July 2010

CORPORATE

RESPONSIBILITY/CONSUMER:RESPONSIBLE LUXURY

The movement towards 'responsible luxury' is

gathering force, as companies come to recognise

the advantage of talking publicly about their new-

found ethical credentials.

Mother nature is the new fashion icon

➔The difficult economy and a fundamental shift in the

market for luxury goods are forcing an industry that

worships names like Chanel and Versace to

embrace a different icon: Mother Nature.

➔ Over the past year, many of the world's best-known

luxury labels have started to introduce eco-friendly

Going green is a luxury

➔ There has been talk lately about how going green

is itself a luxury: what people want during a

recession is cheap goods, whether or not they are

the most environmentally friendly products

available.

➔ There is a counter-trend too: the UK industry self-

regulatory bodies the Committee of Advertising

Practice (CAP) and Broadcast CAP (BCAP) have

revised their codes to clamp down on

“greenwashing”. They said absolute claims of

environmental benefits “must be supported by a

high level of substantiation” without omitting

“significant information”. “Green” claims must

also cover the full life cycle of a product and

recognise areas where scientists’ opinions are

divided. The Codes, due to come into effect in

September 2010, will be administered by the

Advertising Standards Authority (ASA).

• In order to have credibility in the green arena,

luxury brands need to be hyper transparent

about their “back story.” Those brands that

can show that the path from production to

marketing and selling is a green one will gain a

huge amount of traction.

• Research shows that there is a clear link

between defining and communicating a

COMMUNICATIONS TAKEOUT

luxury labels have started to introduce eco-friendly

products, snap up brands that tout their social

responsibility and weave environmental themes

into their advertising and marketing.

➔ Recently, French luxury conglomerate Moët

Hennessy Louis Vuitton (LVMH) took a stake in

Edun, an organic-clothing company founded by the

singer Bono and his wife. In 2004, it conducted a

"carbon inventory" to gauge its impact on

greenhouse-gas emissions. Afterwards it cut back

on corporate travel and air shipment of goods.

➔ Long time eco-friendly designer, Stella McCartney is

finally being recognized for her steadfast

commitment to cruelty-free, green luxury fashion.

➔ Other companies have begun to advertise initiatives

they took years ago to promote resource

conservation.

Advertising Standards Authority (ASA).

➔ On the other hand, the market for luxury goods is

a tiny market. So how much effect can greening it

really have? In terms of promoting

environmentalism as a trend, the greening of

luxury brands has to be a good thing. After all,

there are plenty of people out there who will

follow faithfully whatever example their favourite

celebrity sets.

➔ It's also worth considering that environmental

promises made by high-end brands may be among

the most reliable. They've presumably got the

resources required to do very careful sourcing, in

order to make sure that the organic, low-carbon,

union-made, fair-trade cotton that goes into their

$200 t-shirts really is what it claims to be. What’s

more, it is clear that these brands would seriously

damage their cachet if they didn't live up to their

eco-rhetoric.

between defining and communicating a

corporate purpose and financial performance.

Brands should develop and publish a clear

Corporate Responsibility policy, and look to set

up interaction with key stakeholders and

consumers.

• Any eco labeling should be Evidence-Based and

preferably have 3rd party endorsement. NGOs

have called for sustainability certification

schemes to incorporate rigorous, independent

evaluation into their design.

• Co-branding or partnering with an appropriate

NGO – after quantifying NGO vulnerability - is

worth investigating.

READ:

WWF DEEPER LUXURY REPORT

http://bit.ly/d5yQF

B2B/B2C/TECHNOLOGY:SPONSORSHIP TRENDS

The rise of social media will inevitably have a major

impact and be a key driver in the globalisation of

sponsorship. Whilst the economic downturn may not

have an impact overall, there is a need for vigilance in

the choice and management of brands. The industry

is becoming increasingly evidence based.

The drive for data and accountability

➔ Twenty years ago only a handful of sponsorships

were purchased based on sound marketing

rationale with an expectation of fulfilling set

objectives.

➔ Today, rising prices have driven most sponsorships

to be purchased in conjunction with some form of

• Companies that can get ahead of the curve

and build in social/mobile media activation

to sponsorship deals will prosper.

• Similarly, no sponsorship deal should be

negotiated without tight Evidence-Based

performance measurements in place.

