AA: Bill, right now how do companies like yours look at the Web and how it changes what you do in the near term?
Mr. Johnson: Well ... in fact, it does change the way we go to market. Because what we have to figure out -- we have 60 million people in the United States that use Heinz ketchup, we've got to figure out a way to talk to those 60 million people.
We've got another 150 to 250 million people around the rest of the planet that use it. There are probably a billion people that ought to be using it. We've got to figure out how to make that work.
But I want to come back to something Martin said, because Martin hit on a very substantial issue for people on our side of the business -- and that is the whole customer issue.
If you talk to marketing people in our companies now, and you ask them who their customer is, they will not say it's you, they will say it's Safeway, or they will say it's Kroger, or they will say it's Wal-Mart.
And as a consequence, one of the reasons I think you have had such a fear of embracing the new technology is a fear of upsetting what people perceive to be our ultimate customer.
So we have created on our side of the business a supplier mentality, as opposed to a marketer mentality. What this technology gives us for the first time since, really, television was introduced, is the opportunity to regain the image of a marketer. To take those billion dollars and reapply it against understanding the people using our product.
And recognize -- I sure don't want to be quoted on this -- but recognize that who we term as the customer has really become the distributor in the middle of the process.
Mr. Sulzberger: You are going to be quoted on this. As a newsman, I can assure you . . .
Mr. Johnson: I'll say it anyway. Because I think that's the issue. And with all due respect to Martin's comment, I'm not sure age has anything to do with it. I guess it all comes down, as it does everywhere in life, to the quality of the people who are participating in the activity.
One of the things that is not occurring in our industry that ought to be -- and I can't speak to the advertising business, but I think I have a sense on the technology side -- is the push we should be getting from below, from the young people.
Martin is correct in saying people, when they become embedded in their ways of doing things, if they're not prepared to walk away from what they've done for 30 years and push down, they're not getting the push up.
That may be a system issue, it may be an issue of the way we've not encouraged participation, it may be an issue that we've rejected new thinking. But the reality is in our company it's come from me. Maybe it's supposed to come from me. But when I was a younger person coming up in this company, I didn't wait for that, I pushed it myself.
Mr. Herbold: I'd like to comment on how information flows in a corporation or an organization. One of the advantages that the information technology industry has is that virtually every company who plays in this industry understands that oblivion is 12 to 18 months away.
And it really does change the way you make decisions, and the way you have your people get out there with creativity. Because you don't have the luxury of time in many instances. And it requires a communication system that is incredibly informal and incredibly fast. That's why you see most of these companies relying only on e-mail, and no paper.
That's why, also, you see these companies delegating responsibility a lot more than normal companies would. And, in fact, given my experiences in the consumer products business and in this industry, I often tell people that traditionally the consumer products business has had the luxury of time.
I don't know how much time they've got these days, but they used to -- when ideas would emerge they would be exposed to what I refer to as layers of wisdom. That takes an awful lot of time to expose a creative idea to layers of wisdom.
And, in fact, since creativity -- and great products and great marketing -- is all about distinctiveness, it actually knocks the distinctive edges off of it. So one of the real advantages of a business model that pushes down responsibility is you do get more creativity, you do get more distinctiveness.
Most importantly, you get a sense of responsibility on the part of the individuals, that uh-oh, there's not those layers of wisdom that's going to backstop me, I have to get on with this and they're expecting me to do this quickly.
Mr. Georgescu: Let's come back to this notion of talent for a moment. To be able to create the kind of added value products and services that consumers want, we need people with creativity, we need people with imagination.
Revolutionaries are fine, but sustaining that revolution over time, and being able to transfer that into practical businesses that return pretty quickly to a quarterly profit basis with which we have to live with, is a very tough thing.
And it comes back to the issue of how are we going to grow this crop of talent that we all need? Are the schools really understanding what's going on?
Access to this talent that used to go to Goldman, that used to go to the consultants and maybe some law firms, and now maybe [is] going to pure technology companies -- not only because they're interesting but because they give the greatest promise for the quickest buck that you can make short of the gold rush -- is an issue for us.
We need these people. We need their energy, we need their vision, we need their courage, and we must have a disproportionate share. Each one of us would want a disproportionate share for our companies.
