The IPA Making Sense Podcast: Rory Sutherland

In the first episode of our Making Sense Podcast, IPA Head of Marketing and Data Innovation Simon Frazier sits down with the inimitable Rory Sutherland. Their discussion spans TK Maxx, geriatric aids, the value of sometimes ‘being more puppy’, and why marketing and advertising have fundamentally failed to explain, price and promote the true value they create.

Transcript

SPEAKER_00 0:00

So nearly all innovations in large corporations emerge as an act of subversion. The Dove campaign, when it first got started within Ogilvy and Unilever, basically was almost like it was a bit Colonel Kurtz, basically a group of people, both client side and agency side, went rogue. Effectively, Nespresso only existed, I think, because they lied to Nestle about their financial figures for two years. Jeff Bezos, when he introduced Amazon Prime, several of the board members threatened to resign if he introduced it. When you go back on any case where any large organization has done something worthwhile, it has almost always started as effectively an act of disobedience.

SPEAKER_02 1:21

The most recent, of course, being Alchemy. So we're absolutely thrilled to have you on the podcast today, Rory.

SPEAKER_00 1:26

Oh, it's a joy to be back. Yeah.

SPEAKER_02 1:27

Fantastic. In the bowels of the building.

SPEAKER_00 1:29

I know, and you've I actually signed a 70-year lease. It's the only time in my life I'll ever sign a 70-year lease on a building in Belgrave Square. But um uh it came up for renewal while I was president. Oh, fantastic. And very interestingly, there was a small body of opinion that wanted to move somewhere cheaper. And I said, once you've done that, uh tempting though it may be, um, once you've done that, you're doomed. Yes, it's very difficult to go back to that. Once you're operating out of some shed in Lewisham, you're not really an effective professional body. And it's a peculiar thing because effectively you end up spending quite a lot of your budget on what is a form of advertising, which is architecture and location.

SPEAKER_02 2:11

Absolutely. And it's quite it kind of draws in quite nicely to the um to the points that I've I was going to start with today is you know, why why do you think it is as an industry we're so focused on the idea of minimizing risk uh and and and prioritizing that over, I guess, things that are reportable versus things It depends.

SPEAKER_00 2:29

I mean, one of the things is that most people in business, albeit unconsciously, aren't really interested or primarily motivated by enriching the business for which they work. They're more motivated by the idea of justifying their own existence within the organization. And then if you look at it through that lens of what is sometimes called defensive decision making, if you think about it, in most businesses, city trading would be an outlier, certain businesses would be an outlier. There's this huge asymmetry between upside gains and downside risk. So you make a cock-up, you lose your job, you know, at worst it's career-ending, okay? You have a multi-million dollar idea, you get a pat on the back, maybe you get a promotion or a bonus, but you don't get to capture anything like the upside value in proportion to what you create. Whereas the downside risk is, if anything, slightly amplified, what might be a relatively small risk to the organization is actually catastrophic to your own career and prospects. So that asymmetry strikes me as being fundamentally a bit problematic, which is why, of course, you need entrepreneurs. Because entrepreneurs are people who are obviously greater risk takers in part because they are likely to gain a far greater proportion of any upside gains than they would do if they were working for a conventional sort of uh organization.

SPEAKER_02 3:58

Right. And I guess in terms of in terms of like the kind of the opposition of creativity and rationality, it becomes kind of problematic because, as you said, if your focus is on reducing the overall risk to yourself because negative events are far more highly.

SPEAKER_00 4:15

There are huge biases if you're interested in blame avoidance as the principal motivation. One of which is that it doesn't matter how bad the consequences of your decision, if the decision appeared to be made rationally, then you effectively have a get-out-of-jail uh card. Whereas if you make a decision which involves intuition or instinct or any form of kind of tacit knowledge, um, and therefore you don't have that rational framework with which to defend your decision making, if that decision turns out poorly, you're dead meat.

SPEAKER_02 4:50

Yes.

SPEAKER_00 4:51

And so these sort of asymmetries are really, really important because you know there's a question really of I would argue that advertising agencies at their best were run a bit like family-run entrepreneurial businesses. In other words, they were effectively opportunistic.

SPEAKER_01 5:09

Yeah, yeah.

SPEAKER_00 5:10

Because that was the only way you could survive in what was, you know, quite a brutal world. I would then say that the holding companies then turned what was a concession, uh, you know, you went from being a concession within the holding company to use department store language to being part of a corporation. And I don't think those gains to scale and sort of scale efficiencies, which might or might not work in the media world, I don't think they work at all in the creative agency world.

SPEAKER_02 5:39

And I mean one of the quite interesting things, I I guess in the from you know, going back to school days and the mathematical sense is like showing you're working out. If you get to the right answer and you've shown your work out, if you get to the wrong answer and you've shown your working out, you're still okay.

SPEAKER_00 5:51

Yeah, yeah, yeah. You're still okay. So an awful lot of business activity, you could include probably 50% of market research in this, yeah, is us covering disguised as rigour.

SPEAKER_03 6:00

Right.

SPEAKER_00 6:01

Because it's very, very difficult difficult to tell the difference between someone who's doing a load of work effectively, or bringing in management consultants, effectively construct to construct a rational framework to defend their decision making in the event of catastrophe. That behavior looks very similar to someone who's seeking to make a very rigorous decision. And I mean, certain people like Gerd Gigerenza, for example, has argued that you know, probably 20% of, or maybe even 40%, of activity within a business, it may not look like it, but it's primarily motivated by that kind of defensive behavior. And that's quite interesting. I mean, Because we don't, if you think about it, as consumers, we make pretty good decisions without having to deliver a PowerPoint deck or an Excel spreadsheet to explain why we bought one car rather than another car. And it's accepted that as individuals uh we can act based on a mixture of rationality, calculation, and intuition, for instance. But we've created this very strange institutional form of decision making where we regard it as a kind of triumph if we can remove any kind of instinctive or subjective judgment completely and present it as though it were a kind of high school maths question with a single right answer. And it's there's a very interesting um book just come out by the very same Gerd Gigerenza, um, which is about the value of intuitive thinking. In other words, intuitive thinking allows us, for instance, to take on board lots of different forms of information which may be incommensurable. In other words, we can make apples to oranges comparisons rather than apples to apples comparisons. And he argues that a large part of the what you might call the devaluation and dismissal of the value of intuition was driven in the 19th century by a kind of sexism. That it was kind of believed that men were disproportionately rational and women were disproportionately intuitive. And therefore, you presented rationality as a kind of machismo in decision making. But in fact, of course, intuition, nearly all the really important decisions we make, I mean, where to live, where to work, who to marry, you know, which air fryer to buy, you know, the really important stuff, those are actually made using a very high degree of intuition. One one intuitive element, of course, being brand preference.

SPEAKER_01 8:29

Yes, of course.

SPEAKER_00 8:29

Which is well, you know, it's made by a reputable company. So though it's this is what I've always argued, it's not a guarantee of perfection by any means, but it is a reliable guarantee that the thing isn't going to be a crock of shit.

SPEAKER_03 8:41

Yes.

SPEAKER_00 8:42

Because Toshiba Stroke, you know, whoever it may be, who makes the air fryer, they have a lot of reputational skin in the game, they've got a lot of sunk cost investment in their brand reputation, therefore, it would not make business sense for them to promote a product which was subpar, let's say. You know, it may not be optimal, but uh if you if if you want to avoid crappiness, then brands are a really pretty good heuristic. Absolutely.

SPEAKER_02 9:07

And I I think that plays what plays quite nicely is that is the is McDonald's. I mean McDonald's.

SPEAKER_00 9:11

Yeah, it's the least worst restaurant in the world. Yeah. In that it, you know, I've never had an objectively bad McDonald's. Okay. Now, as I jokingly say, you know, it's not very good if you want to take someone on a first date, you know, if you want to show off, if you want to have a meal you'll remember for the rest of your life, it's not great. That's obviously what you know, that's what Nando's is for. Um, but on the other hand, as a reliable guarantee that you won't get ill, you won't be ripped off, the food will be pretty palatable, your kids will eat it, the toilets will be clean, the the location will be safe. If you add up all the non-negatives, it's amazingly impressive.

SPEAKER_02 9:53

Yeah. And I think, I mean, an interesting point on McDonald's. I mean, one of my favourite films is the founder, of course, the story of Ray Kroc. Really, really good story. Well, I mean, there's two interesting angles on there. There's one which is the rationality of why McDonald's was successful in terms of their production line approach. And then there's if when Ray Kroc said, you know, the thing that got it for me, it was the name McDonald's. He said, in that when he took the name from the two brothers, and then proceeded to kind of almost try and drive them out of business. So I mean, what would you say that in that sort of example there is this is the kind of the thing that made that as a as a really successful.

