best experience brands: a global study by jack morton worldwide

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BEST EXPERIENCE BRANDS A GLOBAL STUDY BY JACK MORTON WORLDWIDE

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New research proves consumers prefer brands that offer unique experiences. Many are even willing to pay more for unique brand experiences.

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Page 1: Best Experience Brands: A Global Study by Jack Morton Worldwide

BEST EXPERIENCE BRANDS A GLOBAL STUDY BY JACK MORTON WORLDWIDE

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BEST EXPERIENCE BRANDS reports the topline findings of quantitative and qualitative research conducted in late 2011 among consumers in the US, UK, Asia and Australia.

This research strongly endorses the view that the brands that will lead in the 21st century will be experience brands – that is, brands that invest in building and continually improving how people experience and interact with them as a point of differentiation from competitors and a reason for consumers to become customers and advocates.

This view is proven out in the following topline findings:

• Havingauniqueexperiencewithabrandisimportant in determining purchase

• Twoinfiveconsumerswouldpaymoreforabrandthatoffers a unique experience

BEST EXPERIENCE BRANDS also highlights the “experience drivers” that brands can adjust based on their audience and industry sector.

Additional insights from the BEST EXPERIENCE BRANDS study will be released at a future date or may be requested by contacting Jack Morton.

EXECUTIVE SUMMARY

We expect unique brand experiences

But how do we do

that?

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Brands are Verbs 4

About the Study 6

Key Research Insights: Experience Matters 7

Experience Brand Drivers 11

Experience Brand Trends 16

Learn More 19

About Jack Morton 20

TABLE OF CONTENTS

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Today, more than ever, how a brand behaves is more important than what it says. Messaging is important, but what really matters is how a brand engages and interacts with the people who impact the business, from its customers to the people who influence customers.

Given an intensely competitive and (in many regions) recessionary climate, there’s huge pressure on every interaction with the brand, every touchpoint – from the shopping experience to the customer experience and beyond – to be effective, efficient and aligned with what the brand says it stands for. Additionally, social media channels have radically amplified the capacity for consumers to broadcast positive and negative experiences with a brand.

On a fundamental level, brands are verbs: what they do matters more than what they say. And thus understanding brands as verbs matters to business success.

Think about today’s most celebrated brands: from Apple to Zappos, one of the things that stands out about leading brands now is how many have established a unique and differentiating experience. Whether it’s Apple’s groundbreaking retail concept or Zappos’ legendary customer service, this unique experience gives the brand clear advantages over competitors.

BRANDS ARE VERBSJosh McCall

Every brand can be an experience brand by understanding the experience drivers that influence customers and optimizing these drivers to have the greatest impact.

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These advantages include: differentiation and memorability in a cluttered and competitive marketplace; the ability to maintain price integrity despite commoditization and recessionary caution; and increased brand awareness through resulting earned media and word of mouth (often more cheaply than by buying GRPs).

We at Jack Morton have long contended that brands that invest in creating a unique experience – which have come to be known as “experience brands” – will be the marketplace leaders of the 21st century.

The BEST EXPERIENCE BRANDS study that you are about to read represents our commitment to providing research-based insights and data not only to prove out this assertion – but also to understand why experience matters so much to consumers, and how this varies across product categories, geographies and demographic groups.

Our goal with this study is to help clients understand how they can become an experience brand, or be a better one. Because we believe that every brand can be an experience brand by understanding the experience drivers that influence their customers and optimizing them to have the greatest impact.

The following pages highlight top-level findings, but we invite you to contact us to learn more. Let us know what you think, and look for more of our annual BEST EXPERIENCE BRANDS studies in the future.

BRANDS ARE VERBS (CONTINUED)

Josh McCall is Chairman & CEO of Jack Morton Worldwide

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Respondents were aged 18 and older and were drawn fromtheUS(1,000),UK(200),Asia(205[Beijing,HongKong, Singapore]) and Australia (200). Data from the sample for the US and for Australia were weighted by demographics so that the results would more closely reflect the distribution of adults according to the US Census Bureau and the Australian Bureau of statistics. Total data were weighted to represent each of the four geographies equally. All findings are statistically significant at a 90% confidence level or higher.

