Insights from Brand Builders – Adam Crozier, Chair, BT Group, Whitbread and Kantar

Hi, good to see you.

Look, I've been lucky enough to work with some fantastic brands over the years from Saatchi & Saatchi to the Football Association, Royal Mail, ITV, British Telecom, Whitbread, all great brands and great companies. And you know, what you see over many, many years is that really great brands generate superior returns. They're more resilient at times of crisis and they generally return to growth quicker than other companies and other brands. And that's really important right now because we probably have more global disruption than at any time I can certainly remember in my career with the impact of the war in Ukraine and Russia. You've got continuing impact of the pandemic. You've got the cost of living crisis. You've got inflation. You've got supply chain problems and of course you've got enormous still digital disruption going on. So, it's a really important time to really focus in on the brand because at these times of lower growth, it's all about market share and generally speaking, that's generated and gained by superior brands.

I think the media world has probably gone through faster disruption than many others, a bit like music. And so the rules have definitely changed. You know, streaming companies have really come to the fore over the last few years and particularly so during the pandemic. But of course, that growth is slowing a little now and increasingly it'll become a question of which ones of those will survive and prosper. There'll be multiple different models. It's not just about subscription models, ad-free models. Increasingly, it's about advertising-funded models as well. And of course, all the traditional media players are also fighting back. So it's finding that intersection between having a fantastic media brand, brilliant content that you market in a really strong way and then multiple distribution models to reach the consumer because the viewer, the consumer will always find the most convenient way for them to access great quality content.

I've got admiration for a lot of media brands. I think Netflix, you know, despite some of the recent issues is a fantastic brand to have come from where they started from, mail-order DVDs effectively, to where they are now is an astonishing story. And you know, many ways their brand has become synonymous, if you like, with the idea of watching great content online. And that's a fantastic thing to have achieved in a relatively short period of time. But of course, like all those brands who take advantage of these opportunities, there comes a point where you also have to adapt and change and think about what the brand stands for. And in many ways the recent very public issues around what the way forward is, how they stem some of these subscription losses, how they compete harder, whether they should have an ad funded model as well as a subscription model. All of those things are part of the growing pains of the brand and how it connects with the consumers in an increasingly competitive marketplace.

Well, to take the words of Bill Clinton and change them a little, it's all about the content, stupid. You know, in the end you first of all got to have access to fantastic content. You've got to own that content and you've got to start to find multiple ways to engage with your viewers both online and through the traditional models.

The difficulty, of course, for the traditional players, as it is in any marketplace for incumbents, is the new players just see opportunity and they have their foot firmly on the accelerator to try and take advantage of that. The incumbents, the traditional players, they've got to defend legacy revenue streams whilst trying to move on to new less profitable revenue streams. And that's a very difficult journey to take

and to explain to your shareholders and stakeholders, particularly at a time when those business models, even for the big streamers, are not yet proven in terms of how they really in the long run will generate profitability and a good level of return for the investment made.

Do you mean specifically media or more general?

Look, I think the traditional media players also have strengths. You know, first of all, they start with fantastic market share. They've been part of consumers' lives for many, many years. They trust them. They're seen as having a huge volume of very high-quality content. And frankly, right now, they are the big players. The issue is how do they adapt to this new world? As always when these new methods come in in any marketplace, what happens is people tend to exaggerate how quickly all this change will occur. I think we can all agree that we're going to end up with a very much more fragmented media marketplace with very fragmented audiences. The younger audiences are leading this change, but actually older ones, particularly through COVID, are also starting to adopt a different way of viewing. And so, how these traditional companies move from one model to the next while maintaining and generating new revenues is a really important task. And the same principles can be applied to almost any marketplace. I think it's how you move from that traditional model to a more mixed modern economy model that is absolutely critical.

It's a mixed bag, I think. I mean, like everyone, the truthful answer is I don't know. It's moving so quickly. And it depends on how various brands behave and act and the decisions they take and the quality of those decisions. But I think there are a few things you can assume. One, content will continue to be king. You know, having access to that great content. Two, I think you'll see further fragmentation, which I think for advertisers is a really big issue. How do you reach those mass audiences when the world is fragmenting? Increasingly, advertisers will want seamless measurement across every conceivable platform so that they can understand how their marketing and advertising is performing. I think consumers will become, as they are already showing through the problems of inflation and cost of living, consumers will become increasingly choosy about which services they take and which services they pay for, which is why I think ad-funded models will continue to grow. And I think the traditional players will have to adapt or they will eventually die. Not in the next 5 years, but over 15 or 20 years. And so, it's really a case of making sure that rather than being King Canute-like and trying to stave off that change, most companies in the end have to get to a position where they say it's better I make this change to myself than wait for someone else to do it for me or to me. And that's why it's really important that the marketers in those companies get to grips with this as quickly as possible. It's a huge challenge.

Well, in a world where you can feast or binge on content, entire series at any one time. You know, and you can delay it when you watch stuff. You can basically watch anything you want when you choose to watch it. The viewer is increasingly in control. The one thing that becomes destination viewing is live events. And so, it's not surprising that those have grown in importance. Whether that's sports or music concerts or all sorts of other things. But there are differences. You know, with other content, you own the IP for that content and you can use it again and again and again. Live sport, for example, has a very short shelf life. You don't own the rights. You effectively rent those rights for 3 years or 4 years or 5 years. And you always stand the possibility of losing those rights at the end of that period. So, the ability to plan for the long term isn't as easy. Notwithstanding all of that, it's pretty clear that live rights will, I think, continue to grow in importance. They'll continue to grow in value. And I suspect all of the streamers eventually will have some form of live events to sort of balance out those great swathes of content that they have in all other areas. I think they'll become more mixed models. In many ways, a new modern version of the old traditional media companies.

