Tom Goodwin | Reflections on AI - Questions, Contradictions & Observations

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0:53I'm Mike Linton, the former Chief Marketing Officer at Best Buy, eBay, Farmers Insurance, and Ancestry.com, here today with my guest, Tom Goodwin. Today's topic, reflections on AI. Questions, contradictions, and observations. And we're also throwing in a few extra topics just as a bonus for our followers. Now, Tom has been studying innovation and change his entire career. He started in the agency business and held positions as the head of innovation at Zenith, the head of futures and insight at Publicis, and SPV of strategy and innovation at Havas. He's a prominent speaker, wrote a book called Digital Darwinism, and publishes Nowism.

1:37We've had him on a number of times during our three-year run and always appreciate his provocative challenges to conventional wisdom. Welcome back, Tom. I'm back. Thanks for having me again. Back again, yes, a fan favorite. Well, let's start with one of your more famous traits, skepticism of commonly held thinking. In fact, lately, I couldn't help but noticing in your posts that you have labeled a lot of thinking about AI and marketing plain old wrong, as in big W-R-O-N-G. Let's start with AI. And the theory of AI is the automatic answer to all issues. And you've said it's wrong to think of AI as a plugin.

2:29Tell us what you mean by all that. I mean, people are very enthusiastic about AI. And they should be because it's amazing and it's transformative. But every time something that's exciting comes along, people rush to apply it as soon as they can. and the way to apply it as soon as they can is to take the most sort of obvious and superficial and kind of easy places to apply it. I mean, we kind of saw it before really with every company having a chat bot. We're kind of seeing it now where every single kind of digital product has this sort of weird sparkle icon. You know, you can see that at the bottom of this Zoom call saying AI companion and this vague notion of sparkliness.

3:11And it just appears that we're adding it where it's easy, but not where it makes a difference. You know, so if I think about a platform like LinkedIn, if I wanted LinkedIn to be better, I'd want AI to reject automatically 95 % of people that try and get in touch with me. I would like it to suggest upcoming meetings I should have in Chicago based on clients most likely to employ me. But instead, we're kind of using AI to help me write a post as if somehow, you know, we need more help with getting more people to write stuff. Yes, we need more posts. Yeah, we need more posts that no one can actually see because there's so many posts on the platform that no one can see anything anymore.

3:50Tom, is this laziness? Is this laziness or is this not thinking or what is driving this behavior? Or is this just normal humans doing the normal human thing? I was going to say, for once, I'm actually quite well qualified to speak on this, which is I've been studying how technology has adapted for hundreds of years. and it's how we always do things like we have an existing structure we have an existing business model we have an existing workflow we have existing incentives and we sort of apply the new thing as something that can fit most easily into that because actually the real change comes from rethinking what we do so actually you know AI and commerce is an extremely exciting discussion but it requires a really deep understanding of how data is structured in commerce it requires a really fundamental understanding of how people actually make decisions it requires people to invest in new sort of infrastructure and most people with their career trajectories don't have time to do things properly they want to get out a press release and they want to show to other people that they've understood it and they've done something a lot of times in this industry people talk about sort of teenage sex as this sort of analogy for something new and I find it quite sort of superficial and a bit grim but in this case and the consulting that I do you know this really does feel like being 16 years old and at school and everyone's talking about sex and there's this this sense that everyone else is doing it there's this sense that people are doing it really well there's this sense that you don't really understand what it is and when it happens and how it starts but that's not the problem and there's this enormous fear of missing out there's this enormous need to pump share prices.

5:33There's this enormous need to signal to the rest of the industry. There's this enormous need to show that we're not sitting on our laurels. And as a result, I see case after case and white paper after white paper, and example after example of stuff that's not really AI, but it's called AI. It's of no benefit to a consumer whatsoever. It's producing large amounts of sort of waste, and it doesn't really go anywhere. And I get angry just because it could be so much better. Let's give a couple examples of that. But first, I'm going to go back. In your book, you made a demonstration of how electricity was misused when it was first invented.

