The Brand Move Roundup – May 4, 2020
We’re tracking the notable brand moves & highlighting the companies who are tackling this challenge successfully.
We started this series of brand updates on March 12, but the reaction has been so positive, and the crisis so fast-moving, that we’re going to move to a continuously updated rolling news format from now until it’s all over (hopefully soon). Keep checking back here for the latest updates on how brands are dealing with coronavirus.
A new online service has been launched by American 50-plus membership organisation AARP to help users find and organize local volunteer groups to provide financial, emotional and other support to those most affected by the coronavirus outbreak. AARP Community Connections features a searchable directory of mutual aid organizations to help people at higher risk of COVID-19, as well as workers who have been laid off due to the pandemic. These informal groups, usually formed and run online, are providing key daily services, such as picking up and delivering groceries and medications, and helping communities stay connected as people practice social distancing to slow the infection’s spread. “We may need to be physically isolated, but we don’t have to feel alone,” said Andy Miller, senior vice president of AARP Innovation Labs, which developed the new tool. “Through this innovative platform, people in need of help from – or who want to offer help to – their communities are empowered to engage.” AARP Community Connections is free to use, and AARP membership is not required.
Weeks after Facebook invested $5.7 billion in Jio Platforms, India’s top telecom operator, private equity firm Silver Lake is following suit. Silver Lake announced on Monday it will be investing 56.56 billion Indian rupees (about $746.8 million) in Jio Platforms for about a 1.15% stake in the Indian telecom network, giving it a valuation of $65 billion, a 12.5% premium to the valuation implied by the Facebook investment. The PE firm, which has approximately $40 billion in combined assets and committed capital, has invested in dozens of tech firms over the years including in video game engine maker Unity, audio and video communication service Skype, consultancy firm Gartner, Alibaba’s Ant Financial, computer giant Dell, and Chinese ride-hailing giant Didi Chuxing. “The market potential they are addressing is enormous,” said Egon Durban, co-chief executive and managing partner at Silver Lake, in a statement. Shortly after the Facebook investment, JioMart, an e-commerce venture, began testing an ordering system on WhatsApp, the most popular smartphone app in India with over 400 million active users in the world’s second largest internet market.
Jaguar Land Rover, the UK’s biggest car maker, plans to gradually reopen some factories on 18 May. The company’s Solihull plant, which employs 9,000 workers making its Range Rover models, will reopen with a quarter of its workers at first, alongside SUV plants in Slovakia and Austria. Ford has said it will restart its main European car factories on Monday 4 May, though its UK plants will stay closed until later in the spring. The US car giant, which closed its European and North American factories at the height of the coronavirus pandemic in mid-March, said production would begin slowly with strict standards on social distancing and safety precautions. “We need to prepare for a new environment once we are past the initial peak of the coronavirus pandemic in Europe, with the key priority in our ‘return to work’ plan being the implementation of Ford’s global standards on social distancing and strengthened health and safety protocols,” said Stuart Rowley, president of Ford of Europe.
Uber plans to require drivers and riders to wear face masks or face coverings after it restarts services in certain countries, including the United States. The company is in the process of developing technology to detect if drivers are wearing masks or face coverings before they go online and start accepting trips. It already has face verification capabilities as part of its “Real Time ID-check” feature used to verify the identity of drivers and is also looking into ways to hold riders accountable. “As countries reopen, Uber is focused on safety and proceeding with caution. Today, we continue to ask riders to stay home if they can, while shipping safety supplies to drivers who are providing essential trips. At the same time, our teams are preparing for the next phase of recovery, where we will all have a role to play,” said Uber’s head of safety communications Andrew Hasbun.
Transport for London is still advising travelers to stay at home, but has launched a set of custom video call backgrounds – including the interiors of buses, tube trains and the Emirates cable car across the River Thames. “We know many of you miss travelling on the network – ourselves included,” said the organization, “but it’s important to continue to stay home to save lives and curb the spread of coronavirus. Enjoy the network from the safety and comfort of your home!” The images are available to use as custom backgrounds including Zoom video conferencing, meetings and chats.
Billionaire investor Warren Buffett says his company Berkshire Hathaway has sold all of its shares in the four largest US airlines. Mr. Buffett said he had been wrong to invest in the airline industry. The conglomerate had an 11% stake in Delta Air Lines, 10% of American Airlines, 10% of Southwest Airlines, and 9% of United Airlines, according to its annual report and company filings. The firm began investing in the four airlines in 2016, after avoiding the aviation industry for years. Mr. Buffett said: “We will not fund a company that… where we think that it is going to chew up money in the future.” Mr. Buffett’s comments came just hours after Berkshire Hathaway announced a record $50bn (£40bn) net first quarter loss.
The top 10 ad spenders in the world (according to RECMA data from 2018) are adapting their marketing strategies to the ongoing crisis. Here’s an analysis from Digiday:
- The world’s largest consumer goods maker, Procter & Gamble – and the biggest advertiser – increased marketing spending by nearly 2% in the first quarter. The company’s organic sales were up 7% in the first quarter, its best sales growth in a decade. “There’s big upside here in terms of reminding consumers of the benefits that they’ve experienced with our brands and how they’ve served their and their families’ needs, which is why it’s not time to go off air,” said P&G CFO Jon Moeller.
