>> advertising cannot [bleep] anyone anymore. you cannot pull the wool over someone's eyes. >> traditional advertising is finished. being a great company is the new strength. there will be not anything between the consumer and the company. >> the essence of every great brand is trust.

>> advertising is going to become a word that we look at fondly and wonder -- we used to do advertising long ago. >> we used to watch ads to get information about products. we used to sit through commercial breaks. most importantly, we used to trust what brands told us. as the years passed, that trust has been tested. >> winston cigarettes deliver flavor 20 times the others. wilson has the blend. >> nose, throat, and accessory organs are not affected. >> we learned that cigarettes were killing us. we learned that the auto industry put more emphasis on imagery than safety.

we discovered child labor in our shoes. and lead in our toys. and then, it got worse. >> federal investigators put out their final report today on that bp oil spill. >> the occupy wall street movement has spread to more than 1000 countries. >> edelman issues this financial trust survey. they came out in january and showed the lowest level of trust in u.s. corporations in history. people do not believe ceo's or advertisers. >> brands are naïve to believe that they have full control of their perception out there today. i think with social media and the speed with which things travel today, there is no way to hide it. >> we have lost our faith in corporate messages. now, we turn elsewhere to find the truth. we share what we find.

there are 5.1 billion searches conducted on google every day. there are over 1000 facebook and twitter posts per second. meanwhile, 100 hours of video are uploaded to youtube every minute. >> $24 million worth of bribes exchanged between walmart and federal officials -- >> consumers are not just exposing unethical behavior, they are exposing the quality of the products they buy. >> asics split second, wrestling shoes, excellent lateral support, five stars. everlast gel glove wraps, not enough wrist support. i am semi-retired, and my two favorite things are coming to the boxing gym and reviewing products online. i consider myself an average

consumer. the only difference is, i review everything i buy. whether that is beauty products, home and garden products, boxing equipment, sports equipment -- i review it. i have written over 900 reviews. those reviews have been read by over 1.4 million people. i'm a fairly opinionated person. but in social situations, i usually keep those opinions to myself. writing reviews for me is a great way to get my voice out there to be heard. cover girl, smokey shadow blast -- crap! the lovely drew barrymore and all of her ads -- this wears off in one minute. you would think that companies knowing that their product is being reviewed and talked about. it would occur to them to make better products. but i do not think that is necessarily true. i am not sure at all that it's true.

there is still a lot of crap out there. trust me. >> you are watching an ad for crayola colored bubbles. it looks awesome. your kid would love this. so you go online, you're about to buy, and then -- you cannot miss it. it is inches from "add to cart." and it is bad. every single reviewer gave it one star. only because zero stars is not an option. if that is not enough, they have taken pictures. they look a little different than the commercial.

>> what can brands learn from me? i do not know. for me, it is staying true to myself. i can remember coming in when i first got signed up. there were 12 suits around this table. they were trying to create my image. those who have their image created -- it never lasts all the way. i told them from day one. image is reality. what you see is what you get. ♪

>> consumers have changed dramatically. advertising is almost the same as it was 50 years ago. dollars have shifted online. strategies remain the same. print ads became banner ads. junk mail became spam. 30 second tv ads became 30 second pre-rolls. >> display advertising put on blinders on digital creativity. it made it really easy for organizations to shift money on balance sheets. and not have to think different. >> why do we have aflac? and major medical?

>> change is difficult in an industry. look at health care coverage. they have had an image problem for years. >> our dollars pour into their bonuses and administrative costs that do nothing to make us healthy. that often go toward figuring out how to avoid covering people. >> safety net. >> what is the best way to combat this image? talking animals. >> aflac, aflac. >> a little more duck. >> a little more duck. too human? >> can you throw yourself into it? you are quacking, you are moving. become the duck. start making it you. >> i talked to the ceo. i talked to the p.r. people.

