direct mail, is having a Impact of company boards on new products renaissance. The launch of the Joint Industry Little research has been done on the influence of Committee for Mail (JICMail) audience data standard company boards on new products. This study in January has given it even more authority. During considers the effect of a company’s “board lock Q3 2017 direct mail ad spend rose by 5.9% year-on- centrality” (how much board members are year and it is the third-largest media channel in the connected to boards of other companies) on new UK after online and TV. According to IPA product introductions. They suggest that board lock TopuchPoints data, 38% of people buy or order centrality gives companies additional market something after reading a mail, while 87% of adults intelligence which provides opportunities for keep mail for more than a month. This article incremental new products. They hypothesise that discusses: JICMail; the forthcoming GDPR; and two aspects of board leadership affect this innovation, in the context of direct marketing. relationship: internal leadership and marketing marketingweek.com, 19 February 2018 (Hemsley) leadership. The theory is tested using a panel of US CPG companies, a sector where new products are Law mainly incremental. GDPR may impede Facebook advertising Journal of Marketing, Vol 82 January 2018, pp132-148 Facebook’s collection of personal data will become (Srinivasan et al) illegal under the new GDPR which takes effect in May. This will have an impact on its ability to sell Building an effective marketing team advertising which relies on obtaining targeted user It is important for the marketing team to work well information. Analysts at the Charles III University of together in response to organisational and customer Madrid have discovered that 73% of Facebook’s demands, hence the use of buzzwords such as European users are targeted by advertisers “collaborative” marketing, “connected” marketing according to their personal characteristics, such as and, the latest phrase: “synergistic” marketing. The gender and political persuasion. The GDPR will problem is to achieve synergistic marketing which forbid companies from processing data on the basis balances both collaboration and connectedness with of race, ethnicity, political leanings, religion, trade agility. The author looks at how to build an efficient union membership or sexual orientation, without marketing team and includes some top tips. first receiving explicit consent. B2B Marketing, Winter 2018, pp40-43 (Clarke) Financial Times, 22 February 2018, p16 Tamoco has your location The Truth in Advertising – photoshopping London-based startup, Tamoco, uses sensors to In 2011 the Advertising Standards Authority banned track around 100m smartphone users and sells the skincare ads with digitally altered images because information to advertisers. It’s proximity sensors, the ads were deemed to be misleading. Last year around 1.1 billion, are based on Wi-Fi hotspots. France ruled that the label “retouched photo” must Tamoco has teamed up with around 1,000 apps; be used on any photo used for commercial purposes once the user has installed one and agrees to the where the model’s body had been modified. US terms and conditions, Tamoco can link their location Congress introduced the Truth In Advertising Act in to its sensor network and sell the data to brands. It 2014, which aimed to reduce the use of images claims to have every pub in the UK (54,000) which have been materially altered. However, the geofenced as well as every bar in the world (1.4m)! legislation has never become law. Despite this, some Wired, March-April 2018, p41 retailers, such as Target and CVS, have decided to stop digital alteration or photoshopping of ads. Market research lexology.com, 20 February 2018 (Max) Using sensory anthropology Multisensory stimulation is an integral part of New trade marks – a sign of the times experiential consumption. Sensory anthropology can Proposed changes to the existing Trade Marks Act in help researchers to understand multisensory the UK would remove the requirement for a trade stimulation and its influence on consumer mark to be capable of being represented graphically. experiences. The authors report on two pieces of Under new provisions set out by the EU, any sign fieldwork involving yacht racing and adventure can be registered as a trade mark provided that it racing. They offer a set of guidelines and examples can distinguish goods or services of one business derived from the “embodied” concepts associated from another. This has led to discussions on “non- with sensory anthropology. This will help standard” marks, such as sounds, movements and researchers to acquire information that would not smells and how these could be represented more otherwise be available through conventional accurately. It means that animations, holograms and interviews, survey or experiential data. 3D shapes can all become trade marks. European Journal of Marketing, Vol 52(1-2) 2018, pp302- out-law.com, 21 February 2018 327 (Scott and Uncles)