SPEAKER_00 10:26

He's actually right, of course, isn't he? And it doesn't occur to anybody because we're so familiar with McDonald's. But it is a case where a rose by any other name. Yeah, I mean, it's impossible to say because we don't have the counterfactuals. Had he called it Dave's or you know, Ray's or Crocs. Well, Crocs, of course, would mean that he would have had to get into the extremely bizarre footwear business. Um, but um, but the interesting thing, I I I occasionally tease, probably unfairly, Greg Jackson with this. Greg Jackson's the kind of founder of Octopus Energy. Yeah, yeah, yeah. And their original intention was to call themselves, you know, like eco-green tech or whatever it might have been, but a deadly serious descriptive name. The bizarrest thing was that they only became known as Octopus Energy because their principal investor, which was called something like Craken Capital, had a completely eccentric policy that you had to name any brand they invested in after some sort of sea creature. Right, right. It may not have been quite that specific. So, much to their annoyance, they were forced to brand as Octopus Energy. And actually, it's a former Ogilvy colleague of mine, Rebecca Dib Simkin, who was also involved in quite a lot of the branding work. But had they not had this bizarre pink octopus on a purple background, I always tease Greg by saying, if you'd gone with the original name, you'd probably only have 15,000 customers by now. Best name story of all, though. Yeah. I I occasionally have this kind of copywriter anxiety, which is when you look at something and go, it's brilliant, but I could never have come up with that. And I always had that a little bit about the Creature Comforts uh TV campaign back in the 90s, when someone wrote, you know, someone said, I like it because it's easily turn off and honable.

SPEAKER_01 12:13

Yes.

SPEAKER_00 12:14

And I had this kind of crisis of confidence as a copywriter because I thought, I didn't think I ever could have written that. And then I discovered they weren't actually written, they were recordings of market research groups, which Ardman then animated. So it was they would literally choose the most bizarre, sometimes the most boring uh uh people in focus groups. Actually, probably not focus groups, they're probably depth interviews. And then they'd pretty much just animate those sayings. So it was never written by a copywriter, easily turn off and honorable, was just said by a member of the public. But there was this other case where I always wondered who the hell came up with. Now, I'm not I'm not approving or endorsing it here, you understand. But I always wondered who came up with the name um Spearmint Rhino. For a chain of gentlemen's clubs, if you're not familiar, apparently I've never been to one. I'm more of a string fellows man. But no, no. But um Spearmint Rhino, if you think about it, it's got two Freudian, you know, suggestions of phallic imagery, right? And yet it's utterly, utterly bizarre, yeah, right? And yet it just works. And there is only one instance I can find anywhere where someone tells the story of why it was so named, which appears when the founder was interviewed in The Guardian about 12 years ago. And I finally found it online. And the reason is this in order to expand, they bought a chain of children's restaurants to be repurposed as gentlemen's clubs, by which we don't mean sort of you know, the uh the Institute of Directors or the um or the Athenaeum, we mean gentlemen's clubs. And they bought this chain of restaurants just as a useful, useful real estate move with which to expand.

SPEAKER_03 13:58

Yeah.

SPEAKER_00 13:59

And the children's restaurants were called Peppermint Elephant. And they thought, well, we can't really have a chain of strip clubs called Peppermint Elephant. So they flipped it to Spearmint Rhino to make it a bit more kind of brand appropriate, and there you have it. But when you think about it, I mean, it is this awful question of brand names, because we never know what would have happened otherwise. It'd be very, very easy. Okay. If you had a silly name, like Octopus Energy, and you'd failed, everybody would have gone, if you only called it something serious, we'd be a billion-dollar company by now. So it's very, very difficult. The tendency is, because you'll never be able to prove it one way or the other, the tendency would always be to go with boring rather than silly. But when you think about it, I mean, huge numbers of very successful things have utterly stupid names, not just spearmint rhino. I I can never understand who the hell came up with murder she wrote. Do you remember that? Yeah, yeah, of course, yeah. I mean, who would for a TV program? Murder, it's just ridiculous. And so every now and then you get these, you know. I mean, you know, when you think about it, strictly come dancing. Okay, it's a non-strictly ballroom. Fucking stupid name. It doesn't do that, isn't it? Really, really stupid name. Doesn't, you know, and now it's just called Strictly.

SPEAKER_01 15:13

Yeah.

SPEAKER_00 15:14

Um, it doesn't really make any sense, does it, right? No, absolutely. What the hell? And so the courage actually just, you know, maybe we're getting into kind of bar and sharp territory here, which is just be distinctive.

SPEAKER_01 15:25

Yeah.

SPEAKER_00 15:26

You know, just call yourself something slightly ridiculous and and just hope for it. But it takes an awful lot of courage because you're the guy who's gonna be if you do boring advertising and the product launch fails, uh you're kind of you're safe. Yeah. Okay. If you do wacky advertising and the product launch succeeds, well, all the people who did the pricing and the product design will take all the credit.

SPEAKER_01 15:47

Yeah.

SPEAKER_00 15:48

If you do wacky advertising and the product launch fails, everybody's gonna blame you.

SPEAKER_01 15:52

Yeah.

SPEAKER_00 15:53

And so the necessity of, you know, the difficulty of being weird, you know, whether it's, you know, a it's not pink, it's coral, the card which is the Monzo card. Yeah, the difficulty of doing those things, you know, and the the I mean it's pathetic to call it bravery. I mean, come on, there are people fighting in Ukraine. But what I mean is the the chutspar required to do something weird in business, given the unevenness of the consequences that result. As a consequence, business is just a lot more boring than it needs to be. Yeah.

SPEAKER_02 16:24

But I think in terms of I know you've been talking quite a lot recently about the idea of family-owned businesses. One of the ones that really resonates with me is pneumatic, you know, the maker of the Henry vacuum cleaner.

SPEAKER_00 16:34

Are they family-owned?

SPEAKER_02 16:35

Yeah, yeah. I can't remember the guy's name who owns them. I'm 99% sure they are. Um but they But Dyson is also family-owned. Of course.

SPEAKER_00 16:41

So the two really interesting ends of the marketplace, apologies to my mate who's the marketing director of Electrolux, yeah. But the two really interesting extremes in the marketplace are both family-owned companies.

SPEAKER_02 16:51

Yeah, yeah, yeah. But the weird thing with Henry is it was obviously designed as a kind of industrial vacuum cleaner. And it was guys at a trade show who got bored and then drew a face on it. And then all of a sudden, like in terms of the product. You can get a Hetty as well, can't you?

SPEAKER_00 17:05

How is the Hetty different? There's a George as well.

SPEAKER_02 17:08

Hetty's just Hetty has eyelashes and is pink.

SPEAKER_00 17:10

That's right.

SPEAKER_02 17:11

George, I think.

SPEAKER_00 17:11

I got a Hetty and Deal, actually. The place and deal with a Hetty, yeah. I mean it's unbelievable.

SPEAKER_02 17:15

I was talking to recently on another podcast. I mean, Henry is kind of I call it like the Keith Richards of the vacuum cleaner world. It's just unbelievably powerful and strong. You can use it.

SPEAKER_00 17:24

You see it's the only thing Interestingly, um, a colleague of mine, um, Malcolm Poynton, it was always his fantasy to do the advertising for Henry. And they don't they don't advertise. Uh well, no, they they don't seem to. And his argument was it's very simple that everywhere you go, uh, which effectively needs an industrial strength vacuum cleaner, you know, you're sitting, you know, I don't know, if you're late, you stay late at a restaurant, whatever it may be, if you're in a hotel you know, at six o'clock in the morning, the people are always using Henry's, aren't they? And and yet, bizarrely, they've managed to kind of straddle the B2B and consumer markets very effectively. And they're incredibly cheap as well. And it's interesting because it's only, I think, the family-owned business, and we we have evidence here, but it's it's any anecdotal, but it's not insignificant. Four out of the five IPA effectiveness gold awards this year were family-owned businesses, and I've presented this so often I can reel them off. Lathwaits, Spec Savers, McCain, and Yorkshire T.

SPEAKER_01 18:24

Yeah.

SPEAKER_00 18:24

All family-owned. You know, uh, there are also brilliant family-owned businesses that don't need to advertise because they're so good. T-Bay services, for example. Yeah. All right. Uh, enterprise rent a car, family-owned, um, H E B in Texas. Actually, Walmart is still uh family controlled, as is Ford, interestingly, in that the family still has some sort of controlling interest. The advantage you have is that I would argue that unless you are either founder run or family-owned, other than a few people like PG and Nestlé and Unilever and so forth, who are Mark or D'Agio, in the case of Guinness, who are marketing and consumer focused enough to evade this problem. It means you're free to set your terms of success over any time frame you choose with a focus on the consumer or the customer. Any PLC is constrained by the artificial time frame of financial reporting in terms of anything they do, and is only really interested in things the success of which you can do in advance, because the cost of failing in the short term is effectively too great. And as a consequence, I would argue one of the reasons why the British economy is growing so little is because we don't have those equivalents, and the American economy is only growing spectacularly because of the magnificent seven, by the way, which are mostly still the legacy of founder created businesses. And if unless you have that, or you have the indulgence of the stock market because you're a tech firm, uh, or you're simply family run and are free to focus on the consumer first uh and the employees second, rather than shareholder first, consumer second, employees third. Yeah, uh fundamentally I don't think you can build a brand anymore. And I don't think anybody's saying this often enough, which is that the constraints of what is a very narrow uh fitness function for uh shareholder-owned businesses are such that any form of innovation that would take longer than any that that that that's basically uh you know that has a payback period longer than a performance marketing campaign is is now impossible.

SPEAKER_02 20:49

Yeah, I guess.