i tried out to be the aflac duck. i wrote a column about it. i'm still not sure what they do. that's the thing. i have farmers. i don't know why. i don't know what their ad is. i hate confusing state farm and farmers. i think they are separate things. why are they all involved with farms? when i was a kid, i knew the ads. i knew the jingle. i can sing you jingles. now, i tivo through them so quickly. there is so much advertising. it is a blur at this point. >> ♪ i'm through with romance ♪ >> advertising is less effective than ever before. it is coming at you in so many directions. is there anywhere i can look that doesn't have an ad? >> today's consumers are exposed to 5000 marketing messages per day. that is more than double the previous generation. the only thing creepier is the

fact that someone is trying to sell us something while we urinate. >> advertising has played a central role in how we function as a society. it is the connection point between consumers and corporations. the definition of advertising has to evolve. companies have to shift away from saying they are great, to actually being great. >> brands are a collection of experiences. it is not about coming up with this big branding campaign. it is about how you are creating lots of little experiences. small experiences that are going to get them wanting to come back for more. it has to start small. small steps lead to larger sets of experiences, and build a brand from the bottom up. it's not from the top down. >> there is going to be a place for funny, creative, emotionally engaging ads. what if advertising can be more

than just ads? what if delivering better products and services is a form of advertising? what if advertising can help companies be more transparent? or more socially responsible? or just more helpful? what if advertising can help the corporations be better? for 20 years, alex was advertising's most gifted storyteller. >> i'm a pc. >> i'm a pc too. >> do you know what else is cool? we can switch our heads around. >> the stories he told were funny and ironic. his own story was more straightforward. he simply dominated the industry. he transformed an agency into the top creative shop in the world. they won agence of the year 13

times. alex was awarded creative director of the decade. that is where the story takes a turn. he started saying stuff like -- >> a fundamentalist capitalist is as dangerous as any kind of fundamentalist. >> he wrote a book about america's obsession with oversized meals, this coming from the man who created this ad. >> ♪ eat it, eat it >> triple whopper - eat it like a snake! >> the conversations i would have with my clients at big corporations, they seemed false. you didn't want to have any more fake conversations. i was done. >> at the age of 46, at the height of his career, he quit the advertising industry.

greensboro, alabama is one of the poorest small towns in america. >> capitalism is in crisis. we do not have to look very far around. you can look in this town. there is a crisis. it has been around for a while. look at middle class america, it got hammered. we are here because we want to start a new kind of bicycle company. it is a bamboo bicycle company. these last longer than steel and aluminum bikes. a stand of bamboo sequesters more co2 than any biomass. there is a lot of energy around bringing it to alabama as a cash crop. >> half the kids in greensboro grow up in poverty. in a town of less than 3000 where many storefronts are permanently shuttered, he's hoping to make an impact on the community, while making profit at the same time.

the bamboo bike is the pilot program for a larger project called common. his goal is to launch 1000 socially conscious ventures. >> i think i'm not the only one with frustration with the constricted conversations happening in corporate america. >> when common has a board meeting, it is broadcast live online. it is not all good news. >> we were having real conversations about where we would pollute, where we would mitigate that, and everyone was involved was out of some aspect of corporate america. they were jazzed to finally be having that conversation. it is going to change radically from what is a fictional story that stood between you and the company, to real-time truth about your company. can you, through that, compel me

to buy? what i always say is, transparency is not a choice. does it happen to you, or do you participate? when it happens to you, it has proven to be ugly. >> in 1997, researcher dara o'rourke was at the forefront of the transparency movement. he traveled to vietnam as part of a study on factory conditions. >> one of the places i did research in was a nike factory. a koran-owned factory producing nike shoes. 2/3 of the women had respiratory diseases. there were violations of overtime and wages and sexual harrassment. at the time, nike said, not our factories. korean dude in vietnam, go talk to him. i came back to the u.s. and i wrote a report.