6:11Yeah. And you're saying the same thing is happening here. Draw the parallel for our listeners on that. It's quite a nice one. I mean, when electricity was invented, it took about 50 years for the world to really change. And for the first 20 years, you know, we took the iron and we made it an electric version. We took a toaster and we made an electric version. We took an oven or a heating system. We took things that we already had and we applied electricity to them and they were good. You know, an electric oven was slightly better than a stove. An electric toaster was slightly better than a toasting iron.

6:45But it didn't change the world. It was only really when we thought, wait a minute, this means that we can invent a fridge or wait a minute, this means that we can invent a fax machine or a TV or a radio set or a microwave oven. It was only really the inventions that happened around the possibilities of electricity that made the difference. And it's quite weird because it's genuinely quite profound. Like when you take an existing structure and existing mental model and you apply the technology, everyone sort of looks at each other, is a little bit surprised, is a little bit excited. But when you start with first principles and you don't go, this is how we work, let's add AI.

7:24But instead, you think what are all the possibilities of stuff that we've always wanted to do can we make that happen is it now economical to do this that's when you get the really profound shifts and you were saying a bunch of the things going on right now drive you nuts tell us some of those things well I think I mean I think often I get quite angry because most of the conversation about a technology is normally dominated by technology people and technology people seem to be very good at getting on stages, very good at getting given microphones, and they're very good at getting noticed by other technology people.

7:56We saw it with Web3, we saw it with blockchain, we saw it with VR. So all of a sudden, conversations about the future of law, the future of retail, the future of architecture, they're all being led by technologists who actually have no understanding of what a lawyer does or no understanding of what a retailer does. So I think I'm getting a little bit frustrated because we're seeing people talk about, I don't know, agentic commerce with no understanding of commerce whatsoever. You know, we're talking about movie making with AI without any understanding of the kind of craft and the dedication that goes into making a movie.

8:31And we're seeing people, you know, I'm being a bit rude here, but we're seeing kind of quasi autistic people effectively set the agenda for the medium term future. And they're amazing people in the world needs people who think like this, but they're not people who are best placed to understand, you know, the weird logic and empathy and emotions of the world. When is the last time you researched something on a website? If you're like most people, AI did that work for you. And that raises a question. If AI is doing the work, what is your website really for? This behavioral shift means AI bots are becoming your most important new visitors, a challenge our sponsor, Scrunch, is taking head-on.

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10:01Let's go to agentic commerce. I was going to save that for later, but since you brought it up, you think a bunch of people working on agentic commerce have no idea. What commerce really is, I think that's what you're saying, right? The reality is that people quite like buying a lot of things. I mean, if you actually look at the things that you own in your house and you were to think about how it was that you came to procure them, you'd realize that you bought a vast number of things in completely different ways, for completely different reasons, in completely different situations. And even the same purchase may happen in different ways.

10:32So I might have some olive oil that sort of hold foods basic, and I'll have some olive oil that's sort of Israeli from some kind of kibbutz that's got a whole sort of you know picture of the owner on the back and I'll have bought that from a farmer's market and it would have taken me 37 minutes and I'll have tried 17 different flavors we buy things in remarkably different ways and most of that stuff we don't really want to be automated like if we really wanted our commerce to be automated we would actually would have subscribed to it on Amazon it's a remarkably small part of Amazon's business subscription commerce because actually most people they want to sort of think about it a bit they want to check out the price points they want to see what's on sale maybe they want to try it maybe they want to ask their friend what they do um you know shopping for a lot of people is part of life it makes them feel something and it makes them feel a bit excited they'll enjoy the process and they don't always know exactly what they want they absolutely don't and i think um you know people talk a lot about agentic commerce and flights you know for a lot of people flights are kind of the foreplay of a weekend away You know, this idea that you might have a stopover in Frankfurt or the idea that you might get to fly on, you know, Air France's new seats.