SPEAKER_00 20:50

They've shot themselves in the foot. Now here's an interesting one. So I met Stephen Wolfram a couple of weeks ago, who's the Wolfram Alpha mathematical genius guy, and it was completely um humbling because not only is he obviously, by many orders of magnitude, a you know, a better um mathematician than me, I think he's actually a better marketer than me as well, because instinctively he you know has an absolutely extraordinary understanding of complex systems. And he said something uh which fascinated me because it never occurred to me before. He said, the reason evolution works is because it's got a very blurry and fairly vague fitness function, which is basically stay alive long enough to reproduce.

SPEAKER_03 21:36

Yeah.

SPEAKER_00 21:36

You know, it helps if you stay alive a bit longer so you can look after your offspring, yeah, and by and large try and have slightly more offspring than the number of organisms involved in its creation. That's it. If you meet those criteria, you can be anything from a kind of stromolite in a pool in Australia to a peacock.

SPEAKER_01 21:55

Yeah.

SPEAKER_00 21:56

If you meet those criteria by whatever means work. According to the environment uh and the ecological niche in which you find yourself, uh then you're in the game and you get to continue. That's it. It's incredibly blurry, incredibly vague as a fitness function. And interestingly, what we've done is we've imposed exactly the same fitness function, i.e., short-term profitable returns, on every single business that's measured according to those similar criteria.

SPEAKER_01 22:27

Yeah.

SPEAKER_00 22:28

And if you want capitalism to work, you want a broad fitness function, which is the weird business that's in existence for 27 years and then somehow becomes cool.

SPEAKER_01 22:39

Yes.

SPEAKER_00 22:40

Right? You know, literally. Okay. Now I think that the imposition this explains why John Kay's obliquity is such an important book, which is that the direct pursuit of a very narrow measure, particularly when it's the same measure that all your competitors are pursuing, okay, is not actually a recipe for biodiversity or economic growth.

SPEAKER_01 23:02

No, no.

SPEAKER_00 23:02

It's actually a recipe for hyper competition with a load of people focused on attempting to achieve the same thing in the same way in the same time frame. Usually it's cost cutting for short-term profit gains, okay, over a quarterly or annual horizon. Now, what you're doing there without noticing it necessarily, is you're just creating hyper competition rather than uh breadth of competition, diversity of competition. And I would argue that the shareholder value movement has hence destroyed billions of dollars of shareholder value by instead of encouraging companies to adopt different different fitness functions over different time horizons. It's effectively forced every company to behave like every other company, which is not, you know, there are, if you think about biological life, there are gestation periods of days and there are gestation periods of years, I think, in the case of elephants. You know, you know, it marches to the beat of many, many different drums. Yeah. And there's also this thing called technoplasmosis. I don't know if you've come across this. I coined the phrase, but the work was done by a guy called Adel Al-Borki, who's this extraordinary kind of self-taught marketing guru in Benghazi, Libya, who started writing for the drum and writing for um uh also on LinkedIn.

SPEAKER_01 24:26

Yeah.

SPEAKER_00 24:27

And he made the point that what's happened in marketing and advertising is that the metrics we've been induced to use for the purposes of comparison with everybody else, yeah, are not metrics that serve the interests of brands or the businesses that own them. They're metrics which serve the interests largely of the people who own digital media properties.

SPEAKER_01 24:50

Right.

SPEAKER_00 24:50

So the reason it's called technoplasmosis is by analogy with toxoplasmosis, which is the cat parasite which affects the brain of the intermediate host organism. So when it gets into a rat or mouse, it makes the rat or mouse unafraid of cats so that they're more likely to get eaten. So the parasite is more likely then to be able to infect another host organism. So it takes away, it's a it's basically, you know, it becomes a brain parasite in any small rodent where it affects the whole brain chemistry, so the rodent basically goes, mmm, cats. Okay? And that's how it maximizes its fitness.

SPEAKER_01 25:28

Right.

SPEAKER_00 25:28

Now, what's happened is that Google and and um Meta and so forth have somehow induced marketers all to use the same uh marketing metrics, which are largely contrived to serve disproportionate investment in the very properties which Meta and Alphabet own.

SPEAKER_02 25:51

Right.

SPEAKER_00 25:52

So, I mean, it was interesting, wasn't it, that your recent paper showed that influence and marketing is disproportionately um successful. And I might argue that might be because influence and marketing is one of very few forms of digital advertising which actually does the job that advertising is supposed to do, which is um uh actually telling people information in some sort of narrative form from a source which may be in some degree convincing.

SPEAKER_01 26:21

Yeah, yeah.

SPEAKER_00 26:22

Most of performance advertising is a shelf wobbler without a shelf.

SPEAKER_01 26:26

Right.

SPEAKER_00 26:26

Okay, it's just a it's point of sale transactional stuff. Nothing wrong with that. I like shelf wobblers, but normally they're next to the product which you can buy right away, okay? No, okay, there are products which, if you buy them online, performance marketing works fairly well. Does it work for you, Nileva? Am I gonna see an offer on a banner and go, whoop de fucking do? Let's build a whole cardado shop around a 20% saving on shampoo. Yeah. I don't really think so. Okay, so that's what I mean by a shelf wobbler without a shelf.

unknown 26:57

Yeah.

SPEAKER_00 26:57

You know, it works in some categories in a kind of very narrow transactional way. But it's not really advertising in the conventional sense of uh of uh you know any kind of you know brand investment. It's it's it's entirely bottom of the funnel stuff. Now, nothing wrong with the bottom of the funnel, by the way. Optimize that first.

SPEAKER_03 27:14

Yes.

SPEAKER_00 27:15

Because if you haven't got your conversion right, then anything you spend further up the funnel is going to be suboptimal, if not wasted. But at the same time, that's the idea that simply because it's easier to prove the efficacy of your expenditure, you should spend it all there. And so what what those what those people have done is they've turned um self-justification and accountability into a target. Okay. Accountability is a very valuable attribute of advertising, but it shouldn't be a target. Now I worked in direct marketing, I still consider myself a direct marketer, and direct marketing was great because you could measure it, and therefore you could count, you could contrast things, you could test things, and you could draw reasonable inferences from what happened.

unknown 28:01

Yeah.

SPEAKER_00 28:02

The downside of that was you were never allowed to do anything you couldn't measure. Right. Now, the fact is there are valuable marketing activities and less valuable marketing activities. Uh, some you know, some media are vastly more convincing or persuasive than others, some are vastly more memorable.

SPEAKER_01 28:20

Yeah.

SPEAKER_00 28:20

Um, you know, some you know probably create brand patterns or all sorts of you know interesting neural pathways, which other forms of advertising don't. But you should be optimizing for effectiveness, not for attribution.

SPEAKER_02 28:35

Yeah.

SPEAKER_00 28:35

Really, shouldn't you? Yeah, yeah, yeah. I mean that that's called me old-fashioned, you know. And do you need to know? Well, if you're selling individual consumer data and you believe that the only really valuable thing about a medium is that it allows you to target people individually, and therefore you want people to become fixated on individual targeting, then obviously you'll convince people that the attribution of every that to every unit of uh of cost there is an equivalent unit of revenue that must be attached. You want people to believe that because that's what you're selling. It's not true, however, is it?

unknown 29:09

No.

SPEAKER_00 29:09

Right? I mean, there are many, many more effective ways of advertising things. They're just not quite as easy to um uh reduce to a granular level of measurement.

SPEAKER_02 29:19

I mean, the idea of hyper-targeting, I guess, is is in some I mean, the interesting thing with hyper-targeting is actually it often reduces the element of creativity in there, which is often what resonates so well.

SPEAKER_00 29:29

Abbott famously said, shit that arrives at the speed of light is still shit. Okay. That was a shot across the bows. Of course. Just to be clear about this, I mean, the the the opportunity for a breakthrough in creative is much, much higher than the opportunity for a real breakthrough in media. Really.

SPEAKER_01 29:48

Right, yeah, in terms of that.

SPEAKER_00 29:48

Okay. In terms of what you might call a complete game changer.

SPEAKER_01 29:52

Yeah.

SPEAKER_00 29:53

You don't need to measure the efficacy of everything at that granular level, the individual level. If something works, it works. That's good enough. That's justification enough. You don't need to dissect it down to its individual consumer components. You know, loads of media, if they work, they work. Do you need to know exactly at what level they're working? No. And so the whole thing has become grotesquely infected by a mixture of technoplasmosis, I would argue, and this business of drisk aversion, where you're better off being able to justify your own existence than you are being able to make money. It's much better to be, you know, to be able to justify the money you make for your employer, however paltry that sum may be, that it is actually delivering something of immense value where the value is difficult to quantify.

SPEAKER_02 30:39

Yeah. And I this draws on some things I've heard you talking about recently in terms of Nassim Tallip's work on the thin and fat-tailed distribution.

SPEAKER_00 30:46

Marketing's fat-tailed, simple as that. It's like pharmaceutical research, it's like poker. Do you ever go to a casino? I don't do it very often. I had nothing to do. Not for many years, yeah. What you notice if you play blackjack or poker or anything like that, is that probably you might stay up until four o'clock in the morning. When you actually look at whether you're up or down, nearly all of that's determined by six hands.

SPEAKER_03 31:10

Yes.