Mr. Sorrell: Peter is absolutely right, but it is a terrible condemnation of our industry -- I'm talking about advertising and marketing services -- that we do not grovel in front of 21-year-old undergraduates, as the senior partners of Goldman and McKinsey do. Until we change that attitude, it will never be the same.
We have had a program running at WPP for the last five years. We call it the WPP Fellowship Program. I think the biggest indictment of our industry is nobody has copied us. Nobody. Nobody recruits at the top.
Mr. Sulzberger: I've got to say, I don't think groveling is what's called for here. . . .
Mr. Sorrell: Can I just come on to one other point? We have seen a significant change in the way that our clients look at us. It's related to this sort of age issue.
About six to nine months ago, I think our clients were enamored of the technological developments that they saw amongst the new Web marketing companies. I think that there's been a significant change in the last year or so in that what they look to us for is consumer insight, and what they don't see the technology companies as possessing is that consumer insight.
And I think what they're starting to see is that there is a benefit from the new technology marketing companies aligning themselves with the more traditional -- let's call them, for want of a different phrase -- advertising and marketing services companies.
Ms. Carpenter: You know, I actually have to jump in at this point, because I don't think you can lump all these companies as technology companies. I know a great number of us are media companies, are not run by technologists at all, and never have been.
There are true technology companies, [but] I think they are fewer and fewer. I think [America Online President-Chief Operating Officer] Bob Pittman would be considered a pretty great marketer. I think more and more the people leading these companies are people who've made their strides understanding the consumer, and not understanding the technology.
I think your comment would've been very true a year or two ago, but I think it's much less true now.
Mr. Sulzberger: I agree with Candice absolutely. This isn't about technology anymore. The technology leaps that you have now in this business last for what, six months? And then they're gone.
This is about how you merge technology with usage, and how people really think. And some of the most interesting stuff that's happening in Silicon Valley now isn't about chip size, it's about integrating basic usage patterns with this technology that, with respect to Microsoft, still baffles the hell out of a lot of people. So I agree with you.
But if I can go back one last time to this talent issue, because it is a critical one for all of us. I would replace groveling with a couple of thoughts.
One, opportunities, which I think we all would agree we already offer to our people, but we never, or rarely, balance them with options. And these are folks now who are going to want to come much more for options as well as opportunities. And accept the fact that they're going to move on, and that there's nothing wrong with that.
You don't have people for a lifetime anymore. These people know their worth, they know their value, they'll work for Candice for a little bit . . . they'll come work for me for a little bit, and then move on, and we know that.
AA: Let's switch gears and talk about multicultural marketing. How will this demographic trend, and the recognition of its importance, change our business in the next 10 years?
Mr. Georgescu: Well, I would link the multinational marketing trend to everything that we've discussed so far, because I think it's simply an expression of that.
It's just, again, recognition and respect for the customer. I think we're now looking at groups of consumers who have cultural characteristics that are terribly important to them, they want to live part of their lives in a different world, and we need to respect that.
AA: Bob, can you address how Microsoft approaches both globalization and deals with the various multicultural segments here within the U.S.?
Mr. Herbold: Well, first of all, this industry, information technology, has some advantages in terms of globalization because the products are truly designed to be absolutely global right from the outset. Typically, all you have to do is deal with some localization issues relative to language. This is an industry that began global, and truly is global.
Mr. Sulzberger: Isn't one of the joys of this technology that it allows you to see where markets are going much more quickly?
Someone said something earlier which I disagree with, about impulse buys aren't very good on the Internet. I think impulse buys are exactly what the Internet does for me.
I mean, in the past I'd have to clip out a review, walk to a bookstore, I'd lose it, it wouldn't happen. Now I just buy. And then what happens? They say, by the way, you've bought these three books, maybe you'd like this book as well, right? And all of a sudden the world opens for me.
Mr. Herbold: What you just described I think is dead right in terms of the future. What you described was doing smart marketing in regard to understanding the member of your target audience and what they might be interested in, and making those offerings as attractive as possible. That's great marketing.
It has nothing to do with 30-second commercials or print ads, it has to do with -- let's take a consumer perspective here, if they're interested in fly fishing, you can be amazed at how much can be put in front of them in an exciting manner in terms of gear that can be delivered to them.
Mr. Johnson: I would like to comment on what you said, because I think you're right. One of the things we haven't talked about today, which fascinates me, and it sort of says where our minds are, is the changing demographics of the world.
