The Brand Move Roundup – June 1, 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.
Netflix has announced that it will begin reaching out to inactive users, who haven’t streamed anything on the platform in a year or more. The pandemic’s impact on the economy has inspired the company to ask these customers if they would still like to subscribe. If the users don’t respond, Netflix will automatically stop billing them for the subscription; as Netflix explained, “The last thing we want is people paying for something they’re not using… we hope this new approach saves people some hard-earned cash.” These “zombie” accounts, however, make up less than half of 1% of Netflix’s total user base, which has grown by over 15 million as a result of COVID. As many brands like Panera (unlimited coffee for USD 9/month) and even cat litter company Litterbox launch subscription services, Netflix’s gesture stands out as a rare play in this sector, as the brand shows consumers – even those who choose not to pay them – that it has their best interests at heart, and that they’ll make cancelling a zero-effort process. As a result, subscription services that don’t demonstrate equivalent levels of empathy will stand out.
This year’s September issues of fashion magazines, usually published in mid-August, are likely to drop back to September this year, allowing more time for ads and samples to roll in. It will also give editors additional time to shoot models and celebrities, which has been difficult during lockdown. “Our September issues will come out in September,” said Carol Smith, publisher of Hearst’s Harper’s Bazaar, Marie Claire and Elle. “When we started talking to Italy [in mid-May] only a handful [of brands] had shot their campaigns… so on that side giving them more time to create their ads for sure, but on the edit side giving our editors more time to get in their samples,” Smith added. In terms of ads, only around three brands have told Smith they won’t advertise in September. Others, though, are scaling back their usual spend. For Vogue, the newsstand release date is also early September. Such a move by Vogue and other titles could also align with the reopening of more retail stores. As for whether a later September issue will become the new norm in publishing, too, Hearst’s Smith hopes so. “I genuinely believe we should hold to this schedule and I think it does feel like finally fashion is going to change its delivery schedule. And hopefully retailers will create new selling seasons so October isn’t when all of fall goes on sale.”
Supercar marque Lamborghini, like many automotive firms, is entering esports, with “The Real Race,” a virtual competition built around their Huracán. The virtual competition represents a marketing maneuver for the brand to increase Lamborghini’s visibility with ounger consumers “It is an extension of our brand, an opportunity to reach Generation Z,” Lamborghini CMO Katia Bassi said. “We know for sure that those who are going to watch and participate in esports are people who love Lamborghini, so for us it’s the most important thing.” Lamborghini developed the Real Race in partnership with computer racing simulator Assetto Corsa Competizione, an offshoot of video-game developer Kunos Simulazioni. The inaugural race in the series will feature a 24-driver mix of professional racers and participants the company has selected from a pool of automotive journalists and influential YouTubers. Lamborghini will treat the top three players from the final to a three-day trip to Italy in September, where they can train with the company’s official drivers and even get a spin in an actual Lamborghini racing car on the company’s own track.
As content consumption surges during the pandemic, WPP has struck a global partnership with SuperAwesome, a self-proclaimed kid-tech platform, to help advertise to children in a more privacy-compliant way. The agreement means that all agencies within the WPP holding group (as well as their clients) have access to SuperAwesome’s tools, including a software platform that reviews ads to make sure they’re child-appropriate, plus ensures that no data is captured when those ads are served. The pact comes as digital advertising faces increasing regulatory pressure on how it serves ads to kids. Dylan Collins, CEO of SuperAwesome, said child privacy laws have historically focused on content owners, but California Consumer Privacy Act and Europe’s General Data Protection Regulation have made the issue more mainstream. “The industry is accepting that these laws are going to apply all the way up the delivery chain,” said Collins. The partnership provides WPP’s agencies and clients access to SuperAwesome’s KidAware certification program, which ensures that online ad practices comply with the latest privacy laws around the world, including the Children’s Online Privacy Protection Act in the U.S. “We’re already seeing big changes in family life as a result of the coronavirus pandemic and how we all interact with technology. WPP’s partnership with SuperAwesome is part of our commitment to ensure children’s safety while engaging with content online,” said Mark Read, CEO of WPP.