11:42You know, not everyone gets stuck into it, but quite a lot of people get stuck into it. You know, trust becomes a huge problem with this stuff as well. And what sort of strikes me with something like agentic commerce is we've seen quite a lot of these things before. you know we saw the amazon dash button which was quite a good um invention um but went nowhere because that's not really how people work um we saw voice commerce which was fairly helpful until you actually tried it for about 10 seconds and you realized it was completely unusable because no one wants to talk for 17 minutes about what type of battery to get um you know we realized that actually pictures are quite good you know voice commerce always suffered because you know one can tell how many Tide Pods there are and which edition of Tide it is and what it's going to smell like just from a picture.

12:31But if that information is read out to you, you know, you've basically got a podcast of Tide Pods talking at you for 20 minutes. And beneath all this, you've got the algorithms, right? I mean, the other side of what you just said, which is the, let's call it the experience of shopping and the humanness of shopping. Is the other side of that the algorithm driven content you're talking about? A little bit. I mean, it's all sort of part of this world of sort of new discovery, I guess, where some of our discovery is done on a sort of hand-picked basis. Some of our discovery is done because brands help us navigate.

13:08Some discovery is done through agents or people or services that you curate. But increasingly, more and more of our stuff comes into our life because of algorithms. You know, at one point when you use social media, the majority of your content was from people that you follow. Now on a typical social media platform, about 90 % of stuff that you will see has been suggested to you by the algorithm. So we're in a very interesting situation where a lot of people's opinions, a lot of people's knowledge, a lot of people's influences are now sort of being shaped by algorithms that are not necessarily working around people's best interests.

13:51And how are brands playing in this space? Because clearly a bunch of marketers are pouring money into the algorithms. You know, if you click on something like, you know, I raise flowers, if I click on gladioles or something I will get, you know, for the next several months just gladiolas will show up everywhere in all my stuff you want to buy some gladiolas or you know a biking helmet or something it'll just show up for forever yes how are brands playing in this and what are they doing right and wrong in your mind first of all i want to take a step back and that's just a i think i think it's actually very hard to be a cmo at the moment um i think effectively there was a traditional playbook which we kind of knew worked and it was kind of block and tackling where you kind of buy enough impressions on TV.

14:43You, you know, do an outdoor campaign, you do some print, you know, maybe you'll invest some money with retailers. We sort of had a playbook and I wouldn't say that that playbook doesn't work, but for many brands and many audiences, it no longer works very well at all. And that's why if you turn on the TV, almost every ad is for a kind of, you know, erectile dysfunction drug or for reverse mortgages or stair lifts or something um and then there's the kind of new playbook really and i think maybe i've talked about on here before yeah which is effectively to kind of spend money on digital media you know to let the algorithms decide for you you know you basically type you know put in an objective you kind of upload maybe um a lookalike audience right and the black box of it all sort of automatically spends your money um and we just got to trust that it actually happened and it was a good thing and that we got results from it.

15:38And effectively, we're kind of someone like me is straddling these two worlds where I understand how the modern world process works, but I don't think it works very well for most clients that we face. And what I mean by that is a lot of the discourse on this is set by a direct to consumer shoe polished brand or it's set by a insurgent suitcase manufacturer or a direct-to-consumer wallet company and these are companies with no brands and with often you know a direct-to-consumer relationship and they're companies that people expect to transact with online and these companies are now being used almost as the kind of playbook you know for the Unilevers and the Buyersdorf and the Zurich insurance is to follow without understanding that most of these companies don't make any money without understanding that often attribution is really create about creating a reason to be successful rather than actually creating success itself and they haven't understood how advertising really works and the power of advertising to me and I may be wrong on this but for me the power of advertising is not being able to sell more it's being able to charge more for what you sell.

16:53Well, and you have said, you know, one of your posts said 95 % of people in advertising think they know how it works and they are wrong. Yes. And we're also seeing advertising come to, you know, AI now or announce that it's coming. Tell us about 95 % of people don't know how it works. And then what's going to happen when you're seeing ads in your AI? I mean, that number is, is based on this idea that, you know, almost every small and medium-sized company has someone in advertising. And increasingly, those people are following the playbook of the performance advertisers. And therefore, they think that their job is to get immediate sales.

