Y&R / 2018
SXSW
INTERACTIVE
INSIGHTS + TAKEAWAYS

What’s
.inside?
Y&R @ SXSW 2018
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THE CULT BRAND TAKEOVER
HER FIRST WORD WAS “ALEXA”
STILL HUMAN AFTER ALL
LIFE AFTER BITCOIN
PODCASTS: THE NEW OLD FRONTIER
FOOD, INNOVATION AND OUR HEALTH
WHAT’S NEW WITH VIRTUAL REALITY?
INNOVATION WITH HEART

What’s up,
Austin?
Creators, innovators, futurists and blockchain enthusiasts all descended on Austin for the
annual SXSW Interactive Conference. The mash-up of industries, technologies and eye-
opening presentations makes for an event that is ripe with insights and inspiration.
This year, we were joined by team members from New York, Austin, Singapore and San
Juan to learn about what’s on the horizon, what’s here already and why it matters to
brands and marketers. Read on for our 2018 takeaways from SXSW.
Y&R @ SXSW 2018 #YRSXSW

1
Cult brands — we know them, we love them, we
obsess over them. Brands like SoulCycle and
Supreme tap into culture and subculture to
develop relationships with consumers that are
electric, personal and rooted in a sense of
identity. As cult brands rise to prominence, it’s
clear they’re here to stay.
We heard from brands like Glossier, SoulCycle,
Milk Bar, Madewell and Instagram about how
they have launched their brands into the cultural
conversation and generated continuous growth.
It starts with your team. As SoulCycle CEO,
Melanie Whelan, said, “Our first and most
important customers are our team members.”
Cult brands invest in their teams as the front line
to consumers. Teams that are passionate about
the product build an authentic culture that shines
the best light on the brand.
Collaborations are critical. Cult brands hone
in on their specific identity and value proposition,
but they collaborate to showcase less-central
facets of their brand. Collaborations also offer
alternate points for creative inspiration. “The
formula for a great company is to paint by
numbers, then figure out precise places to color
outside the lines,” said Christina Tosi, Milk Bar
CEO and founder. While collaborations are not
necessarily about ROI, they are about creating
special moments that surprise and delight
consumers. It’s a more emotional approach with
incredible marketing value. “Collaborations are
the oxygen for our business,” said Madewell
President Libby Wadle.
THE CULT
BRAND
TAKEOVER
Y&R @ SXSW 2018
NICHE RETAIL AND THE RISE OF
CULT BRANDS
CULT BRANDS

Experiment constantly. Assuming that ideas
should always be strategic and oriented around
brand values, taking an experimental mentality
enables the freedom and creativity to try new
things while learning what works/what doesn’t.
Instagram Product Market Manager Jeff Taylor
advised that for social it’s test, learn and adapt.
Be willing to do what no one else will. Pay for
a SoulCycle rider’s cab when she’s running into
class late. Rush a Milk Bar Crack Pie for a
customer’s birthday. Pick up the fallen sweater
on the store floor, even if you’re the CEO. Tiny
details matter, and showing you care about your
consumers can build long-lasting relationships.
Don't underestimate influence. Many brands,
like Instagram, build cultural currency and word
of mouth through micro-influencers. According to
Taylor, “Everyone’s an influencer no matter the
size of the following.” What makes someone the
right influencer in marketing depends highly on
the brand and goal. Kyle Wong, CEO of Pixlee,
added, the right influencers are often “within
reach, have expertise, closeness/proximity, trust
and relatability.”
Most importantly, cultivate community. Time
and again, these brands came back to the idea
of community, both online and offline. Instagram
and Glossier have active online communities in
which consumers connect over shared interests,
gather inspiration from one another and trust
fellow consumers’ recommendations. Madewell
places dressing rooms in the middle of the store
to invite conversation between customers,
friends and store managers. SoulCycle is a
source of friendship and relationships for riders.
Melanie Whelan explained, “Our product is how
people feel.” It’s a high bar to set, but building a
community is one of the most effective
marketing tools out there.
Y&R @ SXSW 2018 CULT BRANDS

80% of Glossier
growth and sales
have come from
peer-to-peer
recommendations.
CULT BRANDS

