Anheuser-Busch's CMO on what many companies get wrong when it comes to being purpose-driven

• Pedro Earp was named the CMO for Anheuser-Busch InBev last summer. He continues as CEO of the firm's 3-year-old innovation arm ZX Ventures.
• Earp talked about the importance of integrating marketing with innovation as one-size-fits-all products no longer appeal to today's consumer. 
• He says when it comes to brand purpose, many companies talk a lot about the causes that they spend 5% to 10% of their money on when they should be asking about whether their core business is good for society. 
• Earp talks about where AB InBev has taken marketing risks that paid off and where it's made mistakes. 
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Anheuser-Busch InBev's Pedro Earp sat down with Business Insider's Sara Silverstein at the Cannes Lions Festival to talk about his role as CMO and the future of the marketing industry. Following is a transcript of the video. 

Sara Silverstein: Can you explain to me what ZX Ventures is and why it makes sense to have somebody who heads up an important part of the business also become the chief marketing officer for the entire business?

Pedro Earp: ZX Ventures is our innovation and ventures arm. We set up shop in 2015 to accelerate, a little bit, innovation. In the past, it was kind of hard because innovation takes some time to kind of pay off and to get scale. And whenever we let innovation compete with our core business for resources, of course it was second priority. So we tried to do something different to set up another unit for the company that could really accelerate, have independent resources, different people, new capabilities. But we got to a stage, now, five years later, the thing got some scale and we thought it was a real opportunity for us to go there and kind of start cross-pollinating between ZX and our main business. And that's why I'm kind of co-heading both.

Silverstein: And how important is it that marketing message is in line with the innovations of the company and which goes first? Do you innovate first and then figure out how to market it, or do you learn from your conversations with the consumer about what sort of things you need to create?

Earp: So, I mean, today, you need to perform, right? You have to deliver products that really make a difference in people's lives. Because, otherwise, people don't buy products and feel the difference of the products just based on pure marketing. So, today, it's very important for you to have innovation - to create true differentiation with the products and then market it. So, I think innovation, in a way, is a fundamental part of the job today.

Silverstein: What do you think you bring to the role or to this industry that you think maybe not everybody else has?

Earp: Sure. Yeah, I mean, before ZX, I was in marketing for a while. But it's great because ZX, it's all about learning with startups and with new platforms and things like that. And, in a way, I think the competitive advantage for the future is going to be to understand consumers better than anybody else, create products that address big consumer needs, and then, deliver it in a frictionless way. And that's kind of what we're doing at ZX.

Getty Images / William Thomas CainAnheuser-Busch InBev's extensive beer portfolio includes Budweiser, Bud Light, Stella Artois, and Corona.At ZX, we have a pretty sizeable e-commerce business these days. So, we have a lot of consumer understanding, consumers vote with their wallet, so e-commerce is a very good indicator on what works, what doesn't, and what people want. And I really think this is kind of the capabilities that we need in a the core business today. You know, how can we use data to create data products that really have a differentiation. And then, use technology also to deliver it in a seamless way.

Silverstein: So, the consumer has changed a great deal, not just their behaviors and what sort of products they're interested in but also the way that they consume advertising. How are you dealing with that?

Earp: So, this is like a massive shift that we are seeing. If you take a look at, like, 10 years ago, you could probably target consumers in 90% of the time that they are consuming media, right, in general. And, today, like, there are a lot of massive platforms and very like high growth platforms that are ad-free, right. If you think about Netflix, if you thing about Spotify, if you think about YouTube Premium, you think about WhatsApp. So, increasingly, I think consumers are spending a lot of time with platforms that traditional advertising kind of doesn't work.

So, I think, in the future, it's going to be a combination of advertising with content. You have to go there and you have to produce content and deliver value to consumers in a way they're going to look for it, and not only get interrupted by it. So, we're kind of trying to do that, we are working a lot, for example, with YouTube. Currently, we have some things, great things going on in Brazil, we're creating content together. And then, consumers are organically going to the platform and consuming our content.

Silverstein: And there has been a shift in the interest of consumers to focus on privacy. How do you think that that's going to affect the future of advertising?

Earp: Well, I mean, this is very recent, right. We have a great relationship with Facebook and we talk a lot about this, and even for them, this is kind of a very recent change in direction. I think we will have to see it, how the privacy first thing plays out but, again, I think to the extent that you're going to be able to deliver value to consumers, create content that engage, provide entertainment to consumers, you're always going to have the channel. So, again, the specifics, we'll have to work through and that's something that we're very focused on because it will have meaningful implications but it's very early days.

Silverstein: If and how should brands get involved in social and political conversations?