Public relations Agriculture, fishing Why long-form content can be better The author argues that long-form content (with over and forestry 2,000 words) is better because it results in more Digital technology breaks down trade barriers shares on social media, more links to your website Micro-businesses and SMEs (MSMEs) have an and increases the website’s authority. It also important role to play in economic development, correlates with higher rankings; in fact, the top ten especially in developing countries where they search results generally have average content length contribute an estimated 60% to formal employment of over 2,000 words. This infographic tells you what and 40% to national income. Yet MSMEs in the advantages of long-form are and provides six developing economies, many of whom are steps to creating successful long-form content. smallholder farmers (around 80% of farmland in prdaily.com, 23 February 2018 (Royse) Asia and sub-Saharan Africa is managed by smallholders), find it hard to do business. Digital Gender equality – sending the right messages technology can help to improve their prospects. Gender equality, which has become more important Connected Farmer, which was developed by than ever, is linked to new gender paygap reporting Vodafone, Vodacom and Mezzanine, uses mobile rules which have revealed some significant technology to enable farmers to interact with others differences between what men and women are and to transact business. This article charts some earning. The issue is likely to remain in the success stories. headlines as more companies publish their figures. International Trade Forum, Issue 4 2017, pp18-19 (Reiter This means that brands and their communications and Joosub) need to take care that none of their campaigns use “crude” gender stereotyping. When planning a Labour Party to ban live animal exports campaign or comms strategy, there are six simple The Labour Party wants to ban the live export of questions that need to be asked. animals for slaughter. It also wants labelling on all prweek.com, 26 February 2018 (Mullen) meat to provide information on country-of-origin, method of production and slaughter. Its draft paper, Sponsorship entitled: Animal Welfare For The Many, Not The Carlsberg abandons England sponsorship Few, also includes plans for an animal welfare Carlsberg is to end its sponsorship of the England commissioner. The proposals will go out to football team after 22 years. Instead it wants to look consultation. at other sporting events and live music to “broaden The Grocer, 17 February 2018, p42 its partnerships as a brand in the UK”. However, it will continue to be the official beer for eight Premier Feedback highlights crop waste League clubs. It will also focus on its five-year A new report from the environment charity, partnership with Live Nation, in which Carlsberg is Feedback, looks at the role that supermarkets play the official beer of festivals, such as Reading and in overproduction and food waste. It claims that Leeds. Carlsberg had previously put £15m into a supermarket buying practices are leading farmers to campaign to position it as a more upmarket brand. waste between 10% and 16% of their fruit and veg thedrum.com, 23 February 2018 (McCarthy) crops every year. Retailers are transferring the risk and cost of over-production to farmers who cannot Alternative role models – women’s sport sell the additional produce in other markets. Over Last week we mentioned the sponsorship 50% of farmers in the survey said they opportunities presented by women’s sport. This overproduced due to pressure from buyers. week Marketing Week comments on how global The Grocer, 24 February 2018, p5; sports opportunities are moving away from https://feedbackglobal.org/wp- content/uploads/2018/02/Farm_waste_report_.pdf traditional gender stereotypes that define male and female sports. Brands should wake up and spot the opportunities this offers. Inspired by the female role Building industry models emerging from the 2016 Rio Olympics, Avon Largest builders increase land ownership became Liverpool Ladies FC’s shirt sponsor last year. The ten largest housebuilders in Britain increased Meanwhile Karen Millen has been working with the amount of land they held with planning Ruqsana Begum, a British kick boxer. permission by around a fifth from 2006 to 2016, marketingweek.com, 20 February 2018 (Rogers) according to the Campaign to Protect Rural England (CPRE). The CPRE, a charity which aims to limit the amount of building in the countryside, found that the number of homes built by companies had fallen by 13% over the same period. The Government has initiated a review into housebuilders who hold land

for long periods without beginning work. The CPRE says this practice makes it harder for smaller Charities and NGOs housebuilders to obtain suitable building land. AI – is it the future for charities? PM Theresa May has announced that she wants the Financial Times, 21 February 2018, p2 UK to become a “world leader” in artificial

intelligence. This article examines the role of AI in Megatowers need a lift the charity sector. An obvious area where AI could Real estate developers, especially in Asia, are replace humans is to offer advice online, a bit like building megatowers that are higher than 250 chatbots in the retail sector. Innovative charities are metres. This is a challenge for lift companies, such already experimenting with this in areas such as as Kone, ThyssenKrupp and Otis. Kone is conducting climate, homelessness, childcare and aging. The experiments in a 350-metre deep mine while article also considers the ethical aspects of AI and ThyssenKrupp has erected a 246-metre high testing the challenge for small charities. It argues that the tower in Germany, as it tries to perfect a system playing field could become more level with the that will dispense with the need for pulleys and advent of “AI-as-a-service”. cables. The three companies, together with charitydigitalnews.co.uk, 20 February 2018 (Green) Schindler Group of Switzerland and Mitsubishi