>> as reports of labor abuses flooded the news, nike's market cap fell by over $2 billion. >> their running shoe is rubber, nylon, a little bit of color and design. what they sell is a brand, a lifestyle and a reputation. that was being threatened. that was in 1997, the beginning of the internet. now the flow of information about problems in your supply chain is going 1000 times faster than it was. >> in 2007, he founded a website that puts transparency into the hands of everyday consumers. goodguide rates products on health, environmental impact, and social responsibility. the app is totally customizable. goodguide doesn't care if you want to save the environment, save your beauty, or simply save money. as long as you see the information that matters to you.

when you are shopping online, goodguide warns you when you're about to buy a product that doesn't meet your standards. it also recommends alternatives. with the goodguide mobile app, you can walk into a store with x-ray vision. >> that was the impetus for goodguide. to cut through the marketing. to cut through the claims on the packaging. new and improved, natural, nontoxic, or whatever. so the consumers really have more power than they have ever had before. they can vote with their dollars. goodguide is a unique offering. it is the tip of the iceberg of new types of information coming to consumers. where does petroleum come from that goes into your plastic toy? where does food come from that is in your organic cereal? we couldn't know that three years ago. as we have been doing this project, there has been scandal after scandal in the marketplace. >> links between high consumption of bpa and heart disease. >> the discovery of horsemeat disguised as beef has kicked off

a crisis. >> how would you even know it was in a product you were buying for your child? >> that has turned this issue into mainstream consumer issues. >> as for nike, the company has made major efforts to clean up its supply chain. nike is now one of the highest-rated apparel companies on goodguide. ♪

>> i'm going to hand you stuff and you're going to tell me what it is, ok? what is your name? >> superman. >> superman, what is this? >> baseball. >> very good. and can i see it? thank you. what shape is that? >> triangle. >> very good. can i see it? thank you. what color is that? >> green. >> what color? >> green. >> very good. can i see it? tyler, will you turn this on and play your new "cars 2" game? >> before kids learn the basic shapes and colors, they interact with information was previously only available in supercomputers. access to information is growing at exponential rates. tyler's world will be completely transparent.

engineers are developing interactive glass that turns every surface we touch into a tablet computer. these images may seem futuristic, but the underlying technology already exists. within a few years, we will be surrounded by screens wherever we go, every moment of the day. someone at m.i.t. is doing away with screens altogether, enabling ratings and reviews to be projected wherever we want. >> there may be a war going on in the retail environment and online where one side will be slamming us with ads everywhere we look, trying to weasel into other parts of our life into our family conversations, our photo sharing, all over. they are going to be trying to infiltrate. but at the same and time, consumers are going to have tools to see through all of that. >> consumers are just beginning to realize the power they have. meanwhile, corporations face a choice.

they can try to stop the revolution, or they can embrace it. >> patagonia is a great example of a strong brand that has said we're going to go as transparent as we can. >> anyone working in the environmental field knows if you're not talking about what is you wrong, you're not telling the whole story. >> you do not have to be worried about telling everybody the bad things you're doing, as long as you say that we are working on these things. if you try to be dishonest, try to hide it, it is going to come back and bite you in the [beep]. >> they did something called the footprint chronicles. they put up on their website the story of the products they were selling. >> it was one of the first really progressive approaches to transparency. through their choosing, they came to people and said we are going to show you how our

products are made. when i looked at it, it is not good news. >> this is patagonia, the outdoor brand talking about, we put toxic chemicals on your jacket you are wearing. >> it is so common to say what is the challenge? what is the opportunity? no, it is bad. it is just bad. we laid it out there. here is what is good. here is what is bad. then what we think. it was a scary notion. if we put it out there, it turns a lot of confrontations into conversations. >> the consumer has proven that they do not expect perfection. time and time again, when companies have used transparency right, the consumer has looked and said, it is not perfect enough, i'm moving on. they are realistic about it. >> i do not think advertising is enjoying the same luxury once had. we are all skeptics. we have heard far too many times.

