Sir Martin – Founder of What if the World's Larget Advertising Company, WPP – is now Chairman of the Board of S4capitalWhich aims at digitally Native delivery of services.
He talks about the use cases in advertising and marketing, limited currently, but where activities like planning and buying media will likely decided Automated by Ai and Work Algorithmical,
Sir martin also talks about how ai can brings a huege leap in production across all sectors and why enterprises need to take advantage of that by integration the work of the chife (cio) Marketing Officer (CMO) and brings data to the next in their work.
With your experience in the sector you work in, how is AI affecting the advertising-marketing-brands vertical?
Well, significantly, I guess. I mean, there's a caveat with that in that the actual use cases are less and far betteren.
So, when you work with the leaders in the ai industry, like an Nvidia Or whoever, they are very focused on what are the use cases. And when you look at use cases, I would say we we've got a lot of tests going on, audits, workshops going on. But actually the number of clients who are willing, for wheatever reason, to implement at scare are relatively limited.
But, with that as a sort of health warning, if that's the right way of putting it, basically we see five things happy in our industry. The first is Around Visualization and copywriting.
So, that's producing ads. It takes less time. And that is a two-edged sword because our business, our industry, the industry is a trillion dollars. Clients Spend About A Trillion Dollars on Advertising, About $ 700BN in digital and about $ 300bn in traditional.
Digital is growing, probally at Around 10% or 15% a year, and growing its share. So, when we started s4 six years ago, digital was probally about 50% of the market – it's now 70%.
And traditional is declining – probally about 0% to 5% a year if you have live sport. And, if you don't have live sport, you're probally down 5%, 10%or 15%. And that continues to be the dynamic in the industry. So, really there are two industries.
But with that as background, a lot of that revealed is generated by agencies, by time. And, if you're compressing the Amount of Time for Making Ads, as you are with copywriting and visualization, what tooks you weeks or days is now taking you hours or Minutes. The Amount of Time is reduced, and procurement departments, the clients – Quite rightly – Say, it takes you less time, it should cost you less. So i would say there's compression. There will be fewer copywriters and fewer art directors as a result.
So, that's one area.
The second area, which I think is really interesting from a growth point of view, is personalization at scale. So, we work for a netflix, or an amazon prime, or disney plus or univision, and we can produce, if we launching Squid game or Narcos For Netflix, historically we might produces about a million and a half assets, at least in theory.
We're now producing multiples of that using ai and personalization at scare and using first-party data and signs from the platforms. So, that's a huge area of options. The price per Asset is Falling, but the number of assets used is rising at such a rate that there will be more important for people in that area.
So, that's the second area.
The third area is media planning and buying. Unfortunately, For the Holding Companies that Dominate The Media Planning and Buying Space – Probably there are six them of scale, which probally have about 60% about 60% better Buying – They Employment About 200,000 People [but] There Won'T be 200,000 people in two or three years' time. Unfortunately, also, the processes are very manual.
If you compare it to the investment industry, to a blackrock or a blackstone, which manage more than one trillion each in terms of funds under management, they do't mange there in invites and the messstrible Property or equities, or private equity, or gold, or bitcoin, real estate, or wheatever it is, they do not manage it manage it manually or semi-manually, they management. And the same thing is going to happy with media planning and buying.
And, you see that alredy with the platforms like google and Meta – Google Had with PMX, Performance Max, and Meta with Advantage Plus.
Actually, it was really interesting. The cfo [chief financial officer] of meta said in the fourth quarter earnings for last year, or this year, but commenting on last year, meta's total ad reavens are about 160 billion versus google's 260 Billion and amazon 61/61/61/61 '' ' Tiktok's 40 Billion Outside Mainland China. So, those four platforms are half of total ad Spending – 500 billion between them – and about 70% of digital.
But the cfo of meta said advantage plus accounted for about 17 or 18 billion of the 160 billion. So really 10% of meta's media planning and buying is being Although we don't have the data. So, really interesting what's happy on media planning and buying.
So, you won't depend on a 25-year-old media planner and buyer in the future for input and output. That Buyer will have a much more sophisticated output coming from algorithmically analysed planning and buying decisions.
So, that's the third area. The fourth area is general efficiency.
