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  3. 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
  4. 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
  5. 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
  6. 80% of Glossier growth and sales have come from peer-to-peer recommendations. CULT BRANDS
  7. 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
  8. 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
  9. By 2020, 30% of web browsing sessions will be done without a screen. —Gartner, 2016 VOICE
  10. 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
  11. 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
  12. 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…
  13. 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
  14. 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.
  15. 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?
  16. Y&R @ SXSW 2018 BLOCKCHAIN Every industry that was affected by the internet will be impacted by this. —Jalak Jobanputra, New York venture capitalist
  17. 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
  18. 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
  19. 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
  20. 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
  21. 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
  22. 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
  23. 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
  24. 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
  25. Y&R @ SXSW 2018 #YRSXSW
  26. Y&R @ SXSW 2018 #YRSXSW
  27. 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