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ONE YEAR LATER

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One week to the day after the 2016 election, Kantar hosted an afternoon event in New York called “FragmentNation.” It was focused on the fragmentation and proliferation affecting the marketplace, and it was planned with the election in mind. The political divisiveness of the election cycle brought home to marketers the scope and difficulty of unifying people around a common cause, brands no less than politics. The unexpected outcome of the presidential contest underlined the urgency of the need to rethink the marketplace of FragmentNation.

Data scientist and pollster Nate Silver keynoted the session with his first presentation about why polling had been so wrong and what this said about division in the marketplace. Top thought-leaders within Kantar followed on the FragmentNation program with insights and takeaways about what brands must do to succeed in a so-called marketplace of multiplicity.

Now, it is time to look again at where the marketplace is headed and what’s changing as things move forward.

We have compiled the ideas of nine Kantar thinkers and consultants about what fragmentation means to the marketplace and what lessons brands can take from the events and developments since the election. Andrew Curry opens with a look at how Silicon Valley has fallen from grace in the past year and what this reveals about managing brands in a time of intense passions and high expectations. Bryan Gildenberg revisits his FragmentNation presentation about the pressures on the middle market and the necessity for retailers and brands to look elsewhere for value and growth. Jon Wood illustrates the sorts of opportunities that fragmentation offers brands with a look at the revival of subscription box services over the past year.

Maurice Nicholson looks at racial and ethnic demographic trends from the perspective of the working class and what this means for retailers and brands.

One of the biggest changes in the marketplace over the past year is the growing pressure on brands to jump into social issues and political debates. Nigel Hollis cautions against that, with a view toward careful study and pre-testing before doing anything with political overtones. In contrast, Leslie Pascaud argues that brands do not have the option of retreating to a neutral corner, and even if they did, should link themselves to a social purpose that will animate their loyal customers. Kimberly Pedersen argues that focusing on stories—not stands—is the strategy that can enable brands both to avoid the worst of getting caught in a political scrum and to reap the benefits of connecting emotionally and passionately with consumers.

Ann Green believes that the best brands have always been a part of common culture, and the utilization of unifying themes and values has proven itself again over the past year. Mitch Eggers agrees that the past year has surprised us with the sort of self-containment that is showing up in digital echo chambers, but he sees this as an opportunity for brands to harness the kind of passion and energy that has gone missing from marketing in recent years.

The insights and ideas offered by Kantar thought-leaders are always deeply reflective and highly action-oriented. These short pieces are no exception. Anyone dealing with strategic issues in today’s marketplace will find a lot of value here. In our extraordinary times, inspiration like this is greatly needed. And so, Kantar looks back a little over a year later to find the future of FragmentNation and the way forward for brands to win.

Taking Stock of FragmentNationJ. Walker Smith

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Index

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Index

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By Andrew CurryKantar Consulting

Silicon valley

one year

on

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A look at the headlines from the last three months shows the scale of the change of mood about Silicon Valley and its largest companies. Google has been fined €2.4 billion by the E.U. for monopolistic behavior, while the Commission is also pursuing Luxembourg and Ireland for their alleged anti-competitive tax treatment of Amazon and Apple, respectively. Facebook is mired in a political advertising scandal that has the full attention of Congress. Uber, having lost most of its senior leadership in the wake of one of the most effective blog posts ever written, had its license to operate in London removed after serious compliance concerns were raised by the city’s police force.

The consumer mood has also changed. Uber’s traffic has been affected by the #deleteUber campaign in the U.S., while Apple launched new products that weren’t greeted by long queues of anticipatory customers stretching around the block. There is also a whole emerging story about the possible adverse effects of digital media use on wellbeing.

So, is this a series of blips, or is it a trend? It is more likely to be the latter.

As NYU professor Scott Galloway told the New York Times in October, “For 10 years, the arguments in tech were about which chief executive was more like Jesus … Now sentiments are shifting. The worm has turned.”

That article was headlined, “Tech Giants, Once Seen as Saviors, Are Now Viewed as Threats.” Another, published the following day, was balder: “Silicon Valley is not your friend.” The mood has also changed among publications that have been sympathetic to Silicon Valley. In September, for example, Fast Company argued, “Technology is growing increasingly complicated and powerful—and people aren’t happy about it … To use an old Facebook phrase, the public’s relationship status has officially and permanently changed from ‘friends’ to ‘it’s complicated’.” Or take tech venture capitalist and ex-Googler Bill Maris, who recently told a Wall Street Journal conference: “It wouldn’t surprise me if the sun is setting on the golden age of Silicon Valley.”

One of Kantar’s five principles of Future Thinking is about “taking the long view,” and there is some history here. Twenty years ago the digital activist and sometime Grateful Dead lyricist John Perry Barlow published a heartfelt declaration of independence on behalf of cyberspace, in response to the supposed reforms enacted by the Telecommunications Act of 1996.

“Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no

Silicon Valley One Year onAndrew Curry

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sovereignty where we gather … I declare the global social space we are building to be naturally independent of the tyrannies you seek to impose on us. You have no moral right to rule us nor do you possess any methods of enforcement we have true reason to fear.” And much more in the same utopian vein.

Even at the time, his claim was contested. Despite everything, routers and servers remain tied to geography, and businesses always have a network of relationships with governments wherever they do business. But as an ideology, Barlow’s manifesto informed the way that Silicon Valley entrepreneurs saw themselves as their companies grew richer and more influential.

Should we be surprised that it has taken so long for the gap to close again? Probably not.