SPEAKER_00 31:10

You know, where you go in big or other people go in big. And that's a fat-tailed distribution. It's where the outliers determine the actual outcome to a large extent. I would argue marketing, creative advertising should be considered like that. The reason you do advertising is because you stay alive long enough to get lucky, which is the fitness function. And every now and then, and I, you know, David Ogilvy said, okay, in my entire working life, I've had no more than five or six big ideas. Yeah. I think he might include Pepperidge Farm, he'd probably include Hathaway, probably include Rolls-Royce. I I I mean uh there's one idea he had which he couldn't sell, which was very interesting. I haven't got time to talk about it. But generally, the principal value of I think having a creative agency around is that you know they wash their face most of the time, yeah, but every now and then, as Jeff Bezos says, in baseball the most you can score in a hit is four. In business, you can score a thousand.

SPEAKER_03 32:10

Yes.

SPEAKER_00 32:10

And every now and then, Amazon Prime. Okay, that's that's a that's what you might knock out. In 1967, someone at Ogilvy had the idea of putting the Member Since date on an American Express car.

SPEAKER_01 32:24

Yes.

SPEAKER_00 32:25

Now we probably got paid somewhere between zero and five thousand dollars for that idea. It's made American Express billion.

SPEAKER_01 32:32

Yeah.

SPEAKER_00 32:33

Okay, in terms of customer retention. And also brand meaning and lots of other things like that. It's a billion-dollar idea for which you get$5,000. Ogilvy Australia came up with the idea of putting names on Coke cans. That's still running. I was in Norway yesterday, and all the Coke bottles have like Sigrid and Thor or whatever, you know, Wotan, I don't know. They have Norwegian names on them. But that's an idea that was originated in Australia about 10 or 11 years ago. I imagine it's made them a billion dollars, right?

SPEAKER_03 33:03

Right.

SPEAKER_00 33:03

Ogilvy Australia from that made 350,000 Australian dollars, I think. Which is enough to buy, as I said, a small flat in a crap part of Sydney if you're lucky. Now, what I'm saying is that I always sat around thinking, gosh, this agency business is shit, isn't it? Because when you hit it out of the park, you only get to capture a meager proportion of the value you create.

SPEAKER_01 33:27

Yeah.

SPEAKER_00 33:28

And then you know, I went into a bit of a sulk about that and thought, well, what the hell? Equally, you know, you know, those big ideas arguably pay for the times in between where you're merely just kind of treading water.

SPEAKER_01 33:39

Yeah.

SPEAKER_00 33:40

Then it occurred to me, because it's exactly the same problem for anybody in marketing. Because in marketing, if you have a huge marketing idea, and by the way, let's be epic fair here. Um, I worked on American Express for uh quite a few years, and there were probably three really breakthrough ideas in terms of customer acquisition we had in that time. And two of them were the client's idea, really. You know, but it was a client who had this wacko idea and persevered, and you know, in a just world, those two clients would be selling themselves in a yacht somewhere off Havar or something, right? But they're not. And then it occurred to me that in marketing, we've allowed ourselves to get into a form of accountability where you're held accountable for every single unit of cost in real time. Okay, but you can only lay claim to the corresponding upside for a very short period after that activity takes place, after that cost is incurred. Moreover, there is no carryover from the value that marketing created one, two, three, four, five years ago, which is still delivering.

SPEAKER_01 34:56

Yeah.

SPEAKER_00 34:57

So the consequence of this is that marketing is completely fucked by finance.

SPEAKER_01 35:01

Right.

SPEAKER_00 35:02

In that they got we wildly excited by the idea of accountability in marketing, because they thought we'll be able to justify every penny of our spend, and look how we'll be able to justify a higher marketing spend. But before they got excited by accountability, they should have had a bit of a thought about the time frame of the payback within which the payback can be judged. Because Coca-Cola, quite justly and rightly, is still making money from that idea of putting people's names on Coke cans, share a coke with. Great, really happy for them, okay. But it's not just the agency that got screwed. The marketers who came up with that idea are now being held responsible for every penny of cost they incur in 2025. Now, against that, no one's allowed to set the marketing contribution that was made in 2015, even though it's still paying out 10 years later, right? So that's like saying to J.K. Rowling, it's like saying, yeah, yeah, we'll pay you royalties, but only on the first edition of the first book.

SPEAKER_01 36:05

Right, yeah.

SPEAKER_00 36:06

So I'm sure they got a bit of credit from coming up with that idea in Australia, and it was regarded as a great success. But when you come up with a gift that keeps on giving, in a case, a point with the behavioral science practice, we came, a brilliant colleague of mine basically said, if you change when people ring to cancel this software product, what you've got people doing is you ask them why they're cancelling.

SPEAKER_01 36:29

Yeah.

SPEAKER_00 36:29

Data collection question. What you're actually getting to do is to reiterate a whole load of reasons why they want to get rid of this product. Why don't you start by saying, can you just remind us why you got the product in the first place? Now that makes them, every year since my colleague had that idea seven years ago, that makes them a few million a year in customer in retained customer value. But the marketing people who commissioned that idea, they can't offset. Now, who's getting credit for that? It's someone in fucking operations, or they'll go and present to the city, and they won't say, thanks to a brilliant marketing idea we had in 2015, we made two million pounds more this year. No, they'll say, thanks to our brilliant cost cutting, you know, or our replacement of our call center staff with AI, or thanks to our wonderful logistics uh, you know, um reinvention, or thanks to the wonderful work we did with McKinsey in terms of blah, blah, blah. So all of the credit for that, which actually belongs to marketing, in the same way that when you fund a drug research company uh within um, you know, a pharmaceutical company, you don't say, did you come up with a blockbuster drug this week? Because if not, you're all fired. You accept the fact that their research today is funded by the discoveries they made, in some cases, 20 years ago.

SPEAKER_01 37:46

Yeah.

SPEAKER_00 37:47

And you accept that time frame. Marketing has got itself into this appalling state of affairs where every single penny of cost is set against you in the debit column, but the value you created outside this financial year effectively is credited to someone else. Yes, I see what you're saying. So that's not that's not accountability, that's just bullshit. That's just finance effectively kicking you in the teeth every single quarter. And the best marketing ideas, by the way, like the best brand campaigns, they're slow. And also their value compounds over time. Fame is really interesting because the value of fame compounds over time. The more famous you get, the more e the easier it is to get more famous still, if you see what I mean. And so anything you do that that that you know starts off now and delivers later, you know, the what I call the kind of marketing equivalent of a pension, you know, those things, again, they're just treated as effectively someone else's. It used to be the the the the famous thing was the OBE, the when in the 50s, the joke was it stood for other buggers' ethics.

SPEAKER_03 38:57

Yes, yeah, I've heard that, yeah.

SPEAKER_00 38:58

And in many ways, much of the value created by marketing is effectively being claimed by some misattributed because it's being claimed by someone else. And do you do you think that that encourages Because nobody wants to go to the city and say, thanks to our brilliant marketing idea in 2015, we're making money now. They'd much rather write a Harvard Business Review case study about how the do you do with you know they have fucking restructuring or bullshit like that.

SPEAKER_02 39:22

I mean, an interesting thing that we found, especially during COVID, is the first things to go during times of difficult economic circumstances is invariably it'll be the insight function, the marketing function, and then the expenditure on advertising. So these kind of things where actually the true innovation can occur, because they're so rationalized they're kind of removed from the equation.

SPEAKER_00 39:41

Well, having looked in direct marketing and having seen how fat-tailed marketing is, I don't think it's useful. I think marketing and innovation should be the same departments. Because Peter Drucker famously said, because the purpose of business is to find and keep a customer, it has only two value-creating functions, marketing and innovation. Everything else is a cost.

SPEAKER_01 40:01

Yeah.

SPEAKER_00 40:02

And actually, I think marketing and innovation are exactly the same thing. And in many cases, I suspect are actually deeply interconnected. Yeah. In that there are two ways you can create new value in the marketplace. You can either find out something somebody wants and work out a clever way to make it, or you can work out something you can make and find a clever way to make someone want it. And the value created is exactly the same regardless of what you might call the uh direction of travel between those two functions. And in many cases, I would argue there are good ideas which only work if they're marketed well.

SPEAKER_03 40:37

Yeah.

SPEAKER_00 40:37

And there are good ideas, by the way, which fail because they're great ideas, but they're marketed badly. Google Glass. Of course, yeah. Um I also think there are good ideas which may be impossible to market well, like you know, Apple Vision Pro. You know, there's there's so this is this is another interesting question about is you know, is innovation really technological or psychological? At some weird level, I would argue that there is something about human perception that doesn't like 3D.

SPEAKER_02 41:11

Yeah, yeah. I mean, that's been going on since the 90s.

SPEAKER_00 41:13

About every 30 years, you know, a breed of people retire who who take the knowledge with them, and a new breed of people turn up who are convinced that the future of you know of entertainment is 3D. Yeah, yeah, yeah. And yet, okay, let's let's be honest about this. If it were really that good, the gaming industry would have cracked it 10 years ago. Right. And yet mostly, I mean, not even porn. You know, there is I I'm told there is 3D porn, okay. But okay, right, okay. If this were really a market, okay, gaming and porn would have got there a long time before Hollywood or advertising agencies or anybody else. And they haven't. Which suggests that there may be a gap in the market, but there isn't a market in the gap. And maybe that's because, at some weird level, I think a large part of what we perceive is actually an internally generated prediction. And therefore, in some weird way, we don't actually want artificial 3D environments. Now, you could argue, is it because they've got them slightly wrong and it makes us feeling makes us feel sick? Yeah. Um, is it you know, may maybe 10% of the population would like it, but it's a bit are you an over-the-air headphones guy or an earbuds guy? Because I cannot make earbuds work. I don't understand people who walk around. All these Gen Z people who walk around with those things in their air, they don't they fall out. I can't make it. No. And also I'm terrified that on a plane they'll get trapped between the seats in some fire or something. Yeah, yeah, yeah. Right. But I I genuinely don't understand them. I I I don't I like I like over-the-air headphones, yeah, and I quite like bone conducting headphones.

