In Focus: Pete Pedersen, Grayling

After 20 years with Edelman, Pete Pedersen, global CEO of Grayling, shares his thoughts on technology and public relations (PR) with Vipanchi, as big data, privacy policies and advancing technology bring new channels and challenges for storytellers.

By Vipanchi Dinavahi

 
 
It used to be advertising vs PR agencies; now, digital agencies have come into the picture. Is this age-old debate of who’s better still on?
 
I think there are probably three different perspectives there. One is the client’s perspective, which has changed. Clients used to be very disciplined and regimented about the sort of agency for a particular activity; now, they just want the best ideas. And they don’t seem to care as much anymore about where the best ideas come from. This could be the result of the exchange of information, or it could be that of increased economic pressure to be more efficient with what they have. So, I think it is less of a debate from the client’s perspective they just want some agency to work fast, be of good value and get the job done.
 
The agencies are competitive with one another. Everyone has their top track—what they say to the market, and what they really believe. In many cases, we’re doing very much the same thing. PR agencies are buying advertising now on behalf of their clients; the ad agencies are doing PR. So everyone realises that they can come together. What I do think is true—and the third perspective that one can take—is that there are inherent skill sets associated with each of the disciplines, leading each of the agencies down a path. In PR, we’re natural story builders. It’s what PR people have done since the dawn of the profession. We tell real stories, grounded in fact and rooted in research. And, in many ways, PR agencies are more adept at engaging audiences—we engage in dialogue, not top-down messages. I would say PR and social media go very well together. Advertising and digital marketing go well together, and you have seen the market shaped that way. And then there’s this area in between that we’re not quite sure what to call yet, but I think it is anyone’s game.
 
Now, after 20 years with Edelman, what’s the "1st order of business in Grayling for you?
 
Grayling is an interesting company. Obviously, very European and has its roots in the UK. And that has profound implications on how the company is operated: 65% of our revenue is European, though, of course, Europe continues to suffer through the economic slowdown. So, the first order of business is, broadly speaking, how to grow, as any business tries to figure out. Europe is still an important market, but we’re going to really focus on the US and Asia. 
 
There’s this huge rush into Southeast Asia happening right now, and MNCs,big brands are all trying to squeeze onto local shelves. Which business sector do you think, or do you foresee, will face the most diffculty in this market?
 
I’ve never thought about what’s most difficult. I think technology is an interesting candidate, simply because there are classic last-mile issues. Infrastructure becomes a real issue. How do you get electrical power in some of these places? How do you get stable internet broadband connection to some of these places? And, of course, smartphones, computers and gaming consoles—things that consumers really like—are so highly dependent on stable infrastructure. Even mobile telephony requires stable infrastructure. I think we have seen some real innovation on tackling that problem. I love companies that are springing up all over the world now. 
 
There is one company that manufactures a cellphone tower in a backpack—have you seen it? It’s fantastic. Another example is these solarpowered mobile charging stations. They make perfect sense: If I’m in an area with a lack of stable electrical grid, I have a way to keep my cellphone charged. I think we’re seeing innovation in the business model—we have markets providing low-cost access to the internet and to cell network, by virtue of advertising on the ringtone. Turkcell is doing something like that. So, the point is, whether it is the hardware, the software or the business model, you’re seeing all this innovation that help us get over the very real physical challenges in emerging markets. 
 
Will this influx challenge local brands’ stronghold in the market?
 
[Market share] will be a mix—a mix of local brands that are either locally produced or, at least, locally designed and catered to local tastes, as well as big multinational brands that are viewed as premium or exclusive to a certain economic status. I think we’re going to see more. There’s a local rum in the Philippines called Tanduay, which can’t be bought anywhere else in the world [Ed’s note: Tanduay recently debuted in the US market in June this year], but is massively popular in its home country. The company sponsors sports stadiums and bars, and every other shop corner has Tanduay signage. Here’s a brand that I’ve never heard of that is clearly one of the most dominant brands in a massive market that also has Diageo brands as well as some of the other multinational players. That’s just one category. In terms of fast food and consumer goods, you have healthcare products. 
 
In China, local brands of sunscreen have bleaching agents in them for cultural reasons. So, I think the new local brands are, in fact, quite powerful. I don’t know if that’s going to be a challenge for Western brands as much as an issue of awareness. 
 
Nevertheless, isn’t it natural to assume increased competition for local businesses with so many brands and businesses coming into Asia?
 
The question isn’t so much about what’s coming in, but what’s going out. Both are very interesting to look at, but maybe it is just because I’m bored of Western brands; it’s more about what innovations are produced by the region, and what’s exported globally. And I use the term “export” broadly—it is cultural exports as well as physical exports. 
 