If you look at the birth rate in Italy, where we have one of the largest baby food businesses in the world, it's negative.
If you look at what we know as the developed world, the birth rate is not going to sustain the population over the next 50 years. And as a consequence -- I don't even want to get into the social issues that it's going to create -- but being able to take somebody who's now buying our baby food in Italy and figure out a way, as the demographics change, to keep that customer in the Heinz family is an issue.
In contrast to that, if you look at India and China, which are going to soon represent two-thirds of the world's population, and being able to figure out how to take the same kinds of things we've learned how to do elsewhere, and apply it to those markets as they grow and develop -- because Martin is exactly right. Like it or not, fundamentally that's where the growth long term is in our business, certainly the packaged goods side of the business, is going to come.
We can create new usage for products, we can create new products. But the whole demographic shift, and the ethnic diversity that's being created now in the U.S., and even through Western Europe, is creating real issues and opportunities for communication.
Ms. Carpenter: You know, you can't go to one-on-one for a long time, no matter how much people talk about it. But also you don't want to be stuck anymore in a single brand communication.
I'm actually struck [by] how powerful it is when people talk back. The real risk from having done multicultural marketing is you try to take in that culture's essence, kind of capture it in a short message and play it back. And the risk of missing it is so high.
People group in many different ways. Sometimes it's part of their ethnic background, sometimes it's part of their work background. The more they can talk to us in all those shades of who they are, you can get really much more of a spectrum of brand communication, that's not just one-to-one, but it touches people in groups that are economically viable.
Mr. Georgescu: Well, the issue is not one answer anymore, it's multiple answers. Every customer or consumer is in part a member of many groups.
The notion of being able to address our customers the way they see themselves through different approaches, different channels, is the way to the future.
At every point of contact between the brand and the customer, the brand needs to be there with the right message that is consistent with what the brand ought to be for that individual.
Mr. Sorrell: I don't think it's really about multicultural marketing. I think everything we see in our business currently is about what I would call specialist marketing.
It is the focus and the added value that we can offer clients through specialist approaches. So it'll be high tech marketing, it'll be retailing marketing, it'll be entertainment and media, it'll be financial services, it'll be multicultural.
AA: We're all defining marketing very broadly. By marketing most people tend to mean advertising, but from what we're hearing here it sounds like advertising is becoming less and less important in the marketing mix in the future. Is it?
Mr. Johnson: I think it's how you define advertising. I've never viewed marketing as advertising.
When you go to the supermarket and you pick up a product, you're looking at probably the best example of communication that product has, and that's the package.
When you look at some of the great success stories over the last 20 years, very few of them started with advertising -- they started with a marketing idea, and they started with a concept and then developed that concept.
I mean marketing for our Weight Watchers business would be going into a classroom. If you have a bad experience you're not coming back. I don't care what, with all due respect, Peter and Martin create in terms of advertising. Because the experience is going to dictate that.
Having said that, I go back to the comment I made earlier, that the majority of companies in our industry are spending billions of dollars on what has theoretically been pushing the product through our customer, as many of our people define it, to the end consumer, whom we've abdicated control over.
That's going to change. And that's the exciting opportunity. How that's going to manifest itself I don't have a clue. I have some ideas, some of which will be proven right, and some of which will be proven to be full of hot air.
AA: For most companies the challenge is how to translate existing brands into a new medium. Candice, what is the challenge of building a brand from scratch in this new medium?
Ms. Carpenter: Having built brands in the real world, and now building one in the virtual world, there's so much that's alike. But I think the difference is the speed at which it has to be done. It may seem like there's infinite money, but there's actually not.
So I think that's one reason speed to market has been so valuable. Because if you go out fast, it's fairly uncluttered, as Yahoo did so beautifully.
You can make so much progress in building that brand before it starts to cost any money. I think PR has been a really powerful medium, and as people sometimes point out, probably some day we'll get tired of talking about the Internet. But in the meantime, word of mouth is the most powerful.
That's what built Yahoo, that's what built Amazon, that's what's building iVillage.
I think, though, there are still a lot of traditional elements. We have a branding visual system that came out of the fact that I'm sort of old school, trained at American Express. It was taught that you should have a very rigid view of your brand.