COMMUNICATIONS TAKEOUT➔ In addition because of the increasing number

of sportsmen/women communicating directly

via Social Media there needs to be very clear

policies governing that interaction to prevent

potential embarrassment to sponsors.

Relatively recession proof

➔ In spite of gloomy predictions about "the

death of corporate entertainment" it is

expected that the present global recession

will have no long-term impact on the

sponsorship market. The sponsorship industry

in Europe has followed global trends in its

growth rate this decade with expenditure on

rights fees growing from an estimated €5.6

billion in 2000, to €7.7 billion in 2007.

➔ B2B corporate entertainment will return once to be purchased in conjunction with some form of

independent research or goals.

➔ Research techniques have advanced to the point

where sponsorship ROI can be measured with the

same accuracy as advertising. It is likely that more

sophisticated sponsors will demand performance

clauses based on such research.

Impact of social media on activation & globalisation

➔ Sports fans are rapidly moving across to social

media (Facebook/Twitter/blogs) and mobile media

(iPhone apps) because these media offer even

greater immediacy and ease of access than

traditional websites.

➔What is more, the growth in digital media - which

is not subject to any national broadcasting rights -

will only accelerate the globalisation of the

sponsorship industry.

• Social media is in some ways a friend and a

foe. As privacy boundaries blur, there is more

risk of sensitive information being revealed.

To counter this possibility, policies and

guidelines on the use of social media need to

be very clearly communicated and crisis

plans should be in place.

VISIT:

B-M’s TOTAL SPONSORSHIP WEBSITE

http://www.totalsponsorship.co.uk/

➔ B2B corporate entertainment will return once

the glare of the public spotlight has passed

elsewhere, and the financial sector has

recovered fully.

➔With regard to pricing, history suggests that

pent-up demand to spend as a downturn

ends tends to actually increase sponsorship

prices somewhat, through competition for

the better deals.

When sponsorship turns sour

➔ The increasing incidence of issues

surrounding celebrities and their sponsors

[need we mention Tiger Woods?] highlights

the need for companies to have robust crisis

plans in place to deal with communications

should the celebrity/brand suddenly develop

issues that could impact the sponsor’s

reputation.

ORGANISATION/TECHNOLOGY:THE AGE OF CYBER WARFARE

Threats of cyber warfare have been hyped for

decades but a report by McAfee contains proof that

cyber attack preparation is definitely happening.

Cyber Cold War

➔Major countries and nation-states are engaged in a

"Cyber Cold War," amassing cyber weapons,

conducting espionage, and testing networks in

preparation for using the Internet to conduct war.

➔ Key countries gearing up for cyber offensives are

the U.S., Israel, Russia, China, and France.

➔ So far nations have been reluctant to use those

capabilities because of the likelihood that a big

➔ There have been earlier attacks that smack of

cyber warfare too. Estonian government and

commercial sites suffered debilitating denial-of-

service attacks in 2007 and in 2008 sites in

Georgia were attacked during the South Ossetia

war, orchestrated by civilian attackers.

Cyber warfare will soon be a reality

➔ Over the next 20 to 30 years, cyber attacks will

increasingly become a component of war. If

networks become ever more pervasive and

unprotected cyber war operations could even

stand alone.

Google Attack: “Digital Commercial Pearl Harbour”

➔ There are increasing concerns about financial

Tips for staying as safe as possible online:

• Know who you’re dealing with

• Keep web browsers and operating systems

up-to-date by setting them to automatically

update

• Back up important files

• Protect children online

• Use a full suite of updated security tools as a

first line of defence

COMMUNICATIONS TAKEOUT

capabilities because of the likelihood that a big

cyber attack could do harm to their own country

due to the way in which the world is so highly

interconnected these days.

➔ Because pinpointing the source of cyber attacks is

usually difficult, if not impossible, the motivations

can only be speculated upon, making the whole

cyber war debate something of an intellectual

exercise at this point.

➔ The July 4 2009 denial-of-service attacks on Web

sites in the U.S. and South Korea could have been a

test by a foreign entity to see if flooding South

Korean networks and communications between the

U.S. and South Korea would disrupt the ability of

the U.S. military in South Korea to communicate

with military leaders in Washington, D.C., and the

Pacific Command in Hawaii.