ABOUT THE STUDY

When you see the term “brand experience”,

it is referring to any of the interactions you have with

either the specific company or its products or services. This can include your own personal use of the product or brand, your

conversations or interactions with employees or people who represent the

brand, or anything you learn from that brand’s marketing, word-of-mouth,

recommendations from your friends, colleagues or social network.

Survey respondents were provided the following definition:

In addition to the results of the online survey reported in the pages that follow, the BEST EXPERIENCE BRANDS study comprised a follow-up qualitative study with a smaller number of respondents relating to their actual experiences with airline brands. Insights from this qualitative study, as well as more detailed quantitative findings relating to other product categories, will be released at a later date or may be requested by contacting Jack Morton.

BEST EXPERIENCE BRANDS is based on a survey sponsored by Jack Morton Worldwide and conducted online by KRC Research among 1,605 consumers between August 22 and September 2, 2011.

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I have a lot of conversations about experience brands. These conversations often falter when, inevitably, the question is asked: What are some examples of experience brands? The answer I most often hear, and give, is Apple. Interestingly, answering “Apple” often leads to an objection – one I’m confident the BEST EXPERIENCE BRANDS study will help to dispel.

The objection goes: “I can’t be Apple, therefore I can’t be an experience brand." The assumption is that Apple is sui generis; only Apple gets to be Apple. Therefore, being an experience brand is a rarified condition, achievable only by a special few. BEST EXPERIENCE BRANDS proves first and foremost that being an experience brand is neither optional nor limited to certain kinds of brands, Apple or otherwise. Put simply: consumers want and expect brands to provide a unique experience. Yes, consumers do indeed rank Apple as the brand that provides the most unique experience across all categories (see [ fig. 1 ] ). But more importantly, they reveal an expectation that they should encounter unique brand experiences everywhere, across many different product categories (see [ fig. 2 ] ). Consumers reveal that they will reward brands that offer unique experiences (and by implication, the opposite is true, too: fail to offer a unique brand experience and consumers will choose another brand).

KEY RESEARCH INSIGHTS: EXPERIENCE MATTERSLiz Bigham

WE ASKED CONSUMERS "WHICH BRANDS DO YOU BELIEVE OFFER UNIQUE EXPERIENCES?" HERE'S WHAT THEY SAID:

[ fig. 1 ]

#1 #2 #3

#7

#4

#8 #9 #10

#6#5

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62%

“Previous unique experience is very important

when deciding what specific brands I use in the future.”

No more punting on brand experience: consumers expect it, they will buy and pay more because of it, and brands aren’t delivering.

60%

“Overall experience with a brand is the single

biggest factor in whether I decide to purchase a product or service.”

44%

[ fig. 2 ]

Strongly agree

Strongly agree

Strongly agree

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KEY RESEARCH INSIGHTS: EXPERIENCE MATTERS (CONTINUED)

HerearethreethingstheBEST EXPERIENCE BRANDS study makes very clear about the need for all brands to understand and invest in their unique experience:

#1 DIFFERENTIATED BRAND EXPERIENCES DRIVE CONSUMER CHOICE Most consumers surveyed across markets say that experience drives – and in large part determines – their purchase decisions. For example, in answer to the question “My overall experience with a brand is the single biggest factor in whether I decide to purchase a product or service,” three out of five (60%) strongly agreed; only 5% disagreed. Asked “Howimportantis a previous unique experience when deciding what specific brands you use in the future?”, over three out of five (62%) also said a unique brand experience was very important; only 1% disagreed. If it was ever in doubt, this definitively establishes that brands do not have a choice when it comes to their experience: they need to invest to optimize experience and leverage it as a point of differentiation.

