Transcription
[Music] Good afternoon everyone. You can respond. I'm Jillian Joseph and welcome to the very first of the future talks sessions. This afternoon, we're going to delve into the topic of marketing with some leading industry experts who we hope will inform, educate, and inspire you about the world of marketing and how it's evolving.
Marketing stands at a crossroads, a space where tradition meets disruption and technology reshapes every touch point. As consumers' behaviors evolve at lightning speed and digital platforms grow increasingly sophisticated, the art of influence is being redefined. In our discussion today, we hope to explore how marketing is adapting to an era of hyperpersonalization, ethical storytelling, and AI-powered engagement. What trends will define the next decade? And how can brands remain not just relevant but resonant? So let's peel back the layers and envision, envision, uh, where marketing is heading. Welcome to Nestle Future Talks. Let's start with, uh, introductions. If you both can tell us a little bit about yourself, starting with you first of all, Rory.
Yes, I suppose I've, I started, I had the privilege actually of starting in direct marketing, which was a field which was immediately measurable and quantifiable. And that was kind of the gateway drug to behavioral science and direct marketing in terms of my interests, because you very rapidly realize that the things that should be important aren't necessarily important, and things which logically should be trivial or irrelevant can be decisive.
Natalie, an introduction, a little bit about yourself.
Hi everyone. Yeah, so I'm interested in the intersection between persuasive technology, which increasingly means AI. So anything that we interact with, it could be apps, websites, VR, AR that influences our behaviors, decision-making, the way we communicate. And increasingly, what I'm very interested in is how it shapes our sense of relationship to one another and to the living world. So how does it change our sense of meaning, connection, values, what we love, what we care for? Um, I'm also an artist and a musician, so I care a lot about a rich, meaningful life. And I'm very interested in how businesses can step into perhaps more values-driven roles where they connect with people from the perspective of how do we create mutual value. So, thanks for listening.
Alex.
Yeah, I actually did marketing at the university and I've always loved marketing. I, I've always liked a mixture in marketing of creativity, design, colors, advertising, but also the kind of business side of it. And I, I think it's very rare to be able to have that combination. So, I, I've liked it from when I was a student and I've continued to love it as a career all through my, my career till now.
Brilliant. Thank you all. Now, let's go back to rewind. Rory, I wanted to ask each of you actually, your personal definition of, of marketing, because one that I read and I thought was quite apt is the act of acquiring, satisfying and retaining customers.
I don't think you can improve on that. Peter Drucker said exactly the same thing, uh, to, to find and keep a customer effectively. Uh, and, um, uh, I think, um, uh, I mean, Drucker also said that's the purpose of business. So he famously said, there are only two valuable things a business does. There's marketing and innovation. Everything else is a cost, which is a very strange thing to say, but since he believed that the purpose of a business was to find and keep customers, this was sort of before the shareholder value obsession. Okay. Uh, he, he would have argued that marketing and innovation were the two core purposes of an organization, finding new sources of value exchange.
Natalie, would you add anything to that definition?
Yeah, when I think about the, the, the language marketing, it's going to market with whatever it is that you have, your goods, your services. Um, and I think in an ideal world, when I've been served great marketing, it's because it's a brand that maybe I didn't know about, who knew I was looking for, respectfully, reached out to me, gave me something valuable, and there's that mutual exchange. Um, so I think it's basically finding the right people that you can serve. So there is a good coming together and exchange of value.
Alex.
Yeah, that point of finding the, the right people.
In in terms of marketing, you really want to market to everyone.
Well, I, I guess we're lucky. If you look at Nestle, we're really lucky that we have many categories and many brands. So that really gives us the opportunity to, to decide, you know, what, what's the best position for our brands and our markets. It's interesting. I saw a great stat the other day. Nestle actually in the UK, um, we sell our goods to 97% of the households in the UK. So that's actually a lot of the households, but we can target them with different offerings and different brands and different categories. So I think we're in a, in a really good position here.
Rory. Back back to you.
Possibly the highest. Colgate was always the brand with the highest household penetration, but you, as a business, may be higher than anybody else. It's an amazing number and we, and we don't talk about it, but, uh, but it's something we should be super proud about.
Yeah, super proud.
Rory, you want to bring in the, uh, digital transformation and, um, how you see that continuing to shape marketing strategies.
There's always a contradiction in anything you do with marketing, which is that a large part of human psychology doesn't change very much. Um, and it's worth remembering, you know, Jeff Bezos always makes this point, everybody's talking about what's going to be different in 10 years' time. We should also spend time saying what isn't going to be different. And he said, generally, people like convenience, good customer service, and low prices and so on. And, uh, a lot, you know, a large part of human deep human motivation doesn't change. But the context, the technological context and the media environment in which we find ourselves in is changing now very quickly. So quite often, what you see is the same human instinct plays out in a different way. I mean, in a way, of course, there's always been influencer marketing. Okay. If you ever see a brand with "By Appointment to His Royal Highness," that was a 19th-century form of influencer marketing, in a sense.
Yeah.
