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. What you see over many years is that really great brands generate superior returns. They're more resilient at times of crisis and generally return to growth quicker than other brands. That's really important right now because we probably have more global disruption than at any time I can remember - the war in Ukraine, the continuing impact of the pandemic, the cost of living crisis, inflation, supply chain problems, and enormous digital disruption. So it's a really important time to focus on the brand because at times of lower growth, it's all about market share, and that is generated and gained by superior brands.

I think the media world has probably gone through faster disruption than many others, a bit like music. The rules have definitely changed. Streaming companies have come to the fore over the last few years, particularly during the pandemic. But that growth is slowing, and increasingly it'll become a question of which ones will survive and prosper. There'll be multiple different models - not just subscription, ad-free, but advertising-funded models as well. All the traditional media players are fighting back. It's about finding the intersection between having a fantastic media brand, brilliant content marketed strongly, and multiple distribution models to reach the consumer, because the viewer will always find the most convenient way to access great content.

I've got admiration for a lot of media brands. I think Netflix, despite some recent issues, is a fantastic brand. To have come from mail-order DVDs to where they are now is astonishing. Their brand has become synonymous with watching great content online. That's a fantastic achievement in a short time. But like all brands that take advantage of opportunities, there comes a point where you have to adapt and change. The recent issues around the way forward, subscription losses, competition, and whether to have an ad-funded model are all part of the growing pains of the brand and how it connects with consumers in an increasingly competitive marketplace.

To take the words of Bill Clinton and change them a little, it's all about the content, stupid. In the end, you first have to have access to fantastic content, you have to own it, and find multiple ways to engage with viewers both online and through traditional models.

The difficulty for the traditional players, as in any marketplace for incumbents, is that the new players see opportunity and have their foot firmly on the accelerator. The incumbents have to defend legacy revenue streams while trying to move to new less profitable streams. That's a very difficult journey.

And to explain to shareholders and stakeholders, particularly when even the big streamers' business models are not yet proven in terms of long-term profitability and return on investment.

Do you mean specifically media or more general?

I think the traditional media players also have strengths. First of all, they start with fantastic market share. They've been part of consumers' lives for many years. They trust them. They're seen as having a huge volume of high-quality content. And right now, they are the big players. The issue is how they adapt to this new world. As always when new methods come in, people tend to exaggerate how quickly change will occur. We're going to end up with a very fragmented media marketplace with fragmented audiences. Younger audiences are leading the change, but older ones are also adopting different viewing habits. How these traditional companies move from one model to the next while maintaining and generating new revenues is a really important task. The same principles apply to almost any marketplace. It's about moving from that traditional model to a more mixed modern economy model.

It's a mixed bag. The truthful answer is I don't know. It's moving so quickly. But there are a few things you can assume. One, content will continue to be king. Two, further fragmentation, which is a big issue for advertisers. How do you reach mass audiences when the world is fragmenting? Advertisers will want seamless measurement across every platform to understand performance. Consumers will become increasingly choosy about which services they pay for, which is why ad-funded models will continue to grow. The traditional players will have to adapt or they will eventually die, not in 5 years but over 15 or 20 years. It's better to make the change yourself than wait for someone else to do it. It's really important that marketers get to grips with this as quickly as possible. It's a huge challenge.

In a world where you can binge entire series at any time, the viewer is increasingly in control. The one thing that becomes destination viewing is live events. It's not surprising that those have grown in importance, whether sports or music concerts. But there are differences. With other content, you own the IP and can use it again. Live sport has a very short shelf life; you don't own the rights, you rent them for 3 to 5 years and always risk losing them. So planning for the long term isn't as easy.

Notwithstanding all that, it's clear that live rights will continue to grow in importance and value. I suspect all streamers will eventually have some form of live events to balance their other content. They'll become more mixed models, a modern version of the old traditional media companies.

I would say. Yes. The streamers will become a little bit more like the traditional guys, but using their distribution model. And 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, once you're in that middle ground, what will really matter is the strength of your content and the strength of your brand. That takes you right back to investing in the brand.

I think all brands share one thing: the consumer is increasingly savvy. They're interested not just in what a company says, but what it does, not just what it makes but how it makes it. The challenge for all brands is to show they're behaving in a responsible, sustainable, and inclusive way. The more brands talk about these things to differentiate themselves, the more consumers will hold them accountable. So we've gone through a phase of talk and positioning. Increasingly for all brands, including media because of high public awareness, it will be about hard delivery. What are you doing differently now?

Production is one of the key areas where you touch the environment. Doing that in a more sustainable, inclusive way is important. The actual distribution network, whether traditional or online, there's less you can do to make that more sustainable. So how you create that great content becomes absolutely critical.

That's a huge question. BT has one of the biggest transformations in the UK today and even globally. It's a hugely important brand and company, underpinning a lot of what needs to happen to support the UK economy. For us, it's all about the rollout of fiber and 5G, connecting every home and business. Once we've spent billions, we need to connect people and generate a return. We have to migrate people from legacy products to new digital products. We've got a big job to change our culture and become more efficient. And we've got to do that in a more inclusive, responsible, and sustainable way. For example, we're the second biggest fleet of vehicles in the UK, so we need to move to electric vehicles. The transformation is critical, and the brand is important within that because telcos have had growth in usage but flat revenues. It's driven by market share. How we use our brands - BT, EE, Plusnet - is really important for all our customers.

Increasingly, EE is seen as an extraordinarily strong brand, connecting particularly the younger end of the market. EE will be at the forefront of combining fixed and mobile telecoms for consumers. BT will become over time more of a business-oriented brand. Plusnet is at the value end. It's important we compete in all those areas, not just in the UK but internationally. Fiber and 5G will improve speed and reliability, which people value. We've got to do that in a cost-effective way with fair pricing. And wrap it all in increasingly good customer service. Traditionally, BT and telecoms companies didn't provide great customer service; part of our brand has to be brilliant service.

I suspect they're broadly similar across most markets. It starts with the macro issues we talked about earlier, which are impacting every company. As we move into a difficult time, that puts pressure on marketing budgets and on marketers to justify ROI. Clients are increasingly having to operate in a world where the pace of change is accelerating in digital and business transformation. Marketers are being asked to make decisions more quickly in real time, and they need high-quality data to base those decisions on. We need to help them by providing that data quickly in a form that allows them to draw insights. It's not just about having the data, but having the insight on how to use it to drive competitive advantage.

It's very similar to the challenges for the clients in many ways, as it should be because we're partners. Our role is to help our partners be as successful as possible. A starting point is that it's hard to find anyone who doesn't believe data and access to accurate data is becoming more important. But many CEOs and CMOs I talk to say they're drowning in data. The question becomes how to collate and interrogate that data to drive insights that help compete in a world increasingly about market share. The technology we use allows greater and quicker access to data on audiences, consumers, and brands. How our clients use that data to compete is absolutely critical.

Absolute pleasure. Thank you for having me. Can come back again in future.