SPEAKER_01 42:54

Right, yeah, yeah, yeah.

SPEAKER_00 42:54

Um, which by the way, a really good thing because uh okay, this is actually quite a useful tip. So this is a I've got one of those Samsung folding phones. Yes, okay, brilliant, brilliant device. Now, one of the principal markets for that thing is basically people over 55, because we can't see a fucking thing, right? And the folding phone means I can actually use some of the apps on my phone without squinting. But obviously, you can't overtly market them at the other. Right, because it would it makes them look like a geriatric aid product. Okay, and so these are this is where innovation and marketing becomes so uh becomes so intimately intertwined, which is there are benefits of things. Okay, bone conducting headphones are exactly the same, by the way. They've been developed and are marketed to joggers. Important point this, by the way, if you jog, because you lose spatial awareness and you run in front of a car. And the bone conducting headphones transmit voice or music uh effectively through your uh they bypass the anvil and the stirrup in the air and they go straight into the into the The airdrum. And obviously, that's a great thing if you bizarrely you can wear them while swimming. I've never tried that. But you can wear them while jogging. Yeah, yeah. And it also means that you know you don't have to take them off every time your spouse asks you a question or something. But they're also brilliant if you're if you're suffer from bad hearing. Because most of most of hearing deterioration in old age is actually effectively the anvil stirrup and the little the mechanical bit of the ear basically becomes compromised. And by bypassing that, it's great new. Now, again, this is a product which should be in some way discreetly marketed to the elderly, but of course, it would kind of kill it off.

SPEAKER_02 44:40

It cuts the coolness off, doesn't it?

SPEAKER_00 44:41

Yeah, it would kind of cut the coolness off. Your granny's headphones has never been a kind of great uh selling point.

SPEAKER_02 44:47

Yeah, that's a that's a really interesting approach. I mean, one of the things I want to ask you about actually is um some of the stuff you've been talking about recently on on reverse benchmarking. Um, because invariably as we kind of move into the AI world and the idea, say my point by the way, if you're a brand, you should have your own metrics, right?

SPEAKER_00 45:04

Your metrics should be brand specific. Yeah. They shouldn't be imposed on you by whoever whichever platform you're using to suit their own selfish interests. You should say, our purpose is to sell more cat food to everybody who buys their cat a birthday present.

SPEAKER_02 45:20

Yes.

SPEAKER_00 45:21

In other words, in order for a brand, in order for an individual to be an individual, you should have some of your own success metrics, your own fitness function. And depending on your temperament, it might be that you want to end up with a stable full of Porsches, or you want to move to the Welsh borders and sell joysticks, right? But you can come up with your own definition of success. If you have a definition of success that's imposed on you by everybody else, then you're not really an individual, I would argue. And in the same way, you're not really a brand if your marketing metrics are exactly the same as everybody else's. Because it's it's where to play, how to win. You know, Roger L. Martin. Now, your where to play is and and how and how to win, that's your strategy. That strategy will then in turn generate metrics and therefore a media strategy, which is appropriate to your device strategy. Whereas if you're saying simply saying all we'll do is we'll reduce everything to its constituent parts and optimize these parts which happen to be displayed on whatever dashboard it is is fashionable this month, then you haven't really got a brand, have you? You've just got a kind of tedious race to the bottom grind.

SPEAKER_02 46:34

And as we move into is increasingly into the into say AI-driven marketing, it seems to be reinforcing, you know, reinforcing kind of the bad work that's gone into say research and data and reinforcing kind of the bad ideas. Because the thing that really strikes me as interesting at the minute is actually the fairly low proportion of investment in direct mail. And I I see it as a as a really interesting.

SPEAKER_00 46:56

I'm glad to hear this because I I'm very happy to do market reach sessions because for reasons we may never fully understand, yeah. Direct mail came out incredibly well. Didn't surprise me at all. It was David Ogilvy's first love and secret weapon as a medium, was physical direct mail.

SPEAKER_01 47:15

Yeah.

SPEAKER_00 47:16

And one of the things I most often suggest bizarrely to tech firms is that they try direct mail. Direct mail was instrumental in the success of, for example, HelloFresh.

SPEAKER_03 47:27

Of course.

SPEAKER_00 47:27

Um, somebody else, there's another tech company which stuck which tested it and was completely freaked out by the results because they're used to this sort of 0.001% click-through, and suddenly they were getting kind of double-digit percentages. What the hell's going on here, basically? Uh the QR code, of course, makes it a bit more interesting, along with a few other things as well. But part of it is the time sensitivity of it, which is it's read, I think, on average, a piece of direct mail is read by something like 120 for 126 seconds. But it's also kept to a moment in the week when you are thinking of sorting your shit out. Yes. So it might be now an awful lot of an awful, you know that wonderful scene in Alan Partridge where he turns up in a funeral in a black jacket, and then halfway through he turns around and there's castrel on the back of the table. Okay? Well, an awful lot of digital, an awful lot of digital advertising is served to me when I'm like trying to pay a parking ticket. Yes. I'm trying to do something completely different, which is important. And these things keep appearing, trying to persuade me to do something utterly irrelevant. And it's exactly like displaying a castrel ad, great brand, by the way, but not at a funeral.

SPEAKER_03 48:36

Right, of course.

SPEAKER_00 48:37

And what interests me about that is that direct mail, if you think about it, press advertising reached people when they were reading.

SPEAKER_03 48:44

Yeah.

SPEAKER_00 48:45

And TV advertising reached people when they were sitting on a sofa staring at a screen. Okay. And cinema advertising reached people when they were waiting for a film to start. All of those were beautifully micro-targeted in terms of moment.

SPEAKER_01 48:58

Yes.

SPEAKER_00 48:59

Right? Not necessarily in terms of person, but in terms of the moment. I'm reading a newspaper, I'm looking for a bit of news, all this news is a bit depressing. Ooh, look, there's a new Ford Focus, you know, XR, whatever it is, right?

SPEAKER_03 49:10

Yeah.

SPEAKER_00 49:10

Okay? Totally appropriate. Most digital advertising is effectively like a castrel out at a funeral. It's just, you know, I'm trying to do something else. It's this intrusive nonsense that has nothing to do with anything I'm trying to do at the time. And this promise they've made that it can be, you know, it can be so beautifully targeted it stops being advertising and starts becoming a service, is delivered about one time in 10,000. Only about one time in 10,000 do I see any ad online, uh by which I mean uh displa a thing on ad online, which looks as if someone with an ounce of copywriting talent has been engaged in its creation. And that's because the answer is they haven't. I mean, actually, to be honest, AI will probably, if anything, improve them slightly because uh at the moment it's incredibly rare for me to see an ad online. It does happen. And when it does, it's an absolute revelation.

SPEAKER_01 50:03

Yeah.

SPEAKER_00 50:04

There's one kind of brand advertising online, interestingly, which is WeTransfer. You probably use WeTransfer. You actually get something like a bit like a Vogue ad, it's a display that it's a beautiful thing. And I always thought, why is that the only place that does it? Turns out that WeTransfer was actually founded by an art director. Ah right. So someone with actually a modicum of taste, judgment, and discernment who actually knew how advertising worked, rather than thinking it was an efficiency optimization game. How you can claim that something which leaves 99.97% of your readership cold is efficient is another matter.

SPEAKER_02 50:42

I think what's interesting, as I said about WeTransfer being founded by an art director, is the consumer or the user experience is clearly very well considered there. It's very easy to use. Yeah, yeah, yeah.

SPEAKER_00 50:55

But also, more than being easy to use, which is nice in itself, it's actually in some ways uplifting. It's it's actually emotionally rewarding in a way that nearly all the other stuff really isn't. And so there is something there. Okay, David Ogilvy didn't even approve of poster advertising of billboards.

SPEAKER_01 51:12

Right.

SPEAKER_00 51:12

Because he said it broke the contract with the consumer. In that David's definition of advertising was the advertisement paid for the surrounding content, which rewarded the consumer, and the advertisement, in a sense, justified its own existence. So it was actually what you might call a benign loop between media owner, brand owner, consumer. Okay? All three parties benefited from this. And he argued that the billboard, now I disagree actually, ad shells, and also digital posters which sometimes display useful information and sometimes display ads, are probably completely legitimate by David's definition. He was talking about obviously about print billboards, but he said no, no, the the site owner benefits, the brand owner benefits, but the consumer just has an uglier environment. We I don't consider this to be a legitimate use of advertising.

SPEAKER_02 52:03

Yeah, that's very interesting. I mean, another thing that um Vicky Fox, who's the chief planning officer at OMD, often talks about, is how advertising should be a good house guest.