#2 CONSUMERS WILL PAY MORE FOR BRANDS THAT OFFER UNIQUE EXPERIENCES Although most of the survey respondents dwell in regions suffering from economic uncertainty, many will pay more for brands that offer a unique experience. In answer to the question, “I am willing to pay a premium price for a product or service if I know that

I will have a unique experience with that brand in some way,” over two in five (44%) of consumers strongly agreed that they would pay more, and only 6% disagreed. Among those willing to pay a premium for a unique experience, nearly four out of five (79%) strongly agreed that experience is the #1 factor in their purchase decision. Not surprisingly, willingness to pay a premium is highest among those least impacted by economic uncertainty. It’s 34% higher among upper income respondents. In Asia, 58% of respondents strongly agreed they’d pay more for an experience. Even in the UK, of the regions studied currently the region most impacted by recession among those studied, 28% of respondents still said they’d pay more for a unique experience.

#3 TOO FEW BRANDS ARE MEETING CONSUMER DEMAND FOR UNIQUE EXPERIENCES The study revealed a big gap between the value consumers assign to experience and the number of brands that are actually providing them with unique experiences. When asked to rate how unique their past brand experiences have been, just one in four (26%) said their past brand experiences have been extremely or very unique. The chasm between the almost two thirds of consumers (62%) who say unique experience drives purchase, and the less than one third who say they’ve had a unique experience, suggests a tremendous opportunity for companies to dramatically elevate their brand experience.

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KEY RESEARCH INSIGHTS: EXPERIENCE MATTERS (CONTINUED)

Collectively, these three key insights should definitively do away with any punting on brand experience: consumers expect it, they will buy and pay more on that basis, and there’s a big gap between demand and supply.

Of critical importance, the BEST EXPERIENCE BRANDS findings also suggest that these patterns hold true across different sectors. As part of the study, respondents were asked in-depth questions about their experiences with a service-driven sector (airlines); a product-driven sector (mobile devices); and a web-driven sector (internet retailers). Additional topline findings relating to these sectors are covered in the following pages.

Liz Bigham is SVP, Director of Brand Marketing, Jack Morton Worldwide

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Digital experience

Customer experience

Shopping experience

EXPERIENCE BRAND DRIVERS

Brands must understand how different experience drivers influence consumers

Productexperience

So consumers expect unique experiences and will reward brands that provide them. What can brands do about that? Where to start?

They can’t just decide to be more “experiential” (a term that has, by the way, become extremely ambiguous through overuse, arguably since the publication of “The Experience Economy,”a1998HarvardBusinessReviewarticlebyJames Gillmore and Joseph Pine that brought experience to the forefront of business leaders’ thinking).

In order to build a strong experience brand, it’s important to understand what the drivers of experience are, and how they variously impact consumer perception and purchase.

Community experience

Discovery experience

WHATINFLUENCES

ME?

Employee experience

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EXPERIENCE BRAND DRIVERS (CONTINUED)

As part of the BEST EXPERIENCE BRANDS study, consumers were asked to rank the importance of a variety of factors to their experience of brands. They were asked to rank importance both to brand experience overall and to experience with brands in specific sectors (airlines, mobile devices, internet retailers). Some interesting insights about these experience drivers emerge:

#1 DRIVERS ARE FUNCTIONAL AND BRAND- FOCUSED, BOTH RATIONAL AND EMOTIONAL Across all sectors, geographies and demographics, consumers are highly consistent in selecting both transparently functional, needs-driven factors and those with softer, more brand-driven associations as very important to them when experiencing a brand [ fig. 3 ]. For example, the #1 driver across nearly all category sets is as functional as it gets (“Products and services that meet your needs”), followed closely by the softer “Understand my needs”. Interestingly, the third-ranked experience driver is a demand to be engaged and educated on an ongoing basis: consumers say it’s important that experience brands “Continue to serve and engage you after you’ve become a customer”. When top ranked drivers are correlated specifically to those consumers who were most likely to say that unique brand experience strongly influences their brand choice, the experience drivers became more brand-driven and less needs-driven [ fig. 3 ].