- Unilever’s sales performance was flat for the first quarter – analysts had expected 2.1% growth. While consumers did stock up on its household cleaners like Dove, Axe and Knorr, Unilever felt the hit in its food and ice cream divisions. Plus, much of its business is in emerging markets, where stockpiling hasn’t been as much of a phenomenon. Unilever withdrew its growth and margin outlook for the year, owing to uncertainty around the severity and length of the pandemic. It’s maintaining its level of marketing investment, however. Chief Executive Alan Jope said that it has halted any new major ad productions that were in the works, reviewing ad spending to take advantage of cheaper ad rates and “dialing up areas with strong ROI.”
- L’Oréal’s first-quarter sales dropped 4.8% as hair salons and other retailers were forced to close. A bright spot was skincare sales, which rose 13%. The Maybelline maker said trends from China, its largest business, looked positive for a rebound in beauty sales elsewhere. L’Oreal said it was “already seeing an encouraging recovery in beauty product consumption” after lockdown rules began to be relaxed in the country — though mask wearing does hit lipstick use. CEO Jean Paul Agon described the current situation as a supply crisis, not a demand crisis, and that the impact should be temporary. E-commerce and digital have become a core focus as L’Oréal focuses its marketing activity to meet the needs of new at-home beauty trends. “When stores are closed it doesn’t make sense to advertise on products and it can be even frustrating to advertise on products that consumers just cannot buy,” said Agon. “Definitely we will cut on these advertising spendings for this short period of time.”
- Renault Nissan Mitsubishi alliance is cutting back, as the French manufacturer Renault’s sales slumped 19% in the first quarter while dealerships shut and consumer demand for cars has dropped. Japan-based Nissan said last week it expects to post its first annual loss since 2009, the last financial crisis. In March, its global sales plummeted 43% from the previous year. Mitsubishi has not yet provided a financial update for the coronavirus period. Renault “reduced advertisement[s] as much as we can in the last part of the quarter; we are going to do the same in Q2,” said Clotilde Delbos, acting CEO and CFO at Groupe Renault. “Nevertheless, we do hope the activity is going to restart.”
- Amazon’s revenue soared in the first quarter as consumers quickly shifted to shopping online. But conversely, while revenue rose 26%, profit dropped 29% from a year ago; costs rose as the company raced to fulfill the surge in orders. Amazon said it expects to record an operating loss of $1.5 billion or profit of $1.5 billion in the second quarter. The company reported $3.1 billion in operating income in the second quarter of 2019. Marketing expenses increased 32% on the year-ago quarter to $4.8 billion. However, the company said it had been lowering marketing in some areas as a way to dampen consumer demand for non-essential items.
- Coca-Cola has been severely impacted by the closure of bars, restaurants, movie theaters and stadiums, and people aren’t making impulse purchases of soda from convenience outlets. Net sales fell 1% in the three months to the end of March, versus a year ago. Coca-Cola said that April sales volumes had slumped by 25%. The brand warned advertising vendors in March that “from April and until further notice we’re putting commercial advertising for Coca-Cola and all our brands on hold.” “We have determined that in this initial phase there is limited effectiveness in broad-based brand marketing,” said Coca-Cola CEO James Quince. “We have reduced our direct consumer communication, paused sizeable marketing campaigns and will re-engage when the timing is right.”
- Pharmaceuticals giant Glaxosmithkline had a strong first quarter, posting a 19% rise in sales that beat analysts’ expectations. GSK is also working to develop Covid-19 vaccines. However, the company said it expects a 1 to 4% drop in profit this year. The drugmaker said consumer consumption levels in China were beginning to return to pre-coronavirus levels — plus it had experienced some supply chain and manufacturing challenges. Chief executive Emma Walmsley said “our goal is to invest behind our new launches” and that “the investment into digital is ongoing.”
- Like other car manufacturers, the pandemic has substantially impacted Volkswagen’s business. Revenue dropped 8.3% in the first quarter. Chief finance officer Frank Witter predicted the second quarter will be the worst of the year and that 2020 sales will be “significantly” below last year. “This involves stringently reducing costs further and cutting budgets back drastically in all areas like external consultancy and marketing,” Witter said.
- McDonald’s has been forced to close many of its restaurants around the world and service has been restricted in locations that are still open. Many customers are also skipping takeaway burgers and breakfasts. Sales fell 6% in the quarter to March 31, while profit dropped by 17%. But McDonald’s is still spending. Late last month, the fast food chain launched a U.S. campaign airing on national television promoting free meals for first responders. CEO Chris Kempczinski said that value will be an important focus of future marketing campaigns, judging by trends from China, where footfall hasn’t immediately sprung back to normal levels. “Each market is rebuilding their marketing calendar to reflect these learnings and many others, so we can reignite our business momentum,” he said.
- NBCUniversal/Comcast’s broadband division marked an uptick in signups, but it can’t open its theme parks, TV and film productions are on hold and NBCUniversal and its recently-purchased Sky TV business can’t broadcast any live sports. The company also expects advertising revenue to be down significantly in the second quarter. Overall, Comcast’s revenue was down 0.9% in the first quarter. NBCUniversal began rolling out its new ad-supported Peacock streaming service in April to Comcast customers, earlier than initially planned. The national launch is set for July, but without many of the shows it had initially planned to offer, due to the production issues. In the first quarter, Comcast’s overall advertising marketing and promotion costs rose 2.6% versus the year-ago quarter to $1.94 billion.