Electric Corp. of Japan, make up the “Big Five” lift companies. The power of these companies has Actigiving replaces slacktivism made it hard for newcomers to enter the industry. The 2017 Charitable Giving Report from the However, one of the biggest barriers to lift Blackbaud Institute, analyses data on 8,453 innovation is the human body. organisations and $29.7 billion in fundraising in the US during 2017. It says that overall charitable giving Bloomberg Businessweek, 19 February 2018, pp14-16 in the US rose by 4.1% year-on-year while online giving grew by 12.1%. Blackbaud identifies 2017 as Businesses and strategy a “turning point” in the use of digital, mobile and Capturing productivity growth social channels by donors. The “modern” donor is Labour-productivity growth rates are at a record low younger and has higher expectation about not-for- in many advanced economies yet growth is critical profit engagement. Meanwhile “actigiving” is taking to wages and living standards. Productivity growth the place of “slacktivism”, with the most generous also helps to increase consumer purchasing power donors choosing to give more. and demand for goods and services. Yet the gap https://institute.blackbaud.com/cgr2017-confirmation/, between the pace of technological change and February 2018 declining productivity growth has become more marked. This report looks at the reasons for the Durable consumer goods recent slowdown in labour-productivity growth in the Dyson awaiting final ECJ decision US and Western Europe. It considers how to Dyson has been trying to prove that Bosch-Siemens, “capture the 2% or more productivity potential of its German competitor, has been exaggerating the advanced economies”. efficiency of its vacuum cleaners. It wants Bosch’s mckinsey.com, February 2018 (Remes et al) energy labelling to state that efficiency tests have taken place in laboratory conditions. The case has Top SME exporters find markets outside EU gone all the way to the European Court of Justice The annual Sunday Times Lloyds SME Export Track but the ECJ’s top legal advisor says that EU laws 100 ranks Britain’s private SMEs according to who forbid extra information being placed on energy has had the fastest-growing exports over two years. labels. Sir James Dyson has repeatedly tried to The 100 companies together amounted to £744m in challenge EU energy tests on the grounds that they sales, up by 80% a year over the past two years. discriminate against his own products because his The majority (92) still sell to North America and vacuum cleaners do not lose power in the same way Europe but 82 are selling to other countries, up from as bag-based machines. A full legal decision is due 60 in 2017. Asia is cited by 45 companies as being a in two to four months. main market. The shift away from the EU is The Daily Telegraph (Business), 23 February 2018, p5 expected to continue, with 93 companies predicting that future growth will come from other markets. Will men take to engagement rings? One of the main enablers of growth has been e- Could singer Ed Sheeran’s engagement ring commerce, with 17 companies saying that most of persuade other men to follow suite? After recently- their sales are made online. engaged Sheeran received an engagement ring from The Sunday Times (SME Export Track 100), 25 February his fiancée, he said he couldn’t understand why 2018, pp1-VI more men didn’t wear one. With 20m followers on

social media, he is an influential figure and this

might just become a trend…

The Daily Telegraph, 23 February 2018, p3

Economy Environment Households struggle with education costs Helping shoppers to reduce food waste Some 41% of EU households had difficulty paying Here are 13 suggestions for supermarkets to help for school and university expenses in 2016, shoppers reduce food waste, such as stocking according to data from Eurostat. This included fees, products in the size that people want and using books, outings and meals. In Greece 89% had clever labels to help them plan. It also includes difficulty meeting expenses. three controversial ideas: making trolleys smaller; Financial Times, 23 February 2018, p1 simplifying the store layout; and putting bestsellers at the front of the shop so that they can be found US household borrowing still at record high more easily. Separately a new food app has Household debt in the US reached $13.1 trillion launched in the UK aimed at connecting people with during the fourth quarter of 2017. This represented food outlets to reduce food waste. Karma, a the fourth consecutive quarter in which borrowing Swedish app, has partnered with grocers, including was at a record high. three big supermarkets, to allow them to upload Bloomberg Businessweek, 19 February 2018, p5 surplus food to the app and sell it at a 50% discount.

