November 14, 2018, Bechtel Center 500, Washington Street, San Francisco, CA
Emma Chiu – Creative Innovation Director, The Innovation Group, JWT Intelligence
Trend evolution is happening ever more quickly. What does 2019 herald? This presentation highlights trends in the areas of consumer and technology, based on JWT’s Future 100 work.
- Xennials: While there is a lot of discussion around millennial trends, there is a big difference between older millennials and younger millennials. Younger millennials are just entering the workforce, while older millennials have been working for several years and seen changes in the economy. A segment termed Xennials is defined to represent 30- to 45- year olds. This group is on the forefront of creating a lot of the trends, and has the money to spend on them.
- There are three key priorities for Xennials:
- Wellbeing – They are interested in looking after themselves and understanding what is good for them.
- Experience – They are willing to spend more on experiences than products.
- Self-improvement – They want to learn, engage, and understand more of what’s happening. They aspire to create something new for themselves.
- Xennials want the brands they buy to be: sustainable, ethical, transparent, and have a sense of purpose. As they become parents, their approach to parenthood reflects these beliefs. For example, if they buy healthy organic food, they want the same for their children. This has ushered in new brands that address these preferences.
- The Female Gaze: In the current feminist movement, people are paying more attention to women working behind the scenes, starting in media and now across sectors.
- Gen Z Beauty: Gen Z is another consumer group of interest, particularly in the beauty space. Media platforms are tapping into this generation by giving them a space to create. Dazed Beauty for example, looks at the intersection of youth culture, pop culture, and public expression for Gen Z.
- They are also giving rise to virtual influencers, such as Lil Miquela.
- Reframing Masculinity: For men, masculinity is being reframed and redefined. Start-ups in skin care are moving away from the rugged, traditional understanding of masculinity to something more gender neutral.
- Augmented reality: While AR is something that companies may be a bit afraid to experiment with, tech companies continue to facilitate this technology. If AR will become available on everyone’s phones, why aren’t brands tapping into it? Retail stands out as one sector where companies are investing in AR, and consumers seem to be game to try it.
- 5G: Fifth-generation mobile phone networks will start to roll out some time between 2018 and 2020. A lot of mobile tech companies are building devices that can support this, even if the infrastructure is not yet available.
- Internet of eyes: The internet of eyes has manifested in the use of facial recognition to replace passwords, unlock screens, and even provide access to cars. It is also moving into payments – e.g. KFC launched a trial with Alibaba affiliate Ant Financial that allows consumers to ‘smile to pay’ in China.
- Internet of ears: This reflects the increased use of voice technology to get information and make purchases, enabled by developments in speech recognition and natural language. 50% less brain activity occurs when processing an answer delivered by voice. Interestingly, when asking a brand a question, the brain’s emotional activity is twice as high when a question is spoken, rather than typed. As voice is less cognitively draining, it will become an increasingly attractive proposition for consumers who feel overwhelmed by technology. The application of AI will allow this to be even smarter and more predictive.
- Transcendent retail: Many of these trends are seeping into the world of retail, which is adopting these technologies faster than many other sectors. AI is expected to boost sales in retail and wholesale by nearly 60% by 2035.
In addition to these trends, there are also macro shifts to consider:
- Well economy
- Experience culture
- New wave feminism
- Political era
- Shifting age, family, and gender norms
- Gigantic data
- Big tech diversification
- Shifting idea of brand – What is a brand? Some brands are positioning themselves more as lifestyle brands rather than sector-specific ones.
The Future of Culture/Work
Candi Castleberry Singleton – VP of Intersectionality, Culture, & Diversity, Twitter
This presentation looks at intersectionality, culture and diversity, and what this means for Twitter.
- One challenge is that when people hear the word diversity, they think ‘I already have that in my organization’. You can hire people to meet your diversity goals, but you also need an environment of inclusion in order to retain them. We also need to acknowledge that everyone in the workplace wants to feel included, even if you don’t count them (or they don’t count themselves) as diverse. Diversity is important but shouldn’t be at the expense of people feeling that they do not belong.
- Diversity lives at the intersection. Intersections provide a space to meet and have a conversation in a way that we might not if we just identify based on the traits we can see. It is sometimes the intersections that we can’t see which reflect the things we care about the most.
- At the intersection, people can always find common ground. If people are not willing to look for the common ground, they can find themselves in corners that create greater division rather than collaboration.
- Intersectionality’s primary focus is to build skills to foster healthy conversations, create diverse human connections, and encourage respectful interactions. To do this, we need to find a way to disrupt organic human behavior, which tends to congregation with people we already know. If we can find a way to disrupt this behavior in a way that people are comfortable, we can help to build diverse human connections.
