ISSUES THAT WILL AFFECT CORPORATE COMMUNICATIONS AND PUBLIC AFFAIRS STRATEGIES IN ASIA PACIFIC

20

DAVID BRAIN, PRESIDENT & CEO,EDELMAN ASIA PACIFIC, MIDDLE EAST & AFRICAWRIGLEY CONFERENCE, FEBRUARY 2014, DELHI

U.S.MARS PETCARE (BANFIELD, NATURAL CHOICE, GREENIES AND NUTRO CORPORATE AFFAIRS)WRIGLEY ORAL HEALTHCARE PROGRAM WRIGLEY GLOBAL CORPORATE

CHINAMARS GOVERNMENT AFFAIRS/PUBLIC AFFAIRSMARS AND WRIGLEY CORPORATE MARS PETCARE   WRIGLEY EXTRA ORAL HEALTHCARE PROGRAM & DOUBLEMINTMARS CHOCOLATE

IRELANDMARS CHOCOLATEMARS PETCAREMARS FOODWRIGLEY ORAL HEALTHCARE PROGRAM

SWEDENWRIGLEY BRANDS & ORAL CARE “DOING GOOD” PILOT

RUSSIAMARS CORPORATE

JAPANROYAL CANIN

UNITED KINGDOMWRIGLEY ORAL HEALTHCARE PROGRAMWRIGLEY PROJECT NEW GENERATION

MIDDLE EAST & NORTH AFRICAWRIGLEY ORAL HEALTHCARE PROGRAM & EXTRA BRANDSOUTH AFRICA

WRIGLEY ORAL HEALTHCARE PROGRAM

AUSTRALIA MARS PETCAREMARS FOODMARS CHOCOLATE

HONG KONGWRIGLEY BRANDWRIGLEY CORPORATE

CZECH REPUBLICWRIGLEY BRANDMARS CHOCOLATE

CURRENT EDELMAN & MARS WORLD

ECONOMIC GROWTH HAS GONE FROM A RANGE OF 2-10% TO 0-6%= GOVERNMENTS (ELECTED OR NOT) UNDER PRESSURE TO SHOW THEY ARE PERFORMING WHICH CAN MAKE THEM UNPREDICTABLE TOWARDS BUSINESS AND BRANDS, ESPECIALLY ‘FOREIGN’ ONES

#1

= MORE IMPORTANT THAN EVER TO SHOW WIDER ECONOMIC, SOCIAL AND ENVIRONMENTAL CONTRIBUTION

HOWEVER, ECONOMIES ARE STILL GROWING AND AP HAS MORE PEOPLE STILL ENTERING THE ‘MIDDLE CLASS’ THAN ALL OTHER REGIONS COMBINED

#2

THREE QUARTERS OF GLOBAL GROWTH FOR THE

NEXT 15 YEARS WILL COME FROM EMERGING

MARKETS …AND AS A RESULT, EMERGING MARKETS WILL REPRESENT WELL OVER HALF OF GLOBAL GDP BY 2025

NEARLY THREE-QUARTERS OF GDP GROWTH WILL COME FROM EMERGING MARKETS…

SHARE OF GDP GROWTH, 2010-25 100% = $50.2 TRILLION USD RER1

TOTAL GDP $, TRILLION

113

DEVELOPEDECONOMIES

26

74 EMERGING ECONOMIES

6

0

EMERGING

63 23

53 DEVELOPED 40

2010 2025

1 REAL EXCHANGE RATE (RER) FOR 2007 IS THE MARKET EXCHANGE RATE. RER FOR 2025 WAS PREDICTED FROM DIFFERENCES IN THE PER CAPITA GDP GROWTH RATES OF COUNTRIES RELATIVE TO THE US

SOURCE: MCKINSEY GLOBAL INSTITUTE MCKINSEY & COMPANY

THE GLOBAL CONSUMING

CLASS WILL SEE RAPID

GROWTH IN THE NEXT DECADE

RESULTING IN AN ENORMOUS

CONSUMPTION BOOM

WORLD POPULATION

BILLIONS

5.2

CONSUMING

7.9

6.8

4.2 2.4

WORLD CONSUMPTION1

$ TRILLIONS

64.0

22.0

OTHER 38.0 1.2

CLASS

NON CONSUMING 4.0 CLASS

4.4 3.7

EMERGING MARKETS

CHINA

OTHER DEVELOPED MARKETS

UNITED STATES

10.0

2.0

15.0

11.0

8.0

19.0

15.0

1990 2010 2025 2010 20251 CONSUMPTION INCLUDES FMCG AND NON FMCG CATEGORIES

SOURCE: MCKINSEY GLOBAL INSTITUTE MCKINSEY & COMPANY

= HUGE APPETITE FOR PRODUCTS AND BRANDS THAT MARK PERSONAL PROGRESSION AND SIGNIFY SELF WORTH

HOWEVER, ECONOMIES ARE STILL GROWING AND AP HAS MORE PEOPLE STILL ENTERING THE ‘MIDDLE CLASS’ THAN ALL OTHER REGIONS COMBINED

