AIM policy roundtable “Brand innovation in the digital era” in the European Parliament

April 2017 AIM policy roundtable  “Brand innovation in the digital era” in the European Parliament

AIM organizes regularly policy roundtables to discuss how brands can help address policy issues relevant for EU decision makers. The discussions are in camera, Chatham house rules. MEP Michal Boni and MEP Victor Negrescu kindly accepted to co-chair and moderate this roundtable on brand innovation in the digital era. AIM would also like to thank MEP Virginie Rozière and her team for their support.

The digital environment offers new possibilities for consumers to have a one to one dialogue with their favourite brands.  With the European Commission’s Digital Single Market strategy (DSM) now in full swing and interesting market findings from the competition inquiry in e-commerce, AIM suggested debating how brand innovation could meet emerging and increasingly demanding consumer expectations online.  This roundtable was also an opportunity to exchange on risks and opportunities associated with new trends.  

Chairmen/moderators:

MEP Michal Boni, President of the European Parliament intergroup on the Digital agenda
MEP Victor Negrescu

Participants:

Antti Peltomäki, Deputy Director General, Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW)
Gerard de Graaf, Director Digital Single Market, Directorate-General for Communications Networks, Content and Technology (DG CONNECT)
Dirk Staudenmayer, ‎Head of Unit, Contract law,  Directorate-General, Justice and Consumer (DG JUST)
Örjan Brinkman, President, BEUC – the European Consumer Association
MEP Kaja Kallas, Shadow rapporteur on online platforms
Poul Weihrauch, Global President Mars Petcare, President of AIM
Jan Zijderveld, President Europe, Unilever, Vice-President of AIM
Marco Settembri, Executive Vice President Nestlé, Head of Zone Europe, Middle East and North Africa
Cynthia Sanfilippo, Director EU Public Affairs, L’Oréal, Chairwoman of AIM’s Consumer Committee
Joris Pollet, Director Global Government Relations and Public Policy, EMEA, Procter & Gamble, Vice-chairman of AIM’s Consumer Committee
Marta Ślednak, Client Services Director, Gamfi, SME co-responsible for the Old-Spice gamification project with P&G, Poland
Stephan Loerke, Director General, WFA, World Federation of Advertisers
Alain Galaski, Director General, AIM - European Brands Association

Executive summary:

Introduction by MEP Victor Negrescu, co-chair of the roundtable:

I know the importance of innovation.  What we tend to forget nowadays is that brands are built on creative ideas not on “digital”, digital tools only come to support or enable this idea creation.  We are not proud enough of our European brands and we forget to promote them.  Instead, we tend to look too much at the innovations coming from other parts of the world.  So, I am pleased to welcome brand manufacturers and to hear about their innovations.

Presentation of brand innovations in the digital era:

In order to kick-start the discussions, members of AIM presented the following innovations in the digital space:

  • Poul Weihrauch, Mars Petcare: Mars Petcare’ WHISTLE® is the tech brand born out of a love for pets.  Whistle is on a mission to equip owners with simple digital tools that help them stay connected to their pets from anywhere and provide ideal care.
  • Jan Zijderveld, Unilever: All Things Hair is Unilever’s first publisher platform. It brings together some of the world’s biggest YouTubers with daily editorial material to alert viewers to new hair trends and practical advice consumers are searching for.  The platform delivers authentic, consumer-first content resulting in increased relevance and credibility for all our hair brands (link).
  • Joris Pollet, P&G and Marta Ślednak, Gamfi: The gamification platform for Old Spice® is an example of P&G driving its global innovation from Poland, via co-operation of the company team of experts with a Polish start-up organization Gamfi.  Gamfi is an award-winning Polish start-up specializing in gamification, or, in another words, the use of role-playing and computer games’ mechanisms in applications.
  • Cynthia Sanfilippo, L’Oréal: “My UV Patch” is the first digitally connected stretchable UV patch.  Ultra-thin, ultra-water resistant and adapted to sensitive skin, it works with My UV Patch app to provide personalized recommendations to improve behavior under the sun and help minimize sunburns and the risk of skin cancer (link).

Challenges and opportunities in the Digital Single Market strategy for brand innovations in the digital era – Open discussion with participants

All participants agreed on the importance of these digital innovations. 

Consumers have new expectations; they enjoy sharing and interacting more.  Entertainment and gamification are becoming major elements.  By answering these expectations through digital innovations, brands are bringing changes in their daily lives, sometimes bringing societal benefits by doing so.  
Second, policy makers need to be constantly exposed to new examples of innovations in order to design the most appropriate regulatory environment.  Few participants from the policy side knew that brand manufacturers from perceived traditional sectors were using the latest digital technologies to create products, improve them and the consumer experience associated with them.   In the European Parliament, only 15 MEPs are members of a group dedicated to innovation.  Coming from different political groups, they usually manage to find common ground when it comes to promote innovation.  Brand manufacturers must make their voice better heard in the legislative process on the digital single market. 