2
Whether it’s a search keyword, mouse click or
menu, much of the Internet has been about our
adaptations to technology. These technologies
have changed how we behave, but today’s
voice-activated innovations not only shape our
behaviors, they are also looking to learn from us.
Humanizing voice technology means working to
translate things like our voice prints (accents,
dialects and tone), conversational context and
spatial intelligence into machine capabilities.
Programmers are conducting ethnographic
research on how to help people day to day, from
getting ready in the morning to relaxing when
they come home. “We want to achieve seamless
consumer adoption. So integrated in consumer
lives that they don’t even talk about it,” said
Rachel Weiss, L’Oreal USA’s VP of Innovation
and Entrepreneurship.
With rapidly evolving voice interface technology
and the ubiquity of digital assistants, Amy Webb,
the founder of Future Today Institute predicted
that 2018 would mark the beginning of the end
of traditional smartphones. The next decade will
usher in advanced computing and connected
devices controlled with voice, gesture and touch.
And the next era may be closer than we think. At
the end of last year, there were more than 30
million Alexa-enabled devices in US homes—
following an adoption curve reminiscent of
mobile phones at the turn of the century.
HER FIRST
WORD WAS
“ALEXA”
Y&R @ SXSW 2018
THE NEXT GENERATION OF VOICE-
BASED SYSTEMS AND COMPUTING
VOICE

But if voice technology is being shaped by
us, how are we being shaped by it?
Like the many technological revolutions before it,
voice technology aims to save us energy. All we
have to do is move our lips to access volumes of
information and actions. Modern day voice
assistants use two components: ASR (automatic
speech recognition), which recognizes and
translates spoken language into text, and NLU
(natural language understanding), which deals
with machine reading comprehension. Some
brands like SoundHound have taken it a step
further by interpreting the meaning behind words
with unprecedented speed and accuracy—an
important step closer to replicating real human
conversation.
As home assistants become mainstream, we
are likely to see greater effects on speech in the
home—especially among voice-native children.
As lines between human and machine blur,
households may create rules on how to interact
with machines. Does addressing Alexa with
frustration teach children that this kind of
language is acceptable? Does it matter that
she’s not a person? Can our children even
distinguish between an “it” and “he” or “she”?
As language is understood to be one of the
facets that make us human, the question
remains: how do we retain humanity for a
generation of “voice natives” whose first word
might well be “Alexa’”?
Y&R @ SXSW 2018 VOICE

By 2020,
30% of web
browsing sessions
will be done
without a screen.
—Gartner, 2016
VOICE

3
Today, we interact with AI through assistants
such as Alexa, Cortana and Siri. Cortana alone
has conducted 30 billion conversations and
answered 18 billion questions, so it’s clear that
adoption isn’t the issue. But what remains is the
gulf between tech and the user interaction.
In response to this challenge, developers are
making breakthroughs in ambient AI, which
relies on the intelligent cloud to merge our digital
and physical interactions. This means receiving
environmental data such as the presence of
individuals, recognition of identities, contextual
awareness (weather, traffic, news, etc.) and
adaptation to individual needs. The result is a
personalized experience or service delivered
automatically and in anticipation of our needs.
There’s no reliance on a single screen or set of
screens, thus creating a frictionless and more
natural interaction between humans and our
intelligent systems. Ambient AI taps into
methods of communication beyond voice, such
as body language. So-called “invisible” decision-
making will begin to happen without direct user
input as AI systems learn to listen and observe
in the background, sometimes asking questions
and sometimes adapting on its own.
AI has advanced considerably and new devices
are increasingly able to determine sentiment in
our speech or emotion in our facial expressions
(even when faked). Futurist Amy Webb’s
session on Tech Trends even discussed how
computers have passed the Turing test for
STILL
HUMAN
AFTER ALL
Y&R @ SXSW 2018
ADVANCEMENTS IN AI TECHNOLOGY
AND EMOTIONAL INTELLIGENCE
ARTIFICIAL INTELLIGENCE