This has been described by the academic Carlota Perez, who analyzed the five big technology waves, or surges, that have taken place since the Industrial revolution. The current ICT (information and communications technology) wave is the fifth of these; the fourth was oil and auto.

Over 50 to 60 years, each technology wave has followed a familiar S-curve pattern. A deployment phase is paid for by investment capital to install infrastructure, at first slowly and then more quickly. The speed of take-up inevitably falls short of investor expectations, which leads to a crash.

Production capital, meaning companies with customers, pick up the pieces, and benefit from a decade or more of rapid growth as customer numbers accelerate. But then the market becomes saturated, growth opportunities tail off, margins fall, repurchase rates slow and people start to notice the external social and economic costs these businesses have dumped on society.

Silicon Valley tech businesses, then, aren’t special. They have just reached the difficult last “winter” phase of the S-curve. If we look back at the oil and auto tech wave, very similar things happened: seat-belt legislation, driving-under-the-influence legislation, parking restrictions, pollution controls.

Winter businesses, so-called, are commoditized businesses that can no longer make easy profits from market growth. This is one of the reasons why the transition from rapid growth to commoditization always creates turbulence. Business models built on customer growth suddenly come face to face with the constraints of mature markets. The behaviors of the tech companies are those of companies cutting corners to try to maintain margins despite their changing market context. Once winter comes, the magic never comes back.

Silicon Valley One Year onAndrew Curry

Patterns are often useful guides to the future, and there is a familiar pattern to the types of transformative technology booms that reengineer our societies, literally and metaphorically.

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By Bryan GildenbergKantar Consulting

Buy a nation, get one free

Still true one year

later

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To think about fragmentation over the past year, let’s go back before Kantar’s November 2016 inaugural FragmentNation event. I was on the planning committee for the event and at that time we were busy with the agenda. In one of our meetings, I remember a colleague making a really telling remark: “People will be sick of talking about fragmentation and polarization by the time the election is over.” I was struck by this comment because it echoed a view shared by many that the 2016 presidential campaign was the cause of fragmentation rather than a symptom of it.

Looking back, it’s clear that fragmentation is much bigger than the 2016 election. The scope of fragmentation can be understood on two levels. First, fragmentation is the central story of the marketplace. At Kantar, we have been describing the long-simmering structural polarization of the U.S. for years. It is the only way to understand an industry like retail that has 100 percent household penetration.

It is not unfair to say that in terms of income inequality, the U.S. is now the largest emerging market in the world. Income disparities as large as those in the U.S. require marketers to think about the affluent haves and the impoverished have-nots side by side.

The impact of these levels of structural income inequality is both caused by and causes differences in healthcare, diet, education, childcare, transportation and time management, which show up in many ways, especially life expectancy. These are under-explored opportunities to help lower-income consumers with solutions, experiences and products that better meet their needs.

Add to this the growing ethnic diversity of the U.S., particularly how different it is for people over 50 and those under 30 years old. This portends enormous social tension. On many occasions, I have pointed out that there are neighboring countries in the world engaged in armed conflicts over ethnic differences that are more similar to one another than the ethnic gap between 50-plus America and under-30 America.

There is a pretty clear story here about a country with structural polarization that finally boiled over in the last election.

Marketers can’t help but see it now, and so must finally deal with it. In retrospect, I regret that we weren’t able to elevate

Buy a nation get one freeBryan Gildenberg

There is a pretty clear story here about a country with structural polarization that finally boiled over in the last election.

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these issues more visibly and more viscerally earlier. It makes me feel a bit like the Night’s Watch in Game of Thrones running from a zombie dragon.

The second level on which to understand fragmentation is less philosophical and more about the relentless change affecting the world of retail. There has been a lot of press about retail over the past year. Amazon’s acquisition of Whole Foods was the biggest headline, but there was also plenty of news about the seeming collapse of department stores, Lidl’s entry into the U.S. market and store closings and bankruptcies.

Much of what’s happened over the past year has been more or less predictable, and for the past few years, we have been warning of these developments. What’s at work is a phenomenon we call “Buy A Nation, Get One Free,” which is about the trap of getting caught in the middle. The upside for retailers is to recognize that as the marketplace fragments, there are more distinct opportunities available. The decline of the middle means more opportunity at both the top and the bottom. Fragmentation may be harder to navigate, but there are more places with opportunities for growth. The bankruptcies making the news are inevitably retailers caught in the middle.

Target, Sears and Toys ‘R’ Us, as well as department stores, had either a tactically or an existentially challenging year. Lidl, too, because as it so often does when it first comes into a market, Lidl struggled with understanding its exact position within the context of competitors.

When it comes to Amazon’s acquisition of Whole Foods, we believe this combination has the potential to become the first true retail experience to take full advantage of the upside potential in the “Buy A Nation, Get One Free” paradigm. Imagine walking through Whole Foods with your Amazon Prime app open, able to in real-time decide whether you want the more expensive organic oranges in front of you or less expensive conventionally grown oranges available through Amazon Fresh. Imagine running through the shopping trip, paying for both the Whole Foods and Amazon Fresh purchases at the register with no additional checkout steps and the things you bought on Amazon Fresh delivered to your home by the time you arrive back from Whole Foods.

That said, over time it is possible that Amazon could get caught by the “Buy A Nation, Get One Free” paradigm. This happens all the time. What once was a unique, defensible position at the top or at the bottom suddenly becomes the middle. It’s even happened to Amazon before. The Amazon Fire Phone wasn’t as good as an iPhone or as cheap as low-cost competitors.