SPEAKER_00 52:14

You know, in terms of the obtrusiveness or or by the way, they in the 50s, which we consider to be like the high point of rapacious capitalism, the advertising industry agonized about this stuff. The ethics of it, da da da, you know. I mean, it's regarded as completely radical in um uh slightly inaccurate point in Mad Men that you know they resigned a cigarette account rather than lose it. Actually, it was very common for, you know, at agencies, then a lot of them wouldn't take alcohol accounts. And they absolutely agonized about the ethics here. And what we've done is we've created an alternative metaphysics in kind of neoliberal economics, which goes, well, if someone's prepared to pay for it, then the it must be good. Well, in other words, people have ducked the whole question of negative externalities.

SPEAKER_01 53:00

Right.

SPEAKER_00 53:01

Um, and you know, what what are the consequences, for instance? Um now, I you know, I don't have any problems actually advertising vapes, and I don't have any problem advertising premium booze. Because generally premium booze isn't bought by people with a booze problem. You could argue, David Abbott did, that it doesn't matter you're normalizing something by advertising it in any shape or form, which was his argument against tobacco advertising. Um didn't stop them advertising crisps, by the way, but nonetheless, okay. Um however, something that would really, really bother me would be effectively gambling advertising, advertising for gambling or gaming sites, which would end up algorithmically targeting people with a weakness. Right. So previously you could effectively uh avoid temptation. If you had a big gambling problem, don't buy the sporting life, don't go into the bookmaker. Do you see what I mean? It was possible to use the physical environment to effectively remove yourself from temptation. There was a case in the United States where an algorithm there there are there are lists in the United States where you can ask for yourself to be barred from all casinos in the state. So it's something that people who have a gambling problem that just says, don't let me in.

SPEAKER_02 54:23

Yeah.

SPEAKER_00 54:24

And there was some case in the US where literally the algorithm discovered this list of people and started marketing to them like crazy, because unsurprisingly, of course, the returns were spectacularly good. So, you know, things like that really, really worry me, and yet everybody's just ducking the questions.

SPEAKER_02 54:41

One thing that you, I know you talk about quite a lot, but I think is increasingly prevalent in how we understand the usage of AI in you know the modern advertising industry is that idea of explore versus exploit. And how I mean, an important thing to understand would be how do we get that explore balance back?

SPEAKER_00 54:57

Because I think in AI might help because it is at least capable of coping with uh intuitive thought in that it deals with words rather than just numbers. Yes, and consequently it captures a whole range of human emotions for which we didn't have numerical measures. So I'm not totally pessimistic about it by any means, except in one respect, which is that uh whether AI and family business, family-owned businesses, will be used to create new forms of value and enhance the consumer experience, the natural deployment of AI within most businesses will be around cost reduction and uh and efficiencies. And that's because if you're an AI company, AI is expensive, how do you sell it? The easiest way to sell any product is this will save you money. Okay, the easiest way to justify your purchase of any product is by saying, look at all the money we saved. And the because a cost is always quantifiable and immediate, whereas an opportunity cost is nebulous and long term, the initial deployment of AI, I think, will be depressingly um uh uh dismal, in that it will be disproportionately used in failed attempts to replace humans in order to justify the c the money invested in it. Uh so there's nothing inherently uh the inherent qualities of AI strike me as potentially very valuable in the right hands. But as we all know, if you're in any kind of marketing function, the hands now are basically tied by the finance function, the procurement function, and everybody else who think that cost cutting is a strategy. That's an interesting one.

SPEAKER_02 56:40

Business has always fascinated me. I know you've talked about it recently, it's like Lidl and Aldi, because there's an idea generally that German businesses are very run to very strict rationality and numerical justification.

SPEAKER_00 56:51

Well, what's wonderful about Aldi and Lidl, of course, is that you know the explore exploit. Yeah, exactly. They're doing the random exploration. The outer wall is exploit. I know what I need, I need some cheese, I need some science, I'm going to procure that at the lowest price possible. Perfectly rational behavior. The middle at Liddle, the middle aisle is classic explore, which is I don't really know what I want, but I'm just going to wander around in case something catches my eye. Now, this gets a bit more intense than this, because I was talking to a Swiss neuroscientist in Norway at the weekend who said that he thinks that this calibration between effectively surprise minimization and exposing yourself to possible upside varies between people. Obviously, it varies between business departments.

SPEAKER_01 57:40

Yeah.

SPEAKER_00 57:40

So you'd expect marketing to have a very high explore function and finance, for example, to have a very low explore function. Right. Um but he argues that the diversity of this in any group of people is important to maintain.

SPEAKER_01 57:57

Yes.

SPEAKER_00 57:58

And I put him in touch with someone who also believes that neurodiversity is a necessary it's not we shouldn't medicalize this because it it except in its extremist forms, where, and don't get me wrong, it's deeply problematic.

SPEAKER_03 58:11

Yeah.

SPEAKER_00 58:11

A degree of neurodiversity in any human group in the evolutionary environment, in the savannah, would have been hugely beneficial to that group, that not everybody thinks the same way. Yes. And so you will you the argument is that the mentality you need, the metrics you need, the timescale you need for explore, all of those things are dramatically different to the approach you'd adopt to exploit. When we invented the spreadsheet, we invented a brilliant mechanism for optimizing exploit.

SPEAKER_01 58:47

Yes.

SPEAKER_00 58:47

The hidden cost we paid was that it made explore look like a cost. So Blair Enns, the author of Win Without Pitching, wonderful Canadian writer and thinker, Blair Enns calls this inefficiency.

SPEAKER_03 59:02

Yes.

SPEAKER_00 59:02

That effectively innovation and it's impossible to innovate if you are pursuing ineff uh efficiency because any form of innovation will, in its earliest manifestations, look like an inefficiency.

SPEAKER_02 59:15

Yeah, yeah. It's like short. Really, really fascinating. Yeah. Because I guess with uh I mean, in terms of like the out of sort of the little middle aisle, some of the products.

SPEAKER_00 59:26

Well, TK Maxx, right? Yeah. I got these, I've got these friends who don't understand. TK Max is really interesting, because like Argos, it's customer base is basically democra, there's no demographic weighting. It's a mindset. So there are a whole bunch of people who just don't understand Argos. It doesn't matter whether they're ABC ones or whatever, okay? There are people who get Argos, and there are people who don't get Argos. And it's exactly the same with TK Maxx. You get these people who go, no, you you told me to go to TK Maxx, although it was terrible. I weren't there to buy a yellow cardigan and they didn't have anything. You go, you fucking idiot. You don't get a TK Maxx with something specific in mind. You go around TK Maxx like a shark looking for something that you weren't expecting that might you might be able to turn to your advantage. And the creative agencies were always, I think, at their best, highly opportunistic, which is exactly appropriate for that kind of business. In other words, people didn't narrowly define how they added value in advance. They didn't really they pretended to have a process. There wasn't one, really. And it's wonderful to read books by Paul Feldwick, you know, Why Does the Peddler Sing, which are effectively lifting the lid on some of those great campaigns from BMP. Well, the way they arrived at them was highly haphazard. Yes. And that's fine because that's how it happens. But the interesting thing is that's also how 80% of scientific breakthroughs happen. It wasn't that someone was intending to develop penicillin. At the time, all the focus was on things called supersulfides, which may or may not have had some promise in fighting bacterial infection. And then someone noticed, someone with the right mindset notices a load of bacteria dead in a petri dish and goes, What the fuck's going on here? And that's how 80% of really major scientific breakthroughs happen. There's no intentionality involved. And so some part of the advertising process should be random. But what we're getting now in advertising is someone goes, Well, you know, we're doing this thing. Well, I've had this idea how we can make it better.

SPEAKER_03 1:01:24

Yeah.

SPEAKER_00 1:01:25

And then some tragic fucker comes in and goes, Yeah, but that's not in the scope of work. In the golden days of advertising, I didn't even know what a scope of work was. If someone said, What are you talking about? We've had a good idea. Go and see if you can sell it, you fuckwit. Right? And now everything's basically controlled. One of the things that I think it upweights the importance of what you might call drudge skills, which are becoming commoditized or will be replaced by AI simply because those things are time consuming.

SPEAKER_03 1:01:51

Yeah.

SPEAKER_00 1:01:51

And it completely underweights the importance of putting an old English sheepdog in a paint ad. Yeah, yeah, yeah. Or rather, having accidentally an old English sheepdog walk into a paint commercial because the owner of the house where it was being filmed happened to own an old English sheepdog. And then someone else spotting that the dog was a magical brand property which should appear in all subsequent advertisements, thereby creating a brand property which is probably worth, I don't know, a few hundred million.

SPEAKER_02 1:02:24

Yeah. And I guess by the same token we were talking earlier about the Henry vacuum cleaner. I mean, somebody they probably would have been sacked for vandalizing the product in in that kind of way of the.

SPEAKER_00 1:02:35

But by the way, the McDonald's drive-thru happened because someone was disobedient. McDonald's breakfast was originally a breakaway McDonald's that started serving breakfast. So nearly all innovations in large corporations emerge as an act of subversion. Yeah, yeah, yeah. The Dove campaign, when it first got started within Ogilvy and Unilever, basically was almost like, you know, it was a bit Colonel Kurtz. Basically, a group of people, both client side and agency side, went rogue. That's effectively Nespresso only existed, I think, because they lied to Nestle about their financial figures for two years. Jeff Bezos, when he introduced Amazon Prime, several of the board members threatened to resign if he introduced it. Right?

SPEAKER_03 1:03:20

Yeah.

SPEAKER_00 1:03:21

And when you go back on any case where any large organization has done something worthwhile, it has almost always started as effectively an act of disobedience.