emotional conversation, meaning a human being
was unable to discern whether the audio sample
they heard was from a computer or a real person.
Dr. Brian Cugelman’s session “Design for
Personality Neuroscience and Emotional AI”
began with a deep dive into the facets of human
behavior and emotion. Pointedly, he discussed
how humans are, in essence, a collection of
biological algorithms honed by evolution and that
computer algorithms may soon have the ability to
surpass humans in emotional intelligence.
For marketers, these shifts call for a greater need
to leverage AI in order to understand and act
upon an audience’s emotional journey—not
simply their channel journey—to effectively
communicate the right message at the right time.
Y&R @ SXSW 2018
AI is expected to
contribute
$15.7 trillion to the
global economy
by 2030.
ARTIFICIAL INTELLIGENCE
—PwC, 2017

DID YOU KNOW?
4
2 LIMITED MEMORY
SELF-AWARE3
1 REACTIVE
THEORY OF KNOWLEDGE
• The most basic form of AI
• Perceives environment directly and acts
• Cannot form memories
• Cannot reference past experiences to
determine future actions
• Typically specialized
• Can consider past information
• Utilizes memory or experiences within limits
• Uses these memories or experience to
evaluate decisions and actions
• Example: self-driving cars
4
• Yet to be built
• Advanced capabilities to interpret the world
or environment around it
• Can form information based on observations
• Emotional understanding
• Yet to be built
• Most sophisticated form of AI
• Can observe and interpret the world
• Capable of consciousness and emotions
• Can anticipate emotions of others
ARTIFICIAL INTELLIGENCE
THERE ARE
FOUR TYPES
OF AI…

4
Bitcoin and ICOs (independent coin offerings)
have dominated headlines over the last year.
But those at SXSW were less interested in how
the price will change and far more interested in
how the world will change.
The focus was on the revolutionary potential
of blockchain, the technology that powers
cryptocurrencies like Bitcoin, and its impending
disruption of industries including the financial
sector. Subject matter experts agreed: we’re
seeing something analogous to the birth of the
Internet. And with that, we may also be seeing
something reminiscent of the dot-com bubble.
“I think it’s pretty clear […] that we’re in the
middle of a speculative bubble,” said Vinny
Lingham, CEO Civic. When the cryptocurrency
craze lifts, many like TenX’s Julian Hosp are
eager to see the real innovations emerge.
Beyond Bitcoin, the foundational blockchain tech
is increasingly relevant today for three reasons:
decentralization, transparency and efficiency. As
companies continue to explore blockchain
technology, there will be far more applications
beyond cryptocurrency.
LIFE AFTER
BITCOIN
Y&R @ SXSW 2018
HOW BLOCKCHAIN WILL AFFECT OUR
MARKETPLACES, INDUSTRIES AND MORE
BLOCKCHAIN

How will
blockchain
disrupt
industries?
Y&R @ SXSW 2018 BLOCKCHAIN
BANKING
MUSIC
Enable artists to collect revenue directly, without a third party, through smart
contracts and licensing.
HEALTHCARE
Verify and authenticate secure access to personal medical records and data.
Facilitate faster global currency exchange, eliminate back-office clearing
houses and third parties, and enable exchanges for micro-payments in
developing nations that don’t have access to traditional banking.

Y&R @ SXSW 2018 BLOCKCHAIN
REAL ESTATE
VOTING
Support voter registration, identity verification and voter fraud elimination
through immutable ledger records.
CONTENT + DIGITAL ADVERTISING
Advanced ad exchange targeting and ad-based monetization of video with
increased security and privacy, without intermediaries.
Issue tokens that represent equity to record ownership and create real estate
liquidity—a particularly significant implication for millennial investors who lean
heavily toward liquid investments.
How will
blockchain
disrupt
industries?