#2

= TRUST IN COMPANIES THAT OFFER DECENT CAREERS AND PROPER PARTNERSHIP= HQ WILL LOOK TO APAC FOR GROWTH AND TO PA/COMMS TO PROMOTE AND PROTECT

FROM TIER ONE TO TIER TWO, THREE, FOUR AND FIVE

#3

9

CHINA URBAN CLUSTER LANDSCAPE

10

NEARLY 60% GLOBAL GDP GROWTH - $30 TRILLION - WILL COME FROM 600 CITIES

GLOBAL GDP GROWTH 2010-25

EMERGING 440

DEVELOPED 160

OTHER EMERGING

OTHER DEVELOPED

GLOBAL GDP, 2010 PERCENT CONTRIBUTION

100

18

36

18

28

PERCENT CONTRIBUTION

100

47

17

27

9

MCKINSEY & COMPANY

= AS WEALTH SPREADS, COMMUNICATIONS AND MARKETING HAS TO FOLLOW IT TO NEWER AND SMALLER CITIES AND REGIONS

FROM TIER ONE TO TIER TWO, THREE, FOUR AND FIVE

#3

= REGIONAL ISSUES/STAKEHOLDERS DIFFERENT AND NEED DIFFERENT PROGRAMMING AND COMS STRUCTURES AND RESOURCES

THE RISE OF INEQUALITY

…BETWEEN RICH AND POOR, URBAN AND RURAL, EDUCATED AND UNEDUCATED, CONNECTED AND UNCONNECTED IS PUTTING PRESSURE ON GOVERNMENTS, CULTURES, BUSINESSES AND BRANDS TO BE SEEN TO BE FAIRER AND MORE INCLUSIVE, AND NOW BETWEEN TRUSTERS AND MISTRUSTERS!

#4

= INCREASINGLY IMPORTANT TO CONTRIBUTE ON SOCIAL MOBILITY / SOCIAL INCLUSION

THE RISE OF PLURALITY

EVEN IN ONE PARTY STATES, SOCIAL MEDIA HAS SPARKED AN EXPLOSION IN SELF EXPRESSION AND ACTIVISM THAT CAN FOCUS VERY QUICKLY ON POLITICS, BUSINESS OR BRANDS IN BOTH A NEGATIVE AND POSITIVE WAY (BOTH ONLINE AND OFFLINE)

#5

THE RISE OF PLURALITY

EVEN IN ONE PARTY STATES, SOCIAL MEDIA HAS SPARKED AN EXPLOSION IN SELF EXPRESSION AND ACTIVISM THAT CAN FOCUS VERY QUICKLY ON POLITICS, BUSINESS OR BRANDS IN BOTH A NEGATIVE AND POSITIVE WAY (BOTH ONLINE AND OFFLINE)

#5

= INCREASINGLY IMPORTANT, AS IN WEST, NOT TO BE DRAWN INTO POLARISING ISSUE(*)

…AND YET, IN MANY MARKETS BUSINESS MUCH MORE TRUSTED THAN GOVERNMENT SO BUSINESS NEEDS TO LEAD DEBATE

#6

50%

Q11-14. [BUSINESS IN GENERAL & GOVERNMENT IN GENERAL] Below is a list of institutions. For each one, please indicate how much you trust that institution to do what is right using a 9-point scale where one means that you 'do not trust them at all' and nine means that you 'trust them a great deal'. (Top 4 Box, Trust) Informed Publics, 20-country global total.

TRUST IN BUSINESS VS. GOVERNMENT

GOVERNMENT

17

BUSINESS

GLOBAL GAP OF 14 PERCENTAGE POINTS BETWEEN TRUST IN BUSINESS AND GOVERNMENT

HIGHER TRUST IN

GOVERNMENTHIGHER TRUST IN BUSINESS

20+ PT. HIGHER TRUST IN BUSINESS

Global

S. Afri

ca

Mexic

oBra

zil

Argentina

Indonesia

Poland

IndiaIta

lyU.S.

Sp

ain

Irelan

dRussi

a

Mala

ysia

U.K.