Okay. You know, those things have always existed. There's always been word of mouth. However, that's now been massively amplified. Probably the power of linear TV is diminishing, but not to the extent that a lot of people claim. Um, so effectively, what you have is effectively a lot of stone-age brains that are operating in a very, very fast-changing environment. And an example which I thought was very well predicted by the evolutionary psychologist Jeffrey Miller. He, he predicted when social media first appeared, he said, this will probably increase the status-signaling importance of things like holidays and travel. Okay. And it will probably reduce possessions like cars to an extent. In other words, people are more likely to show off where they've been and where they're going as a form of status signaling, and slightly less likely to rely on things like cars or or material possessions, uh, to the same extent. And I think that prediction has been borne out. I was talking to someone who's a BA steward, and they said the biggest pain in the ass passenger are the influencers who sit in first class or business class, immediately photograph themselves 17 times before being forced to move to seat 57K. Okay. And so I think what we've always got to do is kind of continually shift, shift our weight from, you know, and, and continually sort of balance ourselves between the danger of getting obsessed with the newest shiny fashion as though everything's changed. Okay. Um, and we've got to balance, you know, a healthy curiosity about what's going to be different with a reasonable knowledge about what, about human nature and human motivation doesn't really change very much.
Natalie, how do we balance that, um, sort of trend-seeking with with reality?
So, I think one thing that you can observe through behaviors in generations in particular is counter-trends. So, I'll give an example. If you think about marketing in the context of social media, um, couple of interesting stats that I read recently. So, Ipsos released a poll that they did recently between 16 to 21-year-olds, and they found that it was something like 47% said that they wish they'd grown up at a time without the internet. Right? Now, we think Gen A, Gen Z, young folks in the millennial range, they love the internet. We all love the internet, but actually, a lot of people are starting now to catch up with some of the consequences that we didn't perhaps foresee. And so while the millennial cohort would have been like, and I include myself at the top end of this, amazing, we get to, you know, communicate with people, it's going to democratize the web and all this creativity and blah, blah, blah, and these great hopes. And it gets captured, you know, those classic kind of systemic patterns that happen over time. For the next generation, thinking about marketing and how it sort of shifts depending on who you're looking to reach, a lot of those folks are buying dumb phones, they're going offline. You've got, um, who's talking about, and other countries in the, in the EU, like Greece, Hungary, I think Hungary, Spain in particular, saying, "Well, we're going to put bans for social media for under 15s." Loads of parents are saying, "Well, we want to keep smartphones out of schools." So, suddenly we've got trends that are in response to trends from previous generations, I, millennials, that will impact how young people behave, their mental health, but also how brands reach them. Um, and if you're thinking about persuasive architecture or nudging and behavioral psychology, who deserves to be protected, and what is appropriate for different cohorts? And so those are some of the things that I'm keen to explore and look at as we go forward about kind of responsible outreach and then what kind of context we're working with, because it is volatile. It has significant impact on the stability and stabilization of society and relationships and consumers, if we want to call it that. Um, yeah. So, we're in a really unusual moment in time, I think.
You mentioned there, responsible outreach. That's a really interesting phrase. Um, Alex, how can you see that incorporated in how brands reach out to various, um, elements of of society? Um, how do you do that responsibly?
Yeah. Well, well, actually, in, in lots of different ways. I, I guess particularly from a Nestle perspective, we're very thoughtful about the kind of corporate reputation. So whether it's we're communicating in sustainability claims or health claims, we're very thoughtful about, are they justified? Are they fair? Are we, are we being, you know, really transparent and honest when it comes to things like, um, data? As we, as we collect consumer data, you know, are we doing that in a secure way? Are we doing it in a really transparent way? Are people really, really clear why we're collecting that data? Are we giving them clear opportunities to opt in, to opt out, increasingly to customize what, what they're happy for us to do with our data? So, in actual fact, I think for a big company like ours, um, to be seen to be responsible, to be recognized to be responsible, is going to build trust. And, and I think trust is a really important currency going forward, particularly when we're asking people to share, to share their data and to, and to join with us. So I think it's, um, it's important for us and, if anything, could be a, I guess, a competitive advantage for a company like ours.
And Rory, there are concerns about, uh, data privacy. How do you build that consumer trust so that they're very comfortable with the fact that the information that you glean on them is kept private, and also it's, it's only information that's necessary that's taken?
Generally, I mean, this is an interesting one because strangely, the evidence of our own experience is that whereas people speak, uh, out very, uh, and they're very cautious when you quiz them about data, all the empirical, uh, evidence suggests that people will more or less click on permission buttons if you simply put them in a sort of, you know, cunning part of the process.
That actually, you know, all people's good intentions about privacy, Germany and a few countries might be a little bit of an outlier here. But broadly speaking, the vast majority of people, uh, although they, you know, state their concerns about this kind of thing, don't actually manifest much about this in their behavior. However, I think, as Alex said, if you're a brand like Nestle, you're one of the reasons why people trust brands is that brands are actually both a strength and a vulnerability. You see, you know, in other words, it's rather like being famous. You know, you're much more vulnerable to scandal, uh, if you're famous. You know, it's a news story if you're caught, you know, um, you know,
Maybe not.
More famous.
Okay. Um, you know, consequently, there is that fundamental thing that you have reputational.
Say what he might be caught doing.
I don't think, I don't think it must.
We won't go there. In a corporate sense, not in a personal sense. Although I did, funny enough, I did have a friend who was invited to go on, um, uh, Gogglebox as one of, one of the households, and I did say, you know, the only thing you've got to be cautious of is you can't have an extramarital affair. You can't get caught drink driving. You know, there are a whole load of things which a list.
Uh, you know, there's a whole list of things which you are now tabloid-worthy, okay? And to an extent, you know, uh, you are simply obliged, given the amount of what you might call reputational capital, reputational skin in the game that you have as an organization, you're obliged to play to stricter rules, I think, than even than those that are sort of legally required in many cases.