The Grocer, 17 February 2018, pp30-32 (Tatum); The Energy and utilities Grocer, 17 February 2018, p7 Plastic policies – BP predicts lower oil demand The ban on single-use plastic, including carrier bags, Families respond to Blue Planet could lower oil demand by 2m barrels a day by It seems that the BBC’s programme, Blue Planet II, 2040, according to Spencer Dale, chief economist at is having the desired effect on consumer behaviour BP. He says that single-use plastics use around 15% after it highlighted the damage plastic is doing to of all non-combustible oil. The BP energy outlook marine life. Some 64% of households said they were report predicts that demand for crude oil will peak at reusing water bottles, 60% said they were buying about 110m barrels a day between 2035 and 2040, loose rather than packaged fruit and veg and 25% up from 97m today. Other experts believe that oil said they were cutting back on takeaways in plastic will peak earlier as governments’ climate change containers. However, only 17% of families said they policies and new technologies kick in. could afford non-plastic alternatives if they were The Guardian, 21 February 2018, p31 more expensive. The Times, 22 February 2018, p3 Warning for newbies in renewables Ignacio Galán, chief executive of the Spanish energy Gove could ban plastic straws company Iberdrola, has warned that newcomers to Michael Gove, the environment secretary, says that the renewable energy sector could collapse following plastic straws could be banned in Britain although the end of “cheap” money. A rise in interest rates Scotland is likely to become the first country in could make it very difficult for some players to Europe to implement the ban, according to the SNP. compete in the renewable energy sector. Galán has It is estimated that the UK uses 8.5 billion single-use also commented on last year’s draft legislation in the straws per year, the highest number in Europe. UK which would place a cap on the most expensive Plastic straws cannot be recycled and often end up type of gas and electricity. He believes that the plan in the sea where they can harm marine life. (See would undermine the UK as a place to invest. also under Packaging) Financial Times, 22 February 2018, p14 The Daily Telegraph, 23 February 2018, p16

Renationalisation – does it hold water? Fashion The Labour Party wants to renationalise the UK’s Boden – building a digital experience water industry. A study from the University of Boden, the British clothing retailer, launched its e- Greenwich has found that the industry has made commerce operation in 1999. By 2015 its profit had around £18 billion in pre-tax profits over the past fallen by 25% and sales were flat for the third decade and has paid nearly as much in dividends. consecutive year. Realising it needed to revamp its The water companies are monopolies, hence the digital proposition, it brought in Phil Lewis from need for regulators, but the government is looking Ralph Lauren as its first director of digital at changes to the regulatory set-up following experience. This article looks at how Boden has allegations of profiteering among the companies. transformed itself from a catalogue business to a bbc.co.uk/news, 22 February 2018 digital experience. marketingweek.com, 22 February 2018 (Hammett)

follow the same “dangerous practice”. The ad was Financial services found to be in breach of rules concerning children. Hiscox tracks live cyber attacks Wrigley’s argued that the ad was “acceptable” Hiscox, the insurance company, is claiming an because the woman was not shown in “full motion”. industry first with a campaign that can trach cyber- The Daily Telegraph, 21 February 2018, p12 attacks in real time. It has set up a so-called “honeypot” test server which can detect attempts at Campbell – a recipe for success? unauthorised access. The server, which is similar to Campbell Soup Company, once described as a one that a small business might have, has been receiving 25,000 attacks a day. Hiscox is hoping to “poster child” for the traditional food and drink industry, is struggling to keep up with the pace of position itself as a brand for SME business change. The company has tried hard to transform its insurance. business, partly by buying up health-food start-ups. marketingweek.com, 16 February 2018 (Vizard) Now it is looking to purchase Snyder’s-Lance, a snack-maker, for $4.8 billion, its biggest acquisition FMCG to date. This article looks at Campbell’s transformation from soup-maker to a diversified Beverages organisation which promotes: “Real food that PG Tips enter dairy-free market matters for life’s moments”. PG Tips has become the first major tea brand in the brandchannel.com, 22 February 2018 (Buss) UK to launch a blend intended for dairy-free milk. The black tea, which is called Perfect with Dairy- Milk in celebrity-endorsed vegan yoghurt Free, capitalises on the rise of the “free-from” Co Yo, a vegan food brand, has been forced to recall category, whose sales rose in value by 18.7% last its yoghurts after they were found to contain milk. year. Alpro, the “free-from” market leader, has Co Yo has a large celebrity following, including welcomed PG Tips’ new product. Nigella Lawson and Boy George. It blames one of its The Grocer, 24 February 2018, p39 suppliers for the contamination. The Guardian, 22 February 2018, p6 Own-brand juice overtakes branded drinks Over the past year people have drunk an additional Tobacco 30.2m litres of own-label (not from concentrate) PHE says heat not burn safer than cigarettes fruit juice, with value sales up by 18.1%. Own-label “Heat not burn” tobacco technology is less harmful juices, smoothies and juice drinks now account for than smoking conventional cigarettes, according to a over half the sector, having overtaken brand sales. recent report from Public Health England (PHE). Retailers have been reducing the amount of branded However, the report, Evidence Review of E- fruit juice drinks they stock, with Tropicana being Cigarettes and Heated Tobacco Products 2018, also the biggest casualty: its sales were down by 12.2% warned that heated tobacco products were likely to last year, as it lost its position as bestseller to be substantially more harmful than e-cigarettes. It Innocent. further stated that it is “currently not clear whether The Grocer, 24 February 2018, p36 such products provide any advantage as an additional harm reduction product”. Philip Morris, which launched Iqos, the first “heat not burn” Cosmetics and toiletries Siberian cosmetics – a warm reception product in 2016, has welcomed PHE’s report. Nearly Natura Siberica, a Russian company that makes 4m consumers have switched to Iqos since it was organic hair and skincare products, exports its first unveiled in Japan. products around the world with annual sales of over The Grocer, 17 February 2018, p5 $300m. The company was set up by Andrey Trubnikov, after he had the idea of using the wild BAT – vaping sales to reach £1 billion this herbs of Siberia. Now he exports 15% of production year to 45 countries. The company has deliberately British American Tobacco (BAT), the world’s biggest branded its cosmetics as Siberian rather than e-cigarette maker, has reported a 39% rise in profits Russian because people seem to be attracted by for 2017. Nicandro Durante, chief executive, says he buying products from somewhere as cold as Siberia! expects sales from vaping devices and other bbc.co.uk/news, 21 February 2018 “reduced-risk” products will double to £1 billion this year and reach £5 billion by 2022. Tobacco Food companies have invested heavily in alternative Wrigley’s ad comes unstuck products. Durante says the industry has “entered a A TV ad featuring a woman playing football while period of dynamic change” which has provided a chewing Wrigley’s gum has been banned. “unique opportunity” for BAT. Complaints focused on concerns that children would Financial Times, 23 February 2018, p19

