Business Transformation Predictive Research

Business Transformation: The Next 5 Years Through the Eyes of Brands and Consumers Richard Hartell Global President, Publicis Media Business Transformation

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Publicis Media Business Transformation A Global Consulting Practice to Unlock Our Clients’ Growth

by Re-engineering their Consumer & Customer Experience

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Transformation requires a shift from siloed approaches

Media & Advertising

UX

Customer Experience •

All customer touch points

•

TV

•

OOH, Press

Digital customer experience, GUI

•

Digital

•

Web

•

Marketing

•

Promotions

•

Mobile

•

•

Shopper

•

Tablet

•

Events

•

IOT

•

Influencer (PR & Sponsorship)

Media & Advertising

Platform, data organisation and operations

Customer Experience

Platform & Operations •

Product

•

Technology

•

Regulation

•

Innovation

Retailers

•

Operations

•

Service excellence

•

People

•

Partners

•

Processes

•

Connected services

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To connecting consumer and customer experiences with business capability building

Media & Advertising

Media & Advertising •

TV

•

OOH, Press

•

Digital

•

Promotions

•

Shopper

•

Events

•

Influencer (PR & Sponsorship)

UX

Platform, data CCX organisation and operations

Digital customer experience, GUI

Customer Experience

Platform & operations

•

Web

•

•

Product

•

People

•

Mobile

All customer touch points

•

Services

•

Processes

•

Marketing

•

Pricing

•

Central v Local

•

Retailers

•

Regulation

•

Technology

•

Service excellence

•

Operations

•

Innovation

•

Partners

•

Connected services

• •

Tablet IOT

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Invention Experience Design

Our Services Disruption Innovation Partnerships

Evolution Capability Building

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Uniquely placed to unleash the alchemy of intelligence, creativity and technology to transform our clients’ businesses

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Technical Capability

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Marketing Capability

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HOW DO CONSUMERS AND EXECUTIVES EXPECT BUSINESS TO TRANSFORM OVER THE NEXT 5 YEARS?

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The Purpose and Approach WHO & WHERE

WHAT

HOW

1799 consumers and 759 executives

12 categories Banking Beauty & Grooming Alcoholic Beverages Cars Airlines Supermarkets Media & Entertainment Everyday Groceries Fashion Retailers Consumer Electronics Telcos Fast Food

Survey and Prediction Markets

7 countries UK USA France Germany India China Australia

6 key trends AI & Personalized Data Democratized Innovation On-Demand Access New Payment Methods and Alternative Currencies Seamless Shopping Sharing Economy

Prediction Markets A “stockmarket-like� gamification technique that asks consumers and execs to bet on the future impact of a particular trend.

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Disruption is mainstream Around 2/3rds of us embrace the rate of change Little difference between execs and consumers

67%

I fully embrace the rate at which the world is changing

60% 57%

28%

I would be happy if the rate of change were even faster than it is now

I think the rate of change is too fast and I find it hard to keep up

Little difference between young and old I wish things would return to slower, simpler times

25% 23%

Executive 18-34

4% 10%

35+

13%

2% 4% 7%

Q: Over the last couple of decades, technology has had a profound impact on our world. The rate at which we find information, communicate with others, and access goods and services is unprecedented. With this in mind, how do you feel about the current rate of change?

Source: Publicis Media Business Transformation Practice Research. November 2016.

Global Base Size: Consumers (1,799) / 18-34 (739) / 35+ 1060) : Executives (759)

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Beauty & Grooming Products Alcoholic Beverages

93%

57%

Cars

There is an Expectation Gap 86% of execs feel they are meeting consumers expectations Only 61% of consumers think they are meeting them A wide variation in some categories versus others

95%

64%

Banking

91%

60%

Media & Entertainment

90%

71%

Telecommunication Companies

88%

62%

Airlines

87%

54%

Consumer Electronics

80%

Supermarkets

81%

61%

Fast Food

80%

56%

Everyday Groceries

64% Executives

85%

84%

68%

Fashion Retailers

74%

Consumers

Executive Question: To what extent do you feel that your business is currently meeting your customer’s expectations? % Agree Consumer Question:. To what extent do you feel that companies and brands are innovating to meet customer expectations in‌ % Agree

Source: Publicis Media Business Transformation Practice Research. November 2016.

