The Ad Industry's Weirdest Tradition

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1:50Peter Kafka:From the Vox Media Podcast Network, this is Channels with Peter Kafka. That is me. I'm also chief correspondent at Business Insider. Today we are talking about ads and also France and why those two things are in the same sentence every year around this time. It's the annual CAN. I don't actually know the formal name of it. It's the CAN advertising convention show mashup where most of the ad world flocks every June to work. Also, they look at yachts. Also, there are a lot of parties, but they swear they're there for work. I am not in CAN this year, God bless if you are, but I wanted to get a sense of what people are talking about there, how people feel about OpenAI's ad push.

2:32Peter Kafka:And yeah, I wanted to know why this thing still exists. So I called up Brian Morrissey, the guy I always call up when I want to know how the ad world works. Brian is in CAN. He has been covering this business for many years. His first CAN was nearly two decades ago. He now runs The Rebooting, a newsletter podcast operation you should 100 % be reading and listening to if you listen to this podcast. But don't go anywhere. First, come listen to me talk to Brian Morrissey. Brian Morrissey, CEO of The Rebooting, and probably five other things that I'm forgetting to name. How are you? Good. How are you, Peter?

3:08Peter Kafka:Good. You seem well. Well, I was hoping since you are in Cannes that there'd be some dramatic background, but it looks like there's a microwave behind you. Yeah. So not that glamorous. Little kitchenette here in Juwan Le Pen. I don't want to ever have, you know, we butcher French pronunciations, but the fact that they pronounce Juan as Juwan says that we can do what we want. Before we get to your geography, we'll just do some table setting. um many people who listen to this show understand that there are two when you say you're going to can there's two things you can mean one is you're going to the glamorous film festival and the other one is the much less glamorous advertising trade show slash open air bizarre and you're at that one it's a little insulting peter but no i just want to be clear so when people that's what i like i've had this uh where you say i'm going to can i go oh there's three People go, oh, very exciting.

4:05Peter Kafka:And then you go, well, it's for the ad. No, there's three cans. There's the one for the film festival. There's the porn. And then there's this one. I don't know which the ranking is. I'll leave that to others. Let me know about the porn one. It's important for you to be here. You cover the ad business. You're in the ad business. Why is everyone at Cannes? Why do people go to Cannes? What happens there? What is the business purpose for going? You know, I first went to Cannes in 2007 and I was horrified, of course. And the first thing that I said as a journalist was, oh my God, why does this exist?

4:44It is so pointless. And now in 2026, I'm still asking kind of the same question. um look this started as a celebration of uh creativity advertising creativity was a festival of creativity as they called it it is now um a carnival of capitalism and it's all these different worlds coming together technology because technology comes first as we know advertising the cmos are the celebrities here in in can because and explain why if you're yeah explain

5:16Peter Kafka:why if you're not in the ad business why the cmos are are the people being wined and dined and fed it constantly because they they decide where their budgets are gonna go they're the buyers they are the buyers and every good event is matching up a buy and a sell side and the buyers are increasingly the you know they are the marketers they fund for the most part the entire circus so i went i went for my first time i've only gone once a couple years ago and everyone who was there told me that there were many fewer people coming from their group or agency than had gone in the past and things were very serious now and they were really there to do business they were not there to screw around and see the chain smokers on yahoo beach or whatever the event was that night um is there actual business transpiring i keep hearing that that is happening are people actually flying to France to buy and sell advertising um I mean I would say it depends like like everything in media um attribution is very fuzzy right so I asked this exact question I have this little text um canned back channel that that I'm doing um and one executive and everyone here is in sales right like whether they're officially in sales or not in sales they're in sales said last year I spent $50 ,000 all in here.

6:42I got$500 ,000 of deals. Now, would he have gotten those$500 ,000 without coming to Cannes? I don't know. We'll never know. So in the meantime, enjoy the rosé.

6:55Peter Kafka:One of the big themes every year is, hey, there's a big new tech company that has decided they're interested in advertising and they're using Cannes as they're coming out. Facebook and Twitter and Snapchat did this. This year, that role is filled by OpenAI, which a couple of years ago, Sam Altman was saying, oh, advertising is gross. And then at the beginning of this year, he said, advertising is great. We'd like to do it. We're going to hire people and start selling ads. And so apparently on Monday was there the sort of coming out party, and they made their pitch to the ad world. What's your sense of how that went over?

7:36Peter Kafka:How it's going? I mean, everyone, all the marketers are looking for some kind of, like every company, they need some kind of AI story to tell, right? And, you know, that's why we're seeing a lot of this waste when it comes to token maxing and whatnot within companies. So OpenAI has an advantage, right, when they come to the market with chat, GBT ads, in that every single marketer is going to be intrigued. They're going to take the meeting and they're going to test it out. You're going to throw some money at OpenAI. A hundred percent. Well, they will absolutely get that money. Now, standing up an advertising business takes time and it's difficult.