as the main preventable risk of cancer in our Government and lifetimes. public sector The Guardian, 26 February 2018, p6; The Times, 26 February 2018, pp1-2 The case for privatisation Opinion polls suggest that there is strong support for Labour leader, Jeremy Corbyn’s, plan to IT and telecoms renationalise public services. However, utilities, such 2018 telecoms survey as water and electricity will require compensation for Here are the main findings of Mobile Europe’s 2018 investors and this could be complicated. The reader survey, which looks at the health and railways are an exception because the 20 franchises performance of the telecoms industry around the only run for a limited period. There is evidence to world. This is the year in which 5G will become part suggest that state-owned companies can compete in of operators’ portfolios rather than just a future some markets. Rail franchises, for example, are concept and respondents are optimistic that they are allocated according to competitive auctions: preparing for it correctly. However, they also increasingly private companies have been outbid by identified a series of obstacles that the telcos will state-owned businesses, such as Deutsche Bahn and have to overcome to make 5G a success. Other SNCF of France. headline findings are: the parts of the industry that Financial Times, 27 February 2018, p9 are driving innovation (14% of operators vs 38% of network vendors); the operator that has innovated the most (Huawei with 44.25%); the technologies Health and pharmaceuticals that will be the biggest priorities this year (54% said Social media blamed for mental health crisis 5G, 42% said building IoT networks); and whether Hugh Brady, the vice-chancellor of Bristol University, organisations have the right technology skills in which has had seven student suicides in the last 18 place for the decade ahead (32% said “no”). months, says social media and the “cult of Mobile Europe, Q1 2018, pp17-23 (Neill) perfectionism” is playing a part in the mental health crisis among young people. He claims that the AI skills in short supply? number of students seeking help on mental health Designing AI systems requires a knowledge of issues has almost tripled across the UK, Canada and mathematics, statistics, data science and computer the US. Whereas student debt is undoubtedly programming. According to a report published in playing a part in mental health issues, he concludes February by Element AI, only around 22,000 people that “there is probably general agreement that social around the world are capable of building AI systems. media may well be the straw that has broken the This is debateable: Vishal Chatrath, co-founder of camel’s back”. Prowler.io in Cambridge, England, claims that he has The Guardian, 22 February 2018, p19 had no trouble recruiting AI developers. Jean- Francois Gagne, CEO of Element AI, thinks that Children losing pen skills due to technology universities and governments need to spend more Children’s overuse of touchscreen phones and money on training. Meanwhile Google is just one of tablets is harming their ability to use a pencil, the companies experimenting with automatic according to Dr Sally Payne, head paediatric machine learning (AutoML), where AI creates its occupational therapist at the Heart of England NHS own AI. For now, however, the demand for AI Trust. She has found that children are increasingly expertise is attracting headhunters and huge starting school without the hand strength and salaries! dexterity to use a pencil that they might have had Bloomberg Businessweek, 19 February 2018, pp22-23 ten years ago. Another expert believes that children may be developing handwriting late because they use too much technology in the early years. Leisure and tourism The Times, 26 February 2018, p21; The Guardian, 26 Male sports – lose girls and update image February 2018, p15 Some male-dominated sports in Europe hire young women, often skimpily-dressed, to appear on the Millennials will become fattest age group sidelines or on the podium with the men. We Millennials (those born between the early 1980s and recently reported that Formula One is to end its use mid-1990s) will become the age group with the of “grid” girls on the racing track. In January highest proportion of people obese or overweight, Professional Darts Corp, based in the UK, said it according to Cancer Research UK. It claims that would no longer use girls to accompany male 70% will become dangerously overweight by the competitors on to the stage, while Spain’s Vuellta a time they reach middle age and that carrying excess España bike race is to stop using female hostesses. weight can lead to 13 types of cancer. Linda Bauld, Some event sponsors are unhappy about the use of a cancer prevention expert, believes that young women because it portrays an outdated overweightness and obesity could overtake smoking image of the sport which makes it more difficult to