If you pull the lens back a bit and think about Asia’s impact rather than that of Southeast Asia, what is the impact of low-cost, highperformance and high-quality smartphones from Huawei and ZTE and the entry of some of the Chinese players into markets like Africa and South America? All of a sudden, you are seeing innovation happen in such a way that is enabling the next set of emerging markets. The economics of the local market do drive a certain amount of innovation. When taken to scale, it is going to do all sorts of interesting things further outside of Asia. Take Tata Motors for example: Their $3,000 car stunned the entire automotive industry. India could become the next big hub for auto manufacturing.
 
This is where you’re starting to see reverse regulations to keep everything in balance and in line with local regulations. The Western markets have reacted to Chinese technology companies in particular. It will take some time for this flow to settle at a place where everyone feels good. Anytime during market disruption, you would expect that to happen, and that’s what we’re in the middle of right now. It is an amazing time, if you really think about it.
 
Having seen brands rise and fall, what do you think the PR market in Southeast Asia for the next couple of years is going to be like?
 
Southeast Asia is quite a big region, and it’s tough to answer the question on a regional basis, because you see differences between countries. Singapore, for example, is a very sophisticated, very mature market in terms of its PR and marketing history, as compared to a market like Vietnam where it is very exciting—everyone’s moving into Vietnam and thinking about the potential there. The sophistication of their market is not quite what it is in Singapore. You go to Indonesia, and the big city—Jakarta—is every bit as sophisticated. With some of the smaller cities, however, they’re not quite there yet. Overall, the region is progressing incredibly fast. But it is really a question of market-by-market and, in some cases, city-by-city communication.
 
Traditional-media veterans challenge the importance of social media. What are your views on this?
 
It is interesting. There is a disservice that has been done by the industry, in the separation of traditional media from social media—they are all just media. Most people these days get their news content via their smartphones or tablets. So, I’m not sure if the conversation is about the “social versus traditional” debate; rather, the conversation is more about content. And that’s the common ground. Whenever I have a conversation with someone who doesn’t really “get” social media, I say, “Forget about social media—that’s a channel. 
 
Let’s talk about content.”  It goes back to what I was saying earlier, that PR people are good storytellers, with an understanding of content. If you can get an executive who might not be as savvy, or a client who might not be as willing, and it’s really about producing great content. The channel is secondary to the story.
 
However, this is a conversation that is rapidly transforming. That education is happening. It varies on a market-by market basis, but we are seeing a rapid movement towards digital and social that’s embraced by many organisations and all levels of companies. That said, I think we still have cultural- and country-specific nuances to which attention should be paid. In Japan, for example, people still rely strongly on newspapers as their primary source of information. Good ol’ afternoon newspapers tend to be massively circulated and widely read in the country, and you wonder why. It is really hard to say something meaningful in 140 characters on Twitter in Japanese. Though Japan is pretty well wired, it’s more about who the people have come to trust and what companies have come to really prioritise as their primary communications vehicles. In contrast, China has new platforms like WeChat.
 
We can talk about the geographical nuances and differences, or argue about device or outlet, but it’s a combination of all of these things. More and more consumers are flowing freely from one device to the next, or one experience to the next. So, they would start watching something on television, very easily continue their exploration on that topic on their smartphones, then pick up a newspaper, a magazine—and as it turns out, maybe even the online version of the magazine or newspaper. What connects all of these things together, all of these experiences  together: search. It makes perfect sense.
 
Various governments across the globe are introducing privacy policies. Some policies pose significant challenges to businesses. What are your views?
 
I’m a privacy geek, so you may have just opened up Pandora’s box a little bit. Let’s look at it from different perspectives, starting with the companies’ perspective. What companies are fundamentally trying to do in most cases is to give you a better experience. Serve up an ad that makes more sense, give you a coupon for something that you want to buy. There is, of course, a commercial element to it as well, but fundamentally there’s nothing evil or nefarious about what companies are doing.
 
The question is a very technical one. How is the data collected? Where is the data stored?  And in some cases, as you well know, the actual server that the bytes sit on could be every bit as legal or illegal as the other issues. With whom is that data shared with, or to whom is it sold? How is security handled around that data? And, ultimately, what is the data used for? These are all very technical questions, either in the legal sense or the technological sense. 
 
Now, let’s talk about the consumers, the end users. Most of us don’t care. But at the end of the day, we make the trade-off decision. We involve ourselves in dangerous behaviour all the time, because we have a  great experience. We cross the street, even though there are cars, because it gets us quicker to the other side. I give out a piece of information about myself because I know it gets better experience, and—let’s be honest—the experiences are pretty awesome right now. What you can get on your phone right now is mind-blowing!
 