And that, you know, as I said, actually being a, being a great brand is a double-edged sword. It gives you massive opportunities. It broadly speaking, brings with it great trust, but it also makes things considerably worse if you're, if you're actually caught, um, uh, in any kind of transgression.
But but Alex, as Rory says, it does afford you that immediate trust. So you're starting from an advantageous point, aren't you?
Yeah. And, and I, I think sometimes actually, um, and Nestle, we can be a bit humble about that, or maybe a bit defensive about it. I, I think we should feel really positive about the, the reputation of the company, about the, the trust that we can build. And it's true that having a big visible company gives you challenges.
But, uh, but I think we know, we should really step into it confidently. I, I think like you said at the beginning, we're definitely entering a period of transformation for marketing. There's a lot of things happening in the industry. Tech is going to change lots of things. But when I look at it, I think, wow, uh, I'm much happier to face into that with a big company like ours, with the brands that we've got, with the capability that we've got. Um, so I, you know, as is a kind of head of group marketing here, I feel very confident because I think, wow, we're entering a period of change, but with our resources, we, we should be able to do well.
And Natalie, let's talk about that, you know, how tech is, is going to to change things. Is it predominantly in a, a positive way from your from your standpoint?
So, it depends on in which way you're looking. So I was thinking about trust as something which is earned. I don't know if you've heard about in fashion, which is one of the most, I mean, we're all wearing clothes, so it's something that we all connect with on a day-to-day basis, but it's one of the most resource-intensive, toxicity-producing industries, kind of the way that it's developed. Um, and in that particular area, you're seeing technology being used for digital passports for clothes. So you can potentially use blockchain to map out the entire value chain and go, "Okay, I know where the original fibers were sourced to what you're wearing, or what the dyes that it was used." And so I'm thinking, one of the things I think, um, technology will be used to help with is to sort of give you the, the backstory of the provenance of the foods that we eat. Is it resource-intensive crops? Or we, you know, buying things that are fair trade or not? And especially in younger generations, as they face into the polycrisis, that's going to be increasingly important. So using technology to make transparent the supply chain, so that big companies that have the resources can actually invest in it and get ahead of the game. And we're seeing some companies do that. Um, so I think that's one really interesting area. Other issues to think about, things like privacy and surveillance. So a lot of millennial parents are very excited about social media. "I'm going to show pictures of my kids. We're going to share our parenting stories." Done with a lot of integrity and and love, usually. And now you're seeing a lot of kids being like, "Well, I didn't want my pictures and videos on." You know, you live and learn. We all make mistakes. Life is messy. And so then thinking about how will people start sharing their stories and connecting with others when perhaps younger people are more privacy-conscious for their kids? So maybe they share, but they, you know, fade out the face or what have you, things like this. But then also things like smart appliances, or there's a particular set of technologies that help block signals from your house. If you've got a problem with your kids spending too much time on their phones, or you want an hour just to have a bit of rest and quiet, you can turn these devices on and they block signals from getting into your room. So there's all these sorts of things that we're going to see people, I think, control more the environments, their immediate context, think about mental health, how and where they want to relate to brands. Um, and I think brands have a really good opportunity in building up that trust and say, "Okay, we're going to earn your trust. We're going to ask you for your data, and we're going to give you something valuable back." So, I think there's something there about alignment with transparency, values, protecting the customer, that the brands that do that, right, will be so much better off.
Especially for new generations coming in.
And Rory, when we particularly look at, um, AI, which is the the buzzword, do we, do we fear or do we embrace it? What, what's your, your take? How do you, how do you approach it?
I do have a concern, um, which is not necessarily, uh, with the idea of AI itself, but that 25 years of experience of the IT industry has taught me that most tech is sold on the basis of cost-saving, because it's the easiest way to sell it, and it's typically sold on the basis of the human jobs that the, the technology can replace. And what will happen? So I call this the doorman fallacy, which, which weirdly went a bit viral once online, which is, let's imagine you have a hotel and there's a doorman there. Okay. And he's called Dave. There may be several of them on shifts, and they do various things and open the door for guests of the hotel.
There might be two women. No, absolutely. Doorman is a gender-neutral term. But what then happens is a tech firm comes along and asks how much you pay the doorman and defines the function of that person as opening the door, replaces them with an automatic door mechanism, lays claim to all the cost savings and walks away. Now, what you then discover is three months later, you know, uh, there are vagrants asleep in the doorway. You've lost some of your best customers because the doorman was providing. Okay. Um, uh, you know, the hotel rack rate's fallen off a cliff, uh, and, you know, you're now a three-star hotel. Okay. What tends to happen, I think, is there's this very, very easy way for tech to sell the story of automation in a way that sounds completely plausible, but in the process, uh, you're losing far more than you realize, because the bit you're automating isn't really the important bit that the human, the task that the human performs. Sometimes the job of a human is just to be a human. Okay? And so one of the concerns is is that generally, and I don't blame them, but if you're going in, unless you're talking exclusively to marketers, possibly to R&D, okay? If you're trying to sell a technological solution of any kind to a company, you have nine times the odds of success by saying, "This will save you money," than you do by saying, "This will make things wonderful for your customers." And I think the opportunity, by the way, for AI to make things genuinely wonderful for customers, potentially, is enormous. But I don't think it'll be sold that way. I think it'll be a load of people going in and saying, basically, you know, you can, you know, effectively, you know, put a great sway through your call center staff or something of that kind, because finance people, okay, the very simple thing, they love cost-saving because it's concrete and immediate. Opportunity costs are actually slightly deferred and they're slightly nebulous and unclear. So therefore, the mentality of a lot of people in a business absolutely fetishizes cost-saving and efficiency at the expense of what you might call finding new forms of value creation.