Amazon could certainly get caught in the middle fending off hundreds of small, nimble players that stay close to their consumers in a deeper way on the premium end while being seen by the public at large as the new public enemy number one at a mass level. Those small, nimble players may have a business model architecture—like Walmart’s Jet.com, for instance—that enables them to scale customer engagement and retention efforts in a way that easily and effectively competes with a much bigger player like Amazon.

The fundamental idea is that retailers must either segment their focus on specific consumers and shopping trips or use data and insight to tailor their stores, marketing and offers to connect more specifically with individual customer needs—or both! The past year makes it clear that this fundamental paradigm of “Buy A Nation, Get One Free” will be the driving dynamic in retail in 2018 and well beyond.

Buy a nation get one freeBryan Gildenberg

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By Jon WoodKantar Consulting

Infusing the model

with customer centricity

Subscriptionbox services

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A year ago, doubt was growing that the still-nascent category of subscription box services would survive the threat posed by rising customer attrition. These services began as ways for customers to receive regular packages with new, exciting personal care and beauty items without having to invest time searching online or in store.

It seemed like a win all around. Consumers discovered new items with little time or effort. Brands could expand their reach through a new channel. And subscription box services could quickly build a customer base and client lists. But despite these advantages, the novelty seemed to be wearing off without much to offset natural attrition.

But in the past year, two things occurred that have infused, refreshed and re-energized the potential of this business concept. First, the concept of subscription boxes expanded to other categories and, second, the business model was enhanced to address a newly discovered truth.

Subscription boxes are now popular for many types of things beyond personal care and beauty, including ready-to-cook food, board games, STEM projects for girls, and even cannabis and fine wines. There is also a developing market for subscription boxes of stylish clothing for men and women who don’t have the time (or fashion sense) to choose attire for themselves.

But something more fundamental took place during the past year. Subscription box services discovered the upside potential of increasing market fragmentation. Early iterations of subscription boxes touted their expert curators. Yet buried in customer feedback was a critical insight: Customers expected more personalization. They wanted products that were not just curated by experts but curated by experts to their personal, individual tastes. This identified the need to update the business model by utilizing more customer data, not relying solely on expert opinions. Building a data spine as the platform for the business is key.

The subscription box services that realized this and acted on it have reversed attrition and are growing by taking advantage of a marketplace fragmented by personalization.

Both Ipsy and Birchbox, two of the most popular subscription box services in personal care and beauty, have turned their business models toward the customer and away from experts by personalizing selections in response to previous purchases and returns. While it remains important to have experts weighing in on the latest and greatest products, consumer tastes rather than expert tastes are now central to the business model. As Jennifer Goldfarb, President of Ipsy, put it, “Over time, the most common question we hear has shifted from ‘What are the best products?’ to ‘What are the best products for me?’.”

Infusing the Model with Customer CentricityJon Wood

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way. As noted, investment is required. Subscription box services should also reassure customers that the data collected are secure. They should also be upfront and transparent about the fact that detailed customer data are being collected for good reason—it fuels the service.

For brands considering partnerships with subscription box services, it is critical to think about the consumer decision journey and how these new touchpoints will fit into the total brand experience and business model. Over the past year, this has proven to be worth consideration as these services have now proven that they have the potential to increase the lifetime value of consumers and switch on growth in a fragmented marketplace.

Something else has shifted in the past year as well. Major brands tied to traditional channels were reluctant to jump into subscription boxes. Their main fear was selling to a distributor at a discount without much to show for it and putting brand image at risk. Additional sales data have become available showing that the customer journey of subscribers to box services has shifted.

These customers spend more in-store and on brands’ websites after first being exposed to the product in a subscription box.All of this has added up to a big win over the past year thought room remains for further optimization. To do so, brands need to do something uncomfortable. They need to accelerate the development of their capabilities for capturing as much relevant customer data as possible in order to deliver a truly personalized experience. This is uncomfortable because it requires new technology. Brands must invest in new tech and these investments will require that brands establish new ways of organizing and operating.

Even more, customer data will need to be converted into products and experiences that fall somewhere between an exact match of what the customer has come to expect and something different from typical expectations but still worth consideration. This is the sweet spot of subscription box services. This offers a growth experience for customers, but it means that brands must learn to do business in a more sophisticated and better-personalized

Infusing the Model with Customer CentricityJon Wood

These customers spend more in-store and on brands’ websites after first being exposed to the product in a subscription box

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By Maurice NicholsonKantar Consulting

Retailing to the new working class:

What education and

urbanization mean for

multicultural markets

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By now, you’ve probably heard ad nauseam about the changing face of America, in particular, how America is becoming a minority-majority nation that will profoundly impact businesses and social institutions. Retailers are especially affected by these changes because they are on the front lines every day. But it’s worth asking why these changes mean something special. After all, aren’t people just people?

To put some numbers to these demographic shifts, the mid-decade population growth estimates of the U.S. Census projected that non-whites would account for 92 percent of U.S. population growth from 2015 to 2020. Hispanics were projected to account for a little over half this growth. Although Hispanic population growth has slackened off recently due to a slowdown in immigration from Mexico, Hispanics will still account for the bulk of near-term U.S. population growth.

This wave of demographic change in America will have profound effects on our cultural center.

Understanding the ripple effects of these demographic shifts will be key to unlocking tomorrow’s opportunities.

What Education and Urbanization Mean for Multicultural MarketsMaurice Nicholson

However, examining these changes through the lens of traditional multicultural demographics is limiting and blinds us to bigger opportunities. Brands that properly tap into the larger cultural shifts resulting from these demographic shifts will be better able to win in tomorrow’s marketplace. Two things, in particular, are occurring, one related to education and the other to urban metro areas.