How can the digital single market strategy support brand innovations in the digital era?

Numerous initiatives taken by the European Commission are relevant for brand innovations:

Participants appreciated that the European Commission is accompanying the digital transformation of industries and that Commissioner Moedas launched Innovation Deals to reduce barriers to innovation.
Participants considered important the work of the European institutions to make sure that the business model of innovative industries is viable in the future by strengthening the protection of intellectual property rights.  Thus, participants appreciated that the European institutions were looking both at regulatory aspects, via the review of the Intellectual Property Rights Enforcement Directive, and non-regulatory options, via Memoranda of Understandings, including one on advertising and one on counterfeited goods online. 

Several participants raised issues with online platforms that should be addressed.  On the one hand, participants acknowledged the value of the e-commerce directive and the fact that online platforms are not liable as long as they do not have actual knowledge.  On the other hand, participants recognised a discomfort with issues such as fake news, online counterfeiting, misplacement of ads, the role of platforms as gatekeepers and the fairness of the relationships between platforms and their users (including abuse of dual role as service provider and competitor).  Participants also acknowledged that only 4% of online platforms are Europeans.  Without reviewing the e-commerce directive, participants seemed to consider that there were ways to make platforms more responsible and avoid that platforms that act responsibly find themselves at a competitive disadvantage.  Finally, participants agreed that brand manufacturers had a major role to play in addressing some of the shortcomings of the digital platforms (i.e. recent cases of ad misplacements).

Participants acknowledged that the European institutions were also supporting growth, including brand innovation, by striving to create a digital single market.  Having to deal with one set of rules, instead of 27 different legal regimes would make the life of manufacturers, traders and consumers easier.  In order to achieve that, the European Commission is working on improving horizontal legislations such as e-commerce and data protection and vertical legislations, such as copyright and the Audio-visual Media Services Directive.  Participants discussed two topics in particular: data protection and consumer protection rules.  For both topics, participants agreed that rules should ensure a level playing field between online and offline.  However, some participants pointed out that what is regarded as disproportionate barriers by some can be regarded as perfectly legitimate by others, consumers or traders.

Regarding data, all participants seemed aware of the importance of data to allow brands to create a better shopping experience online for consumers.   The General Data protection Regulation (GDPR) strives to offer predictability while avoiding negative impact on innovation.  No brand would want to face reputation issue for having mishandled personal data from its consumers.  All participants recognised that consumers should be informed on how their data are stored and used.  However, participants pointed out the importance of a granular understanding of what consumers want.  Consumers could give consent to brands collecting their data depending on their nature, on opt out possibilities and if there is a meaningful value exchange. For example, on the one hand, some consumers could accept that a brand they trust collects and stores some of their data to access a service they would have to pay for otherwise.  On the other hand, consumers would probably refuse access to their browser history.  In this context, regulation, co-regulation and self-regulation have all an important role to play to deal with the various aspects of the issue.  Participants also mentioned amongst the remaining issues the liability for the data used by autonomous system/robots with artificial intelligence and the internet of things.
Regarding consumer rules, some participants argued that new private law rules were needed to deal with new situations, such as the liability for self-driving cars.  This would support the adoption of innovations by helping consumers overcome their fear of the unknown.  Some participants also argued that this should not lead to consumers being less protected because they buy or use services online rather than in a physical store.

Conclusion by MEP Michal Boni, co-chair of the roundtable:

I would like to thank all participants for this comprehensive discussion.  The digital innovations offer new possibilities to already known as well as to new products and services. The innovations facilitate a greater consumer's involvement in the process of product development; placing the consumer at the heart of what a brand is doing and representing.  Increasingly the value of a company is measured by how positively the global public perceives them.

The innovation drivers for the digital era are personalisation and customisation thanks to technology.  This is only possible if manufacturers and traders can collect and use data.  In that respect, trust is needed, transparency of rules is needed and in some cases we need to moderate the behaviour of individuals.  We must analyse all aspects of personalisation in the GDPR.  The e-privacy directive could create major problems for advertising and direct marketing.  The current proposal could negatively impact this activity by putting an end to the use of cookies.  This would mean cutting out small firms from their consumers. 

Moreover, we absolutely need to prepare to new realities: the internet of things with 5 G solutions could completely transform smart homes; gamification and virtual reality could change our ways of interacting; e-health is affected too, with innovations such as the one developed by L’Oréal.   We must understand these changes and discuss the type of legal framework we need.  We need strong rules, transparent rules but self- and co-regulation can be appropriate to test solutions before embedding them in legislations. 

 

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