clear is the new clever. you need to be clear in your messages. clever doesn't work anymore. >> recently, patagonia was called upon by walmart because walmart wanted to figure out their sustainability index. suddenly, this relatively itty-bitty company had infected ideas that were going to be radical. in a company that represents the 19th largest economy on earth. walmart is bigger than norway. >> at walmart, energy makes up a huge amount of our cost. that is why we are in texas. we are using wind power. >> walmart has a lot of negative press over the years. but going green isn't just good for the company's image. by lowering waste and increasing efficiency, walmart is actually helping its bottom line. >> they're convinced that they can actually make more money. that is where we come in. i'm convinced of that myself. every time we make a decision

that is right for the planet, it makes us more money. >> walmart isn't the only huge corporation that sees profit in going green. unilever is the second biggest advertiser in the world. it announced a plan to cut its environmental footprint in half over the next 10 years. >> waste costs money. it costs money to produce it. it costs money to get rid of it. that is the most basic. but if you go up a few levels, you need to have a healthy start to have a healthy business. an unhealthy society is unsustainable. >> every day, unilever products are used by over 2 billion people. that is a bigger consituency that any country on earth. at this scale, a simple decision can have a major impact. >> one of the things that we say, we can do well by doing good.

a really good example would be the concentration of liquid detergents. in taking water out, concentrating the detergents. it has made smaller packaging, lowered the shipping costs, and storage costs. when there is a win all around, there is no reason why we shouldn't make the planet benefit. >> it sounds like a small change, but consider that unilever detergent is used by one out of three households in the world. at that level, there is no such thing as a small change. ♪ >> compared to unilever, under armour is a small company. but it is also making big changes to its business model. its green clothing line started with used water bottles. they are spun into fabric. in 2011, under armour recycled 2 million plastic bottles.

>> the definition of advertising is changing. it is not built by those who spend the most money. it is about those who have the best product. those who are about driving and dictating with a point of view. the best merchants are those that dictate the future, not the ones who are trying to predict the future. we are trying to push our suppliers. we need renewable fibers. our consumer is interested in this. more importantly, we are interested in going in this direction. consumers typically won't pay more because you are telling them it is a green story. but if i can create a product that performs better, you feel great about wearing it. we call it a gift with purchase. the principles of green are completely in line with the principles of business. it means doing more with less.

>> again and again, innovative companies have proven that doing good doesn't have to be a sacrifice. it can be a competitive advantage. since introducing its green clothing line, under armour has doubled its revenues. unilever's sustainability measures have saved the company $400 million. walmart is expected to save $3.4 billion by reducing the size of its packaging. just as important, all three have created powerful true stories that help build their brands. return on investment -- it is the ultimate driver of any corporate decision. in 2005, chanel invested in an ad starring nicole kidman.

it is the most expensive ad ever produced, costing $20 million. >> i love you. >> in 2010, pepsi took the same budget -- $20 million -- and made a different kind of investment. they gave it away. >> every month, pepsi accepted a thousand proposals for projects that refreshed the world. the best proposals were chosen by audience vote to receive grant money. >> we thought we were not going to get enough submissions. 16 hours, it exploded. 16 hours, we had submissions shut down because we hit our quota. the next month, it happened in 16 minutes.

>> in its first year, pepsi refresh received 80 million votes. that is more votes than barack obama received in the last presidential campaign. by comparison, chanel's $20 million ad only has 4 million views on youtube. pepsi doesn't pretend that soda is healthy. but it redefined the brand by putting consumers in the driver seat. >> it was less about let's do good for the sake of doing good, but let's create a platform so that our consumers can bring to life what they want and their passion. i spent a lot of my time going around meeting with some of the participants and the winners. people would hug me. i have never been hugged for any work that i've ever done in my life -- i barely get hugged at home. this is where i grew up. i was a nerd. a programmer. a developer. then i came out of school and it was the boom of the internet.

we could change the world, right? there was this weird exuberance. then we created display media. we all of a sudden took an old concept, called display, and plugged into the medium that could have changed the world. now i think we are breaking out of those old terms. you have to tear down the notion of advertising, which is stuck in this command and control paradigm. the stuff that worked before no longer works. what is crazy is that that stuff worked for 100 years. now all of a sudden, 20 years, it is all gone. that is a frightening time. i think that fear stops people from seeing the excitement on the other side. ♪

