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4 April 2017 | Issue 10
Market corner

by Ghillie Little, Head of Corporate Consulting
ghillie@sbc.london
Outperformer
Audi defines the relationship
Audi and Silvercar have decided to take their relationship to the next level and move into the territory of exclusivity. Audi currently has a minority stake in the US car rental start-up Silvercar, and last week agreed to go all the way and purchase the firm. Silvercar was founded to serve the high-end airport rental car market and the 15-city fleet consists of exclusively Audi A4s.

The purchase is one way to accelerate a new strategy that wards off the threat posed by the transformation of personal transport - in addition to ownership of Silvercar’s active network and established brand, Audi immediately gets access to car sharing technology.

After major US car manufacturers reported some not-so-pretty sale numbers on Monday, the deal highlights the possibility that private car ownership is becoming a thing of the past far sooner than expected.

Neutral
Eyes on new business
Coutts has launched a low cost, mass-market fund platform that will support current clients and attract net new assets in an increasingly competitive environment. The online investment service offers five passive risk-rated portfolios for investors to choose from. The platform is a really smart move by Coutts, who have always had quietly impressive technology offerings.
 
We’d love to see this in the Outperformer category, where it belongs.  But it’s to be determined on whether they can capitalise on the new platform and convert the online-oriented, young investors into new clients. Will the target audience know this is available? Where’s the buzz, guys?

Underperformer
Athleisure competition gets real
Lululemon joined Under Armour and Nike last week when shares plunged over 20% due to lower than expected sales, specifically within the athleisure space. Lululemon found out that strong brand loyalty does not serve you well if your digital offering is severely lacking. Athleisure is a saturated space with everyone trying to grab a piece of the athletic-wear pie and if you can’t keep up digitally, you will be left behind. Note to the wise: just because someone wears yoga attire, does not mean they have ever experienced the joy of downward dog in an overcrowded gym class.

FinTerest
Bottoms up for the booze biz!
VCs have poured more than $280 million into booze businesses that offer innovative approaches to “creating, selecting and procuring” alcoholic beverages. The largest portion of investment has gone to delivery services, booze-related gadgets and apps for finding the perfect wine. For those who always wish they had a reliably fully stocked bar, this may be the year your dreams come true.

Notable headline


Russia's prank voice message: 'Press 3 for election interference'.

...well played Russia.

Reputation

Sometimes, size does matter
Yesterday, Euronext announced that, starting in 2019, it will process its derivatives transactions through ICE Clearing Netherlands. The agreement will see Euronext transfer all revenue currently going through LCH SA, the LSE’s French clearing business, to ICE’s Dutch clearing business. Euronext claimed their business accounted for around half of LCH SA’s turnover. LSE responded appropriately with a one-two punch on Euronext, confirming that Euronext’s contribution to derivatives clearing was not only “immaterial” but made up less than one percent of the LSE group’s overall adjusted operating profit.

In certain circumstances, we would advise a client to take the high road and not to engage with minnows. However, this cutting down was necessary.  Euronext has been acting big, and to some extent it's worked for them.  The media cannot be blamed for ascribing an importance to them above their station - they briefed well, often and in a timely fashion.  LSE was right to hit back with a reference to size. Flexing your company muscles a bit to stamp out gross embellishments is at times the best response.

Much an egg about nothing?
It is extraordinary how omitting a single word can turn into an eggy mess of political correctness. This week the National Trust found out the hard way how quickly tides can turn.
 
The company has been accused of “airbrushing faith” out of Easter after many noticed the word “Easter” had been omitted from their annual Cadbury Easter Egg hunt logo.
 
The Archbishop of York went as far to say the egg hunt logo was tantamount to “spitting on the grave” of John Cadbury, “a Great Quaker whose faith influenced his industrial output”. The National Trust denied it was “downplaying the significance of Easter” and attempted to pass the buck to the event’s sponsor, Cadbury. Cadbury said it wanted to “invite people from all faiths and none to enjoy our season treats”.
 
Should the National Trust have pushed back on Cadbury’s branding? Was Cadbury so focused on appealing to a broader market or was it a simple case of naïveté that this was the inclusive route to go? Hard to say either way without inside knowledge, but at the end of the day we again see how timing is everything, quick and direct reactions are paramount. However, as one PR to another we really feel for the National Trusts public relations people today.

Heroes of the week


Leceister City...


...team preferences aside, Leicester City wonderfully surprises teen cancer survivor.

Corridors of power


by Louis Rynsard
Director, Reputation & Strategy
louis@sbc.london
Round Two
After seeing off TrumpCare the Dems are gearing up for another fight with the Donald over his Supreme Court nominee. With enough votes to launch a filibuster, the big match showdown is set for Friday with a full Senate vote.
 
Democrats on the Hill are set to force Republicans to use the “nuclear option”, effectively ending the Senate filibuster (once so powerful and designed to make sure the minority is heard). Already happy to gerrymander districts, the Elephants of US politics are now looking like they might rip up the rules of the legislature. The thing is, for the past eight years we have seen that Congressional Republicans are willing to use anything to get a win. Now that they are running the show, this has gone from worrying to potentially terrifying for American political institutions.
 
All going down south
A Finance Minister summoned back to the country to be fired, a flailing economy and now, for the first time in 17 years, a currency rated as junk. Things are not looking great in South Africa. For what was once considered the African continent’s powerhouse economy, this is a dramatic reversal of fortunes.
 