Canad

a

Fran

ceJap

an

German

y

Hong Kong

Australi

aChina

Turk

ey

Singa

pore

Netherla

nds

S. Kore

aUAE

Sweden

58%

63%

73%70%

58%

82%

45%

79%

45%

58%

38%41%

45%

72%

56%

62%

43%

53%

57%

49%

59%

77%

43%

71%

54%

39%

82%

51%

44%

17%

28%

34%

23%

53%

19%

53%

24%

37%

18%21%

27%

54%

42%

51%

32%

45%

49%45%

56%

76%

43%

75%

60%

45%

88%

63%

MORE THAN EVER, REGULATORY ISSUES ARE REVENUE AND PROFIT ISSUES

#7

19

REGULATORY ISSUES MEANS SIGNIFICANT VALUE AT STAKE ACROSS INDUSTRIES ESTIMATED SHARE OF EBITDA AT STAKE

PERCENT

CONSUMER 20-25

BANKS 50-60

ADVANCED INDUSTRIES 50-60

HEALTH CARE 25-30

TELECOM 40-50

TRANSPORT 45-55

ENERGY 35-45

RESOURCES 30-40

SAFETY CONCERNS AND REGULATION, TAXATION, LICENSE TO TRADE REGULATION

CAPITAL REQUIREMENTS, SYSTEMIC REGULATION (‘TOO BIG TO FAIL’), CONSUMER PROTECTION

GOVERNMENT SUBSIDIES, RENEWABLE REGULATION, CARBON EMISSION REGULATION

MARKET ACCESS, GENERICS REGULATION, SUBSIDIES AND REIMBURSEMENT, REPUTATION

TARIFF REGULATION, ACCESS TO INFRASTRUCTURE, FIBER DEPLOYMENT, LICENSING, SPECTRUM

PRICING REGULATION, LIBERALIZATION OF SECTOR

TARIFF REGULATION, RENEWABLE SUBSIDIES, INTERCONNECTION

STAKEHOLDER ENGAGEMENT FOR ACCESS RIGHTS, REPUTATION RISKS

MCKINSEY & COMPANY

A CALL FOR GREATER REGULATION ACROSS ALL SECTORS

20

GOVERNMENT REGULATION OF BUSINESS AND SECTORS - CHINA

Q148. [TRACKING] When it comes to government regulation of business, do you think that your government regulates business too much, not enough or the right amount? (Not Enough, Too much) Informed Publics. Q262. When it comes to government regulation of the financial services industry, do you think that your government regulates it too much, not enough or the right amount? (Not Enough, Too much) Informed Publics. Q263. When it comes to government regulation of the energy industry, do you think that your government regulates it too much, not enough or the right amount? (Not Enough, Too much) Informed Publics. Q264. When it comes to government regulation of the food and beverage industry, do you think that your government regulates it too much, not enough or the right amount? (Not Enough, Too much) Informed Publics

57%51% 52%

84%

19% 19% 21%

3%

Not Enough Too Much

MORE THAN EVER, REGULATORY ISSUES ARE REVENUE AND PROFIT ISSUES

#7

= DOES YOUR BUSINESS UNDERSTAND THIS?

= ARE YOU RESOURCED SUFFICIENTLY?

FOOD QUALITY AND FOOD SAFETY ARE ‘ELECTRIC RAIL’ TOPICS IN MANY MARKETS

= WHICH DRIVES A FIERCE GOVERNMENT AND SOCIAL SPOTLIGHT AND REACTION TO ANY FOREIGN FIRM HELD RESPONSIBLE

#8

RISE OF OBESITYASIANS ARE GETTING FATTER AND HEART ATTACKS AND DIABETES ARE INCREASING (ESPECIALLY AMONGST CHILDREN) WITH THE ATTENDANT NEED FOR BRANDS TO BE SEEN TO EDUCATE AND INFORM

#9

= ARE WE DOING ENOUGH?

= IS IT IN LINE/IN ASSOCIATION WITH GOVERNMENT APPROACHES?