But what happens is, we've had advertisers early on who said we like your site, it's a brand. Something made it feel like it wasn't a site, it was a brand. It had sort of those identifying elements that traditionally you recognize as being slightly greater than the sum of the parts.
AA: Let's go with the blue sky. Put ourselves 50 to 100 years out. What do you think will be the biggest change in marketing at that point?
Mr. Sorrell: OK. I don't know if this is earth-shattering. I'll make two predictions. One is that Omnicom, IPG, Y&R, Denstu and WPP will dominate the advertising and marketing services industry.
Mr. Georgescu: Thank you, Martin -- from your lips . . .
Mr. Sorrell: And you notice, Peter, that I said that they were still separate. And the second thing then is specifically, I think that we will see an incredible increase in the growth of what David Ogilvy spotted some 50 years ago, when he started Ogilvy. He made it an intrinsic part of the Ogilvy agency, the direct marketing business as it was then called. Interactivity is only a subset of direct.
And I think our view is that one-to-one marketing, that specialist marketing, the multicultural marketing that we talked about, will be the most important media that we deal with.
That doesn't mean that television advertising, network advertising, will die. It doesn't mean that radio will not become more important or outdoor, but it means the balance will become much more specifically orientated.
And to our manufacturing clients, I just leave you with one thought -- they spend, according to what we can see, about 50% of their costs on distribution. And if we can find ways of reaching the consumers directly in theory, and I underline in theory, that could reduce their cost base by about 50%.
So, the potential for direct consumer communication -- if you can get that right, it can result in very significant reductions in cost, and very, very strong relationships directly with the customers, and development of relationships with existing consumers, who, as we all know, are our most profitable means of development.
AA: Bill, if you can put us in the year 2099 or 2050?
Mr. Johnson: Well, one thing I know for sure, form may be different, but people will still be eating. And how that will manifest itself I'm not certain.
Ms. Carpenter: But they'll still be needing ketchup.
Mr. Johnson: And they'll still be needing ketchup, that's right. . . .
I think two things that I would mention. One is that our industry will become marketing-driven again, as opposed to just manufacturing distribution-driven. And I think that's a change you'll see starting to evolve over the next 36 to 48 months. And I think that while it may sound like not a big change, that is a fundamental transformation of where we are as an industry.
The second thing that you're going to see -- and, again, doing 50% of our business outside the United States -- you're going to see a far different world than you live in today. It's going to be a lot smaller. It's going to be more connected.
It's not necessarily going to be nicer, but it's going to be different in the way you do business. And you're going to have to adapt to different ways of doing business or you will not survive.
AA: Arthur? They'll still be eating ketchup, will they still be reading newspapers? Will The New York Times still land on their doorsteps every morning?
Mr. Sulzberger: I don't care how they get it 100 years from now. And the key is not caring.
It goes back to knowing the audience, and being, not ambivalent, but agnostic, rather. Agnostic about the methods of distribution. Because we can't afford to be tied to any production process, to support Bill's statement.
I would argue that the most important story of the last century was: "Man walks on moon." Why? Because it was the first time this whole planet shared a moment in time that meant the same thing to every one of us. The world is getting smaller. Immensely smaller. And we're going to see that play itself out over the next century in ways we can't possibly imagine.
That said, there will still be communities of interest. There will still be a need, both socially and politically, for common and shared experiences. If there's not that, heaven help democracy.
So I think we can imagine adaptations in technology, adaptations in how people come to products and to information. You're going to see greater and greater interconnectivity. You're going to see fewer and fewer middlemen. I would hate to be in the middle in this new world.
But in the end we're still marketing, and we're still meeting the needs of individuals and human beings. Thank God, at that end of the spectrum we're all different.
AA: Candice, besides a woman president, what will the world be like?
Ms. Carpenter: That would be exciting, but one of the least exciting of the amazing things in front of us. I actually am very excited about what will happen over the next 30 to 40 years as the women of the world hook up and talk to each other. . . . and I just hope we don't start too many revolutions.
AA: Peter, sum it up.
Mr. Georgescu: For me, since I agree with so much that's been said, let me focus on one thing, and that is creativity. I think that the thing that is going to drive the world 100 or so years from now is going to be the human mind.
That's where the great leverage is going to be. Much else is going to be commodity-like, and our ability to do all the things that have been discussed will rest upon the human mind to create added value.
And I think, I like to believe it's going to be, in fact, a better world. I'm