Yes. The streamers will become a little bit more like the traditional guys, but using their distribution model. And I think the traditional guys will have to move more towards what they are doing. So, you'll end up in this sort of middle ground.

Well, and once you're in that middle ground, then of course, what will really matter is the strength of your content and the strength of your brand. And that takes you right back again to really investing in the brand.

Well, I think they all brands share one thing, which is that the consumer, the viewer are increasingly savvy, if you like. And what they're interested in is not just what a company says, but what it does. And they're very interested not just in what a company makes, but how they make it. And so, the challenge for all brands is to show that they're increasingly behaving in a responsible, sustainable, and inclusive way. And of course, the more brands put their heads above the water and start to talk about those things as a way of differentiating themselves, the more consumers will hold them to account about whether they're really behaving in that way and making progress in that. So, I think we've sort of gone through a phase where there's been a lot of talk and a lot of good positioning. And increasingly for all brands, including media because they're very high public awareness, I think it's really going to be about hard delivery. What are you doing differently now from what you did before?

Well, production I mean, production is one of the key areas where you touch the environment, obviously. And doing that in a more sustainable, inclusive way is probably one of the most important ways to show you're behaving differently. The actual distribution network, whether that's through traditional methods or online, there's less you can do there effectively to make that more sustainable. So, it's how you create that great content, I think, becomes absolutely critical.

That's a huge question. Big question. Sorry. It's got a very big agenda.

I think BT is one of the biggest transformations in the UK today or for a long time, actually, and even globally. It's a hugely important brand and company and in many ways it underpins a lot of what needs to happen in terms of supporting the UK economy in the future, building back better, leveling up, connecting people for good. You know, we've seen in the last 2 years through COVID just how important what BT does is to everybody in every part of the UK and beyond. So, hugely important strategy. For us, it's all about the rollout of fiber and 5G and connecting every house and home and business with super fast fiber and 5G. It's about ensuring that once we've spent the billions that we need to spend doing that, that we actually connect people and generate a return. Like all companies, we have a job to do in both consumer and business to migrate people from legacy products to new digital products. We share that with most brands. We've got a big job to do to change our culture and to become much more efficient. And we've got to do all of that in a much more inclusive and responsible and sustainable way. And we really do touch the environment in many ways, including things people might not think about, like we're the second biggest fleet of vehicles in the UK. And therefore we need to move to more electric vehicles. So there's a lot that can be done, but that transformation for us is absolutely critical. And the brand is really important within that because if you look at telecoms companies all over the world, it's an unusual industry because you've had growth in usage of maybe 50% every 2 years. And yet if you look at the revenue streams of most telco companies, they've been relatively flat. And so there's clearly an issue there about how the markets operate. And it's very much driven by market share. And therefore the strength of the brand within that is absolutely key. So how we use our brands in the future, both BT, EE, and Plusnet is really important for all our business and consumer customers.

Well, increasingly EE for example is seen as an extraordinarily strong brand actually. And really connects particularly the younger end of the market. And though that brand has to also connect fixed and mobile telecoms. That's a big drive, bringing those things together. And EE will be at the forefront of that for consumers. BT will become over time more of a business oriented brand. And Plusnet's very much at the value end of the marketplace and it's important we're able to sort of compete in all of those areas, not just here, but internationally as well. So, developing that brand is key. And a really important part of that is that fiber will obviously improve and 5G improve the speed of everything, which means better service. It's also much more reliable which again people really value. We've got to do that in a cost effective way for people at prices they feel are right and fair. And for us, getting all of that to work positively is absolutely key, but then wrapping it all up in increasingly good customer service. Traditionally BT and telecoms companies generally didn't provide great customer service and part of our brand has to be that brilliant service.

Yeah, but all coming together for the good of the BT group.

I suspect they're broadly similar across most markets actually. I mean, it starts with the macro issues we talked about earlier. You know, those are clearly impacting on every company in every country in the world. Clearly as we move into what is a very difficult and challenging time, that puts pressure on marketing budgets. It puts pressure on marketing people to justify the return on investment they're getting from that. I think clients are increasingly having to operate in a world where the pace of change is accelerating in terms of big digital and business transformation. I think marketers are increasingly being asked to make decisions more quickly in real time. And they need really high-quality data to be able to base those decisions on. So, I think it's a very challenging time for marketers. And at the heart of that, we need to help them by making sure that they have that high-quality data as quickly as possible in a form that allows them to really draw insights from. It's not just about having the data, it's actually having an insight into how can I use that data to really drive competitive advantage.

It's very similar to the challenges for the clients in many ways. As it should be. As it should be because we're partners. Our role is to help make our partners as successful as humanly possible. But if you starting point is it's hard to find anyone who doesn't believe that data and access to accurate data isn't becoming more and more important for every company in the world around their market, their brand, their consumers. But equally, many people I talk to at CEO, chairman level, CMO level will say they're sort of drowning in data. They've almost got too much data. And then the question therefore becomes how can I collate that data? How can I use it and interrogate it to really drive insights that really help me compete in a world where increasingly it'll become about market share rather than just going with the flow of natural growth. And the technology that is increasingly being used by us and the market generally allows us greater and quicker access to data on audiences, on consumers, and indeed on brands and their performance. And I think it's how they use that data to help our clients compete that is absolutely critical.

Absolute pleasure. Thank you for having me.