As live events continue to go virtual or postpone due to Covid-19, the 3% Conference has announced it will hold a three-day digital summit in July instead of its planned gathering in Atlanta this fall. The 3% Movement, a gender equality organization that champions inclusive change in advertising, will hold The Future of Work conference on July 27-29. Founded nine years ago, the organization has held mini conferences around the world but was set to host its first large-scale gathering in Atlanta in October. Founder and CEO Kat Gordon said after a few advisory board meetings on Zoom, the organization decided a virtual conference was the best alternative. “There’s so much yearning from the industry to have a sense of togetherness, a shared experience and a sense of being informed in a time where there are no certainties. We felt it would be totally wrong and off-brand for 3% to go dark this year,” Gordon said. “We had a desire to show up for the community and provide some kind of context for what we’re living through.” The programming will focus on topics like conscientious leadership, health and wellness, multi-generational workforces, support for caregiving, agile work environments, and how companies can support their workers and talk about grief.
America’s top dollar store chains have beaten profit estimates and said they would benefit from demand for affordable groceries and household essentials in coming months as rising unemployment threatens to spur a deep recession. Designated as essential retailers, Dollar General and Dollar Tree were allowed to stay open while much of the United States remained shut due to lockdowns amid the coronavirus crisis, and saw a surge in sales of toilet paper, cleaning supplies and packaged foods. While panic buying has now died down, both discount retailers said they expect skyrocketing unemployment and an economic downturn to lead to more shoppers looking for cheaper alternatives for groceries and clothing. “In 2008, folks lost jobs … and they found us. And I think that’s some of what we’re planning for as we take a look into our crystal ball at back half of the year and 2021,” Dollar Tree Chief Executive Gary Philbin said, referring to the 2008-2009 financial crisis. Dollar Tree’s first-quarter sales rose 8.2% to $6.29 billion, beating analysts’ estimates of $6.14 billion. Larger rival Dollar General said sales rose 27.6% to $8.45 billion in the first quarter – its biggest jump in at least 14 years, according to Refinitiv data.
NetEase, a U.S.-listed Chinese online gaming and technology company, and the biggest rival to Tencent and Alibaba, confirmed on Friday it will seek a secondary listing in Hong Kong amid a recent rise in users. Games developed by NetEase are among the most popular in China, including the hit titles Fantasy Westward Journey 3D and Knives Out. The company also operates international online games locally, such as Activision Blizzard’s World of Warcraft. While still reliant on gaming for the bulk of its revenue, NetEase is competing with Tencent and Alibaba to provide a diverse set of online services, including music streaming and online education, to the world’s second-largest economy.
After some perhaps surprising news of electric vehicles topping sales charts amid a virus-related slump, a new report by Cairn Energy Research Advisors, a research firm focused on the battery and EV industries, predicts a surge in electric vehicle sales in 2021. Cairn estimates global sales of EVs in 2021 will jump 36% and top 3 million vehicles for the first time ever. “There’s pent-up demand for electric vehicles,” said Sam Jaffe, managing director. “We will see a combination of factors make 2021 an inflection point for the sale of electric vehicles.” The two biggest markets will be Europe and China, he said. China is already the world’s largest market for electric vehicles, with one million battery powered models built in that country last year according to Sanford C. Bernstein. Production of electric vehicles is estimated to climb to at least 1.3 million and could reach 1.5 million depending on market conditions this year, according to Bernstein analyst Mark Newman. Wedbush analyst Dan Ives raised his price target for Tesla from $600 to $800 saying, “we continue to believe EV demand in China is starting to accelerate with Tesla competing with a number of domestic and international competitors for this market share.” Cairn Energy Research predicts the biggest growth in EV sales next year will happen in Europe, mainly because governments in the EU are committed to lowering carbon dioxide emissions. That commitment is pushing countries like France to roll out new incentives to convince residents to buy electric cars. In the U.S., sales of electric vehicles are expected to grow next year as more models roll out. While the Tesla Model 3 and Model Y are likely to get the biggest share of mass market sales, several new models including the Ford Mustang Mach-E and General Motors’ Hummer EV SUV will focus more attention on the electric market.