Global Base Size: Consumers (1,799) : Executives (759) Average sample size by category: (51)

92%

69%

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The Dunning Kruger Effect

Execs Could Be Falling For The Dunning Kruger Bias – Mistakenly Assessing Their Ability As Much Higher Than It Is

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The Dunning-Kruger Effect Source: Unskilled and Unaware of it: how difficulties in recognizing one’s own incompetence lead to inflated self-assessments. J. Kruger & D. Dunning. (1999)

BT is on the Agenda but still a work in progress

76%

67%

Of execs have a BT agenda in place

Have a consultant working on it

Source: Publicis Media Business Transformation Practice Research. November 2016.

Global Base Size: Executives (759)

81%

54%

But the majority are not Think their agenda is yet half way through gaining strong momentum

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The focus is around IT infrastructure, digital expertise and marketing.

The challenges are talent, organization and agility.

Q: Execs: Where do you feel your business transformation activity is having the most impact?

Infrastructure & IT

82%

Q: Execs: What are the greatest challenges in pursuing a business transformation agenda?

Talent pool challenges

41%

Digital Expertise

80%

Keeping up with latest technology

Marketing

80%

Organizational barriers

36%

Lack of data and data skills

36%

Customer Services

79%

Production

78%

Data Management Talent & Recruitment Company Culture

77% 74% 73%

Source: Publicis Media Business Transformation Practice Research. November 2016.

Global Base Size: Executives (759)

38%

Insufficient resources

34%

Lack of digital capabilities

33%

Unforgiving competitive landscape

32%

Outdated or unavailable systems and processes

32%

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Q: Which Companies Will Play The Biggest Role In Shaping Future Products, Services, & Customer Experience?

84% 82% 78%

Big tech companies of today (e.g. Google, Facebook, Tencent etc.)

36%

Peer-to-peer networks where individuals interact directly

Most agree that big tech companies will shape future products, services and customer experience

49% 47% 38%

The same companies and brands that have existed for generations

59% 36% 43%

Communities, networks, or organizations that don't yet exist

30% 56% 48% 44% 42%

Start-ups and entrepreneurs

43%

Government agencies and organizations Executive Source: Publicis Media Business Transformation Practice Research. November 2016.

Global Base Size: Consumers (1,799) / 18-34 (739) / 35+ 1060) : Executives (759)

33% 39% 18-34

35+ 13

Consumers and Executives were asked to predict the disruptive impact of six trends across 12 categories Banking Auto

New Payment Methods

On Demand Access

Sharing Economy

Seamless Shopping

Artificial Intelligence

Democratized Innovation

Consumer Electronics Supermarkets

Categories

Media & Ent Telco Fashion Everyday Groceries Fast Food Beauty & Grooming Airlines Alcohol

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Expectation around disruption tends to sit where people’s money (and data) matters most Over 50% PLI significant

200

Banking

180

Average Betting Index

160

Auto

140

Consumer Electronics Supermarkets

120

Fashion

100

Everyday Groceries

80

Beauty & Grooming

60 40

Alcohol

Telco

Media & Entertainment

Fast Food Airlines

20 0

30

40

50

60

70

Average PLI (Prediction Likelihood %) Source: Publicis Media Business Transformation Practice Research. November 2016.

Global Base Size: Consumers (1,799) / 18-34 (739) / 35+ 1060) : Executives (759)

*PLI = The calculated probability of this statement being true.

Predictions are relative to 12 other categories tested. PLI scores over 50% are significant.

