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>>Evan Davis: Angela, have you had bad experiences as well as good experiences of the way managing
a brand in the digital era -- the challenges of that?
>>Angela Ahrendts: Yeah. I mean, I think there's always going to be trials and tribulations
when you are going into -- let's -- let's -- When you started a company; right? That's
not growing and the sector is growing and you are going through the digital space. So
I would say very early on we did. But then when you put a team in place and
you lay very clear direction up front, and so we are a very visual team so we tell a
lot of stories inside and we, too, knew five years ago in our original strategy there is
a digital tsunami coming and I told the team we are either going to ride the greatest wave
of our life or we are going to die. I mean, those are your choices.
So we had to take all of our I.T. guys, our CTO and I said, look, you guys have been sitting
in the back of the bus. You have been doing the plumbing of the company for a long time,
putting in SAP, et cetera, but I need somebody to drive the bus with me; right? Christopher
with can dream all he wants, but I have to enable. I have to connect these guys, and
I don't think the two of them have ever been in a room together. So I told John, I said
get out of the back of the bus. I need you to drive the bus. And I sent him a quick text
on the way home and I said have you ever seen the movie Speed? And he very quickly realized.
In five years on, now I tell him he is driving the Starship Enterprise. And I am up there
with you, but we are going where no man has ever gone before because we are letting Christopher
dream. So he is now my closest partner, no different
than the CFO, no different than Christopher. I just spent a week on the road with John
from San Francisco to San Diego to New York meeting with big companies because it is him
and I that are going to determine if, in fact, we can execute Christopher's dreams.
>>Evan Davis: It's the triumvirate at the top of the program, the technology officer,
the creative officer, and the chief executive. I don't wonder, Maurice, whether we don't
slightly exaggerate how much has changed. Let me add to that. It didn't take 18 months
for Coca-Cola to change the brand. It took about a month I think.
>>Maurice Lévy: Oh, no, no, no. >>Evan Davis: It was --
>>Maurice Lévy: Go back to the story. It took them a lot of time, first because they
stopped -- they had the new Coke, and they had to put the old Coke -- to change the packaging,
to call it Classic, et cetera. They wanted to wait for the first result. Measurement
was not that clear. You have to remember -- I know you are very
young and you have not seen these days, but you go to Google and you will find out.
>>Evan Davis: Yeah. [ Laughter ]
>>Evan Davis: But do we -- do we exaggerate -- put aside the specific case. Do we exaggerate
the power of it and the way it changes things? >>Maurice Lévy: I don't think so. I think
that we have not seen half of what -- when I say "half" -- 10% of the change which will
happen. You know, there is a lot of people who don't
read papers or read paper, they read the news on the Web. There is a lot of people who do
not use this (indicating). They use the iPad. I have one, but I don't show it.
[ Laughter ] >>Maurice Lévy: You have a lot of people
who have dramatically changed the way they are learning, they shall getting news, they
are communicating, they are meeting. They are even getting married. Shopping. All this
has changed dramatically. And we don't have yet seen the full impact, simply because we
are in a trend of generation. Look at the room. People are much younger
than I am, but they are not the digital native of 25, 26 years old that are populating the
agencies today or the brands. And these people are changing the world.
And we are far from having seen what will happen and the impact of everything.
>>Evan Davis: Right. One of the implications is obviously that
there's a breaking down of national boundaries, isn't there? I mean, it must be impossible
to maintain separate -- I would have thought in a sector like yours, Angela, impossible
to maintain national marketing strategies; right?
>>Angela Ahrendts: Well, and again, if you are going to be a digitally focused company,
why? So, you know, we always say that when you
go on to Burberry's Web site, I mean totally unaided there's a million people a week that
just go onto that site, and from all over the world.
So if that's the front door to the house that more people are going into than anything physical,
then shouldn't everything you do be geared in and around that? Whether it's the way you're
designing product, shipping product. And, you know, any of the traditional media,
it has to follow that now because that has to be the epitome of the brand. That's what
more people around the world will see first, and sometimes the only thing they'll see because
you can't possibly keep your physical environment up with as fast as everything is changing
at digital or the amount of people that you can reach. Especially as a luxury brand. We
are just not going to have tens of thousands of stores all over the world.
>>Maurice Lévy: With the permission of Angela, I would probably bring some nuance, if you
would allow me to. >>Angela Ahrendts: Please.
>>Maurice Lévy: I think that for luxury brands, this is true because you have a target group
which is almost the same and which has the same purchasing power and they have access
to the knowledge of what's going on. I believe that for consumer goods situation,
and even for cars, situation is very, very different, and you have a slice which is global
and you have a lot of specific communication tools which have to be rooted in the culture
of the people. So it's much more sophisticated, much more
complicated than it was in the past because digital give access to the same kind of information.