SPEAKER_02 1:03:30

Yeah. Because I think when um like a good example of that is when Bob Dylan was signed to Columbia Records, and everyone said, you know, he was then turned by every record label, and then John Hammond, who you know, just said, actually, I want to sign this guy, and everyone's like, Why are you signing him? And then suddenly it kind of people started to pick up on what Dylan was doing and and kind of growth in popularity. But every rational, logical decision said, don't sign him. He doesn't have a beautiful singing voice, you know, whatever the thing it may be.

SPEAKER_00 1:03:58

If we're being brutal about it, every someone did say on Twitter recently that every single Bob Dylan cover is actually slightly better than the original, which I think is unfair, unless it's Johnny Cash doing the cover. Where I think let's be honest, okay.

SPEAKER_02 1:04:11

Or Jimmy Hendrix, I mean, the all Roman. Well, you may be right.

SPEAKER_00 1:04:14

You may be right, yeah, fair enough. I'd I but actually I love Bob Dylan, so I'm being disloyal there by saying that. But I kind of went, okay, right, I kind of get it. However, you're absolutely right. Um and also the interesting decision, so I I spoke about this at Nunchstock, which is poor old Mike Smith, who is vilified for signing Brian Poole and the Tremolos instead of the Beatles. That was a classic explore-exploit dilemma. Yes. And someone had told Mike Smith, for no reason other than this kind of idea of efficiency and optimization, that you can only sign one of the bands you interviewed that day. Brian Poole and the Tremolos was a safe bet and a rational thing to do, regardless of whether or not they signed the Beatles. The Beatles was the wild card.

SPEAKER_01 1:05:01

Yeah.

SPEAKER_00 1:05:02

Um, procurement's finest hour was that it was also argued that because Brian Poole and the Tremolos, who had several number ones, they knocked the Beatles off the number one slot with Silence is Golden, I think, or possibly with a cover of I Saw Her Standing There, I can't remember which. They were a very good band. They're still playing until about five, ten years ago. Extremely good singing voice, probably better than the Beatles singing voice, good instrumental skills, wrote a couple of very good songs, and they had they they more than paid for themselves. It wasn't a bad decision to sign them. The bad decision was whoever told Mike Smith that you can't sign two acts. Because you you, if you think of any of the explore and exploit as a trade off, they're not a trade off, they're two complementary activities. You go to Aldi partly to get your milk and you put or Little and you partly go there because you go, fucking hell, there's a wetsuit for seven times fifty, right? And they're both complementary. The way we lead our lives as human beings is a mixture of doing what we need to do and wandering around going to Parties in the hope that some interesting shit happens, right? And everything in life is probably comes down to some sort of interesting calibration between those two important functions. And if you want to, apparently you can get into Carl Friston and his free energy principle and all manner of really interesting stuff there. That you know, are we trying to basically minimize prediction error in our lives? But no, we have to to some extent create some prediction error because otherwise we wouldn't survive because we just sit in a corner in the dark all day, because we'd then be free of any surprises. You could certainly argue, by the way, that the mobile phone as a device fucks with that calibration by interrupting us all the time. And I'd be very happy to listen to arguments against excessive smartphone use on that basis. But that explore exploit thing, they're not, it's not a trade-off. An Eastern mindset would go, it's yin and yang. They're two complementary activities, each of which is boosted and improved by the other. Yeah. Because exploit funds explore and explore informs exploit, right? They're complementary activities and we should see them as, and therefore, you should sign the Beatles wild card. They were clearly, and they weren't on their best. It was January the 1st, 1963. Yeah. The people evaluating the two bands were hungover because they'd been out the night before. The Beatles had got lost because their driver, can't remember who the guy was, but he was sort of their roadie guy. Uh got lost driving down in the minibus. Yeah. Okay. So, you know, none of the songs the Beatles performed were actually that good because even really hardcore Beatles nutters, you know, don't really listen to them. The most of them were covers. Yeah. Right? Long tall Sally, etc. So I'm beginning to sound like I'm really a Stones fan, but anyway, okay. Anyway, so but Mike Smith did spot that, as obviously Epstein had spotted, there's something really special about these people. They're not actually intrinsically that good, but there's something there. Not least, by the way, they were really, really funny.

SPEAKER_01 1:08:07

Yeah.

SPEAKER_00 1:08:08

I mean, one of the interesting things, and Lennon, in particular, in a nasty sense of humour, Lennon. It was quite dark, but bloody funny guy. I mean, one of my favourite, you know, brilliant joke, okay. So they're at some restaurant in London, and they're served with being served a lot of Italian food, okay. And a plate of they're being served pasta and all sorts of things. And a plate of Mang2 arrives, and John Lennon picks it up, puts it on an adjoining table, and says, let's that put that over there away from all the food.

unknown 1:08:37

Okay.

SPEAKER_00 1:08:38

That's bloody funny, right? That's still funny. You know, 70 years later, that's how 60 years later. That's a funny joke, right? Okay. Life is what happens to you while you're busy making other plans, all this sort of stuff. And you know, and George Harrison was you know, you watch interviews with him, he's intriguing, bloody.

SPEAKER_02 1:08:56

Oh, fascinating, yeah.

SPEAKER_00 1:08:57

And actually, you could see so one of them was what you might call the safe bet, and the other one was the out the outside the outlier, but with higher potential.

unknown 1:09:06

Yeah.

SPEAKER_00 1:09:07

And you should have you should have signed them both. But poor old Mike, who gets the blame for this, he made by the lights in which he was being judged, he made the right decision.

SPEAKER_01 1:09:16

Yes.

SPEAKER_00 1:09:17

Um, because he was told he could only sign one. And if you could only do say four or now, Jeff Bezos would go, look, signing the Beatles is a two-way door, right? If it doesn't come to anything after six months, well, you haven't spent that much. Yeah, it's a few return tickets from Liverpool. Yeah. I mean, that was one of the reasons they signed Brian Poole and the Tremlows, which is they came from Essex, so their travel expenses would be lower, not procurement's finest hours, I might say. But I find those decisions really interesting because what is it about us that makes us think, and this is a kind of weird metaphysics, that every decision should boil down to one or the other. Yeah. And I had this conversation with um uh Dan Ariely, and Dan Arieli was thinking of um uh taking a year's sabbatical or something in uh Britain. And he said, Where should I live? And we had this endless conversation about where to live. And then after about sort of literally sort of 25 minutes or 30 minutes of the relative merits of you know X and Y, we both burst out laughing because now I have no idea about his finances, but I mean he's written a few best-selling books, and he's a you know Harvard is a Harvard Princess. He was a Duke. Duke, sorry, Duke, yeah. Still as a Duke. I imagine he's got a bit of cash. And we said, we're automatically assuming you can only live in one place. Now, the obvious logical thing to do, if you have reasonable funds, I would argue, in answer to the question, where should you live, is you have a tiny little flat somewhere in central London and a fuck off place in Kent with an orchard, right? Because then you're getting the best of both. You've got there's no point in being in a flat in London and having extra rooms, right? Because what are you doing in London if you're indoors? It's complete waste of things. And then, you know, you're not gonna you don't want to spend the money getting an orchard in London because it's gonna bankrupt you, right? But on the other hand, you can do both. And there's something about us. I've I've got two little places, funnily. I don't own a house and two flats, and I like it that way because you get a bit of um but there's something about us where we go and there has to be one thing. Now, obviously, there are decisions which are strategy decisions which involve sacrifice, where absolutely by doing one thing, it means you cannot do the other thing, right? And it's absolutely right to consider those decisions in that way. But there are a lot of decisions where you go and just get both of them.

SPEAKER_02 1:11:33

And I guess to go to the example that that I've heard you talk about before about uh bees and the the proportion that don't obey the wheel dart. Yes, if every if all of them you know did were of the exploit mindset, actually.

SPEAKER_00 1:11:44

Oh no, you get trapped in a local maximum.

SPEAKER_02 1:11:46

Yeah, and you'll be in a very risky situation.

SPEAKER_00 1:11:48

So one of the best, most interesting presentations, my friend Paul Bloom, who is the professor of psychology in the University of Toronto, uh, was the prof he was professor of psychology at Yale. And there's a presentation he gave at Hey on Y, uh um uh at Where the Light Gets In, which is a sort of ideas festival, brilliant ideas festival. Go there if you get the chance. Go to Kilkenomics as well if you get the chance. Right. Uh where he talks about this weird human tendency for just total perversity, where you walk on the grass not because you want to, but because the sign says do not walk on the grass. You know, he talks about St. Augustine, who basically nicked pears from an orchard with his friends for the sheer joy of stealing them, even though he had loads of pears at home.

SPEAKER_01 1:12:35

Yes.

SPEAKER_00 1:12:36

And he argues that there are a load of cases in which willful perversity may serve a really important end. Right. Because in total conformity of behavior and thinking effectively means you get either you get trapped in a local maximum, that um there are also cases, this is a really interesting one, which is another case would be um he talks about you weren't expecting this, a conversation about Wordle, were you? No, not so much. So his wife, like me, I've never met Paul Bloom's wife, but her word her wordle word, by the way, Wordle invented by a guy from Momnershire, not far from where I grew up, I'm proud to say. Then Tilio Pertholli, I think he grew up in. But he then moved to New Zealand and invented Wordle. Now, my Wordle word is usually crate.