- One thing Twitter does to encourage this is a Tuesday where everyone wears shirts of something they care about. This allows people to find and make connections with people they might not otherwise talk to, particularly in organizations with a large number of introverts.
- With the aim of building a more globally diverse organization, Twitter looks at four areas: Me (supporting individuals), We (how these individuals can feel connected and respected as part of a team), Us (Twitter as an organization), and World (Twitter as a global platform). Diversity is not just about the workforce, but extends to people, geographies, and partners as well.
- The ICD Advisory Council’s purpose is: “to create a healthy inclusion and diversity community for ourselves, our work, our organizations, and the world; Discuss and anticipate diversity and inclusion trends and influence actions; and Amplify thought leadership, community, and actions.”
- There are four current areas of focus, with the first two most critical for the industry:
- Bias in artificial intelligence, machine learning, and virtual reality (and augmented reality) – Imagine that the bias that exists in every human is embedded into the systems, tools, and processes we use. What should we know and how should we be involved? What is the potential impact of not including diversity in the discussion? By the time we realize that this is a diversity issue, it might be too late to solve it.
- Self-identification, metrics, and equity –How is self-id changing and how does it impact our work? Corporations rely largely on self-identification to measure their diversity efforts, but this process of reflects the fact we still have a long way to go.
- Support/social responsibility – Our shared commitment to each other in the industry.
- Best practices and innovation – Demos and presentations from our organizations and partnerships.
- “When we consider all ideas, especially ones that differ from our own through our products, diversity of our people, combined with our purpose, we ensure that everyone in the world, on our service is seen and heard.”
The Future of the Insights Function: Digital Transformation
Bernard Brenner – Senior Director – Advertising, Social and Retail Effectiveness Research, Microsoft
With the proliferation of data types, sheer volume of data, and availability of modern technologies, market research has an historic opportunity to generate customer and market insights at greater speed, volume and quality than ever before. This creates disruption in an industry comfortable with traditional techniques such as focus groups and survey research. Microsoft shares how it is managing this disruption and crafting its journey in digital transformation.
- According to Microsoft CEO Satya Nadella, “Longevity in this business is about being able to reinvent yourself or invent the future.” This reinvention applies to market research as well. In the past market research was centered heavily on traditional primary research methods. While still retaining these capabilities, we now need to embrace new ideas and new data sources.
- For Microsoft, customer and market understanding is a key business differentiator. However, this introduces its own challenges, in particular the speed of the business, data proliferation, and alternative sources.
- The digital transformation imperative is to “transform the insights supply chain using new raw materials and modern technologies, to deliver high-quality insights at greater depth, speed, and volume.” This transformation begins with small steps. Among these:
- Using social data to understand what people may talk about after a launch – In contrast to the typical study that follows up with people for a few months, the team looked at social data after just a week to draw out what people were saying about their experience and their unmet needs. This insight could be shared with engineering to influence the roadmap, with marketing to inform communications, and with PR as a caution.
- The team also retooled its drivers analyses, allowing anyone on the team to adjust levels around certain features to see the expected impact on product satisfaction, thus facilitating scenario planning on the fly.
- Machine learning is being applied to code large, open data sets.
- Through work with vendors, artificial intelligence is helping to break down ad pre-testing. Advanced techniques are being used to understand the variables that drive strong creative.
- Using PowerBI to democratize competitive spend allows the team to quickly run reports and see how the brand is doing versus competitors. PBI dashboards create dynamic SLT ad reviews to allow instantaneous looks at campaign results for immediate decision making. This allows the team to answer questions in real time and influence management decisions.
- Why take these small steps? The digital transformation does not just impact the computing industry as a whole. Organizations need to undergo the journey as well.
A Future Beyond Facebook & Google
Matt Ochsner – Principal, Internet & Digital Media Investment Banking, Needham & Co.
While Facebook and Google currently take the bulk of digital advertising spend, a variety of firms are competing for the remaining third, equivalent to ~$100B. As the industry shifts more to this holistic view of the user, the opportunities in working with more independent platforms and technologies will grow.
- A few years ago Mary Meeker’s report highlighted a discrepancy between the time spent on mobile and mobile advertising spend. This called out a huge opportunity for brands to spend money where people were spending their time. Now another discrepancy has emerged between where people spend their time online, and where advertising budgets are being allocated. The platforms dominant in capturing digital ad spend represent only a part of user’s online experience, and an even smaller part of user’s offline experience.