Educational attainment among African Americans and Hispanics is increasing. Data from the 2014 National Center for Educational Statistics show a growing percentage of African Americans and Hispanics obtaining a high school diploma as well as earning a bachelor’s degree or higher.

But these percentages of educational attainment remain lower than those for non-Hispanic whites (and Asian Americans, too). So, while African Americans and Hispanics will dominate the demographics of the population as a whole, they will be slower in ascending to the upper and upper-middle classes. Instead, they will be a growing part of the working class. While yesterday’s working-class mass market was overwhelmingly white (and rural), tomorrow’s mass market will be much more multicultural.

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Urban areas are also becoming more multicultural. By overwhelming margins, African Americans and Hispanics live in major urban metro areas. In 2010, Hispanics were 16 percent of the total population (18 percent today), but nearly half lived in 10 large urban metro areas. While three-quarters of African-American population growth from 2000 to 2010 occurred in the south, it was mostly in major urban metro areas like Atlanta, Houston and Dallas. Only a few urban metro areas nationwide, like Provo, Boise, Nashville, and Charleston, WV saw more growth among non-Hispanic whites than among minorities. The driver of urban population growth is multicultural.

Whereas in years past, racial and ethnic minorities were to a certain extent isolated minorities, now they have reached a tipping point in major urban metro areas. They are large enough and successful enough to the point where they feel empowered to interpret the American Dream for themselves, infusing it with cultural and contextual relevance that reflects their reality.

For many, it is no longer about the house in the suburbs with the white picket fence and the two-car garage.

For many, it is no longer about the house in the suburbs with the white picket fence and the two-car garage.

Instead, they live in an increasingly urban and connected world, with preferences and aspirations shaped by role models found in their own communities and by exposure to what’s hot and trendy around the world in places like London or Seoul, even if they may not have the financial means to get there in person. These consumers may be working class but their tastes are often very urbane and cultivated.

In this environment, culturally relevant products, messaging and brands matter to retail. Regional variations in culture have become a big part of the American retail landscape. Major metros are creating their own multi-hued, multicultural American identity, while smaller metros are becoming increasingly white, with a different set of choices reflecting a different cultural identity. Retailers that acknowledge and embrace these emerging and evolving American identities, with their differing sets of local and regional cultures, values, expressions, needs, wants and aspirations, will be the ones that win.

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Risks and rewards

Brands must be

careful about taking a stand

By Nigel Hollis Kantar Millward Brown

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Today’s endless media coverage makes it seem like people are more invested in politics and social issues than ever before. By contrast, few people have ever been that invested in brands. Shocking though it may be to a brand manager, most people feel little passion for the brands they use. And perhaps this explains why so many brands are trying to associate themselves with social issues. They hope that some of that passion will rub off on the brand. But in trying to align their brands with a cause, marketers may end up hurting the brand rather than helping it.

Social media have had a huge influence on our culture by helping to connect people of like minds across geographies. This has given those outside the mainstream a collective voice they never had before. But the societal effects of social media are far greater than giving voice to extremists. In the past, “fish schooling” used to be a concept applied to teens; now everyone lives in their own social shoal and quickly follows along as it weaves and turns. As a result, many brand managers feel that if they do not act quickly and keep up with their target audience they will be left behind.

But are marketers right to assume that they have to be part of the cultural debate? The BrandZ Top 100 Most Valuable Global Brands Ranking provides evidence to suggest that pursuing a purpose is weaker than other more fundamental drivers of success. A comparison of the same 86 brands that were measured in both 2006 and 2017 finds that those in the top third for making people’s lives better grew by 175 percent and the lowest third by only 70 percent. However, the top third ranked by perceptions of innovation grew 276 percent versus the bottom third at 15 percent. And if we examine the sorts of brands that scored well on making people’s lives better, it is brands like Visa, IBM and PayPal. Ultimately, people like and value brands for making their lives better and for solving a personal need, not because they are trying to make society and the world a better place.

Whether or not brands must align with activist values depends on their origins and heritage. Brands like Ben & Jerry’s that are known to stand for a cause have little to lose. People who disagree with their stance enough to care have likely given up on the brand already. But brands that suddenly espouse a cause run the risk of seeming inauthentic.

Many brands took a stance over this past year yet failed to resonate with consumers and faced widespread social criticism. This need not be the case.

Risks and Rewards: Brands Must Be Careful About Taking a StandNigel Hollis

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Done correctly, espousing a cause can benefit the brand, not lead it to be criticized.

For example, Kantar Millward Brown tested consumer reactions to the Always “Keep Playing” #LikeAGirl ad campaign. The campaign connected the brand to a broader social purpose, and it did so well. Research showed that it was involving and inspiring, and that it created an instinctive impression that the brand is supportive, is a leader and is confident.

Today’s social heat is turned up high, so whatever they do, brands need to tread carefully. Dove is a famously activist brand, yet it incurred social backlash for posting a three-second Facebook video clip for its body wash product that appeared to show a black woman transforming into a white woman. The brand apologized for not representing women of color thoughtfully, and it may well be that, in the rush to get the content online, little thought was given to how the video would be received by the ever-present social critics. Time pressure and the failure to check the likely audience response beforehand has probably led to more than a few high-profile missteps over the past year.