➔ There are increasing concerns about financial

losses and security breaches in the commercial

world too, especially after Google was targeted by

cyber attacks from China. This “digital commercial

Pearl Harbour” has dramatically raised awareness

of this threat to businesses.

Every computer user plays important role

➔ There are 32,000 suspected cyber-attacks every 24

hours.

➔ Reports are that almost 90% of all email today is

SPAM. Every computer user plays an important

role in using the Internet safely and securely by

protecting themselves and the networks they are

on.

.

first line of defence

• Use wireless devices and networks securely

• Use hard-to-decipher passwords (long with

numbers and symbols)

We all need to employ the same judgment we

use in the “off-line” world by remembering

three letters: WWW

Whenever you are asked for information

online, make sure to ask yourself:

1.Who is asking or going to see this

information?

2.What is the value of the information I am

being asked to share?

3.Why do they need to see it?

READ:

7 PRACTICES FOR COMPUTER SECURITY

http://bit.ly/bK6s1t

ORGANISATION/CRISIS:BEWARE THE BLACK SWAN

Black Swan is a highly topical term that is used in

horizon scanning and future planning scenarios.

The origin of the term Black Swan

➔ The "Theory of Black Swan Events" was developed

by Nassim Nicholas Taleb to explain the

disproportionate role of high-impact, hard-to-

predict, and rare events that are beyond the realm

of normal expectations in history, science, and

technology.

➔ Taleb regards almost all major scientific

discoveries, historical events, and artistic

accomplishments as Black Swans — undirected

and unpredicted. He cites the rise of the Internet,

Recent and Future Black Swans

➔ The eruption of the Icelandic volcano

Eyjafjallajökull was a surprise to most of us and

had a major impact on air travel. After it occurred

plenty of experts said they could have told us it

was going to happen. Airlines are now all vying

with each other to produce volcanic ash detectors

to prevent the repeat of the havoc that caused

wide scale grounding of flights .

➔ Since there has been oil-drilling in the Gulf for

more than 40 years, with over 30,000 oil wells,

BP's Deepwater Horizon oil spill certainly qualifies

as a Black Swan event.

➔ As per the previous item on cyber warfare, data

security products, such as antivirus software, can't

protect you against Black Swan viruses, i.e., the

ones that are out in the wild but haven't been

identified or found yet.

COMMUNICATIONS TAKEOUT

• Taleb believes that more disasters along the

lines of the Gulf of Mexico are waiting down

the line and that we are woefully unprepared

to predict their occurrence in advance or to

deal with them once they happen. He blames

an overreliance on theory for some of the

most seemingly insoluble problems troubling

us today.

• It is essential that companies confront their and unpredicted. He cites the rise of the Internet,

the personal computer, World War I, and the

September 11 attacks as examples of Black Swan

Events.

➔ Criteria for a Black Swan event :

oThe event is a surprise (to the observer).

oThe event has a major impact.

oAfter the fact, the event is rationalized by

hindsight, as if it had been expected.

When is a Black Swan a Black Turkey?

➔ There has been much debate as to whether the

financial crisis 2007-2009 was a Black Swan or

simply a Black Turkey : an event that is

everywhere in the data—it happens again and

again —but to which one is wilfully blind.

identified or found yet.

Learn how to turn the Black Swans White

➔ Taleb’s advice is not to attempt to predict Black

Swan Events, but to build robustness against

negative ones that occur and work on exploiting

positive ones. Taleb contends that banks and

trading firms are very vulnerable to hazardous

Black Swan Events and are exposed to losses

beyond that predicted by their defective models.

➔ Taleb states that a Black Swan Event depends on

the observer. What may be a Black Swan surprise

for a turkey is not a Black Swan surprise for its

butcher—hence the objective should be to "avoid

being the turkey" by identifying areas of

vulnerability in order to "turn the Black Swans

white".

•doomsday scenarios and build crisis planning

around them.

• What is Your Company’s Deepwater Horizon?

READ: TEN PRINCIPLES FOR A BLACK SWAN-

PROOF WORLD http://bit.ly/9F2UG7

CONTACT

To request further information, give feedback

or suggest a future topic for the newsletter,

please contact:

Elaine Cameron

Strategic Research & Trend Analysis, EMEA

elaine.cameron@bm.com

And don’t forget to follow on Twitter:

http://www.twitter.com/FUTUREPersp