- Metrics to watch include:
- User growth, daily active users, and monthly active users
- Time spent on platforms – If video becomes users’ preferred form of content, platforms that can provide the best video experience will attract advertisers.
- Advertising revenue
- The discrepancy between time spent offline versus online still exists, but the gap is now where people are spending their time and where budget is being allocated.
- Adtech TAM is massive and growing, attracting independent technologies to compete with the dominant players.
- Independent technologies and platforms will need to either raise money, publicly or privately, or merge with others to remain competitive.
The Future of Privacy
Lydia De La Torre – Privacy Law Fellow, Santa Clara University School of Law
Eric Goldman – Professor of Law and Co-Director of the High Tech Law Institute, Santa Clara University School of Law
Moderated by: Scott McDonald, Ph.D. – President & CEO, ARF
What do the California Consumer Privacy Act of 2018 and GDPR mean in terms of the future of privacy, businesses and consumers? This session shares what ARF member companies are thinking about privacy compliance, and offers insights from two experts on privacy law.
ARF President & CEO Scott McDonald set the stage with an overview of privacy from the consumer and industry perspective:
- There has been explosive growth in the amount of raw data being used for advertising and CRM management. More recently, there are increasing signs of a privacy backlash, as evidenced by GDPR and state law. Some industry associations have also pivoted on their position on privacy.
- A consumer study conducted by the ARF in 2018 revealed:
- There is a willingness among consumers to share aggregate, descriptive data, but there is a resistance to sharing data that would permit identification of them in the real world (e.g. email, name/address) and to sharing sensitive information (e.g. medical, financial, government).
- Even when framed as a value trade-off, there was no change in willingness in exchange for customization.
- There appeared to be very poor comprehension of commonly used terms in T&C forms.
- An ARF member survey also from this year indicates that companies are still figuring out how to comply with GDPR.
- 50% consulted legal counsel. 45% revised privacy policies. 40% revised opt in /opt out procedures. 25% altered targeting practices.
- 70% said that GDPR has affected their business less than they expected, but that may change in the future. 71% say it will change the industry’s use of targeting.
Key takeaways from the panel discussion:
- When it comes to ownership of data, one perspective is to focus on the rights of different parties to do things with this data rather than ownership per se. For certain countries, however, the view is that the data subject owns the data, not in the way of possession and exclusion, but rather in terms of a bundle of rights that the individual has over the data, regardless of who is it. This stems from the concept of data self determination
- GDPR is purpose-based, and mentions several lawful bases for using data. Consent is just one of those cases, and the idea that more knowing consent will solve the problem may be optimistic. ePrivacy regulation may potentially impact the industry more than GDPR.
- First-party data appears to be more flexible, with data sale/exchange more likely to be restricted.
- In the near future, we may see more complexity in regulation as states come up with their own initiatives. Another possible outcome is more prescriptive regulation.
- One of the biggest misconceptions is that California’s privacy regulation applies only to the internet giants – it affects all companies.
So, What Can a Good Marketing Dashboard Do For You?
Laura Patterson – President, VisionEdge Marketing, Inc.
Many marketers are missing the mark when it comes to having an effective dashboard, as most dashboards consist of a smorgasbord of numbers that report on activity and outputs. Best practices are offered to building dashboards that provide clear guidance for decision-making, spotting trends and seizing opportunities.
- An older ARF survey found that CEOs were disappointed in marketing’s ability to prove their value. Unfortunately, this situation has not changed. One recent study highlights the huge disconnect between what marketing is measuring and what the c-suite wants.
- We have access to more data today then we’ve ever had, and can analyze data faster than we’ve done before. Despite this abundance of measures and metrics, they can be the wrong ones. “It doesn’t do any good to be efficient if you’re going in the wrong direction.”
- Marketers need to understand what the c-suite wants. Looking at the mindset of the CEO:
- Standing still is riskier than change, as CEOs are driven by a mandate for growth. In marketing, we have a tendency to hide risk. CEOs are willing to take on risk as long as they understand the implications and how the risk can be mitigated.
- CEOs want to know how to move more quickly into new products and services in different areas and regions. They’re looking for transformative innovation within their own companies.
- CEOs are willing to experiment, and accept failure as a condition of success. Fast failure is okay, but marketers tend toward analysis paralysis because we have too much data.
- The future is more important to CEOs than the past. CEOs want to know what the next move is, and what opportunities can be pursued and created.
- When it comes to CFOs, their role is changing from finance to overall performance management (including marketing performance).