And my worry is that what we've seen in, in the way in which everything else was sold. Okay. The other worry I have is that a lot of technology arrives as an option and ends up as an obligation. So the analogy I always use there is parking apps. Okay. Now, in a way, you know, parking apps, when the only alternative was pay and display, and you had to walk 100 yards and put in six pound coins, walk back to your car, put a sticker in the windscreen, which, by the way, the police also pointed out to me, also advertised to any thieves how long you'd be gone for. Okay. Never occurred to me until my car was burgled. The police really, really hated pay and display because it was basically a sticker on your car saying, "I won't be back for a while." Um, um, and, and so parking apps came along, and they're a wonderful, wonderful alternative, you know, rather like an order screen in McDonald's. It's an option. I can still go and talk to the person at the till, but if I prefer, um, I can go and use the screen. And then what happens is people notice that parking apps are cheaper than, uh, pay and display to run, and they don't get burgled and so forth. And McDonald's notices that screens are cheaper than people at the till. And so what started as a really handy option suddenly becomes an obligation. So you find yourself having to use a parking app when you're four stories underground in a car park where you have no chance of a mobile signal whatsoever. And that's the thing that worries me about AI is that quite often, what happens is that a lot of businesses think the job of the business is to force customers through whatever the lowest cost channel is. They go, "This is the most efficient channel, so we want everybody to buy that way." What we know as marketers is generally the more channel options you offer to a customer, the more you sell. And so it depends whether you want to grow your brand or whether you want an efficient brand, because you can't, in many cases, you can't do both. If you want to grow a brand, you have to sell in, in a variety of channels, some of which, by definition, are less efficient than others. And the, the efficiency brigade go, "In my perfect fantasy world, everybody will pay for this online, and then they'll collect it from a locker." Okay. But the problem with that is generally the more ways in which you sell, the more you sell, and the more people to whom you sell. And generally, that's what a good brand should be aiming to do.
Alex, how do you strike that balance between the cost efficiency, chasing that, and losing a bit of humanity, which often is is the thing that people most feel aligned to in terms of associating with your, your brand and and the loyalty to your brand?
Yeah. You know, I, I, I think one of the things I say about AI and, and, and the digital and tech thing is it's still in the service of a lot of the ideas that behind marketing from the very beginning, because at the end of the day, when I, when I think of AI, I, I think it's an interesting time in marketing right now. In the one hand, there's a lot of discussion in our company about going back to the fundamentals. Have we got brilliant products? They're the right price, in the right place, with brilliant communication. So, in the one hand, we're talking about that. There's a lot of chat in our business about, have we cracked the fundamentals? And then what I think AI does is it helps us to, to do that in better ways, both efficiently and, and effectively. I mean, the answer is, in a business like us, we're equally interested in both. Uh, I mean, if I think of the team here, what, one of the things I'm very aware of is we've been asking marketing people to take on so much stuff. For asking them to be experts in packaging, experts in sustainability, experts in nutrition, experts in P&L, experts in understanding consumers. Bit by bit, the marketing challenges get bigger and harder and more complicated. What AI, I think, is going to do is going to liberate our teams to, to give them, you know, to work more efficiently, which I think will then give them time to think about how they want to connect with consumers. Um, and I think that's going to be a good thing, certainly internally. Then when you think externally, I think AI is going to allow us to, to personalize at scale, um, to really, um, use AI to help us understand consumers and then ultimately serve personalized communication to them. Um, and I think that's going to be good. I think consumers are going to think, "Wow, this brand, this brand owner really understands me, and they've sent me something that's tailored to me and is speaking to me in a, in quite a personal way." So I, I think it's possible to do both. And I, I'm super excited about it. You know, I, I'm, I'm very, very thoughtful about how much we're asking our people to do, and I think AI, um, is going to transform what we can do. And, and I, and I, and I think the, the efficiency gains we can then put into the, into the, the really important parts of marketing, like, you know, brilliant creative content, really delivering propositions that really work with consumers. So, I'm, I'm super excited about it. And I also think a big company like ours should be able to move fast and, and equip our people quickly. Um, and I know there's a lot of effort in Nestle to do that right now. So, to be honest, I'm, I'm, I'm super, I feel actually very excited about it. I think we're, I think we're entering a golden age for marketing, and I think we're entering a, a good period for marketing in Nestle. I really believe that.
Natalie, when we go back to Rory's example of the, the doorman, and losing the that human element, do, do you agree that that that is an issue, and that's something that that AI can't give you?