>> invest in your products a lot. and invest less in advertising. those of you in advertising may hang me. trust me, your advertising will go further if you are selling something that is a lot better. >> what we are going to do is to try a couple of these salad dressings. >> there used to be one way to find what customers wanted. you asked them. >> you know what i think this is? this would be the compromise for a woman feeling creative. >> i see. >> i think that it has a place in our american way of life. >> for 50 years, market researchers used the same

methods. they got the same results. recently, things have changed. today, neuroscientists can plug into a consumer's subconscious. ♪ they use high density eeg sensors to measure areas of the brain at 2000 times per second. the eyes are tracked to determine visual focus. electrical variations in the skin are linked to emotional engagement. dr. a. k. pradeep is ceo of neurofocus. a global leader in the field of neuromarketing research. >> an experience has evocative moments for the brain. everybody thinks the big moments are, you look at a product, think about it, you buy it. you take it home. those are moments, right? we find that the brain's best

enjoyment in activity many times is in moments between moments. >> hello. thank you for flying with virgin america. a few announcements as we begin our flight. for the 0.0001% of you who have never operated a seat belt it works like this. just insert the metal end into the buckle until it clicks. pull on the loose end to tighten. >> it is a moment between moments. everybody knows there is the video, and then we go on for the rest of our lives. that which you take for granted, and you say is trivial, figuring that out is brilliant. >> 6:00 a.m. at lax. you are wating in line at u.s. air. it looks how you feel. tired, colorless. compare this to the virgin america ticket counter down the hall. it is actually human.

virgin isn't going to get you to point b any quicker. or any cheaper. but they nail the moments in between a and b. flowers, colors, atmosphere. it is the little things that count. virgin america spends $10 million per year on marketing. the typical major airlines spend close to $200 million. >> as a startup company, our advertising budget is small. we put a lot of focus into our product experience. look at every single touch point and see how you can do it better. having a better product where you can order food on demand, even bringing full fleet wi-fi to the market. all of those things actually are advertising. people are going to talk about it. they're going to share the story with their friends. >> i love virgin airlines. it is the same plane. they just took care in cheap ways of the things i dislike about flying. >> people are better looking in purple light. you feel sexier and it is a

plane. that is a place you don't usually feel sexy. it's like you could get laid on that plane. >> i will give you a call. >> let me get that for you. here you go, cutie. >> it is a brand taking your experience, and taking the points of pain, and either diminishing them or demolishing them. it is a survival game. those that do not do this will die. they will be gone, for consumers have so much choice, they will never suffer these things. >> they are pains in the [beep], the next generation. if you treat them badly, they will make you pay. >> ♪ united, you broke my

guitar. united, some big help you are. you broke it, you should fix it. you are liable, just admit it. i should have flown with someone else or gone by car. because united breaks guitars ♪ ♪

>> a lot of companies have ideas for improving customer experience. the challenge is making it happen. how do you change your organization and train your people to deliver a great experience? in search of answers, we took a trip to the zappos' headquarters in las vegas. ♪ >> one more thing i'm going to do for you, for being a good sport and understanding that sometimes we all make mistakes, i'm going to upgrade your account to vip with us. we have ordered one pair of nike's. we ended up talking for two hours. i told him he didn't feel like a customer to me. i told him i felt we were bros shopping for shoes. >> no company is more synonymous with customer service than zappos.

the online retailer has sold millions of the shoes while spending little on paid advertising. instead, zappos has invested in free shipping, a 24/7 call center, and the simple idea that happy employees will lead to happy customers. >> rather than just say culture is important, let's make it the number one priority of the company. if we get the culture right, most of the other stuff happens naturally as a byproduct. ♪ >> ♪ the store service is what we do check this out we are more than just shoes ♪ >> the zappos corporate culture is casual, a little dorky, and happy. on a typical afternoon, you will see a potluck lunch, a parade, a giant shoe, slick dance moves, and a guy in a leopard suit. the company throws blowout parties, provides free health care for all employees, and