Y&R @ SXSW 2018 BLOCKCHAIN
Every industry that
was affected by the
internet will be
impacted by this.
—Jalak Jobanputra, New York venture capitalist

5
Podcasts—they’re a dime a dozen and shouldn’t
brands have them down by now? After hearing
from podcast superstars like NPR’s Ira Glass
and the New York Times’ Michael Barbaro, the
answer is: not quite.
While some brands like GE and Spotify have
dabbled in podcasts, the majority of marketers
have yet to capitalize on the enormous
opportunities that podcasts offer. Podcasts
already exist on a range of subjects and most
are underfunded. It’s a relatively low barrier to
entry for brands to seek out a podcast with a
tone and subject matter that is interesting to their
consumers. Brands would be remiss not to see
podcasts as a significant opportunity.
Audio is a timeless medium. As NPR’s Ira
Glass put it, “As long as human laziness exists,
so will radio.” People want to be entertained
while driving, walking, cooking or doing errands.
It’s a pleasant, interesting way to learn and
engage with content while simultaneously
accomplishing all of the mundane aspects of life.
Its longevity is what makes it a strategic place to
invest for marketers and advertisers.
Engagement is through the roof. In a world
where attention is increasingly fragmented
across mediums, 80% of consumers listen to the
entire podcast episode, and they listen to an
average of 7 shows per week.
PODCASTS:
THE NEW
OLD
FRONTIER?
Y&R @ SXSW 2018
WHY PODCASTS SHOULD BE AT THE
TOP OF YOUR MARKETING STRATEGY
PODCASTS

It’s personal and familiar. Podcasts develop a
repeated interaction—one that builds trust and
adds value. A consistent host means a
consistent tone and personality, and people
develop strong affinity for the voices they hear
on a regular basis. There’s an emotional
connection that can be extremely powerful.
The format reflects internet culture. Podcasts
are real people, talking about human things in
an authentic tone on a one-to-one basis. They
are chatty, personal and sometimes snarky—
casual but still informative. It’s a balance that
television hasn’t figured out yet.
Podcasts are still growing. After becoming a
full-fledged business vertical in 2017, podcasts
are predicted to continue significant growth in
the upcoming year. According to Michael
Barbaro, The Daily has been downloaded more
than 200 million times since it launched just over
a year ago.
Marketers and advertisers can take advantage
of this growth, smoothing difficult discovery
processes and investing in podcasts that offer
value and entertainment to their consumers.
Y&R @ SXSW 2018 PODCASTS

Marketers don't
understand the
scale of podcasts.
The Mad Men season finale
had 3.3 million viewers.
Each episode of Serial had
16 million downloads.
—Ira Glass, SXSW 2018
PODCASTS

6
The food at our favorite restaurants, in our local
grocery stores, and in our refrigerators are all
vastly different from what we were eating, buying
and preparing even just a decade ago. Much of
what’s new today in restaurants and in our home
kitchens is a direct result of the desire to eat
healthier, whole foods, and the rising need for
simplicity and convenience. It’s also reflective of
a growing awareness of topics such as animal
protection and the environmental impact of what
we eat.
Many brands are tapping into these cultural
trends and opportunities to bring healthy and
responsible foods to our tables.
For instance, the environmental impact of raising
farm animals for meat consumption is one issue
that has been brought to the fore in recent years.
David Kay, manager of communications and
sustainability at Memphis Meats, highlighted that
90% of the world’s people eat meat and the
demand is expected to double in the coming
decades. In response, Memphis Meats offers a
solution using animal cells to create clean meat
in a cultivator. This process allows for a 10x
reduction in greenhouse gas, water and land
use, and reduces waste and contamination.
And CEO of Beyond Meat, Ethan Brown,
introduced a product that has the look, smell,
texture and taste of meat products, but has no
meat whatsoever in its makeup.
FOOD,
INNOVATION
AND OUR
HEALTH
Y&R @ SXSW 2018
THE CHANGING LANDSCAPE
OF WHAT WE EAT
FOOD