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Banking: New Payments, Democratized Innovation and AI are the trends seen as most likely to disrupt Consumer 18-34

Executives

NEW PAYMENT

D. INNOVATION

AI

85% PLI 561 BI

61% PLI 163 BI

59% PLI 141 BI

DRIVER

DRIVER

DRIVER

Disruption in progress

Disruption in progress

Everyday relevance

New Entrants e.g. Venmo

Automated Customer service

Security concern

On Demand Access (56% PLI / 133 BI) / Seamless Shopping (52% PLI / 97 BI / Sharing Economy (49% PLI / 77 BI)

Source: Publicis Media Business Transformation Practice Research. November 2016.

Global Base Size: Consumers (1,799) / 18-34 (739) / 35+ 1060) : Executives (759)

NEW PAYMENT

AI

D. INNOVATION

85% PLI 354 BI

65% PLI 172 BI

64% PLI 151 BI

DRIVER

DRIVER

DRIVER

Disruption in progress

Role of banking & branches

Outsource decision making / efficiency

Robots replacing humans

New Entrants e.g. Fintech Start Ups Question ability to keep up

On Demand Access (60% PLI / 136 BI) / Sharing Economy (52% PLI / 94 BI) / Seamless Shopping (42% PLI / 69 BI)

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Auto: Sharing Economy, On-Demand and AI are the trends seen as most likely to disrupt Consumer 18-34 SHARING ECON

ON DEMAND

Executives AI

SHARING ECON

ON DEMAND

NEW PAYMENT

80% PLI 287 BI

58% PLI 136 BI

54% PLI 107 BI

DRIVER

DRIVER

DRIVER

81% PLI 395 BI

55% PLI 110 BI

55% PLI 138 BI

DRIVER

DRIVER

DRIVER

Disruption in progress

Disruption in progress

Instant access & ride sharing e.g. Zipcar/Uber

Mobile tech driving services like Uber

Onset of selfdriving cars

Seamless Shopping (46% PLI / 76 BI) / New Payment Methods (43% PLI / 56 BI) / Democratized Innovation (41% PLI / 59 BI)

Source: Publicis Media Business Transformation Practice Research. November 2016.

Global Base Size: Consumers (1,799) / 18-34 (739) / 35+ 1060) : Executives (759)

Disruption in progress New players force biz definition shift from selling cars to mobility services

Connected cars to deliver new experiences for customers And data streams for marketers

Driverless cars reducing need for insurance

New paths to purchase e.g.

virtual showrooming

D. Innovation (53% PLI / 115 BI) / Artificial Intelligence (51% PLI / 114 BI) / Seamless Shopping (44% PLI / 71 BI)

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Consumer Electronics: Democratic Innovation, AI and Sharing Economy are the trends seen as most likely to disrupt Consumer 18-34 D. INNOVATION

AI

Executives SHARING ECON

ON DEMAND

SHARING ECON

NEW PAYMENT

76% PLI 240 BI

74% PLI 268 BI

56% PLI 96 BI

62% PLI 143 BI

62% PLI 141BI

57% PLI 115 BI

DRIVER

DRIVER

DRIVER

DRIVER

DRIVER

DRIVER

People primed & excited for CE innovation.

Already feeling impact of SIRI/Cortana/Echo

Witnessed flurry of innovation & entrepreneurs e.g.

Smart phones/homes immediate application

start ups/kickstarters

Source: Publicis Media Business Transformation Practice Research. November 2016.

Global Base Size: Consumers (1,799) / 18-34 (739) / 35+ 1060) : Executives (759)

Connected devices ushered in sharing economy

IOT pushing connectedness and utility of devices

Making higher priced CE goods more affordable

Continued shift to mobile wallets

Quantified self trend pushing functionality

New trial/revenue opportunities

Checkout anytime anywhere

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Beauty & Grooming: AI, Seamless Shopping & The Sharing Economy are the trends seen as most likely to disrupt Consumer 18-34

Executives

AI

S. SHOPPING

D. INNOVATION

53% PLI 92 BI

46% PLI 66 BI

38% PLI 39 BI

DRIVER

DRIVER

DRIVER

Increased personalisation of skincare products

Improved and personalised customer service

New entrants e.g. home-grown natural trend

Better data to understand performance of products On Demand Access (35% PLI/ 41 BI) / Sharing Economy (35% PLI/ 24 BI) / New Payment Methods (33% PLI/ 31)

Source: Publicis Media Business Transformation Practice Research. November 2016.