TOP EXPERIENCE DR IVERS OVERALL1

1 Products and services that meet your needs

2 Understands your needs

3 Continues to serve and engage you after you’ve become a customer

4 Exceeds your expectations

5 Makes it easy to find information and buy their products, wherever and whenever I want to shop

EXPERIENCE DR IVERS IMPORTANT TO UN IQUE BRAND EXPERIENCE

2

1 Initial impression the brand makes on you

2 Continues to serve and engage you after you’ve become a customer

3 Understands your needs

4 Differentiates from similar products

5 Employs people who anticipate your needs

[ fig. 3 ]

1. Data reflects top box rankings for “very/somewhat important”. 2. Data reflects derived ranking based on correlation of driver ranking and

respondents who were most likely to state that unique brand experience is very/somewhat important in deciding brand choice.

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Across all three, consumers indicated a significant gap between drivers that were ranked very /somewhat important and those they deemed excellent /very good based on actual experience [ fig. 5 ]. In some instances, the gap exceeds a 20-point gulf between expectation and delivery. Clearly, there’s work to be done to fulfill both brand promise and consumer expectations

It’s interesting to note how well these findings about experience drivers map onto what’s already evident about top experience brands. From Apple to Zappos, Amazon to Zipcar, top experience brands emphasize and invest in innovating their product experience even as they orchestrate and perfect their customer and shopping experiences. They’re dedicated to continuing to serve and engage consumers even after they’ve become customers. And they’re truly passionate about exceeding expectations.

BEST EXPERIENCE BRANDS demonstrates that it’s not just these leaders who are setting a path for experience brands: it’s consumers themselves who are demanding these very qualities from all brands.

LB

EXPERIENCE BRAND DRIVERS (CONTINUED)

#2 THE MOST IMPORTANT CATEGORIES OF EXPERIENCE DRIVERS ARE PRODUCT EXPERIENCE AND CUSTOMER EXPERIENCE Looking holistically at the various drivers ranked in the study and grouping them into different types of experience [ fig. 4 ], it’s clear that on a general level, product experience and customer experience are most influential for consumers, followed fairly closely by shopping experience. Other drivers, although still important, figure less explicitly in consumers’ judgments of brand experiences. This suggests that brands may need to reprioritize programs and partners to reinforce innovation in product experience as well as exemplary delivery across the customer and shopping experience. This is definitely not to say that any areas of experience are unimportant, but rather to emphasize that in the minds of consumers, the areas of product, customer and shopping experience are the forefront of conscious decision-making.

#3 ACROSS EXPERIENCE DRIVERS, BRANDS NEED TO CLOSE AN EXPECTATION AND DELIVERY GAP There’s a sizable gap between the importance consumers place on varying experience drivers and how those drivers actually deliver in reality. For example, consumers were asked about actual experience with brands in three sectors: airlines, mobile devices and internet retailers.

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5.8 5.4 4.9 4.85.8

PRODUCTEXPERIENCE 6.1 Products and services that

meet your needs

5.6 Invents new ways to enhance their products or services, after you’ve become a customer

CUSTOMER EXPERIENCE 5.9 Understands your needs

5.8 Continues to serve and engage you after you’ve become a customer

5.8 Exceeds your expectations

5.6 Educates you about how to use their products and services and be a smarter customer, after you’ve become a customer

5.3 Employs people who anticipate your needs

SHOPPINGEXPERIENCE 5.8 Makes it easy to find

information and buy their products, wherever and whenever I want to shop (in store, online, mobile)

5.8 Provides an efficient purchasing experience

DISCOVERYEXPERIENCE 5.6 Initial impression the brand makes

on you

5.5 How the brand differentiates itself from similar products and services

5.0 What a brand says about itself in marketing and ads

COMMUNITY EXPERIENCE 5.0 Supports causes that are

important to you

4.8 Makes you feel part of a special group of people

DIGITALEXPERIENCE 5.0 Array of available digital

functions (apps, mobile, etc.) to engage with the brand

4.8 Online presence (web site, social networks, advertising)

4.5 Active online following or community

EXPERIENCES VALUED BY CONSUMERS Average importance on a scale of 1-7 for unique brand experience drivers, by category (mean score)