ENVIRONMENTAL ISSUES ARE NOW MUCH, MUCH MORE IMPORTANT SMOG, CONTAMINATED WATER, RADIATION, WOOD SMOKE, LITTER, DEFORESTATION AND EROSION HAVE GONE FROM BEING ACADEMIC SUBJECTS TO ISSUES THAT MAKE LOTS OF PEOPLE VERY ANGRY

#10

= ENVIRONMENTAL ACTION AND COMMUNICATION WILL BECOME A LICENSE TO OPERATE ISSUE IN MANY MARKETS

ATTACKS ON ‘FOREIGN’ FIRMS AND BRANDS ARE ON THE INCREASE (?) …AS GROWTH SLOWS AND PRESSURE TO PROTECT AND PROMOTE LOCAL CHAMPIONS AND LOCAL INTERESTS GROWS

#11

= WE ARE MISSION CRITICAL IN AP

ASEAN, APEC AND THE NEW TRADE BLOCKS

#12

Trans-Pacific Partnership (TPP)

(12 Nations)

• Australia • Brunei• Canada• Chile• Japan• Malaysia• Mexico• New Zealand• Peru• Singapore• US• Vietnam

Regional Comprehensive Economic Partnership

(RCEP)(16 Nations)

• Australia• China• India• Japan• South Korea• New Zealand

• (PLUS THE ASEAN 10)• Brunei Darussalam• Cambodia• Indonesia• Laos• Malaysia• Myanmar• Philippines• Singapore• Thailand• Vietnam

“WE’VE GONE FROM 5 FREE TRADE

AGREEMENTS IN THE REGION TO 75 AND ANOTHER 82 BEING

NEGOTIATED.” –

SINGAPOREAN PRIME MINISTER LEE HSIEN LOONG, ON BUREAUCRACY OF FREE TRADE (FTA) AGREEMENTS IN THE ASIA REGION.

= WATCH SPECIFIC AGENDAS AND BE AWARE THAT THE BUREAUCRATS HAVE MORE FORUMS TO COMPARE NOTES/POLICIES ON YOU AND YOUR ISSUES

ASEAN, APEC AND THE NEW TRADE BLOCKS

#12

= YOU MUST BE JOINED UP

THIS IS THE AGE OF 24/7, ALWAYS ON CORPORATE COMMS

#13ASIA IS THE WORLD’S MOST ENGAGED ONLINE REGION AND THE INTERNET HAS BECOME AN AVENUE OF COMMUNICATION, COMMUNITY, SELF EXPRESSION AND ENTERTAINMENT FAR BEYOND THE EXPERIENCE IN THE ‘WEST’ (AND MOBILE IS BECOMING THE ON-RAMP)

31

THIS IS THE AGE OF 24/7, ALWAYS ON CORPORATE COMMS

#13ASIA IS THE WORLD’S MOST ENGAGED ONLINE REGION AND THE INTERNET HAS BECOME AN AVENUE OF COMMUNICATION, COMMUNITY, SELF EXPRESSION AND ENTERTAINMENT FAR BEYOND THE EXPERIENCE IN THE ‘WEST’ (AND MOBILE IS BECOMING THE ON-RAMP)

= GET IN TOUCH WITH YOUR INNER NERD, OR HIRE ONE

= YOU OR YOUR AGENCY MUST HAVE 24/7 LISTENING AND ANALYTICS AND A RESPONSIVE CULTURE

= HUGE OPPORTUNITY TO BOTH PROMOTE AND PROTECT REPUTATION WITH STAKEHOLDERS

GOOGLE (BAIDU, ETC.) IS NOT A SEARCH ENGINE; IT’S A CORPORATE REPUTATION MANAGEMENT SYSTEM

#14

= YOU SHOULD MONITOR KEY WORD SEARCH TRENDS WEEKLY

= YOU SHOULD MANAGE YOUR FRONT PAGE THROUGH AD-WORDS BUYS AND HIGH SOCIAL MEDIA ACTIVITY

= YOU SHOULD TASK YOUR TEAMS/AGENCIES WITH BRAND AND CATEGORY SEARCH OBJECTIVES

= CONTENT IS KING

COMMUNICATIONS IS MOVING FROM THE PURELY TEXTUAL AND RATIONAL TO THE VISUAL AND EMOTIONAL

#15

PHOTO BY// YINGUO ON FLICKR

“IN 2011, VIDEO COMPRISED THE MAJORITY OF CONSUMER

INTERNET TRAFFIC FOR THE FIRST TIME, MAKING UP 53% OF ALL

UPLOADS AND DOWNLOADS. BY 2015, CURRENT VIDEO TRAFFIC WILL MORE THAN QUADRUPLE, AND THE WEB WILL BE TWO-

THIRDS VIDEO.”