While mindfulness and ethical consumption is
certainly a burgeoning trend, the food industry is
changing on multiple fronts at all times. There
has been an explosion in fad diets—Paleo, Keto,
Whole30, GMO-free, antibiotic-free, organic—
and the result is a confused and frustrated
consumer.
Rebecca Larson, of the Western Sugar
Cooperative, noted how certain foods are using
pointless labels to make consumers perceive
their brand as healthier or safer than another.
Some spices and salts now have a label that
says “GMO-free” even though there is no way to
create some of these spices with GMOs.
“Rather than choose a label, choose the food,”
advised nutrition consultant Roseanne Rust.
She advises her clients that just because
something is “organic,” it doesn’t make it better.
There are 54 million people in the US going
hungry every day,* which means not everyone
can be picky about what they’re eating—they
just need to eat. And while it is true that “we
should celebrate the diversity of dietary
choices” (Jay Hill, New Mexico & West Texas
Produce & Alfalfa Farmer), we should all
educate ourselves about what is and isn’t true,
and listen to our bodies to know what works best
for us as individuals.
*Source: Kris Moon of the James Beard Foundation, Re-Imagining How America Can Reduce Food Waste panel
Y&R @ SXSW 2018 FOOD

7
You didn’t need a crystal ball to know VR will be
a hot topic at SXSW. Our experiences at SXSW
proved that real-life experiences can, and often
do, still trump anything VR has to offer. But when
done well, VR does have the ability to transform
and surprise. Here are some of the biggest VR
takeaways from SXSW:
Headsets are still unnatural. Saturday at
SXSWi was 91 degrees, threatening to dethrone
the all-time high of 92. Just imagine what it was
like to strap on not only a headset and
controllers, but a heavy haptic feedback
backpack as well. Spoiler alert: it was a sweaty
situation leaving assistants scrambling for extra
wet wipes to clean the devices after each use.
Besides all that, VR can be very isolating and
unnatural—something that Mixed Reality, which
blends real and virtual worlds, readily addresses.
It’s all about the experience. Like the real
world, the virtual and augmented world is about
delivering a great experience. But the quality of
most VR experiences are average at best.
There’s just no reason to slap on a headset and
controllers to play table tennis or archery. The
virtual versions never live up to the real thing.
The most memorable were experiences that
transport users somewhere they’ve never been
or could never go. Think “Colossal Wave”—a
multi-person experience that combines art and
sound in an underwater world.
WHAT’S
NEW WITH
VIRTUAL
REALITY
Y&R @ SXSW 2018
THE LATEST VR DEVELOPMENTS
FROM SXSW
VIRTUAL REALITY

Barriers to entry are still high. Most
consumers haven’t tried or experienced VR, and
those who have, aren’t buying headsets. But VR
will continue to make in-roads in gaming and
entertainment as hands-free and multiplayer VR
capabilities are developed.
Immersive storytelling through VR is the
next big thing. Volvo and BMW have
introduced apps that allow consumers to test-
drive vehicles through VR. Although still far from
mainstream, virtual training and virtual
simulations will become a rising trend. Marketers
have a real opportunity to use the technology to
tell powerful stories in simulated environments.
In addition, once other technologies like AI,
blockchain, and cryptocurrency are integrated
with VR, we can expect exciting new ways for
consumers to interact with brands.
Y&R @ SXSW 2018 VIRTUAL REALITY

VR connects you
to an experience.
It creates empathic
connections and
bonds to social
issues you can no
longer ignore.
- Dell Experience panel
VIRTUAL REALITY

Y&R @ SXSW 2018 #YRSXSW

Y&R @ SXSW 2018 #YRSXSW

CONTRIBUTORS:
Eric Ackley / Director of Experience Design, Y&R New York
Barry Brothers / Senior Art Director, Y&R Austin
Lucy Cross / Manager of PR and. Communications, Y&R North America
Skye Duster / Account Supervisor, Y&R Austin
Eliud Echevarria / Design Director, Y&R San Juan
Allison Griffin / Account Manager, Y&R Austin
Heather Griffiths / Senior Strategist, Y&R New York
Jinie Kwak / Global Director of Communications, Y&R
#YRSXSWY&R @ SXSW 2018
See you
next year!
Clara Luo / Chief of Staff, BAV Group
Stella McClellan / Senior Account Manager, Y&R Austin
Akia Mitchell / Global Director of Innovation, Y&R
Jennifer Siegel / Account Manager, Y&R Austin
Scott Youngblood / Copywriter, Y&R Austin
Lauren Silverman / Senior Strategist, Y&R Austin
Nancie Sophias / Brand Strategist, Y&R New York
Marcus Rebeschini / Chief Creative Officer, Y&R Asia