[ fig. 4 ]

5.7

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EXPERIENCE BRAND DRIVERS BY SECTOR

[ fig. 5 ]

PERFORMANCE IMPORTANCE GAPSERVICE-BASED SECTOR / AIRLINES

Products and services that meet my needs 44 70 26

Understand my needs 40 69 29

Provide an efficient purchasing experience 41 66 25

Make it easy to buy their services, whenever and wherever I shop 42 63 21

Exceed my expectations 34 62 28

Employ people who anticipate my needs 35 60 25

PRODUCT-BASED SECTOR / MOBILE DEVICES

Products and services that meet my needs 53 72 19

Understand my needs 43 69 26

Make it easy to buy their services, whenever and wherever I shop 51 63 12

Provide an efficient purchase experience 43 62 19

Exceed my expectations 40 59 19

Educate me about how to use their products and be a 41 58 17smarter consumer, after I’ve become a customer

WEB-BASED SECTOR / INTERNET RETAILERS

Provide an efficient purchasing experience 60 76 16

Products and services that meet my needs 64 74 10

Make it easy to buy their services, whenever and wherever I shop 59 71 12

Understand my needs 50 65 15

Exceed my expectations 46 63 17

Initial impression the brand makes on me 45 60 15

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BEST EXPERIENCE BRANDS provides detailed insights into varying considerations and influences for experience brands across sectors, geographies and demographic groups. Although we will be sharing more detailed insights in future articles and presentations, the following top-line trends stand out:

GEOGRAPHIC TRENDS:

Impact of brand experienceConsumers in Asia are far more likely to say that experience is the single biggest factor in brand choice (71%, compared to 60% overall). This should inform the strategies for brands moving into Asian economies like China. Willingness to pay more for experience Asian consumers are more likely to be willing to pay a premium for brands that offer a unique experience (58% vs. 28% in the UK). Australian consumers are as likely as US consumers to indicate they’d pay more (45%).

Customer experience In general, US consumers have the highest expectations around customer experience: they’re most likely to identify “Exceeding expectations” as a driver (75%). By contrast, consumers in the UK are far less likely to cite “Exceeding expectations” as a driver (57%); Asian and Australian consumersareinthemiddle(67%).Highexpectationsforcustomer service in the US are an important consideration as brands seek to compete in the American market.

EXPERIENCE BRAND TRENDS

Consumers more likely to value experience are prized by marketers

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DEMOGRAPHIC TRENDS:

Women more responsive and receptive to experienceWomen are somewhat more likely to say that unique brand experience is very /somewhat important in determining brand choice (64% vs. 59% among men). Women are also more likely to agree that they will pay a premium for experience (47% vs. 41% among men). Interestingly, women are also slightly less likely to say that they’ve been engaged in a unique experience in the past (24% vs. 28% among men). Since women still make or influence most household purchase decisions, this is an important insight for marketers. Also of note, women rank some experience drivers much higher than men: “Understands your needs” (73% vs 65%), “Continues to serve and engage you after you’ve become a customer” (71% vs 62%) and “Exceeds expectations” (72% vs 60%).

Younger and middle-aged consumers are more willing than seniors to pay a premium for experienceThere is a ten-point gap between people under 55 and people over 55 when it comes to willingness to pay more for brands that offer a unique experience (47% vs 37%). Whether this reflects seniors’ budgetary caution or a more conservative brand-view, it’s worth noting for marketers.