Consumers are savvy from a very early age. This savviness on purchase behaviour is the same sort of savviness that leads consumers to make conscious, or even unconscious, decisions about what information to give or otherwise. So, here you have these two seemingly players at odds—the corporations and the consumers—when, in fact, their objectives are aligned. There is a natural balancing that happens in that little ecosystem. If consumers don’t like a company that collects too much data, they won’t use the company. Look at how quickly Facebook has moved to change their privacy policies because they upset their consumers—and things find their way there.
 
Then you get the disruptive force, the government, who comes wading in and says, “Aha. We don’t trust that this thing is going to balance itself out, so we’re going to start putting in all of these regulations.” These frameworks, these laws, are all fine and good if the world was defined by just one country. But if you’re a company trying to do business in 225 markets around the world, having to deal with all of those individual privacy policies is a complete nightmare. Most companies would say, “Forget it, I’m not going to do it, I’m not going to deal with it.” 
 
In fact, companies are pouring out of Europe because of the proposed regulation around data protection there. The EU is making it  incredibly difficult for a company that collects data to actually have its headquarters in Europe. So they’re going to Brazil, where there could be another level of change that we haven’t yet discussed: What happens when these companies start to headquarter outside of places where they have grown their products? 
 
This ecosystem will eventually work its way out; companies, in particular, are working very fast to figure out the right approach, so they can avoid or stave off the regulation. They are grappling with two issues: collection and use. Collection is easy—they just have to tell you what they are collecting. Use is a trickier issue, because they can’t predict the future. They can tell you what they are doing with the data now, but they can’t tell you what they are doing with the data in 10 years. And that’s the issue that will trip everything up.
 
CEOs these days are required to have a more active public profile. With data so easily accessible, it has become a necessity to plan and think ahead about what one says within a quick turnaround time. Comments made can affect a company’s public profile. What advice do you have for CEOs and professionals when they tweet or put up a Facebook update?
 
The first thing is nothing new or groundbreaking, but is certainly truer now than it has ever been: Authenticity and transparency really matter. There are no secrets anymore—no burying the truth or hiding it. CEOs, leaders, individuals, employees, all of us in the room—we have to own our behaviour. It is an age of accountability, and folk —whether they are individuals, corporations or governments— who don’t own up to their behaviour, past, present or future, are the ones who tend to find themselves in trouble. That’s the preachy, macro view.
 
The more tactile view is that online reputation is an important topic, and there are ways to manage reputations online that has to do with how the search algorithms are built and so forth. It’s really about making sure there is enough good content about the brand, the product, the CEO or the individual—so that the less flattering stuff is not obvious. But again, Google doesn’t forget: If you go down to the seventh, eighth or ninth page, you can always find what you are looking for. Most people don’t have that much time, though—they are searching for a name or a product, and once the first page comes up, they don’t go on to the next page. The question becomes how you fill the channel with enough appropriately tagged content.
 
Google rewards good behaviour, too—in a funny way. Vastly simplifying, the algorithms are based on how many links [a piece of] content has to it, how that content is shared—there is an authenticity or credibility ranking for content. The lies, the junk and the garbage don’t get higher up on the search returns. Therefore, the quality and good stuff that the community self-polices looks to be credible and real. In a way, it’s less about our impatience for information than about good content and information rising to the top. It is true more often than not: Good information rises to the top.
 
Which technology has impressed you the most over the years?
 
I’m fascinated with two things. First, it’s wearable technology—anything from Google Glass to Nike’s FuelBand. We’re just starting to see the practical applications of wearable technology, which makes the necessity of carrying a phone around obsolete—it will be built into your jacket. In fact, in most cases, the technology already exists; it’s just a matter of figuring out how to reduce the cost, so that you and I could afford it.
 
Going a step beyond the obvious, there are new technologies that have already been introduced, things like tattoos that emit digital signatures and allows sensors built into conference rooms to detect thus: “Okay, it’s me who’s walked in. I like the lights just so, I like the TV like this.” Similarly, there are pills that can be swallowed, that emit digital signatures. A lot were unveiled at the “D: All Things Digital” conference.
 
There are a thousand different things that are wearable that, I think, will really remove the barrier between humans and data. Right now, your cellphone is a barrier—it’s a mediated experience. We won’t have any need for a mediated experience; it would be just around us. We would achieve the greatest use of technology when it disappears. Similarly, something that I’m fascinated with is natural user interface. Speaking of Minority Report, the idea of a keyboard is very antiquated. The idea of typing anything—we’re talking about voice recognition, speech recognition, gesture-based interface, and so on. This is extraordinarily exciting to me.
 
A third thing I am excited about is particularly relevant in this region: robotics. In the field of robotics, Japan is leading the market, the world, and for a very good reason: They have a healthcare problem on their hands. They have an ageing population, and they’re going to require quite a lot of caregivers for that, and they’re not keen to import that talent; they are interested in figuring out how to use robotics to take care of their ageing population. We’ll see how that goes.
 
 
 
 
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