attract new fans and TV viewers. However, not regard to production decisions while management everyone is happy with the change in tack and some deals with operational aspects, such as HR and sports, notably British Boxing, will continue to use marketing. The business model appears to be ring card girls. working because six years after launch Supercell Bloomberg Businessweek, 19 February 2018, pp13-14 was valued at $10 billion. In this article Paananen shares what he has learnt. With regard to marketing, he says that there are no rules: “It Materials and mining completely depends on your business and your Apple to secure cobalt contracts market”. With the predicted rise in the number of electric Wired, March-April 2018, pp66-67 cars, there will be additional demand for cobalt, a key material in lithium-ion batteries. Apple hopes to Internet tackle the potential shortage of the metal by buying Experiential across cultures it directly from mining companies rather than relying Experiential marketing is an important way of on the companies that supply the batteries. Sales of differentiating brands both in traditional and online electric cars are forecast to hit 30m by 2030 and services. E-tailing has become an effective channel Apple could find itself in direct competition with for experiential consumption as well as being a way carmakers for the metal. Glencore, the world’s of shopping across cultures. There has been limited biggest cobalt producer, has said it is in talks with research on the impact of cultural differences on the Apple, Tesla and VW. demand for experiential benefits. This study is The Times, 22 February 2018, pp40-41 carried out among students in North America and China to see how they react to experiential benefits Media on e-tailer websites. It finds that offering Digital media – where to next? experiential benefits on a website is more influential Digital media companies, such as Vice Media and for North America than for China. BuzzFeed, have missed their revenue targets or Journal of Marketing Communications, Vol 24(3) 2018, been sold at a “knockdown” price as in the case of pp270-290 (Shobeiri et al) Mashable. The problem for such companies is how to diversify and succeed in an age when traditional Cookies could be a thing of the past TV is up against streaming services such as Netflix A 2017 survey of US digital marketing executives and Amazon Prime. The advertising market has also found that 60% believed they would no longer need become tougher and the Google-Facebook duopoly to rely on cookies within the next two years. Cookies accounted for 63% of all US digital advertising last have been the main method of tracking website year. While the new digital media companies try out activity for over two decades, but browsers and new business models, traditional media, such as The regulators are gradually tightening up on digital New York Times, is boosting its sales through online privacy. Apple’s Safari browser has made it more subscriptions. difficult to track users by deleting third-party cookies Financial Times, 21 February 2018, p15 after one day. The GDPR will only allow the use of personal data if people give their explicit permission. Books This could affect companies that have long relied on Rise in toddlers not being read to every day cookies. Since 2013 the number of toddlers being read to emarketer.com, 22 February 2018 (Benes) every day has fallen from 69% to just 51%, according to Nielsen Book Research. The survey, Music entitled Children’s Book Consumer, found that 19% Pizza topped by music of parents of three- to four-year-olds “struggle to Pizza Express is to transform 50 of its restaurants find the energy at the end of the day” while 16% into venues for live entertainment, having already said that their children prefer “to do other things”. trialled artists, such as Goldie and Martin Kemp of The findings correlate with a rise of almost a fifth in Spandau Ballet, at some of its outlets. The toddlers watching online video every day. There are restaurants will incorporate dedicated performance concerns that this could have a long-term social spaces a bit like the company’s existing Dean Street impact. Jazz Club in Soho, London, which it has owned since The Guardian, 22 February 2018, p14 1976. The Birmingham and Holborn restaurants, which have already been revamped, have also Games arranged comedy nights. Pizza Express is responding Tactics for winning the game to pressure in the casual dining sector where several Ilkka Paananen is co-founder of Supercell, a mobile chains, including Jamie’s Italian, are closing gaming company based in Finland. The company branches. has a “radical” structure with small teams of The Guardian, 26 February 2018, p20 developers enjoying a high level of autonomy with