- CFOs are looking at customers, revenue, and key indicators – data that is largely inside sales and marketing. They’re looking at new and existing customer behavior, and monitoring indicators to assess risk and influence decision-making.
- While marketers have a tendency to go into all the underlying data, the c-suite only wants to know what is being doing to create value, the impact, and the contribution to the business. They want to know how we’re moving the needle, not the nitty-gritty day-to-day.
- Best practices for dashboards:
- Select the right metrics that line up with what the business wants.
- The information on the dashboard needs to be actionable. Car dashboards, for example, display only a few things that allow drivers to make key decisions. g. Should I slow down? Do I need to get gas?
- Set performance targets in your marketing objectives, not just to increase awareness for example, but real targets that are tied to customer behavior and will deliver business results.
- When reporting on performance targets, it should be immediately clear if you’re within operating parameters.
- The best-in-class marketers can create a chain between the things they do every day and the larger business outcomes.
Crushing the Crystal Ball: How Experiences Today Predict Behavior Tomorrow
Fiona Blades – President & Chief Experience Officer, MESH
Case studies are used to illustrate the predictive power of experiences, looking at the impact of customer churn, negative news, and touchpoint investments.
- It is the experiences that people have that create the brands in their minds. Share of experience correlates more closely with share of market than does share of voice.
- Real-time experience tracking (RET) looks at brands through the eyes of the consumer, using self-reports to capture people’s experiences with a set of brands. Surveys capture brand health metrics and imagery to measure the impact of these experiences.
- Three case studies from the banking sector demonstrate the predictive power of experiences:
- In this case, predicting behavior depended on: one major competitor, how persuasive the competitor’s communications were, and how many people these communications were reaching.
Predicting the impact of negative news
- Predicting behavior depended on: the current position of the bank (is it trusted?), the current climate (e.g. branch closures), how much the negative news impacts the consumer, and if the news is a mistake or deliberate wrongdoing.
- Should the brand continue advertising in these situations? If the problem is serious and impacts a lot of people personally, brand advertising (particularly where people talk about loving the brand) should stop as it simply reminds people of the negative news. Specific communication and action is needed, e.g. opening the banks over the weekend. It the issue is less serious and not too many people are aware, brands can continue product advertising but may consider cutting brand advertising. If the product is good, people normally turn a blind eye.
Predicting the impact of touchpoint investment
- Among the touchpoints that impact brand choice, there are factors such as peer observation and retailer advertising that brands may not necessarily be looking at or measuring.
- One consideration is whether the effect is short or long term. Online and offline POS touchpoints impact the short-term, while paid advertising impacts on longer-term consideration.
- Also look at who and what the touchpoint and message will impact. For maintaining and improving consideration among banking customers, consider online/mobile app. For improving and maintaining trust among non-customers, online reviews/news and social media can work well.
- Data sources are improving and predictive power is increasing. The challenge for organizations is their ability to take timely action.
Forecasting Entertainment Sales
Greg Durkin – Principal, Guts + Data
This presentation looks at forecasting entertainment sales with the widest data aperture: the process of identifying client questions, identifying and hoovering relevant data sets, modeling methods, and delivering value.
- To answer questions such as ‘How much money will I make?’ and ‘’Does the quality of the product matter?’, the following process is applied:
- Explore client objectives – known unknowns
- Strategy consultation – discover additional objectives / value
- Diagnosis and prescription – holistic, data agnostic, efficient
- Study and enrich existing data – typically sales, attitudinal, media, social, 3rd party
- Generate new data – e.g. competitive, psychographic data
- Analyze and forecast using a variety of tools
- Forecast estimates are but one part of the value of modeling. When doing forecasting of any kind, don’t just think about the output. Look at the learnings along the way.
- Forecasting must inform and be informed by overall strategy. Even when working with internal clients, don’t lose sight of the bigger picture.
- Know the value of your data and whether that value can be increased.
- Don’t rely on data that work – fight to find data that matter.
The Future of Marketing Science
Peter Szczesny, MBA – Director, Ipsos
In a post Byron Sharp world, marketing science is more important than ever. This presentation explores the fusion of social media insights, natural language processing, machine learning, surveys, and mobile data, and looks at the resulting opportunities in advertising and forecasting.
- Fundamentally we agree with Byron Sharp’s view that the brands that grow are chosen by more people, more easily, and more often. At the heart of growing brands is an understanding of how people make choices. However, there is a wide gap between having the theoretical understanding and executing successful growth strategies. This is where marketing science can play a role.