So it's much more complicated, and we can nuance a little bit, with your permission,
the theory. >>Evan Davis: How many people go into your
stores each year? Your physical bricks and mortar stores.
>>Angela Ahrendts: Oh, a tenth of what go online.
>>Evan Davis: And how many of the ones online translate into sales? because I bet it's not
as many who go into the stores; right? >>Angela Ahrendts: Again, it's one of the
things that nobody has been able to measure yet. Nobody.
So again, we do about 30% of our business through third-party wholesale customers. We
have our own stores, we sell online. And we don't break out what we sell online.
I mean, I can tell you it's low single digits from a volume standpoint, but --
>>Evan Davis: So it's much less online than in the store.
>>Angela Ahrendts: Absolutely. But again, we're selling. We're selling $2,000 trench
coats. But understand, the goal -- the goal is not
-- we don't call it e-commerce. We don't call it -- The goal for us is brand engagement.
We are building a global luxury brand. I care more that they sat on the site for
7 minutes and 22 seconds than I care what they bought. I don't care if they buy. I am
getting mind share, and we know some day, somewhere, whether it's at Nordstrom, DFS,
one of our stores in Paris, if they are connecting with the brand -- and I don't think it's any
different than an Apple device, I don't think it's an different than a Starbucks cup of
coffee to the example that was earlier. You know, our quest is to build a really great,
pure, very engaging, very entertaining global luxury brand.
>>Evan Davis: Mind share is good but sales must be better, Angela. I mean --
>>Angela Ahrendts: I think the results speak for themselves.
[ Laughter ] >>Angela Ahrendts: We just reported profits
up 27%. We reported that channel up, of course the largest on a very small base.
But I think we have invited a new customer into the brand. We have not walked the core
customer. Of course the products have to be compelling.
>>Evan Davis: So it's long-termism, really. >>Angela Ahrendts: Absolutely.
>>Evan Davis: Because you are building them for future sales, even if they don't buy the
day they come in. Maurice, last question before I open to the
floor. Just what are the egregious errors, what are
the mistakes people and companies, your clients, what mistakes do they make?
>>Maurice Lévy: Oh, they never make any mistake. [ Laughter ]
>>Maurice Lévy: They can't. They are clients. >>Evan Davis: They are well advised.
>>Maurice Lévy: But more seriously, what we see with the clients is exactly what we
see with the agencies. You have clients which are more ready to step in the new world and
some who are less ready to. For example, if you go to tourism, financial
services, automotive, these people are fully embarked on the digital age. When you go to
consumer goods, you have different speeds. And going to some brands, you see that they
are also fully engaged and some other who are not.
But the biggest mistake that they have done -- some have made, and some of our clients
including, is to do not pay enough attention of what is going on the Web.
And considering that -- because a young guy or a young girl has said something, it's not
very important, the reality that this young guy or this young girl has criticized, "A,"
either the corporate culture or the ethical attitude or the nongreen attitude, and the
result has been that pretty quickly it went on the Web and became a big buzz.
>>Evan Davis: Yeah. >>Maurice Lévy: There are a lot of things
which happen to very well-known brand. I don't believe it is important to name them. Everyone
has this in mind. And this is probably the biggest problem that they have faced, and
they are still facing because a lot of people who have been burned by this kind of situation
continue to ignore what's going on. >>Evan Davis: Angela, should we very quickly
show the video? Tell us about it and what it shows and let's have a quick look at it.
>>Angela Ahrendts: Okay. We work closely with one of Maurice's companies,
happens to be here today, BBH in London. And -- on creating new concepts.
>>Maurice Lévy: Minority share. We have only 49%.
>>Angela Ahrendts: We still love working with them.
[ Laughter ] >>Angela Ahrendts: They're amazing.
>>Maurice Lévy: And we love them -- >>Evan Davis: Get on with it, please.
>>Angela Ahrendts: Our teams always work on pushing the boundaries, coming up with new
concepts, et cetera. It's our job to execute them. And again, in your quest to build a
great luxury brand, we need to work with a lot of different partners and so we take every
opportunity. We never do an event that's not a global event, so we happened to open a store
in Beijing but it wasn't just a store in Beijing. The concept the team came up with was let's
make it a convergence of everything, so there's got to be a music component, a digital component.
It's a virtual runway show, if you will. It was done for 2,000 people live at the Beijing
TV studios, the first time that anyone had taken over the new studios in central Beijing,
but it was streamed live with over 200 media partners all over the world.
And it was interesting because there's another connection john Smith, the CEO of the BBC,
is also on our board, and he says we need to be almost more of a media content company
today than we do a luxury fashion brand. And that's what this exemplifies.