How long have you got? So, I'll try and keep this succinct. So I think it's very easy to fall into this narrative of doomerism or utopianism, of the technology is so powerful it's going to lay off all our jobs, or it's so awful that it's going to completely decimate society. And what's harder to do is engage ourselves with the consequences that we're starting to be able to map out, to be able to say, "Okay, how do we use AI in a way that is discerning, that looks at the context, that empowers, enriches, and improves human life and what we create, including marketing, in a way that we do gain efficiencies, but we don't end up cannibalizing really valuable human elements, for example." Um, and then also reading between all these crazy headlines, like the hype is ridiculous towards both ends. So an example might be recently, um, MIT's Media Lab came out with a paper that was looking at what they call cognitive debt. And then all of these media outlets were like, "Oh, we're going to get brain rot." You know, the, the, the, like, blah, blah, blah. And then your mom saying, "Oh, do you know you're going to get brain rot if you use your phone?" It's like, "No, mom. It's a bit more complicated than that." But there is such a thing as using AI without really thinking about it, because there are so many pressures on. So many of us go, "Sorry, I'm just going to use it for convenience. I've got too many deadlines." And what we risk doing is doing the simple easy thing now, outsourcing ideation or writing that email, and offsetting that kind of flexing of the cognitive muscle, if you want to call it that, your brain, your creative capacities, so that when it comes to doing something really important, we've come out of practice. It doesn't mean you've got brain death. It just means reducing your capacity for that particular task or skill. Another element is things like looking at, and Rory, you were mentioning this earlier, um, if you're thinking about any kind of statistical model or algorithmic model, um, from social media to pattern-predicting LLMs, it's all based on historic material, right? So if you're a brand and you're living in a particular zeitgeist, and you've got a friend who mentioned this random thing, and it sparks a kind of moment of creativity, and you think, "Hang on, that's not been done before. I wonder if we take a risk with this and we try something new?" AI is unlikely, unless you have a huge amount of human input, but again, that's the human factor, to enable new trends to emerge, new exciting discoveries within the realm of the imaginal. Um, we're not talking about medical advances, protein folding, all the rest. I think there are also other issues with AI and the human factor, which is, if we end up saying to people, "Your job is at risk, get on board or get lost," it's going to cause huge amounts of fear.
And we've seen this happen in companies, especially for customer service agents. It's like, "Well, here's an area where you can cut costs." Time and again, year after year, you get companies going, "Oh, we're just going to get rid of all these people." Three months later, they have to hire them back. Why? Because the AI is unreliable. It hallucinates. It's biased. Often, it's misogynistic. It's racist. Like, all, whatever kind of bias you want to throw into the mix, these are not perfected systems. They are not ethical systems. They are not symbolic systems. They don't understand what it means to live and be in the world. They're abstractions. They use tokens as an approximation for real life. And until you end up with AI that solves that problem, and it seems like we might, there's an amazing piece that's just come out about a Swiss company which runs on clean, carbon-neutral or carbon-negative energy in Switzerland, but it's creating an open-source LLM, transparent, so all people can use it. Like that, for me, I'm like, "Hooray." It solves, it seems, if it works according to the hype, a lot of these problems. If we can do that, then we can conceive of a society in which people have greater rights. Consumers have the ability to understand how and where their their behavior is being monitored and for what ends. You can personalize, but it's opt-in. And I don't know, there the potential is huge, but we are absolutely not there yet. And my personal sense from going to a lot of these events is that if we adopt this, "Deploy now, think later," and you don't look at the very real risks from all of the studies that have been done, then you really risk cannibalizing all of your success because you're not treating the negative consequences with as much foresight and seriousness as you should. So test, sandbox, do not adopt everything just because a company says this will make it more efficient. Probe everything. Get to learn it. Play with it. Test it. Does this work? When does it not work? Does this merit getting rid of people because we can get a better output? What does that do to your organizational culture, motivation, sales, marketing coms? Like, we're talking about complex systems. You can't just go, "Here, have this AI, and everything gets fixed." Life doesn't work like that.
Rory, you wanted Oh, you wanted on your on your point on the human thing. I think I think one big opportunity for for us as a company, um, we've obviously got important customers like Tesco and Sainsbury's, and we, we give them a lot of focus. So the, the, you know, the take-home channels, as it were, but within Nestle, we've got Nestle Professional, which deals with the out-of-home channels, so where people are actually consuming our products in coffee shops and restaurants. And I, and I think that's a tremendous opportunity going forward. I think Nestle Professional is a, is a business where, in terms of building our brands and speaking to consumers at the moment of consumption, that's a big opportunity which I, I think we can just make a lot more of. And I, I think in this world where we're trying to connect, connect with consumers and, and kind of have human interaction, I think we're in the lucky position that we've got Nestle Professional. And I would say to the brand and the marketing community, we need to think more about how we, how we use the opportunities in Nestle Professional to, to be there when people are actually consuming our brands out of home. It's a big opportunity for us.
Let's just before we go to, um, some questions from the floor. So actually, I should have said at the beginning, have some questions in mind. So be thinking along those lines, because we're coming to you next. Yes, do have questions in mind. Um, how do you keep the workforce motivated towards implementing AI when it could be the thing that puts them out of a job? You know, it, it's, you know, it's something that's starting to roll out across the company. But it's interesting today. I was, I had a session this morning in AI with Michelle Sliff, and Michelle was taking me through the tools that we've got to use AI, and I was amazed. I was amazed at the time that it would save and the productivity would improve for me, and how it would actually change my job. Because one, one of the issues I've actually got in the company right now is, is well-being and just just workload and, and how people manage that. So in actual fact, I think one of the positive things that's going to help us with is going to be able to say to our teams who are wrestling with high levels of workload and a lot of initiatives, it's actually going to help us to deal with that. If I, if I speak to my team, and I do pulse surveys with the marketing team, and I say, "How are you feeling? What, what are the things that are troubling you?" One of the things they'll talk about is just managing overall workload. They'll talk about managing meetings. They'll talk about managing emails. People will say things like, "I'm drowning in emails. I've got so many things to do." And actually, people will talk about the impact that that's having on them. So, yes, it's true, as, as AI unfolds, will it change how we organize and will it, will it give us opportunities to think differently? I think it will, and we'll need to see what that looks like. But also, what it will do is it will help with the kind of well-being challenges that we know people are feeling in the team, because people are saying, "Well, how do I cope with all of the communication I'm currently getting?" Then I think AI will, will actually help us with that. And even if I think of myself as a, as group marketing director, and I look at my workload and I think about how I manage things like, like work-life balance, I'm actually quite excited about the fact that I think it's going to give me the chance actually to, to improve things like my work-life balance as well. So I think, will it, like all new technologies, will it come with some challenges? Yes, it will. But I think in this regard, it will also give us some benefits too, and we'll just have to manage the balance of that.