In times of change, it is more important than ever to stay in close touch with the needs, values and sentiments of potential buyers. Whatever their own views, marketers would do well to make sure they understand the sentiments of all their customers and assess the risks as well as the rewards of taking up a social cause. If the risks seem low and the brand is seen to have a right to play in the chosen space, then the challenge is to get the word out in a way that feels authentic, not opportunistic. In this regard, there is no substitute for pre-testing ad content before distribution with a sample of the target audience. Once an ad goes live online, for good or ill, it will live forever.

Many brands took a stance over this past year yet failed to resonate with consumers and faced widespread social criticism. This need not be the case.

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By Leslie PascaudKantar Consulting

The Land of Purpose

No Neutral

Zone

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It was a little more than a year ago that we wrote that the situation of fragmentation seemed acute. Since then, the cracks in our cultural and social edifice have deepened. Profound tensions are affecting people the world over, and marketers are far from immune to these seismic shifts. As truth becomes weaponized and more difficult to decipher, society is soul-searching. People are striving to understand and defend what they believe to be right. Brands must do the same, or risk irrelevance.

The democratization of information has given the average individual the ability to voice opinions at scale. People are stepping in wherever and whenever they see a void left by brands. People are using new channels to speak truth to power by launching campaigns to call out bad behavior by elected officials and by corporations. Ordinary citizens and consumers are discovering grassroots activism and leveraging social platforms to hold both companies and their employees responsible. #DeleteUber and #GrabYourWallet are two examples of bottom-up efforts to wield the power of the purse to reroute spending to brands seen to have commendable values, while delivering a loud message to offending companies.

This new form of 360-degree resistance is elevating consumer expectations of companies across every avenue of impact. Brands are finding themselves under scrutiny, not just for their mistakes, but

for also for their unwillingness to support those who are speaking out. When the L’Oréal-owned prestige brand Lancôme cancelled a Hong Kong event that featured pro-democracy activist Denise Ho, the brand’s buzz score plummeted along with its intent-to-purchase score.

When the white supremacist website The Daily Stormer applauded the Charlottesville terror attack, consumers demanded that its hosting service GoDaddy take it down, which it did. The Daily Stormer then moved to a Google server but was immediately removed amid growing consumer outrage, which then set off a series of moves as one service after another refused to host it.

It is interesting to note the speed at which Google responded to consumer reactions. Because Google was clear about its values, the imperative to act moved up the corporate chain of command quickly. Google knew that slow response time and condemnation wouldn’t cut it given contemporary cultural realities. Contrast Google’s speed with the plodding response of elected officials to what happened in Charlottesville and to other domestic terror incidents. One can understand why people are increasingly turning to brands to enforce values and norms, rather than rely solely on governmental bodies to do so.

These examples illustrate the growing savvy of a public able to identify and influence brands by wielding power

The Land of Purpose: No Neutral ZoneLeslie Pascaud

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strategically with the greatest impact. Google’s largest source of revenue source may be AdWords, but in the case of The Daily Stormer, denial of domain registration packed the biggest punch. Google knew this and so did their influencers.

This is the new reality. People want brands to act with impact. Marginal initiatives and lip service are seen for what they are.

For example, no longer can financial institutions run corporate social responsibility campaigns encouraging their clients to go paperless without also managing their investment portfolios in a socially responsible way. These investments are the most powerful tool that financial institutions can wield, so that’s how people expect them to act with impact.

Ironically, it is the very fact that brands are not perceived as innately virtuous that lends so much weight to their worthy actions. In other words, consumers expect brands to be profit-motivated and shareholder-minded, so when brands take action notwithstanding the risk of collateral damage, they engender a strong sense of solidarity among consumers who align with the ideals these companies have gone out on a limb to defend. Of course, in doing so, brands also risk alienating those on the other side of an issue. But attempts to stay out of the fray and remain neutral on values-related issues are no longer an option. People see silence itself as a response.

A brand’s understanding of purpose and its actions relative to a clear, single-minded purpose are more important than ever. A time of cultural upheaval and transformation necessitates different behavior from what is true during moments of cultural calm and stasis. Today’s zeitgeist argues for courageous brand commitments. There are five key things involved in getting this right.

First, brands must own something deep that rings true at their core. Purpose is rooted in fundamental beliefs about the way the world should be. Brands should find a purpose worth fighting for.Second, brands must understand the practical implications of purpose at it relates to the business. Purpose is more than words on a wall. It is a call to action. With every competency and touchpoint, brands should drive toward purpose.

Third, brands should be prepared to act quickly. Consumers are swift in condemnation, so brands must keep pace, and even stay ahead. Brands need internal channels for crisis review and a plan to escalate concerns to a level with the authority to act decisively.

Fourth, brands should err on the side of human instinct. Moments of cultural crisis necessitate a human response. That means trusting your gut, not consulting your bottom line. The uncomfortable truth is that being called onto the carpet necessitates a sincere response. Inauthenticity smells bad.

JetBlue capped flight prices out of Florida at $99 in the midst of Hurricane Irma’s approach. This is a deeply human response with short-term financial losses that will pay long-term dividends and gains, especially considering other airlines left their pricing up to algorithms, with unfortunate results.

Finally, be prepared for the cost. The larger and more diverse the consumer base of a brand, the more likely it is that a brand’s response won’t be loved by everyone. Brands must be prepared for backlash. However, brands that act courageously on behalf of their core purpose will stand tall as their critics stand down.

No Neutral ZoneLeslie Pascaud

This is the new reality. People want brands to act with impact. Marginal initiatives and lip service are seen for what they are.