The reputation and strength of the ANC in South African politics (winning 53% of the vote in last year’s election) makes this uniquely concerning. They may be about to crash the economy as Zuma purges his cabinet and turns international investors off, but no one is emerging to challenge his march into economic problems.
 
A local election, for local people
Its local election season! (I understand that most people aren’t as geekily excited about this as I am) 27 country councils, seven unitary authorities, one metropolitan borough, 6 combined authority mayoral elections, 2 district mayoral elections, every council in Scotland, every council in Wales and the Manchester Gorton by-election. It’s going to be a busy campaign. In recent days, Tory MPs have been ordered to call Labour MPs “Trots”, who are soft on terror. Labour today have launched their campaign saying the Tories are “running our country down in every way” and we still have a month to go.
 
With Westminster preoccupied with Brexit, most of what will actually impact the day-to-day will come from local authorities. To use a well-worn phrase, this matters. And at the very least we will all get to laugh at the next set of ridiculous Corbynista excuses when Labour gets trounced.

Who's having a rough week?


Miss Mackie of Dundee...

...this will make you think twice about ignoring your next parking ticket.
Silicon passage

by Nicholas Brown
Head of Client Media Relations
nicholas@sbc.london
Apple swallows its Imagination
Talk about a bad breakup
Shares in UK microchip designer Imagination Technologies have plummeted more than 60% after Apple announced they would end a deal to use Imagination’s microchips.
 
Although Imagination have already claimed that Apple will not be able to develop their own technology without infringing on existing patent and other intellectual property, the fact that Apple have hired at least 25 engineers and managers from Imagination over the past two years may have given Apple the confidence to push Imagination aside. One may ask oneself how Imagination did not see this coming… perhaps we’ll find out this is all down to an overlooked contract blunder.
 
Will Apple be better off alone? Aside from the reputational damage of bleeding your ex-partner dry (not a great long-term strategy), the tech behemoth will face an uphill battle to develop its own microchips for future devices.
 
The future is bright - the future is app-less?
Japan's Rakuten bets on a future without apps
The e-commerce giant Rakuten today unveiled Rakuten Games. The USP? - Games that do not have to be installed on phones or personal computers. Instead, games can be played on web browsers or within other apps, making it easier for users to play with each other without having to wait for new software to be loaded onto their devices.
 
This trend looks set to continue: Facebook and Tencent Holdings Ltd. have also embraced similar initiatives, seeking to keep users within their closed ecosystem of apps and services, rather than venturing to app stores run by Apple and Google. Is this the end of the app economy? Time will tell, but it is a clear challenge to the dominance of the titans of Silicon Valley.
 
Alphabet training 101: How to be offended
Google teaches ad placement computers to be offended
With more than a billion videos on YouTube, 400 hours of new content being uploaded every minute and three million ad-supported channels on the platform, Alphabet has a job on its hands keeping undesirable material off its platform. For most areas, it does a pretty impressive job. In others, not so hot.
 
The most recent headache was how to prevent ads from wholesome household brands such as Coca-Cola and Wal-Mart, never mind Western governments, from appearing next to Jihadist recruiting videos. It seems that Alphabet hit a blind spot: Their models failed to understand this particular context. As we speak, Google’s brightest minds are now trying to teach their computers the complex nuances of what exactly makes certain videos objectionable to viewers. Action is needed quickly to stop the tide of companies and governments pulling ad money.  

Forgivable f*ck up


The Internet of Things gets up close and personal...


...safe to say there isn't a return policy.

C-suite steer

 
by Lief Anya Schneider
CEO
lief@sbc.london
If you don't feed the best, look forward to becoming the meal
Imagine going to a dinner party and you’re just not in the mood to talk. You’re tired, or just not interested in the assembled crowd. Not in the mood for engaging with others.

Enter Madame Storyteller and Monsieur Critique - the ones whose lives haven’t always gone so well, perhaps. The rapacious gossip; the self-justified moraliser. They come at you. Suddenly you are telling them things you never wanted to disclose. You wish you’d joined in with the general conversation - that crowd over there - happily smiling away – finding points of reference, engaging in mutually enlightening and stimulating conversation having got to know each other a bit.

You, on the other hand are left with the parasitic, loony tuners, who have by now taken the threads you gave them and turned you into someone you don’t recognise, just for their own fun.

And next the nutters, tired of you, wade into the general conversation. Armed with your “story”. Which they have all wrong. And proceed to tell it. And by this point, it would seem churlish to defend yourself. Rather than look like a bad sport, you stay silent while they defame you.
 
We've all done it one time or another. Even though we know it’s bad form. In business, it's an ethical imperative to explain yourself to those who you have an interest in your operation. Everyday we see examples in the media of sulky businesses or business leaders, who didn’t feed the beast, and became the meal.
 
I was in Paris at the weekend. I love Paris. And it brought to mind the blog I wrote a few days after the Brexit referendum.  Re-reading it, I stand by it: http://www.sbc.london/divorceu-is-like-any-breakup-what-can-industry-learn-from-brexit

Poem of the week


Easter Song


Picked by Louis Rynsard

The SPIT is produced weekly by SBC London.
SBC London is a corporate reputation and communications advisory firm based in the City of London. 
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