Right now, we are coming to the section where you, uh, get involved. Uh, thank you, panel. We're going to hear a little bit more from you a bit later, but now let's turn it over to the floor. Um, we also might have some questions online, but I'll take from the, the floor first of all. Who would like to go with the first question?
Don't be shy.
Hey, so thanks for coming to present to us today. So, um, yeah, if there's one thing that you could think that Nestle could change to future-proof our marketing strategy, what do you think it would be and why?
Who would like to take that question?
I'll take one.
Uh, don't overstate the pace of change. So, for example, you know, the death of linear TV, uh, has, you know, long been predicted. In fact, uh, what you'll find is that a large part of this is people saying, "Well, my kids never watched linear TV." But I was, what I was 20 in the, you know, 20 in the late 1980s. Okay, you never watched any linear TV when you were 20 in 1987. Okay, because when you're 23, you just don't watch very much linear TV. It, and the an awful lot of things which are sometimes purely kind of cohort effects or or life-stage effects are being interpreted as if they're absolutely indelible changes. And I'll also take Natalie's point, which is don't actually, never underestimate the counter-trend. Um, which is, you know, fundamentally, for example, we have all these technologies, but people love being with other people in all kinds of ways. You know, people absolutely crave human connection and just collocation with other people. I think, was it Glastonbury at the time of the festival is something like the 37th largest town in Britain, okay?
And the, the, and so there's a, one of the problems I think we have is that marketing is one of those disciplines where you have to do more than one thing at the same time.
And we tend to come into conflict with parts of the organization which think that everything in business is a single optimization problem with a single right answer. And yes, performance marketing is important. Yes, it's important to measure things. But, uh, long-term brand building is also absolutely necessary. Indeed, if your competitors find it more and more difficult to do culturally, to do long-term brand building, okay, all the more reason why you should do it. Interesting fact, okay, I'll just give you this example. Uh, four out of the five gold winners in the IPA Advertising Effectiveness Awards this year were family-owned companies.
Okay. So it was actually, if you wanted Specsavers, McCain, Lyle's, and just trying to remember what the fourth one is, Yorkshire Tea, all family-owned companies. And it suddenly occurred to me that family-owned companies have an unfair advantage in that, a, they're more, they're predominantly focused on their customers because they don't have shareholders. Okay. So they can concentrate on creating the proper business of creating consumer value rather than obsessing about some arcane part of financial engineering. Okay. But secondly, they can also play, they can also operate over different time horizons because they don't have arbitrary reporting inter. And so it suddenly occurred to me that we should look at this, because an extraordinary number of very, very successful long-term brand-building case studies, um, aren't conventionally owned, uh, you know, shareholder organizations.
And so if you have the capacity to, to operate in the long term, and you have permission to do so, all the more reason to do this, is that everybody else now finds it almost impossible. So your inner game theorist should be always asking the question, let's, let's not focus entirely on what's fashionable. What is it that we can do that nobody else can? That maybe nobody else can technologically, nobody else can legally, nobody else has the brand strength to do. It could be that nobody else can do it culturally. I mean, one fantastic bit of advice I always give to tech companies, I'm not making this up, is I go, "Just do physical direct mail." You can't do that. It's like something from the 1980s. I said, "No, no. The point is it works really, really well. But even if your competitors know it's working, most people in a tech company find the idea of doing physical direct mail just so completely countercultural, okay, that they won't copy you regardless of how successful you are doing it." And so sometimes there's a genuine virtue to being unfashionable. By the way, you know, try a jingle, branded merch. Okay. I've been saying this for ages about Felix. You know, the fact that you can't get a cuddly Felix, okay, is nuts. Okay. So, so, so actually, to some extent, spend about 30 to 40% of your time being the counter-trend.
Actually, because the weird thing is that this is, I mean, marketing is an unbelievably kind of, uh, uh, it's driven by extraordinary sort of fashions and herd effects. I mean, I'll be absolutely honest with you. Jingles never stopped working. Okay. People just decided they were old-fashioned. Okay. I mean, Mark Ritson now says, you know, sonic branding, as you now call it, okay, is genuinely one of, I think, along with, funny enough, along with what else is it? Oh, brand partnerships. You know, two of the most overlooked tools in the brand, uh, armory, in the brand repertoire. So genuinely, don't, don't necessarily prioritize everything by how fashionable it is. Uh, you know, there are great, great tools from, you know, which the Victorian marketers used, which actually are still just as relevant and just as effective today.
Very interesting. I, I want a cuddly Felix now.
Exactly.
I want one. I got one.
I went to an Octopus Energy, uh, conference, and literally people were fighting to take away. Adults in their 50s were fighting to take away a cuddly pink octopus. Right. Let's take another question, uh, from online while you keep thinking. Um, everyone knows the pace at which use of AI is picking up now in all industries, but do you think consumers are accepting or forgiving if they see use of AI in brand communications?