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By Kimberly PedersenKantar Millward Brown

Humanize your position

Stories not stands

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At Kantar’s November 2016 Fragmentation event, we optimistically argued that brands could succeed in an age of fragmentation if they focused their efforts on universal stories that could be meaningful, different and salient.

One day later, on November 16, 2016, Gallup released the results of a poll showing that 77 percent of Americans perceived the nation as divided, the highest percentage saying so in the history of the poll.

This division does not appear to have abated. According to a 2017 Pew survey, the partisan gap is now the largest since Pew began measuring it in 1994. This partisan gap is also tangled in demographics. The generational cohort of Matures remains conservative, with Boomers turning more conservative, while Millennials and Gen Xers are identifying increasingly as liberal Democrats.

These divides are fraught for brands that must preserve their (often older) loyal base, while at the same time casting a wider net for newer or younger audiences. A 2016 Kantar Worldpanel study found that among the 47 percent of brands that grew in 2015, 79 percent did so because they gained new shoppers. Conversely, of the 53 percent of brands that declined, 84 percent did so because they lost shoppers. Accordingly, brands have a commercial imperative to grow their base and communicate to their core while concurrently reaching a broader audience.

Brands are under pressure to take sides, and this pressure is increasing. According to Edelman’s 2017 Earned Brand study, 57 percent of consumers will buy or boycott a brand based on its position on an issue, and 65 percent won’t buy a brand when it stays silent on an issue that they feel a brand has an obligation to address. Consumer boycotts also intensify this pressure. For example, sites like grabyourwallet.com list companies that they urge consumers to boycott because of political or economic ties to the Trump administration.

Brands are feeling the pressure to acquiesce. In a 4As study on values-based marketing, 67 percent of agency respondents stated that changing American values were causing brands to become more interested in corporate responsibility and values-based marketing.

The pressure to take a stand is also evinced in advertising industry awards. The Cannes 2017 Grand Prix Winner “Fearless Girl” is literally a stand - a statue of a little girl standing on Wall Street. It is a compelling piece commissioned by asset manager State Street Global Advisors. But there is no story behind it. It’s just a statue. To figure out the rationale or message, you have to look hard.

“Fearless Girl” is intended as a powerful symbol of female leadership. But in and of itself, as it stands alone, it lacks a character or a narrative structure. Consequently, it falls short of its potential.

Humanize Your Position: Stories Not StandsKimberly Pedersen

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A Kantar Millward Brown analysis finds that ads achieve better results when they tell stories. Video ads that told a story vastly outperformed those with no story in terms of expressiveness, or the ability of an ad to elicit an emotional response as measured by facial coding, and eliciting the active involvement of the viewer.

These findings are bolstered by what’s been learned from neuroscience. According to research by Dr. Paul Zak at Claremont Graduate University, character-driven video narratives cause the brain to produce oxytocin, the neurochemical responsible for bonding, kindness and empathy. When the video narrative is expertly crafted as an emotionally resonant brand story, as opposed to just an emotional story, the narrative gets encoded into long-term memory via association. It is this combination of emotional resonance and brand connection that gives the ad its effectiveness.

In addition to telling a story, brands should try to tell a universal story. This is what enables brands to transcend the so-called sand trap. Brands succeeding in today’s fraught environment are making deliberate choices to tell universal stories.

One such brand is Starbucks, which began a series of videos in late 2016, and continuing into 2017, called “The Upstanders.” These videos tell the stories of ordinary people making “extraordinary differences in their communities and beyond.” Starbucks made these videos available on its own channel, and Amazon has made them available as well and included them as part of its Prime membership offerings.

“The Upstanders” are 6- to 10-minute mid-length videos that convey Starbucks’ core brand values by featuring the real-life narrative arcs of actual people with compelling and inspirational stories. For example, “A Warrior’s Workout” is a video

about retired NFL player David Vobora who trains physically disabled veterans through his Adaptive Training Foundation. The video “Love for All” is about Stephenie Larsen, a Utah mother of six, who created the first LGBTQ community center in Provo, Utah, in an attempt to reduce suicides among gay teens and build bridges with the Mormon Church.

“The Upstanders’ video series shows brands what can be done with some creative leveraging of video distribution channels that tell stories with universal appeal about real people. In fact, in a time when brands are under pressure to take a side, what it really shows is how to pick a side. Not for or against an issue. Not red or blue politics. Not pro or con. Rather, brands must pick the side of telling stories.

It’s not about stands. It’s about stories. Brands that pick the side of stories will find common ground even in today’s era of partisan divides.

Humanize Your Position: Stories Not StandsKimberly Pedersen

A Kantar Millward Brown analysis finds that ads achieve better results when they tell stories.

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By Ann Green Kantar Millward Brown

A unifying force

Brands must

embrace and disrupt

culture

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Consumers are more fragmented than ever in terms of the values they hold, the media they consume and the politics they support. The rise of social media and the ability to create personalized echo chambers have only multiplied this fragmentation. In this environment, marketers are struggling to build meaningful connections with consumers, and it is becoming harder and harder to accomplish this with consumers no longer defined by homogenous groups of simple demographics and psychographics.

But one thing that can bring people together is culture. Brands like Apple, Amazon and Heineken are taking a stand to bring people together by embracing culture.We’ve been here before. The year was 1971 and the world was torn apart. In January, Charles Manson and his co-defendants were convicted of the Tate-LaBianca murders. In March, the Weather Underground exploded a bomb in the men’s bathroom of the U.S. Capitol Building. In April, half a million demonstrators gathered in Washington, D.C., for the largest ever protest against the Vietnam War.