- CISCO

UNDERSTAND HOW CONTENT INFLUENCES SEARCH

60%

40%

20%

0%

BLOGS

MAPS

NEWS

BOOKS

SHOPPING

IMAGES

VIDEO

(SEARCH METRICS)

37

AVERAGE URBAN DAILY COMMUTE IS ONE HOUR

= IMPORTANCE OF MOBILE

TRADITIONAL MEDIA IN AP STILL MASSIVELY POWERFUL AND INFLUENTIAL, BUT LESS ‘TRADITIONAL’ THAN IT WAS

#16

= NEW OPPORTUNITIES FOR SPONSORSHIPS AND ‘NATIVE’ JOURNALISM

= ONLINE THIRST FOR PIX, VIDEO AND INFO-GRAPHIC

= NEW ‘SPONSORED LINK’ TECHNOLOGIES LIKE OUTBRAIN CAN MAKE YOUR BEST COVERAGE LAST MONTHS

39

#17MEDIA IS CONVERGING IN AP AS IT IS EVERYWHERE ELSE

A NEW MEDIA ECOSYSTEM

TRADITIONAL HYBRID

OWNED SOCIAL

OF WEIBO TWEETS LINK TO CONTENT

OF TWEETS IN SINGAPORE LINK TO CONTENT. MOST RT:

OF TWEETS IN KOREA LINK TO CONTENT. MOST RT:

1

5OF TWEETS IN INDIA LINK TO CONTENT. MOST RT:

MEDIA IS CONVERGING IN AP AS IT IS EVERYWHERE ELSE

#17

= TRADITIONAL, SOCIAL, HYBRID AND OWNED MEDIA STRATEGY AND EXECUTION NEEDS TO BE INTEGRATED AND MANAGED WITH CONTENT, SEARCH AND NOW PAID AT THE CORE

THE INTEGRATION OF EVERYTHING

#18

PHOTO BY//COTTONCOTTON ON FLICKR

THE RISE OF SKEPTICISM

#19

AP REMAINS THE OPTIMISTIC REGION

#20

TRUST IN GOVERNMENT, MEDIA AND BUSINESS REMAINS HIGH AND MOST MIDDLE CLASS PEOPLE ARE OPTIMISTIC (COMPARED TO THOSE IN THE ‘WEST’) AND BELIEVE THEIR LIVES ARE GETTING BETTER AND THAT THEIR CHILDREN WILL HAVE MORE OPPORTUNITIES THAN THEY DID AND THEY WANT THE BRANDS AND LIFESTYLES THAT MARK THEIR PROGRESS AND ACHIEVEMENT

GLOBAL 54UAE 79China 79Singapore 73Indonesia 72India 69Malaysia 65Canada 60Netherlands 60Mexico 59

Hong Kong 59

Australia 58Brazil 57Germany 57Argentina 53U.K. 52Sweden 51S. Korea 51S. Africa 50U.S. 49France 46Japan 44Italy 43Turkey 41Spain 39Ireland 39Russia 37Poland 35

GLOBAL 57 China 80 Singapore 76 India 71 Mexico 68 Hong Kong 67 UAE 66 Malaysia 64 Canada 62 Indonesia 62 U.S. 59 Netherlands 59 Brazil 55 Germany 55 France 54 Sweden 54 U.K. 53 Italy 51 Australia 50 Poland 48 S. Korea 47 Ireland 46 Argentina 45 Spain 42 Turkey 42 Japan 41 Russia 36

Trust Index is an average of a country’s trust in the four institutions of government, business, media and NGOs. 20-country global total (does not include Argentina, Hong Kong, Malaysia, Singapore, South Africa, Turkey, UAE).

47

BIG TRUST INCREASES FROM 2013UAE +13 pts.Indonesia +10

pts.Australia + 8 pts.

Argentina + 8 pts.

THE TRUST INDEX: SLIGHT DECLINE IN TRUST OVER THE PAST YEAR WITH STRONG REGIONAL VARIATIONS; MAJOR DECLINES IN POLAND, U.S. & MEXICO

2013 2014

BIG TRUST DECREASES FROM 2013

Poland -13 pts.U.S. -10 pts.

Mexico -9 pts.

TR

USTER

SN

EU

TR

AL

DIS

TR

USTER

S

THE ONLY COMMON THING BETWEEN DEVELOPING

ECONOMIES IS SPEED OF CHANGE AND EXISTENCE OF A BRIDGE

GENERATION

CHANGE IN DEVELOPED ECONOMIES HAS BEEN INCREMENTAL, BUT ACROSS AP WE HAVE SEEN BILLIONS GO FROM POVERTY TO MIDDLE CLASS

IN ONE GENERATION AND THIS CHANGES EVERYTHING

= WE SHOULDN’T FORGET

= WE SHOULDN’T LET HQ FORGET EITHER

THANK YOU