Can I jump in here?
So, there's a really interesting paper that came out towards the end of last year, beginning of this year, looking at this thing called the AI authorship effect. And this is basically the effect that they found when using AI to craft an emotional message. So marketing is about changing someone's emotional state so they have a greater inclination to buy, to memorize your brand, to reach out, to take some sort of action where they're one step closer to purchase, right? And so emotional messages when crafted by AI, in this study, created moral disgust in the consumer if they understood that it was done by AI. Now, here's the rub. Cheekily, you might think this is one of the best ways to optimize your workload, right? You can iterate, you can do all this kind of stuff, but if the idea is bad, or if the person thinks that it's created by AI, they don't feel that you've put in the time to actually craft something for them. They're like, "Well, this brand just doesn't care. Why would I bother with a brand that's just going to spew out this AI slop?" And so increasingly, especially when you look at things like influencer marketing, or Alex, you were saying, people in store chatting with a customer, like, who does that anymore? It creates a much stronger signal of care, of interest, of desire to connect with your customer, not just sort of play to the shareholder value and go, "Actually, we want to know what you think. We want to be here with you." So that's one of the strongest signals is one of authenticity, of creativity. L'Oréal is a great example of this. Um, they created, uh, well, they came out, I think it was earlier this year, and said that actually they're not going to use any AI-generated models in their campaigns. Not that they won't use AI. You can iterate as much as you want, create whatever backgrounds you want, like harness the technology to your heart's
content, but they said, "We're going to use real models because we believe in supporting these people." That's a moral stand. And it's not saying, well, we're just going to, you know, not use AI at all. It's about how you use it, who you empower, and who that's going to convince to listen to you if you are a brand. So, I think it's also about being sensitive to that, too.
And I think there's a there's a a big consensus I think in marketing too that says one of the responses to AI and so on will be more exponential marketing. Yeah. You know humans are humans are still humans. Humans are going to want to connect. So I mean if you look at if you look at I don't know take Kit Kat where you know we've just recently launched the Formula 1 sponsorship. That's a great platform for us to say okay how do we how do we want to create actual experiences for consumers around Formula 1 and we've we've got that opportunity across a range of brands. So yeah, whatever we do with AI, we will also be thinking about experiential marketing.
"I mean, real life is a medium too." That's one of the phrases I always use because sometimes medium.
It's the the medium. Sometimes as marketers, we have this idea that people just sort of bumble around in a vacuum and occasionally exposed to a bought marketing message which then in influences their behavior but then laps into a coma until the next marketing message arrives. And you're absolutely right that actually real world presence probably becomes disproportionately more valuable now, doesn't it? In a weird way in that actually I know it sounds really benile but physical direct mail to my kids is really really exciting.
Yes.
You see someone has written to me this is a physical thing. They never went through the 90s where you couldn't get through and run out to Christmas.
Especially if you post a cuddly Felix for example.
Yes. Exactly. No, no, without without
I think we've probably made that point, don't we?
We're going to bring that leafy into being, aren't we? Um, let's take another question from the audience, gentleman over there. Um just referring back to the the door person analogy we had earlier. Um how does um well what advice would any of you guys give to a company like Nestle to help them identify the value maybe the less direct directly obvious value a person can offer in a role um when you know a management team is looking at replacing something with AI.
So highlighting the the personal value of the individual of the the human.
Should I give you a couple of
Yeah. No. Yeah.
So, one of them comes back to organizational culture. I have friends who are either CEOs or working quite high in companies and some of them when a lot of these agentic AI models came out fired half their teams and it caused a huge amount of fear in the organization. Productivity, performance, creativity dropped, attendance dropped, and now they're they're basically having to fight to get new people in. And so if you judge it poorly and you make mistakes that are rapid without thinking them through or you make decisions rapidly, you risk causing reputational damage for people who then will choose not to come and work for your company. So that's one that you have to be really cautious of.
Um another is that there are lots of companies who are firing people using AI as the reason and it's not actually the reason. and it's restructuring, cost-saving, firing people for you know and so there's also the question of the zeitgeist economic downturn is very real people are worried about losing their jobs people are worried about losing shareholder value they're cut so I think for me the the whole point about an organization it's an organization of people you are organizing people to do something right so if you unless you're completely uh building companies and these do exist from the ground up that are entire entirely AI enabled like using I don't know reckless or whatever, then you've got to be really cautious of the short and further term costs of just firing a bunch of people because you could make short-term savings. I think one of the interesting things is that thinking about long-term success and wisdom, often these include the capacity to sacrifice short-term gains for longerterm outcomes and the capacity to be to be restrained when all of your competitors seem to be behaving in a particular way, which is like look at how how much we we spiked our quarterly return this year and how how good it is when 6 8 12 months down the line they're really floundering. So I think taking a longerterm view uh is probably wiser and that's probably the place that I would start.
We'll need to figure out what role AI plays for us. But but even more important than that, right now we're working for a business that's rediscovered to a certain extent is love of brand building. And it recognizes that for Nestle going forward, its ability to build brilliant brands is is going to be the key thing that makes a difference. And then we'll just need to figure out what makes the tools and stuff all help us do that really well. But an even bigger idea I think for us in the company is um the fact that brand building and being the best brand building businesses is right back at the center of things.