Another 125,000 protestors gathered that same day in San Francisco. In June, The New York Times began publishing the Pentagon Papers, which revealed decades-long deception by the U.S. government about the course of the Vietnam War. In July, The Doors lead singer Jim Morrison was found dead in his bathtub in Paris. In August, President Nixon abandoned the gold standard, effectively ending the Bretton Woods international finance system established at the end of WWII. In September, a riot broke out at Attica Prison in New York, which, after failed negotiations, was violently put down with the loss of many lives. In November, as the year drew to a close, Intel kicked off the digital era with the release of the first commercially available microprocessor.

In the midst of this unrest and turmoil, Coke first aired its now-iconic ad known as “Hilltop.” Developed for Coke by famed adman Bill Backer, Hilltop offered a positive message of hope and love, featuring a multicultural collection of young people, called the Hillside Singers, atop a hill outside of Rome singing, “I’d like to teach the world to sing in perfect harmony.” It mentioned apple trees, honeybees, snow-white turtledoves and love, all of it tied to the brand, as the Hillside Singers sang, “I’d like to buy the world a Coke and keep it company … It’s the real thing.”

The tune was reworked as a hit single for The New Seekers in 1972 that reached number one in the U.K. and peaked at number seven in the U.S.

A Unifying Force: How Brands Must Embrace and Disrupt CultureAnn Green

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The ad became so famous for its tuneful, catchy message of unity and optimism that it was later reprised for the finale of the AMC series Mad Men, which was set in the ad agency scene of the 1960s.

What Coke did with this 60-second spot stopped people in their tracks, causing them to rethink, in the words of the song, “what the world wants today,” and in particular, the definition of real. But Coke never lost sight of the fact that, ultimately, the commercial needed to sell Coke. The lesson is that when creating content designed to disrupt culture, brands need to both embrace a higher-order purpose and reinforce the benefits of the brand. While subtle, Coke did this quite well, highlighting its story about real ingredients.

Today, a great example of an ad embracing and then disrupting culture in a way that clearly demonstrates the benefits of the brand is the Amazon Prime “Vicar and Imam” spot that first aired in the U.K. in 2016. In this ad, two aging friends, a vicar and an imam, get together to catch up over tea and discover that they have a similar problem. Each then uses Amazon Prime to send a gift to the other. When they open their packages, they discover they have given the same gift, a pair of kneepads.

“Vicar and Imam” celebrates interfaith friendship, and according to Amazon, it is about “selflessness and thinking of other people.” The ad features few overt product messages, but nevertheless, it is clearly designed to sway people to be more predisposed toward Amazon. To connect with the brand, the ad shows the vicar using the app and the emotional payoff of being able to order with Amazon’s One-Click and have a gift delivered the next day. It is not too much to say that Amazon is truly the hero in bridging the divide between these two parts of a fragmented world, Christianity and Islam.

After airing on TV, “Vicar and Imam” went viral. Twitter was filled with comments from people saying it was so beautiful that it made them cry. Others said it gave them hope.

Of course, it wasn’t warmly received universally. Some criticized it for pushing a divisive agenda about Islam. However, Kantar Millward Brown research puts these objections to rest. When we tested this ad, it triggered very strong positive emotional responses, with enjoyment in the top 20 percent of ads in our database of ads tested in the U.K. The usage of the app in the ad drove strong linkage to the Amazon brand. Most importantly, the ad performed in the top quarter of ads in our U.K. database in terms of giving people reasons to be predisposed toward Amazon in the future.

When done well, a brand can drive business performance by riding the wave of culture and making itself more relevant. Being part of culture connects people with brands on an emotional level. If brands can become a part of culture, then content, both brand- and user-generated, becomes the voice of the brand as opposed to intrusive advertising that frequently falls into the trap of being invasive, often to the point of stalking. Content connected to culture cuts across all screens, reaping the benefits of sharing, rather than triggering avoidance.

So, to be successful, brands must be culturally aware. But culture is complex and nuanced. Just as cultural relevance can help brands create strong and lasting connections, it can also, when done poorly, cause a brand to appear opportunistic rather than authentic. Brands must ask themselves if they have permission to address the social trend and if they have sufficient understanding of culture to engage appropriately. If a brand’s operational infrastructure is not rooted in the beliefs portrayed, these initiatives risk being seen as simply marketing stunts.

Brands can be a unifier in today’s fragmented marketplace if they truly stand for something relevant to the culture. But at the same time, brands run the risk of creating further fragmentation, with a negative impact on business performance, if the goal is merely to use culture to garner attention instead of leveraging it in a genuine way as a force for good.

One final thought. In the desire to embrace culture, brands must be sure not to leave consumers behind. What is going on in culture may not be pertinent to the daily realities, values and challenges of many people and thus if not done in a way easily recognized as relevant, could further alienate segments of people. Brands have a long history of being powerful agents for the better. Fragmentation makes this more important than ever.

A Unifying Force: How Brands Must Embrace and Disrupt CultureAnn Green

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From physical to digital neighborhoods

Putting Passion

into Play

By Mitch EggersLightspeed

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Consumers are constructing and migrating to online digital neighborhoods at an extraordinary pace, which puts a premium on understanding these online digital neighborhoods.

In North America in 2017, two-thirds of the population owned a smartphone, a 13 percent increase since 2014. Globally, in 2018, 2.5 billion people will own smartphones, up from 1.3 billion in 2013. A recent study by Deloitte finds that adults check their smartphones 50 times per day. Millennials do so 150 times per day. In fact, 87 percent of smartphone users under the age of 34 report never being without their smartphones.