SPEAKER_01 1:13:25

Right.

SPEAKER_00 1:13:26

Do you do word games, cryptic crosswords? They're brilliant, okay? That and detective fiction are the two best practice for creativity games, along with Weirdly Mathematics, but I won't go into that because it gets a bit nerdy. But solving mathematical uh things can be a brilliant creative kind of um uh sort of mental exercise. But and my word's usually crate, sometimes rated. And she always starts with crate. And he refuses to have a wordle word, and occasionally, right, he just puts in a word first, which is totally stupid, right? Puppy. But one time one time he did exactly this. He put in the word puppy, and it was the first word. He got in one. Now, literally, his point is nobody else that day on Wordle would have put in puppy because it was such a stupid thing to do. And he therefore he was probably the only person to get the Wordle. Does anybody else do Wordle? Am I okay, few. I'm not I don't want the other camera crew to go, what the fuck is this guy talking about? Okay, right. Anyway, and sometimes you're better off basically going, it's like your Eurovision strategy. If you go in really weird, basically you'll either come last or you'll win.

SPEAKER_01 1:14:36

Yes.

SPEAKER_00 1:14:36

Now, since the purpose of Eurovision is not to come third, going in with a bunch of, you know, Norwegian thrash metal act who defecate on stage, right? You're either going to be despised or you're gonna win the popular vote. And the other point is, well, look, we'll I mean it's like go big or go home. And there are certain occasions where that's the right strategy. Dating, for example, you know, if you're a not particularly attractive guy, what you might do is take up base jumping, right? Because there's a high chance of dying, but you only need one girl to find base jumping guys really, really attractive, right? And you're there. So the the last thing you should try and do is try and be conventionally attractive if you don't have a massive inbuilt advantage in being conventionally attractive. Right. The answer is go off on a and I think this is why a lot of men go into weird shit, right? Because they go, Well, I don't really know I'm not fucking George Clooney. The best chance I've got is like being really good on a unicycle. Yeah. Juggling. Because there's gonna be some girl out there who just got a thing for jugglers, right? I mean, maybe, okay? Now, so there are occasions where, of course, in game theoretic terms, being wacko, and you might argue that with certain brands. Look, you can either be just conventionally invisible, or you and I would argue with Jaguar, and I know Mark Richson's always grumbling on about people talking about Jaguar, um but my argument with Jaguar and the Jaguar campaign is a bit this, right? Jaguer did a totally logical thing for 15 to 20 years, which is to try and compete with Audi, BMW, and Mercedes. Here's the problem in behavioral terms. If you're the kind of person who could happily buy an Audi, a BMW, or a Mercedes, you're gonna buy an Audi a BMW or a Mercedes because Jaguar is the weird outlier in that. What you've got to go for if you're Jaguar, given that they don't need to sell that many cars, is you've got to go for people like me. I really like, okay, objectively, I really like BMWs. The Chris Bangle era of BMWs, I thought were fantastic cars. I can't buy a fucking BMW. And the reason is, because of my weird personality, it kind of says, ooh, you probably work in financial services. Apologies to all the people in financial services watching this, by the way. But it's a bit like if you have a beam or an Audi, it's like, oh, you probably work in insurance. You're a bit, you know, you know what I mean. Whereas, so I I want to have two cars, I got a Lotus Electrae at the moment. I'm gonna buy Micralino. My wife doesn't know this. That miniature Swiss electric bubble car. Because, you know, okay, that's my kind of statement of cars. Because I can't physically bring myself to buy an Audi, even though I really admire them in many ways, as great car manufacturers. And Jaguars, in a sense, that's what, in some extent, that's what Aston Martin have done and what Bentley have done. They've appealed to the kind of people who, just for whatever reason, you know, it's a bit like Bang and Olifson, right? They sell to the people who can't buy a Samsung, right? They know that a Samsung's a really good TV, it's great value for money, but they kind of go, I'm worth$17 million. What's the point of this if I end up with the same telly as everybody else?

SPEAKER_02 1:17:54

Everybody else, yeah, yeah, yeah.

SPEAKER_00 1:17:56

And so so there are certain there are a certain puppy, what we ought to call the puppy strategy, which is where it makes complete sense to go, I either win or I lose. This is, by the way, a really interesting question, which is John Maynard Cain said, and this gets us back right to the beginning of our conversation about conformist thinking. Yeah, that institutions breed conformist thinking because you never get blamed if you fail by doing what everybody else does. John Maynard Cain said, worldly wisdom teaches it is often better for the reputation to fail conventionally than to succeed unconventionally. Warren Buffett says that uh although lemming behaviour is utterly ridiculous, there is never a case of an individual lemming being singled out for blame or opprobrium.

SPEAKER_02 1:18:43

Yes.

SPEAKER_00 1:18:44

And consequently, there's a default human behavior, which is do the boring thing, because if everything goes wrong, I'll be in good company.

SPEAKER_02 1:18:50

Yes.

SPEAKER_00 1:18:52

And so what you have to do sometimes is try and look for ways to succeed unconventionally, because those unsuccessful modes of success are underexploited because most people are trying to succeed conventionally. So I was having a conversation with someone about this, and I said, Look, if you want to get a job at Goldman Sachs, okay, go to university for well, probably four years, because you'll need a master's degree. You've got to be really good at maths, probably, okay. You've got to have a first from an IV league institution, you've got to do this, you've got to do that, right? You know, then you get your first, then you get your master's degree, then you debate doing an M Phil, then you apply to Goldman Sachs. And even then you've got a like a one in, I don't know, 50 chance of getting in. Your education has up to that point cost you about$300,000. Yes. And I said, what happens if you just borrow$300,000, right? And you go to the pub next to Goldman Sachs in London, and every evening you buy everybody drinks. Oh yeah. My hunch is that the odds of getting a job at Goldman Sachs are enormously high. My brother, by the way, had a friend. My brother's an astronomer and a sort of astrophysicist. And he had a friend who had a he'd graduated from the Top Gun Pilots Academy thing in the US. And he had a degree in astrophysics. No, he had a PhD in in astrophysics and a degree in physics, and had also been to some sort of military thing. And he applies to NASA to become an astronaut. Right. And he thinks, well, I'm going to walk with one. And he's in this bloody waiting room, and everybody else has got exactly a fighter pilot with a degree in astrophysics. So anyway, I said this as a joke. You know, the best way to get a job at Gelbersach is not to go to university at all, but just take out, you know, the equivalent of your student loan and just spend it buying drinks for everybody in the pub next door.

SPEAKER_03 1:20:42

Yeah.

SPEAKER_00 1:20:43

And the person I was talking to said was, Well, it's funny you say that because they said the daughter of a friend of mine couldn't get an interview with the BBC. She got all the qualifications, done all the stuff. And I said, just go and sit in Cafe Nero. They're going to love me now, because everyone the podcast will follow this idea. Go and get takeout, a few hundred quid, sit in Cafe Nero all day outside broadcasting house, where they all go because you apparently can't get coffee inside the building. I don't quite know. But everybody goes there. And just chat to everybody you meet. But day three gets an interview at the BBC. And that's what I mean by puppy. You know, if there's a single bloody phrase we ought to actually understand in this business, is the job of an advertising agency is sometimes just to do puppy.

SPEAKER_01 1:21:25

Yes.

SPEAKER_00 1:21:26

Not to do crate, it's to do puppy.

SPEAKER_01 1:21:28

Yeah, yeah, yeah.

SPEAKER_00 1:21:29

So there you go. The whole of world, the whole of the world described in terms of wordle. There you go.

SPEAKER_02 1:21:35

And I mean it's been fascinating talking to you today, Rory. I've really, really appreciated it. It's been a joy, I think. Now obviously we've had Alchemy, and uh are you working on a follow-up or what?

SPEAKER_00 1:21:43

It's going to be called Mad Think, and it's partly about advertising. But as Jeremy Bullmore has said, the best books about advertising aren't about advertising. So it's also about other things, including Wordle.

SPEAKER_02 1:21:54

Fantastic. And one of the things I particularly liked about Alchemy is I'm I've bought I I bought that for my mum for Christmas and she really enjoyed it. Oh, thank you. And the great thing is, you know, in advertising, you always dread the question of being asked, what do you do? And I gave her that book. I said, Mum, read this and you'll understand a little bit more about what's interesting.

SPEAKER_00 1:22:10

Can I end on a very simple sentence? Which is that marketing and advertising have both completely fucked the dog in terms of how they market themselves. Let me explain. Which is they've restricted themselves to an incredibly narrow target audience of people who buy bought media. Right. Right. Which is, I would say, about 0.01% of the addressable audience for business applied creativity, commercial creativity or commercial arts. And the reason they've ended up restricted to this unbelievably narrow target audience, and the reason that agencies and marketing are not much more influential than they should be is one very simple thing. Okay, they should, they they always sell themselves on the basis of what they do when they should sell themselves on the basis of how they think. Because what they do as marketers is of relevance to about 7,000 people worldwide, if you want a reasonably well-paid job. How they think is a valuable talent for the ages for almost everyone. So that was probably a pretty good place to end. Absolutely.

SPEAKER_02 1:23:18

Well, thanks so much for coming in today, Rory.

SPEAKER_00 1:23:21

Albeit in a subterranean room I never knew existed. Well, you're fantastic. Thanks very much, Rory. Always a joy.