Fitness clubs across Georgia and Oklahoma – among the most aggressive U.S. states in reopening their economies – are reporting that 75% or more of their customers have returned over the past weeks. In most cases, those clients are behaving, keeping distances and wiping down their equipment. Gyms are among businesses that are closely watched for signs of economic recovery after being among the first to reopen in some Southern states. Across the nation, fitness clubs rocked by Covid-19 closures face a swell of bankruptcies with more than $10 billion of revenue wiped out as clients ditch memberships, according to investment bank Harrison Co. Globally, market researcher WinterGreen Research estimates the fitness and health club industry could shrink to $45 billion this year from $85 billion in 2019 – assuming people would be slow to return to packed gyms. However, some clubs that have opened reported encouraging news after spending heavily on disinfectants or ultraviolet light lamps to clean their equipment and bathrooms. In Cartersville, Georgia, roughly 80% of the customers have returned to BodyPlex Fitness Adventure, and the club has sold about 100 memberships in the past month, manager Keith Turner said. The only group noticeably staying away are seniors, he said. In Lithonia, Georgia, business is starting to pick up at Pro-Fit Fitness and Rehab, which reopened two weeks ago to a slow start. Normally, owner Kevin Peoples could count on his two trainers dividing up 20 customers every hour for group sessions. For now, as many as 12 customers are dropping by each hour. “As long as we use Lysol, we’ll be perfectly fine,” Peoples said. Orangetheory Fitness, a Boca Raton, Florida-based chain, has reopened 377 of its more than 1,300 studios, most of which are in the U.S. A survey of members showed that 84% are likely to return when their local clubs reopen, Chief Brand Officer Kevin Keith said.
In spite of the challenges publishers are facing now with diminished ad sales, distracted readers and uncertainty everywhere, Harvard Business Review has seen its multi-channel strategy working overtime, keeping the title’s revenue on track to meet their year-end goals. “We put our COVID coverage free in front of the paywall. And we ramped up the volume, as well as the way we deliver content,” said editor-in-chief Adi Ignatius. One of those new channels is their LinkedIn TV show, HBR Quarantined. Thanks to their success with the show so far, Ignatius is expecting to gain sponsorship support to make this an ongoing series. “There are a lot of good social media options, but the people who follow us on LinkedIn are aligned with what we care about. We have over 10-million followers there, so we realized we could get a large audience relatively easily,” he noted. They are also running podcasts around anxiety, especially as it relates to high-achieving professionals. And perhaps surprisingly, they are now on TikTok, an initiative they launched pre-pandemic. “We launched on TikTok in January and we had people who thought it was a terrible idea,” Ignatius said. “But it’s really interesting to extend the brand into a platform that’s completely different. It’s helped us project a sense of what we want to be, and how to build a workplace attuned into diversity and the new ways to interact and be effective in an office environment with younger professionals. It trickles up to management and senior management.”
Among those hit hardest by the pandemic has been the UK charity sector. By the end of March, for example, the chief executive of Cancer Research was already predicting a decline in fundraising income of up to 25% – a reduction with major ramifications for the organisation’s efforts to prevent, diagnose and treat cancer. Similarly, Oxfam is currently losing £5m a month in revenue. The cancellation of fundraising events has decimated income for charities – perhaps unsurprising given that one of the events affected is the London Marathon, moved from 26 April to 4 October. In 2019, this 26.2-mile road race through the UK capital raised an enormous £66.4m for charities, a new world record for an annual single-day fundraising event for the 13th year in a row. Since it began in 1981, the marathon is responsible for over £1bn of giving to good causes. Less attention, however, has been paid to the effects that shutting charity shops is having on the sector. According to the Charity Retail Association (CRA), these stores contributed £330m to their parent organisations in 2018-19, an 11% year-on-year increase. On average, this equates to £27.5m per month, or £55m over two months. Robin Osterley, chief executive of the CRA, notes: “There’s clearly going to be a big hiatus in our activities. A lot of March and all of April has been zero income. People are fairly optimistic that that will pick up during the course of the rest of the year [but] it’s highly unlikely they’ll get back to their projected turnover or profitability.”