Global Base Size: Consumers (1,799) / 18-34 (739) / 35+ 1060) : Executives (759)

S. SHOPPING

62% PLI 155 BI DRIVER Role of facial recognition sensors and related tech in retail environments Opportunity to speed up consumer decision making

SHARING ECON

AI

47% PLI 75 BI DRIVER

46% PLI 73 BI DRIVER

New trial/revenue opportunities e.g.

Subscription services Birch Box, Dollar Shave Club

Impact of improved performance data on consumer product selection New paths to purchase

On Demand Access (43% PLI/ 82 BI) / D. Innovation (42% PLI/ 61 BI) / New Payment Innovation (40% PLI/ 59 BI)

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Alcohol: Seamless Shopping, Democratic Innovation and On Demand are the trends most likely to disrupt Consumer 18-34

Executives

S. SHOPPING

D. INNOVATION

SHARING ECON

46% PLI 55 BI

45% PLI 56 BI

40% PLI 40 BI

DRIVER

DRIVER

DRIVER

Off-licence very trad. transaction environment New delivery apps like drizly changing retail expectations

Rise of home brewing and craft beer trend and grass roots innovation

Intersection of ride sharing and responsible drinking

Greater visibility of heath and wellbeing in daily lives

New Payment Methods (40% PLI/ 39 BI) / Artificial Intelligence (36% PLI/ 41 BI) / On Demand Access (34% PLI/ 34 BI)

Source: Publicis Media Business Transformation Practice Research. November 2016.

Global Base Size: Consumers (1,799) / 18-34 (739) / 35+ 1060) : Executives (759)

S. SHOPPING

46% PLI 86 BI DRIVER New delivery apps like drizly adds a premium service model to existing channels

D. INNOVATION

ON DEMAND

44% PLI 73 BI DRIVER

41% PLI 63 BI DRIVER

Crowdfunding reduces need for access and support from establish companies

Concern about competition Amazon could bring

Sharing Economy (39% PLI/ 51 BI) / Artificial Intelligence (37% PLI/ 47 BI) / New Payment Methods (34% PLI/ 40 BI)

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A tension between personalized experiences and ’traditional’ brand marketing approaches 90

Q: Beyond good quality and value, what attributes will consumers demand the most from companies over the next 5 years?

80 70 60 50 40 30 20 10 0

Make life easier for consumers

Provide a Are trustworthy Provide Provide Make personalized entertainment something to consumers and individual and excitement believe in smarter by service providing good information

Executive Source: Publicis Media Business Transformation Practice Research. November 2016.

Global Base Size: Consumers (1,799) / 18-34 (739) / 35+ 1060) : Executives (759)

Provide a sense of belonging

35+

Provide a feeling of prestige

Do the right Inspire Challenge thing as consumers and conventional corporate communities wisdom and citizens behavior

Provide a sense of discovery

Unite or connect consumers and communities

18-34 21

9 Learnings

1. Disruption is mainstream 2. There is a surplus of confidence 3. The gap between companies confidence and consumers expectations is wide 4. Transformation is on your competitors agenda 5. You are likely less than halfway through your transformation (and likely always will be) 6. Tech is the focus but talent and agility is the challenge 7. Follow the money (and data) 8. Big tech is the force but how it disrupts can come from anywhere and anyone 9. Transformation has to cater to individuals but not lose the universal appeal of brands

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Please get in touch‌ richard.hartell@publicismedia.com www.linkedin.com/in/richardhartell @richhartell

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