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Y&R / 2018
SXSW
INTERACTIVE
INSIGHTS + TAKEAWAYS
What’s
.inside?
Y&R @ SXSW 2018
1
2
3
4
5
6
7
8
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

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Y&R TAKEAWAYS FROM SXSW 2018

  • 2. What’s .inside? Y&R @ SXSW 2018 1 2 3 4 5 6 7 8 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
  • 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