8:15They have very ambitious goals for this ad business. And look at Snap. You know, I remember here, Snap was the bell of the ball at some point, right? The Snaps business is in the toilet now, and that's because they didn't do all the things needed to build a really performant, to use the terms here, ad business. And they couldn't rival the scale of Google and Facebook. And so OpenAI will absolutely be, quote unquote, successful in advertising. But success at their level with the amount of money they have raised is quite a bit different. They have very, you know, they're ambitious. And so they will be given every opportunity to perform.

9:01Peter Kafka:Does it matter to the ad world that they launched this ad business and then basically a week or two later said the real focus for us going forward is going to be because initially the thing with the ad business was we have a ton of users. Most of them don't pay us any money and we'll put ads in front of them and our lowest cost users. And then really almost as soon as they launched, they said, our new focus is on paid users. And we're going to really we're going to push everything into one app. We're really going to focus on Codex, which is the rival to Anthropics coding platform. And that's our big push.

9:37Peter Kafka:Does that dissonance register in the ad world or they just go, it's a big ad company. We're going to play with it. No, I don't think it really matters. But also, it's important to realize that, you know, standing up in ad business these days is completely different, particularly as a technology platform than it used to be, right? Because Can attracts the Fortune 500 marketers, you know, like P &G is here. I did a panel yesterday with a P &G marketing executive. They probably have hundreds here, right? And, you know, the real money in advertising now isn't really in the, yes, there's money in the can world, but the real money for platforms is in every business on earth that is not in can.

10:20And that is 99 % of businesses because what Google and then Meta confirmed, what they proved was that it's better to have an ad business that has hundreds of thousands and then millions of customers than, you know, 400 or 500 customers that traditional media would have.

10:40Peter Kafka:Yeah, Twitter had Twitter until Elon came in, had the brand business. They didn't have the scale to do the sort of smaller advertiser business. Yeah, but performance average. So I guess, you know, the ad, the ad world has always been divided between brand advertising, which is the kind of image advertising that you do magazine ads, TV ads, et cetera. And then direct what we used to call direct marketing. That's like direct mail, email marketing, the more the less sexy stuff, let's just say. And guess what? That's the stuff that, you know, marketers really like because they put a dollar in, they get$3 back.

11:17they'll keep spending that dollar until it stops working. And so what's happened in the advertising world, particularly as, you know, in digital data is so important, is that it's shifted from, and that's why you see it this event, it's shifted from the creativity of advertising to can you amass enough data or can you apply data to enrich a media impression to the point where you trace it back to a sale or some kind of action. Because that's what marketers, they love that. They don't, you know, a CFO doesn't want to spend on advertising. A CFO wants to buy distribution.

11:57Peter Kafka:I'll be right back with Brian Morrissey, but first a word from a sponsor.

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14:08Peter Kafka:And we're back. You were sort of walking me there about sort of the ad world is increasingly automated. And we can come back to sort of what that means and why there's a can if everything is automated. And then AI comes and says, we're going to fundamentally change two things. We're going to change the media world that you guys are used to interacting with. And there's a question about, is there going to be such a thing as a website in a couple of years? Because you're just going to use chat or whomever it is, your sort of portal of the Internet. But it's also going to reshape the actual advertising business, correct?

14:42Peter Kafka:Are people, have they come to grips with that? Are they telling themselves stories about how it's not really going to affect their business because what they do can't be replicated by a computer? I mean, you know, Ken is a place, you used the word dissonance. This is a place with lots of dissonance, right? And you walk around, you know, the main road here is called the Quasette. And there's agentic this, agentic that. We're going to do agentic, agentic, agentic. And then you're left with, but why are all these people here if the agents are going to be doing this? And then you talk with marketers.

15:18And, you know, they will say that, yes, AI is a wonderful opportunity. We're using it to be more efficient. I was talking to a marketer earlier. I said, how many people are in your marketing organization? This person said a thousand. I said, are you having fewer of those? And he's like, no, no, but we're more efficient. And there's just like complete dissonance. Like what are, I don't quite understand how that works. Now, most of the people I talk to, just like it has not shown up in the numbers, all the talk about AI wiping away marketing jobs seems the same sort of false story that was told about developers.

15:57because developers, there's still lots of developers being employed out there. The unemployment rate is not skyrocketing. And so what I end up wondering, and I'll leave it to the economists, is then what are they, because it seems like the pitch when they were trying to raise all this money, whether they said it publicly or not, and Anthropic did more, was we're going to replace expensive humans who get sick, et cetera.