These incredible devices allow people to create digital neighborhoods of their own choosing, and then take them along everywhere they go. The field of human ecology helps us understand these digital communities.

The fundamental concept at the heart of human ecology is that spatial distributions like the neighborhoods people live in and how those neighborhoods are arranged reflect social organization. This is why sociologists, urban anthropologists and urban ecologists measure neighborhood integration and segregation. If we don’t live in the same neighborhoods, it is very unlikely that we will interact socially.

Market economics sort people into physical neighborhoods, but these same forces also allow people the opportunity to sort themselves. People can and do buy their way into neighborhoods with good schools, good shopping, good amenities and even a good yoga studio or two.

There are social and legal codes that influence how people are allowed to sort each other into one place versus another. These codes are designed to ensure that the marketplace operates transparently and fairly. People compete for the best that the marketplace has to offer as varying combinations of market economics, government programs and legal restrictions sort them into physical neighborhoods.

Digital neighborhoods have different sorting mechanisms. Digital is not about zip codes, geo-demographics, race and ethnicity or economics. The Internet and the smartphone have removed nearly all the friction of physical neighborhoods. Distance from one website to another is essentially non-existent. Most sites are free or have a very cheap paywall hurdle. There is almost no way to discriminate based on age, income, family type, race, religion or sexual orientation. Everybody gets the same offers and apps to build their digital neighborhood.

From Physical to Digital Neighborhoods: Putting Passion into PlayMitch Eggers

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Urban ecologists might have expected that integrated digital neighborhoods would reinforce our shared social fabric and diversity. Unfortunately, people have sorted themselves into fragmented digital neighborhoods based on tastes, preferences, personalities and beliefs. To understand what happened and what it means for consumers and brands, we need to turn first to the field of economics then to the field of psychology.

Economically, low costs make digital niches viable. It also costs much less for consumers to find specialty sites. Search engine power allows consumers to search, evaluate and buy a specific item. Once launched, a niche site is as affordable to support as a consumer micro-market.

These economic advantages are reinforced by the fact that people seek and enjoy information, news and commentaries that agree with or confirm their values and beliefs. Psychologists have also found that we ignore, disregard or otherwise filter out facts that are at odds with our beliefs. Brain scans show that such dissonance activates the fight-or-flight circuits in our brains. In fact, when confronted with challenging facts, we hold our existing beliefs evenly more strongly.

This is part of our innate need and desire to belong.

We are social animals who long to be part of the herd.

In Maslow’s hierarchy, belonging is what comes next after our physiological and safety needs.

With these lessons in mind, we can begin to make sense of today’s digital neighborhoods. An explosion of choice paired with confirmation bias and a need to belong drive selective sorting and a hardening of opinions and tastes. But it also creates opportunities for brands.

The depth of engagement in digital neighborhoods is very strong, stronger than might be expected based on studying physical neighborhoods. Digital neighborhoods have come together around shared interests that are not constrained by the kinds of things that have affected physical communities in the past. As a result, digital neighborhoods are strongholds of intense emotions and attachments, which is one of the biggest realizations to come to the fore over the past year. But extreme politics are not the only thing to have taken root in digital neighborhoods. Extreme engagement with brands, both new and old, can be found there as well.

Consider the Instagram fashion influencer Arielle Noa Charnas who blogs at SomethingNavy.com. She built a following and became an influencer. As her following grew she crossed over from individual to brand, and then to a purveyor of fashion items through a partnership with Nordstrom, which reached out to stock items that her followers wanted. Within 48 hours of posting an excited, emotional announcement, she had received over 3,500 comments and requests. A new brand was born. Charnas launched the Something Navy brand as a capsule collection with Nordstrom’s Treasure & Bond, and when shoppers buy from this collection, Nordstrom donates 2.5 percent of sales to organizations that empower youth.

This has many of the classic components of great brand building applied in a guerilla fashion within Charnas’s digital neighborhood. She has authenticity, trust and transparency. She has a direct connection with her followers and she gives them all the credit for her success. And she gives something back.

Another example of creating success with digital neighborhoods comes from Chip and Joanna Gaines. They had been flipping houses for several years when one of their projects was written up on

a popular blog. A producer read it and wondered if this might be right for a TV program. After some due diligence, the HGTV show, Fixer Upper, was launched. Chip and Joanna pursued a digital strategy along with the TV program by embracing home-related topics found on Pinterest and Instagram. The result was a hit show for five seasons and over 8 million followers on social media. Their franchise includes a quarterly magazine, a retail store called Magnolia Market at the Silos, a real estate company, and their own lines of paint, rugs, wallpaper and furniture. They recently announced the launch of a retail capsule collection with Target. It is another bottom-up success built by understanding the depth of connection inherent in digital neighborhoods.

The future may be fragmented and polarized, but it is sorting itself out in a new kind of neighborhood, one with the sort of passion that brands covet and one with the kind of access that all brands can afford.

33Inspiration for an extraordinary world.

In this extraordinary world our clientsneed an extraordinary partner, with realskills, extraordinary skills to help them

navigate the challenges ahead.

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About Kantar

Kantar is one of the world’s leading data, insight and consultancy companies. Working together across the whole spectrum of research and consulting disciplines, its specialist brands, employing 30,000 people, provide inspirational insights and business strategies for clients in 100 countries. Kantar is part of WPP and its services are employed by over half of the Fortune Top 500 companies.

For more information visit www.kantar.com

©2018 Kantar. No part of these materials may be used, reproduced or adapted without the prior written consent of the copyright owner. All rights reserved.

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ONE YEAR LATER