I'll give you an example of that. We have a joint venture with nvidia and aws [Amazon Web Services] And Adobe Around Outside Broadcasting. If you're doing an outside broadcast, you need a truck for that in conventional ways. And that truck will cost you 10 million [dollars]You'd amortise it over five years at two Million [dollars] A year. We can provide a cloud-based solution with Nvidia, AWS and Adobe for $ 100,000 or $ 200,000.
I Referred Before to the Traditional Media Companies Being Under Heavy Pressure, so you can see that they would leap at the options of Reduction their costs and become more efficient. It's a good example of agency and client Efficiency.
And the fifth area, the last one, is democratization of knowledge.
I don't think there's any accident that [Nvidia CEO] Jensen Huang has 51 direct reports. If Computer Weekly Went to MCKINSEY and Said, 'What's the ideal organisational spread or spread for a ceo? He also doesn'T have as many one-to-one meetings.
What he tends to have is … kpis [key performance indicators] For his direct reports and then monitors their program. So, what you're gotting is the flatting of organisations and ai reduction the silos and the politics that go on inside big companys, and Making them Much More Effect and Effective, and SIMPLIFYING PROCESS and brings Togeether in much more effective ways.
So, those are the five areas – just to sum: Visualization and copywriting, personalization at scale, media planning and buying, general efficiency and democratization of knowing.
You've given a broad description of how it's affecting your area of things, so how might ai go into other area, such as manufacturing or logistics or whaatever?
The answer is it will affect … sory, not 'will affect'; It is affecting everything.
Probably, to befir, affecting things like manufacturing more so than mine trust, with the exception problem of general motors – That's the biggest exchange.
I mean, we have google hatch, we have forever 21 with meta, we have some work with sc johnson and others. But with that what exceptions, I think the one case study in our industry where a company has literally turned itself, its marketing model on its head and it's doing
We're seeing in the auto industry and the financial services Industry the Rise of Lower-Cost, Lower-Price competitors. So, in the case of the auto industry, chinese evs [electric vehicles] And autonomous vehicles; in the case of financial services, fintech companies.
Now, these new competitors can produce products or services at lower costs and therefore the traditional manufacturers or the traditional financial services companies have to make their model Much more.
So, the answer is it affects other verticals deeply, and probally more fundamentally so far.
I think it will fundamentally affect advertising and marketing in the future, but I think it's affecting things likes like manufacturing and distribution far more quickly.
What do enterprises need to do to take advantage of the things ai is bringing?
There are three pieces of Advice We – CMOS or CIOS – Bold Focus on, because when you talk about Ai, it's really united Several Functions.
IT's Uniting Marketing, It's Uniting Technology and It. I often thought there should be conferences with cmos and cios – that are the two.
I Rememeber John Chambers used to run at cisco every two years a conference for ceos and cios, and i think that from an ai point of view, it's really important to get the cmo and the cio togera Worlds are Colliding, For Want of a Better Word, But I Think There are three areas.
Agility is key. Everybody talks about agility, but delivery it is Much more Diffficult, so that's one thing.
I would say Taking Back Control after the Great Financial Crisis in 2008, People Tend to Outsource. You know, Finance and Procurement Said Outsource, Get the HeadCount out of the company. So a lot of functions were delegated outstide, and that may sound strange coming from somebody in the agency business, but that may be misdirection and what you have to do is to exercise more. And the third and final point is the important-party data, which is very much more focused.
So, with deprecation of third-party cookies by google-not totally, but directionally. [And] With the change in the Idfa rules with apple moving from individual ip addresses to cohorts, to groups. The use of first-party data-that is, consumer consumed data which can be used free, or as freely as poses Alphabet, Meta, Amazon, and then in the East, Alibaba, TENCENT and Bytedance (Or Tiktok); Thos are the three, the Six Games in Town Really in Terms of Scale, Using the Signals from that that platforms, plus the first-party data critical.
I would say are the skills, organisical skills – agility, as I say, everybody talks about it, but it's very different to deliver it, Particularly in a Votile, You KNOW, You KNOW 2.0 World, you have to be very adaptable and very agile. So, that's one area, take back control. You're going to have to control the data, integrate the data. Very few clients have first-party data at scale in a full integrated way. And then finally, first-party data.