I I think I'm so so pleased to to hear that and if if that's a north star then we can figure out everything else around that and and we just kind of put AI in that context. I think it's important. I think that makes a very good point which is if you say your focus is brand building and I find this a bit weird if I'm being actually I'm going to be careful here uh with with regard to WPP's approach which is what makes WPP uniquely good is it's a very good creative transformation company and very good at transforming brands now we are looking to some extent to you know I I don't think this is necessarily consciously intended but what we should really be doing is saying how can we get by with fewer HR people fewer finance people, you know, fewer ancillary staff who aren't central to what we do and spend more money on these newly empowered uh people who are very good at brand building who are now even better at brand building because they have AI to help them do it. And what seems a little bit strange is that a lot of the conversation is it's almost like the NHS saying the wonderful thing about this is we can actually reduce the number of doctors we need. Okay? And you go no, no, no. Doctors and nurses are actually what the NHS is for. Okay? They actually do the thing that the organization exists to do. And yet every organization is looking to automate what is its core competency. What it should be doing, I would argue, and I don't know if other people say the same notice the same thing. I think the scale of corporate bureaucracy, the extent to which it's grown, not necessarily, it's not necessarily costly actually in terms of the cost of the salaries of the people involved, but the extent to which activity is slowed down by needing to be approved by seven, you know, six or seven people in compliance or this or that or the other. Okay, fair.
It's a maverick.
Okay. The number of hoops you now have to jump through just to hire somebody, okay, has become completely excessive and a massive source of friction. And my argument is that's probably the bit of the business we need to accelerate. And yet every organization is is focused on effectively automating what it does. Actually what it should be doing, is saying how can we use this to do more of what we exist to do and less of the extraneous bureaucratic stuff which to some extent is genuinely a cost.
And yet it's it you know do you see what I mean? I mean the NHS should basically be going well let's let's make doctors really really good doctors because they have AI and actually because they're now so good and so productive we can have even more of them and the way to pay for that is to have fewer of the extraneous functions of business which ar don't really exist to achieve the core purpose of the organization
I guess in reality it's going to be fair
I mean I'm I'm up for that version doctors
I call this the tentric sector by the way there's the public sector, the private sector and the tantric sector is the part of the economy which exists to make everything go on for ages and ages like without actually reaching a climax. Okay.
Okay. I think we'll take one more question.
We've talked about a couple of different themes today. you know, we've talked, you know, a lot about AI in the future and hyperpersonalization, but on the flip of that, we've also talked about, you know, sort of being analog and old-fashioned and, you know, talking about where do you sort of find that balance and, you know, going into the future, where should we potentially lean into AI and sort of those trends, but also then hold back to be a bit more traditional.
So, there's a really interesting book, actually, there's a spate of really interesting books. Interestingly, predominantly written by women, one of whom is called Karen How and she's written a book called The Empire of AI. And one of the things I found fascinating about what she writes about journalists in the tech world is that actually the biggest gains and the lowest costs to the environment, to energy supplies, and diminishing water resources and to humans and organizational culture is to develop AI with the very specific parameters, solving particular problems with proprietary data in closed systems that require very little energy. I'm going to keep it at that which is but but that this is a
the small language model isn't it? You actually kind of a smaller language model you train a particular type of medicine where breast scans for detecting cancer can give you results way before the cancer necessarily gets to the point they normally would to empower doctors not to replace. So she talks a lot about um systemic structures that can lead to a lot of suffering and how to rectify that by going for specific types of AI within certain areas. So look at the places where the largest gains at the lowest costs can be had. These are generally not in the world of generative AI which is still rife with issues. Also look at things like the coupling between what you have as kind of like I suppose the LLMs and then you've got symbolic AI. So that's an interesting one. A good person to check out Gary Marcus. He's a psycho linguist from the states also AI developer. Read his work. Ed Zitron does really interesting work around this. You've got the DAIR, distributed AI resource center. Um, you've also got the Center for Humane Technology. Like, look at these places because they do really interesting research. They're intelligent. They're thoughtful. They look at the pros and cons of different types of AI. And then if you are going to use AI in marketing, um, close systems that help reduce inefficiencies like notion, Asana, like I had to do a rebrand a while ago and was able to get rid of all of my emails because you're just working within a brand template with free creative capacity like within certain range things like this. Like there's amazing uses for AI in marketing and creativity and personalization and ideation. Just don't cannibalize what's at the core, which is that human creativity zeitgeist ideas. Anyway, yeah. And and maybe the other thing I might add to that as well is in marketing there's a whole thing about kind of bucket tricks we need around you know functional excellence and functional marketing skills. There's also a big big part of marketing which is just about leadership, personal leadership, personal engagement, personal energy and that's always going to be there. So for the the marketing community in the room, yeah, you're interested in tools like AI and you're interested in how to use things like that, but there's a whole other thing where you you know in marketing people make a difference and in marketing personal leadership makes a difference and and and if anything in an AI world that's going to be even more of a premium, you know, so I think I think keep keep that in mind. um that that that personal component particularly if you're a leader in marketing or you're you're leading a brand or you're leading a marketing team or you're a marketing director, your your leadership's going to be super important and uh always there are.
Okay. Now, I'm going to ask each of you in one word to describe one word, Rory.
Okay.
The future of marketing. Do you want him to go first?
Yeah, I was going to say you want me to go first.
Now he's speechless.
No, I was going to I'm actually going to say reimplified. That's a single word.
Reimplified.
Yeah.
Okay, Natalie. Regenerative.
It's interesting. Exciting.
Exciting. That's what we like. Thank you all for your contributions. [Laughter]
Thank you very much, Alex, Natalie, and Rory. [Applause] [Music] [Music]