>>Evan Davis: And how many people watched the event?
>>Angela Ahrendts: Millions, millions. And of course now it's up on YouTube, so hundreds
of thousands more. >>Evan Davis: Let's have a quick glance at
this two-minute video of the making of the Beijing event.
[ Video ] [ Singing ]
>>> Who is the man I see. Where I'm supposed to be?
I lost my heart, I buried it too deep. Under the iron sea
Oh crystal ball, crystal ball. Save us all, tell me life is beautiful.
Mirror, mirror on the wall. I don't know where I am, and I don't really
care. I look myself in the eye, there's no one there. I fall upon the Earth, I call upon
the air. But all I get is the same old vacant stare.
Oh, crystal ball, crystal ball, save us all, tell me life is beautiful. Mirror, mirror
on the wall. [ Video concludes. ]
>>Evan Davis: We should say, actually, the video doesn't actually do justice to it, because
they were hologram models and real models. So it looks like a video effect on the video.
But for the audience, it was -- >>Angela Ahrendts: Absolutely, absolutely.
Six of them were live for the campaign. >>Evan Davis: We've got time for two or three
questions from the floor. Anyone got questions for Maurice or Angela?
>>> I have one. >>Evan Davis: Oh, yes.
>>> Sorry. You were talking to me or to someone --
>>Evan Davis: Sorry. I thought you were queuing up for a question.
>>> I did. >>Evan Davis: You did. Then we'll take --
>>> I wasn't sure. My name is Loic. Can you talk a little bit about the future
of brands such as Google or YouTube or Facebook or worldwide brands, and they have never done,
or almost, no advertising. They just spread and became huge without it.
So how do you see the future of marketers, given that new phenomenon that you don't have
to do huge campaigns to -- >>Evan Davis: It's a good point. It's the
end of intermediation, to some point. >>Maurice Lévy: No, it's not the end of intermediation.
We should know it if it was. It's not. I think it's a very good point and a very fair point.
It's like the price. It's a media. And as a media, they are spreading.
Now, they will have to fight one against the other. And the one that will start to fight
and not the ugly fight that we have seen recently, but the real fight, the marketing fight, they
will need us. And then we will decide if we go or not.
[ Laughter ] >>Evan Davis: Yes, question here.
>>> -- for Zurich Insurance. And for the audience, Publicis happens to be our agency we are working
with. And, Maurice, I have a question for you. I still have the feeling that we are
very much relying on traditional media, and "we," meaning we as a company, but also Publicis
as an agency. Can you give some recent examples of where you say you're proud of what you
did in new media channels which are inspiring for us.
>>Maurice Lévy: I will not speak specifically about Zurich. But for each of our clients,
we try to bring the solution which is adapted to the client, and also in the discussion
with the client, we see what is acceptable and what is not acceptable according to the
objective that the client has in terms of marketing.
And when it comes to Zurich, where a lot of the -- the sales are made through agent, we
need to work in a very subtle way in order to not upset the network of agents.
And this has been one of the reasons why we have less digital than we should.
>>Evan Davis: Give us an example you're proud of, and then I'm just going to briefly ask
Angela how she relates to her advertising agency, and then we'll close.
>>Maurice Lévy: I'm proud of many, many extraordinary things that we have done. One example is what
we have done for Nike in China. Another example is what we are doing for Lancome on a worldwide
stage. And Lancome is a luxury brand for cosmetics. And they have also a portal of the site which
is designed for e-commerce. And they have -- it has become the largest store in the
world. But yet it is only 2 or 3% of their business. But it's growing fast.
And many, many other examples that they can sure.
>>Evan Davis: And Angela, your relationship -- you have a traditional advertising agency,
presumably. You were awarded a contract -- >>Angela Ahrendts: Honestly, not really. We
have an in-house marketing team, and we work on concepts. But a traditional, no.
Our teams deal directly with Facebook, YouTube, Google. I mean, our guys are dealing with
Google constantly. So there's traditional magazines, there's traditional television.
So, no, we have in-house creative media who shoots everything -- everything, the video
was done in-house. We have -- that's 25, 30 people, we have in-house marketing that are
placing it across every medium. So, no. We do work with agencies, absolutely. But we're
looking for what's next. And when we have a big project, absolutely, we'll work on a
global basis to help get things placed. But there's not one size fits all anymore
for us, but, realize, we're really small in comparison to a lot of the big companies that
Maurice works with. >>Evan Davis: No one size fits all, that's
a good summary of the entire discussion. Shifting sands, the world changing around us, ***-on
theme. Maurice Lévy, Angela Ahrendts, thank you both very much, indeed.
[ Applause ]