Newspapers based packaging. Ad-blockers may have to pay Digital Labels & Packaging, January-February 2018, pp14-15 (King) Salon, a San Francisco news website, wants to charge users who use ad-blockers on its site. Users will have the choice of disabling the ad-blocker; Shoppers extremely concerned over plastic using their spare computer power to mine Monero, a In a survey of UK consumers by Kantar Worldpanel, cryptocurrency; or pay for ad-free content. Salon, 24.6% voiced “extreme concern” about plastic which was founded in 1995 by journalist David packaging while 42% thought that it should be a Talbot, has thousands of readers in Britain. priority for food and drink manufacturers to make packaging recyclable. Although 59% of shoppers The Times, 21 February 2018, p15 said they were acting to reduce the waste plastic Social media generated by their household, it is clear that the responsibility lies more with retailers and Helping to “fix” Facebook manufacturers to find a solution than with Mark Zuckerberg has promised to address “abuse, consumers changing their habits. Greenpeace claims hatred and political interference” on Facebook. Here that UK supermarkets generate 1m tonnes of plastic is some advice from experts on what actions he every year, some of which finds its way into the could take. The changes to Facebook’s News Feed oceans. means that brands or businesses that own a page The Grocer, 17 February 2018, p4 may be adversely affected, some sectors more than others. Sarah Golding, IPA president, believes that it will be the smaller brands and publishers that rely Packaging industry opposes deposit scheme heavily on organic reach, which will be hit. Gemma Michael Gove, environment secretary, is considering Butler, associate director at CIM, wants Facebook to placing a refundable deposit on plastic bottles and help smaller players. She says that: “User positivity coffee cups (see also under Environment) but the is not just a benefit to the users themselves, but Foodservice Packaging Association (FPA) opposes also an opportunity for businesses to create deeper the plan because it will be too expensive for its and stronger connections to their communities”. members. Instead it is proposing an extension of the The Times (The Digital Economy), 21 February 2018, pp5- Packaging Recovery Note (PRN) system, whereby 6 (Codrea-Rado) big retailers and packaging companies contribute towards the cost of recycling, to small businesses. It Television says the money could be used by government and 1970s TV series censored councils to educate households and launch anti-litter Talking Pictures TV has become popular by showing campaigns. The Campaign to Protect Rural England vintage, nostalgic TV programmes. Now it has been believes that the “industry is trying to fool Mr Gove” taken to task by Ofcom for failing to censor the into not supporting the deposit scheme. word “wog” from the 1970s series, A Family at War, The Times, 23 February 2018, p16 following a single complaint. Talking Pictures argues that the language, though offensive, reflects the Ecover uses 100% recycled plastic attitudes of some people of the period. However, Ecover has achieved its goal of using only recycled the channel was found to be in breach of the plastic washing-up liquid bottles by 2018. Using broadcasting code. Viewing attitudes have changed: plastic that comes mainly from used PET, it claims to these days viewers are more tolerant of sex and have a 70% lower carbon footprint than new plastic. swearing than they are of racist and discriminatory The Grocer, 24 February 2018, p39 language. The Times, 22 February 2018, p3 Retailing The rise of voice commerce Packaging Physical retailers, who are already trying to compete Bio-based growth down to consumer demand with e-tailers, now have a new source of Historically bio-based packaging has not been competition in the form of voice-activated shopping viewed as a viable alternative to fossil-fuel plastics or voice commerce. It is predicted that nearly half of for FMCG. Although bio-based is expected to grow British households will have a smart speaker by by 20% over the next five years, it will only 2022, up from 10% now. Shopping through devices represent 1% of all plastics. Packaging accounts for such as Amazon Echo and Google Home, is expected around 58% of total bio-based production. However, to grow from £200m today to £3.5 billion, according its real impact lies in marketing. In an age of media- to OC&C, a consultancy. It believes that voice- neutral marketing, packaging is the brand-owner’s activated shopping will be the “next disruptive force most direct point of contact with a customer base in retail”. that is becoming increasingly concerned with green The Times, 26 February 2018, p19 issues. This article examines developments in bio-