- To ‘do’ marketing science requires an understanding of data sources and tools, plus the know-how to put these together.
- Data: Sources include: mobile, images and video, speech and text, social media surveys, geospatial information such as satellite and drone imagery, radio frequency measurement, and weather.
- Tools: There is a plethora of tools, including: text analytics / natural language processing, artificial intelligence /machine learning / deep learning, as well as non-parametric drivers analysis.
- Know-how: This means having the domain knowledge and know-how to fuse the data sources to come up with growth strategies to outpace competitors.
Can AI/ML Address Forecasting Challenges in the Dynamic World of CPG and Retail?
Dr. Krishnakumar (KK) S. Davey – President, Strategic Analytics, IRI
Nagi Jonnalagadda – Head of Innovation for Strategic Analytics, IRI
Can AI/ML Address Forecasting Challenges in the Dynamic World of CPG and Retail?
Dr. Krishnakumar (KK) S. Davey – President, Strategic Analytics, IRI
Nagi Jonnalagadda – Head of Innovation for Strategic Analytics, IRI
Retailers and CPG manufacturers alike are struggling to predict performance in real-time, in order to stay up-to-date to drive strategic portfolio decisions and increase granularity of predictions for better supply chain and inventory planning. This presentation looks at how forecasting can address this business need, and the value that automation can bring to the process.
- Forecasting is essential for business planning, but is becoming increasingly complex. There are a confluence of factors influencing CPG sales, making sales forecasting a real challenge:
- Channel complexity – e-commerce, cross-channel effects
- Smarter buyers – real-time information on promotions using mobile phones
- Increased competition – intense branding and pricing wars
- Increased volatility in sales – blurring category lines
- Fewer barriers for entry – innovation is more important than ever
- Macro-economic environment – improving affordability
- Out of home consumption – rising faster than and exceeding at-home consumption
- The needs and challenges that the CPG industry aims to address around forecasting include:
- Speed of developing forecasts and need for real-time information
- Increasing need for granularity, as decisions are getting decentralized
- Holistic view that incorporates a wider variety of causals
- Based on actual data, not made up by imputations and assumptions
- Not a black box, but a transparent process
- Single source of information that an organization can rally around
- As the need for granularity and speed increases, there is an increasing need for automation. There are three parts to this framework:
- Automated data feeds – Used for causal data acquisition, data refinement and harmonization, and data filtering and shortlisting,
- Automated modeling engines – From a modeling perspective, avoid over-specification or collinearity, automate robust model development, and incorporate business sense using causals. At the end of the day, forecasting is both art and science.
- Automated insights and recommendations – This requires forecasting the causal variables, balancing various forecast methods, developing reliable baseline forecasts, and recognizing risk factors.
- Best practices and competencies to pursue around forecasting include:
Kantar & Clorox: Shaping the Future of Industries
Vikram Sarma – Senior Director of Marketing, Clorox
Jenny Maguire – Director, Kantar Consulting
Clorox partnered with Kantar Futures to identify disruptions and future opportunities to consider for long-term growth. This presentation shares some of the insights uncovered through the process that can impact business strategies and innovation.
- The company had become skilled at applying forecast fundamentals to predict single events and optimize the current business. Experiments (some of which succeeded and some which failed) informed how the organization could grow. However, there is only so much growth that can be extracted from optimizing forecasts, and there wasn’t a lot of runway left.
- It was necessary to reframe the question – rather than ask ‘how are we going to grow?’, the team asked the more fundamental ‘where are we going to grow?’. The thinking shifted from forecast to foresight. A forecast is about predicting a single event or trend line, while foresight is multiple trend lines intersecting and creating a new future.
- In this case the question shifted from the number of hospitals to the broader healthcare landscape and the brand’s role within that space. Four major paradigm shifts were unlocked: the modern day battleground moving from healthcare to public health; human error and going from hard surface to environmental; omnihealth; and stratified health.
- Futures thinking entails combining many different data sources and trends to look beyond what’s happening today and tomorrow to envision what will happen ten years from now. The approach starts with understanding the big macro drivers of change within the industry. Understanding the intersection of these drivers of change uncovers future dynamics, which can then help shape the new vision.
- Lessons learned:
- Challenge assumptions.
- The journey is as important as the outcome. Bring all stakeholders on the journey with you and get a champion in the organization if you can.
- Foresight is not a one-and-done exercise, it is an ongoing exploration.
- Listen hard. This requires working with partners as true partners and not just as vendors or suppliers.
- Co-shape applications with external partners to help push thinking.
- If you are not uncomfortable you are doing it wrong.