Earp: Yeah, so, here in Cannes people talk a lot about purpose and there are different definitions of purpose. A lot of people are talking about social causes and doing good for the world and things like that as purpose. We have a slightly different view on that one. We think we should do that and I think brands need to get involved, I mean, there are so many problems in the world that governments are not going to be able to solve by themselves, so I think brands and companies, they have a role to play.

But I think the most important thing is that the core business of whatever industry you are in or whatever company you are in is actually positive for people and for society as a whole. So your business need to have meaning and need to impact people in a positive way. Because, at the end, you spend, if you have social causes and you have activism, whatever, this is like 5%, 10% of what the brand does. But, I think, consumers are really asking the question, what is the other 90%? Your core business, where you really spend the money and you spend the time, is that good or bad for society?

So, we are a beer company and we love that beer is a product that brings people together. We think that has a very meaningful role in society and it's great. It takes people, you know, it changes people's lives in a positive way.

Silverstein: Can you tell me about a campaign where you took a risk and it paid off?

Earp: Yeah, so, we had one, it actually won Grand Prix last year, here in Cannes. A campaign from our team in South Africa from Carling Black Label. It was a campaign about domestic violence. There are a lot of problems with domestic violence in South Africa. And Carling Black Label was a masculine brand, historically, and a lot of people that did domestic violence, they were kind of using that they were drunk as an excuse for the domestic violence. So that's something that we embraced with the brand and it said, look, real men doesn't give excuses. And we went very broad and it was a super successful campaign and the brand could really impact the cause.

Silverstein: And is there a time where you took a risk based on what you thought was happening with data or something where it really didn't pay off ?

Earp: You do so much at the same time that some things fall in between the cracks and you don't pay attention to every single execution and things like that.

Reuters/Ricardo MoraesThe Carnival in Rio de Janeiro, Brazil.So, back in the days when we were in Brazil, we have a brand which is a lot of fun and things like that. And we were kind of telling people to have fun during Carnival in one of the executions and it was saying, leave no at home - as in meaning, go there and have fun and seize opportunity and just enjoy and have a great time. And that was misinterpreted as if there is sexual harassment or whatever, you should just go with it. And there was a huge backlash and we had to apologize but, again, sometimes you try to push a little bit and it kind of got misinterpreted and you make mistakes.

Silverstein: What have you learned most about consumer trends or consumer behaviors since working at AB InBev?

Earp: Yeah, so, I mean the market has changed a lot. I think, in the past, you had kind of a few markets of millions and it was very easy to kind of segment consumers and have a pretty tight portfolio of brands that address the whole population. The market is moving from a few markets of millions to millions of markets of a few. And I think marketers, they have kind of two options. One is, they try to make the returns lower. Good luck with that, right? Or they can adapt themselves to have a much broader portfolio and satisfy many more consumers, right. So, the good news is that technology is helping a lot, you know, in personalizing product and delivering the right product to the right person at the right time. But it's a challenge, so consumers really - audiences are becoming very niche. And if you're not ready to cater for these audiences, somebody else will, so you'd better be prepared for it.

Silverstein: What's coming next, either from a marketing side or from an innovation side that you're most excited about?

Earp: I think the barrier between technology companies and CPGs or big companies, in general, is getting very blurred. And this is a great opportunity but also could be a massive threat, right. So if we take a look at the life of consumer understanding, the relationship that big technology companies have with consumers today is amazing. Allowed them to create a much better product to address consumer needs but, you know, it also allows them to disrupt other industries, right. So, you take a look at Amazon today. Amazon has more than 130 products and they have 100 times more information than some of the manufacturers of this product. They have better algorithms and they have the channel, right, with this consumer. So in a way, I think, companies in general, they have to be much better at technology and at consumer understanding in order to be able to compete in a world where lines are going to be blurred. I think the good news that the companies that do that, they're going to be very well-positioned to compete. I really believe that probably one of the best things that happened to Walmart in the past 10 years is Amazon, because it allowed Walmart to really step up in terms of technology and innovation and they're doing a great job at it.

Silverstein: Is there a campaign that someone else has done, doesn't have to be in the last year, but that you felt like, man, I really wish I had come up with that, that was such a great idea?

Earp: The two companies that caught my attention this year, of course, Nike, right? Everybody's talking about Nike with Kaepernick. A very bold campaign. When you talk about purpose, and you talk about your core purpose and social cause, I think the beauty of Nike is that they did both at the same time. And that's the magic, you know, they are inspiring every human being to be an athlete, and at the same time, they are furthering the cause for social justice and they did that in a beautiful way. It was very risky. Initially, a lot of backlash, right. But, at the end, I think it was a brilliant move by Nike. And I like, a lot, the work that Fernando Machado is doing at Burger King. The Whopper Detour, I think, for me, was genius. It's the kind of campaign that we should have thought. So this, for me, are the ones that caught my attention.