Premium audiences outshine other groups when it comes to valuing experienceNot surprisingly, those with higher incomes are far more likely to say they’d pay more for a unique experience. Also not surprisingly, those consumers willing to pay more are also far more likely to cite experience as the #1 factor informing their purchase choices (84% vs. 60% among the general population). Interestingly, the drivers influencing these “experience-seeking” consumers are far more likely to be customer experience drivers such as “Understands your needs”, “Continues to serve and engage you after you’ve become a customer” and “Educates you about how to use their products and services and be a smarter consumer, after you’ve become a customer”.

SECTOR TRENDS:

AirlinesConsumers appear to suffer from low expectations based on less than stellar experiences when it comes to the airline sector. Over two in five consumers (43%) say that unique brand experience is important to their purchase choices in this sector. Yet fewer than two fifths (39%) of consumers rate their previous airline experiences as excellent or good. Again, refer to the significant gap between consumers’ expectations for key drivers and how airline brands have actually performed [ fig. 5 ].

EXPERIENCE BRAND TRENDS (CONTINUED)

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Mobile devicesThere is a much smaller gap between consumers’ judgment of past experiences with mobile device brands and the importance they place on experience. Almost half (48%) say that unique experiences drive purchase in this sector; a slightly smaller group (46%) rank their actual past experiences as excellent or very good. Interestingly, although Apple tops the list of experience brands in this sector with a 69% ranking for highly unique brand experience, the next best-ranked brand pales in comparison, at 41%.

Internet retailersMost consumers ranked this sector very positively in terms of actual past experience: over two out of three (70%) said their past experiences had been excellent or very good. Simultaneously, unique experience was most important in this sector compared to the others (49% vs. 48% for mobile devices and 43% for airlines). This is worth noting as more transactional or exclusively web-based brands may assume that “brand experience” is less relevant in the online marketplace. Clearly, online brand experience maps closely to user experience – just look at the drivers cited as important by consumers [ fig. 5 ].

LB

EXPERIENCE BRAND TRENDS (CONTINUED)

I like to experience new

things

What makes an experience memorable?

What's a 'wow' factor?

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Look for more insights from the BEST EXPERIENCE BRANDS study to be released in the future. To request insights from the qualitative phase of the study, as well as more detailed quantitative findings relating to product categories, contact [email protected]

READ OUR ARTICLES ON EXPERIENCE BRANDS:

What is an Experience Brand? read

Experience Brands and the Owned Media Opportunity read

Experience Brands and the New Engagement Model (research) read

Experience Brand Leaders 2010 read

TO JOIN THE CONVERSATION ABOUT BEST EXPERIENCE BRANDS, PLEASE CONNECT WITH US ONLINE:

Follow us on twitter: @jackmorton

Visit us online: jackmorton.com

Read our blog: blog.jackmorton.com

LEARN MORE

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© Jack Morton Worldwide 2011

JACK MORTON WORLDWIDE IS A GLOBAL BRAND EXPERIENCE AGENCY WITH OFFICES ON FOUR CONTINENTS. OUR AGENCY CULTURE PROMOTES BREAKTHROUGH IDEAS ABOUT HOW EXPERIENCES CONNECT BRANDS AND PEOPLE – IN PERSON, ONLINE, AT RETAIL AND THROUGH THE POWER OF DIGITAL AND WORD OF MOUTH INFLUENCE. WE WORK WITH BOTH BTOC AND BTOB CLIENTS TO CREATE POWERFUL AND EFFECTIVE EXPERIENCES THAT ENGAGE CUSTOMERS AND CONSUMERS, LAUNCH PRODUCTS, ALIGN EMPLOYEES AND BUILD STRONG EXPERIENCE BRANDS. RANKED AT THE TOP OF OUR FIELD, WE’VE EARNED OVER 40 AWARDS FOR CREATIVITY, EXECUTION AND EFFECTIVENESS SO FAR THIS YEAR, INCLUDING BEST NEW PRODUCT INTRO, BEST MEDIA EVENT AND EMPLOYEE CAMPAIGN OF THE YEAR. JACK MORTON IS PART OF THE INTERPUBLIC GROUP OF COMPANIES, INC. (NYSE: IPG).