keeps a full-time life coach on staff. >> we know for a fact if a person is happy personally, they are also happy professionally. >> happiness is great for business. in 2008, zappos hit $1 billion in sales and hasn't looked back. the growth has been driven by word-of-mouth recommendations and repeat customers. in 2010, the company received 25,000 job applications for 250 openings. that makes zappos more selective than harvard. >> my name is tyler. i'm trying to get a job with you guys. i wrote a little song based on your 10 core values. ♪ you can be a little weird if you are humble. ♪ grow and learn while having fun. ♪ >> at the same time, we had to ask. in a company where everyone is

happy, can they make the hard decisions? is there a happy way to fire somebody? >> a lot of companies have core values or guiding principles. they read like a press release that a marketing department put out. maybe you learn about it on day one, and then it is just a spot on the lobby wall. for us, we wanted to avoid that. we wanted to have commitable core values. we want to hire or fire people based on those core values, completely independent of their job performance. even if they are a superstar in their specific job function, if they're bad for our culture, we will fire them. for that reason alone. that is something that most companies aren't willing to do. >> thank you for calling zappos. this is kevin. >> the culture is reflected in the interaction with customers. as well as their media coverage. when they spend money on paid advertising, they let the culture speak for itself. their recent tv campaign consisted of transcripts of real

customer service calls. >> it is a great day. how may i help you? >> i received the most beautiful dress this morning. it is gorgeous. my problem is, i don't know who it is from. >> let me take a look here. >> does this happen a lot? >> not really. could you think it is from? >> is it from eddie? is it from jesse? >> yes. >> it's from jesse? [screams] oh, my god, he is so hot! ♪

>> transparency is no longer a choice. how brands deal with it is a choice, a choice that will determine the fate of corporations and ripple through the lives of consumers. more than ever, the definition of advertising is fluid. the question is -- what do we want advertising to be? a disruption, distraction, a fictional story that if we tell it enough times begins to sound true? maybe advertising could be something else. maybe it is telling a true story in a new way. maybe it is solving a small problem. maybe it is admitting to a big problem. brands, advertisers, consumers.

we all have choices to make. >> change is hard when you are a successful company. because you're good at selling one thing. you know how to sell it and you're making billions of dollars. there is a better way to do it. >> there is an atmosphere among a lot of agencies of just fear. that fear to make a decision. >> the skeptics, if they continue to be skeptics, you guys do what you are going to do. i see the future. there will be people springing up. it will not be people who are used to the 30-second and 60-second spots. they will be dinosaurs. nature abhors a vacuum. >> am i still having a marketing career? i really don't know. i think i might. if i am doing a marketing career, then there is a lot of space to find what you want to

do, and what you want to spend your time on. too many people get in and say i really don't know. this is just the way it is. it is never going to change. my job is never going to feel good because my job is x, and i need that paycheck. it is just not true. >> people who are unwilling to stick their necks out and unwilling to change, unwilling to accept risk are eventually going to lose it all in the end. >> we know the planet is under pressure. one company is not going to change it. we need to start a movement, get more companies on board, then, yes, we can have a meaningful impact on the planet. >> in a transparent world, the consumer is a watchdog. a critic. but also, a champion. a collaborator. when a brand truly partners with

its customers, interesting things can happen. a 26-year-old ceo can turn happiness into a business model. a soda company can empower communities. a blue-chip corporation can lead a green revolution. >> it really is flipping marketing on its head. to empower consumers to tell you what they want, rather than you tell them what they should want. that is a big shift. >> if you look at the history of the world, somehow humanity has scraped and crawled and gotten a little bit more power and a little bit more control all the way. it cannot end with corporations as the greatest power on earth. it ends with humanity itself.

♪

. .

>> with the right ingredient -- >> we have sugar and butter. >> celebrity chefs have turned their kitchen chops into sizzling businesses. >> anybody can do this. >> luring us in with their tips of the trade -- >> it's a very easy recipe. >> and the high-stakes drama of the kitchen. >> i'm dying up here and you're killing me. >> tv shows, restaurants, and cookbooks. >> i feel like a burger or something. >> these larger-than-life personalities have made eating into a multi-billion dollar industry. we all know some of the best conversations happen over a meal, so we gathered at a classic new york city restaurant. let's meet the titans. first up, mario batali.