The high street lives on – in Godalming Godalming high street in Surrey has 204 shops of Transport and travel which 70% are independent. It is also unusual in Self-driving cars need 3D maps…and data that it only has a 5% vacancy rate, well below the Self-driving cars require 3D maps that are updated 14% national average. John Taylor, Godalming continuously and are accurate to the nearest Chamber of Commerce vice-president and owner of centimetre. This involves collecting more than a a hardware store, attributes the failure of some high terabyte of data a day, enough to fill 1,400 CDs. street retailers to a lack of commitment. Tim However, there is a lack of agreement among map Downing, director of a local estate agent, believes companies regarding standards of data-sharing and that as shopping at out-of-town retail parks moves a wave of consolidation in the industry seems online, high streets are coming back into their own, inevitable. The broader technology sector will be with shoppers wanting to deal with retailers on a interested in potential spin-offs, such as AR, from smaller scale. There might even be a backlash 3D mapping. However, self-driving cars may against the increasingly digitised, omnichannel eventually become less dependent on maps as their environment… sensors become sufficient to navigate them. The Sunday Telegraph (Business), 25 February 2018, p8 Financial Times, 22 February 2018, p9

Women buyers – luxury carmakers respond Services Last year a new law was passed in Saudi Arabia More collaboration between print and creative allowing women to drive cars, a move that will boost The organisers of the Pure Digital show, which takes the luxury car market. Since then there has been a place in Amsterdam in March, have polled design raft of car ads targeting women. This change and print professionals to identify some of the coincides with luxury carmakers’ general shift in challenges for short run digital printing. Asked why attention towards wealthy female buyers. Women digital still represents only a small proportion of the buy more compact and midsize luxury SUVs than value of all print, 35% mentioned the creative any other vehicle type, according to IHS Markit. industry’s lack of understanding of digital’s true Automakers, such as Aston Martin with its female potential while 24% cited reasons such as higher advisory panel, are responding to the rise of women costs and slower speed. There is a general feeling buyers. However, advertisers should be careful that consumers are fuelling change and that this will when targeting women: there is a fine line between be the main factor driving growth. However, there is being engaging and patronising. Last year Audi had still a major barrier between the print and creative to apologise for one of its Chinese ads which industries and more collaboration is needed. equated a bride-to-be with a used car! Digital Labels & Packaging, January-February 2018, p7 Bloomberg Businessweek, 19 February 2018, p71

KFC’s chickens didn’t come home to roost Fiat Chrysler to ditch diesel The closure of almost 700 of KFC’s branches due to Fiat Chrysler plans to stop making diesel passenger a shortage of chicken has resulted in near-hysteria, vehicles by 2022 following reduced demand and 999 calls, chicken smuggling and even involvement higher costs. It is the latest car brand to publicly by an MP. KFC is the second most popular takeaway announce that it will scrap diesel. Last year Toyota restaurant after McDonald’s and 42% of people in announced that it probably would not produce any Britain say they eat there. The chicken shortage was more models with a diesel engine. Diesel’s share of caused by a switch in delivery contract from Bidvest the market has declined following the VW emissions to DHL. DHL has blamed “operational issues” for the scandal, with sales of diesel vehicles falling by 8% in problems. However, questions remain over how the Europe last year. franchises will be compensated and the staff remunerated for loss of work. Financial Times, 26 February 2018, p15

The Daily Telegraph, 21 February 2018, p3; The Daily Telegraph (Business), 21 February 2018, p4

Travellers can rent out their cars A peer-to-peer car rental scheme is to be trialled at Gatwick Airport. Motorists will be able to rent out their cars for up to £160 a week after leaving them in the airport car park. The vehicle is valeted and checked out by mechanics before being rented. However, motorists will still have to pay carparking charges. The Times, 26 February 2018, p15

Eddie Stobart – staying on the road The Eddie Stobart brand could disappear from the Written by CIM’s Knowledge Services Team side of trucks if a branding dispute isn’t sorted out. Eddie Stobart Group, which demerged the trucking © Copyright 2018 CIM business last year in the name of Eddie Stobart

Logistics (ESL), retained the brand rights and a The views expressed in Cutting Edge are not 12.5% stake in the company. Now it is demanding £3m a year for use of the brand name or £50m for necessarily those of The Chartered Institute of exclusive use. Eddie Stobart is regarded as one of Marketing. the most powerful business brands in the UK and Alex Lafferty, chief executive of ESL, says he is passionate about it. Nevertheless, he is considering the possibility of rebranding the trucks. The Times, 26 February 2018, p37

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