16:19Peter Kafka:Yeah, that's why we're so valuable. Yeah, what is that? The TAM, they like to talk about TAMs. Elon Musk claims he has a$26 trillion TAM. Why not? Sure. You know, the TAM of like the global labor force is quite a bit, you know, particularly in white collar jobs. It doesn't seem like that story is resonating with marketers. There are a lot of marketers here and nobody that I talk to seems to be interested in AI replacing the decisioning that they do. Do they want it to do a lot of the grudge work and the gobbledygook that is the programmatic ad world? Sure. Right. Because we, I mean, from the outside, you still think about, you might still think about advertising as like thinking up a pitch and putting together a commercial.

17:14but it's a ton of it is just moving bits around.

17:19Peter Kafka:Yeah, or versioning. Not to mention the back end of it, right? Where just there's tons and tons of work that AI should be really good at because it's moving paperwork around. But I do think, you know, this, I think that one of the things that struck me, and it's like an obvious one, but is just how this is like symbolic of how media has become these, like it was called shards of glass to me. It's just been completely fractured. And that's why when I first started coming here, it was all about like who was going to win the Grand Prix for film, which is a very European term for TV commercials. And, you know, now nobody nobody talks about that at all.

17:58And I can't honestly I used to write about advertising. I mean, I cover it because it it affects the media world. It drives it. But like culturally, you know, advertising has, you know, almost disappeared from what the central role that had played. Like we can't remember.

18:15Peter Kafka:I remember watching the best commercials of the year on television. That would be a TV program that you could know. Yeah. With commercials. Yeah. There were so many good hustles back then. Great way to double dip. Back to current times. The creator economy is something that I feel terrible even saying. I feel terrible. using those words out loud. It is not a new idea. When I was at Cannes a couple years ago, you would definitely see like Peloton people being portrayed as influencers. It seems like they are having a moment, at least in terms of sort of public profile. I was flipping through my Instagram this morning, Emily Sundberg, who's been on this show and is everyone's favorite influencer, was doing a collaboration with Yahoo.

19:01Yeah, I went by, I didn't go to the dinner

19:04Peter Kafka:portion but i stopped by for uh it seemed fabulous it seems like can should be perfect for the create for the creator economy influence the world in that and that it's the kind of thing that if you're an agency that wants if you're an advertiser that wants to separate yourself from the pack you say you do it at an emily sunberg deal um and again if you're the emily sunbergs of the world you may not have the ability to reach these folks unless you show up at a can am i getting that right yeah i mean i think so i think it's funny you brought that up because i i had like gone by i had i had put on a different dinner last night and then i went i went by to uh to emily's dinner and i was just walking up it was very striking maybe it's just from being around a long time to see like feed me and yahoo i'm like okay like you know like a newsletter and yahoo like that is pretty striking because it was Yahoo you know almost like borrowing the cultural cache that Emily has built up with feed me you know to have this you know I just saw the extremely long table with lots of other you know creators there and I think that's telling with how you know creators have have risen and like you mentioned like it was a couple years ago but brands are always like a couple years behind.

20:25And so this is a time for, I believe, for like particularly creators that can, you know, really touch on like business areas. I think that they're doing really well. I've seen a lot of creators here.

20:38Peter Kafka:I know that if you're a creator that you could do a brand deal, which really means video. I have a lot of people on my show who are in the sub stack and podcast world. those seem harder for an individual creator to sort of monetize directly it seems like they're sort of reliant on sort of not very good ad buying networks is that going to change will will uh you know will other emily sunbergs be able to get their hands on yahoo money i mean i don't see why not i mean look everyone wants to go direct as a business the the card i I mean, there were many cardinal sins of media in the last generation.

21:20But I think one of them is just losing a direct contact with their customers, both their audience and their customers. If you think about it, the last generation of media was being intermediated by Google or by Facebook on the audience side. And then programmatic advertising intermediated publishers from their customer relationships. I don't like it. It doesn't you think about other markets not having a direct connection with your customers is a strange, strange way to go about things. I mean, there's lots of reasons with with how the Internet is structured that that took place. But, you know, for creators, it's it's about developing those direct relationships.

22:02There's programmatic.

22:03Peter Kafka:I guess I guess what I'm getting. I mean, because the advertisers still want to reach lots and lots of people. Right. Let's say Emily Sundberg reaches 100 ,000 people, whatever the number is. They want to reach way more people. And yes, they want to be associated with something special like Emily. But they also just want to put a lot of money to work to reach a lot of people. It seems like something won't match up there and they'll have to sort of figure out some way to collectively buy placement there. I would say yes and no. So yes, advertisers want to reach a lot of people. That is a solved problem.

22:37I mean, just go on to Google or to Meta's ad system and you can reach a ton of people, like infinite. And you can target them pretty fine targeting, right? So, you know, most of what advertisers are looking to creators for is much more. I mean, they're looking for entree into niches to have some kind of cultural cachet, basically to get the right people in the room. Which has always been the case.