17:35They think that their job is to translate an impression into a click. They think that click-through rates matter. They think that a real-time dashboard that does social sentiment listening will pick up on what matters about their brand. And I think they've basically been kind of sold on a whole religion of advertising, which is not untrue, but it's not necessarily reflective of the entire scope of advertising and the entire world of advertising. Because actually, advertising is a really weird thing. Advertising makes people behave in ways that don't make sense. Advertising is somewhat unexplainable.

18:13Advertising works over a really, really, really long period of time. most impacts of advertising will never be possible to attribute into a spreadsheet. And I think therefore there's this sort of weird thing where a lot of the old guard of advertising people, they understood that they didn't really know how it all worked specifically, but they knew that it worked generally. Well, you had those bastion companies like Procter and Pepsi and Frito and Lever Brothers and General Mills that they believed to their very core to a person that it worked. Yes, yes. But they probably couldn't explain how each one did.

18:59I mean, that's my sort of general point I'm not making very well is that they knew that if they spend$25 million on media, then all of these things would happen over roughly this period of time. But you wouldn't be able to say, well, it was that 48 sheet outside Tottenham Court station that drove this pack of cereal being poured. Right. Whereas there's this sort of new wave of thinking that kind of looks at advertising as a science. And it kind of assumes that if you can put this many eyeballs into this black box and then you can turn that handle and put in this third party data and then use this tracking software and then use AI to optimize and then change the woman's color from blonde to brown.

19:38and then put them in a boat rather than a plane and then serve it on a sunny day, not a rainy day, and then pull in this special offer. They kind of think that it's a logical process. They're going to do a million A-B tests with AI now to optimize that. But in your theory, then a bunch of brands are going to lose their way over time here and lose their brand power. You've also said AI won't fix old companies. space. Tell us why. It kind of goes back to what I was saying before, really, about the application of a technology rather than the ability to make significant changes. And this sort of comes from a lot of experience I have, really.

20:22Again, some of my kind of emotion comes from the fact that I'll go to many events where extremely bright 29-year-olds will say that AI is going to change everything. And then three days later, I'll be in a kind of an office in Detroit, you know, talking to a legacy car maker. And you'll realize that, you know, they can't get their computers to work in the room and the Wi-Fi doesn't really work in that part of the building. We've got 27 different databases where different country managers recorded the data in different ways, where the license on some software has expired and they haven't got around to buying a new one, where 13 different people own the data and they all have arguments about who owns it.

21:04And they all get paid differently too, usually. They all get paid differently. They've all got completely different incentives to their own individual performance plans. And this is not me being in any way sort of miserable or dismissive of it. I'm just explaining that the reality of businesses is they've been built up over a really long time by people that have done a really good job, who've done the best with what they can. They've used very old software. They've got technical debt. They've got software audit problems. They've got license issues. They've got incentives to act against each other.

21:36They've got risk aversion. They've got version control. And there's this sort of feeling somehow that that's all great. But if you just add a bit of AI, it's going to fix it. So does this mean that older companies that have these issues, Are they at bigger risk from AI native companies that do the electricity model you said before? I think one needs to go through every category and figure out where this is likely to be a much bigger problem. AI, I do think, is a very transformative technology, but it doesn't change every industry. You know, if you look to something like the car business, you'd already find out that actually most car plants are using extremely advanced forms of AI to optimize how they do things.

22:19you'll realize that the majority of their advertising actually works quite well in a sort of non-AI environment and you'd realize that actually the best use of AI would probably be through their dealers it'll probably be to kind of apply it in a very decentralized way and to let their dealers have access to better technology you look at a company like P &G and I would imagine that AI would have a fairly minimal impact on their business and P &G is not under threat from a kind of direct to consumer fabric conditioner company, because that's just not how the unit economics of that industry works.

22:52When you get to a company like an area like insurance or banking or payment companies, when you get to products that are more service based, when you get to things that the unit economics are a little bit different, you know, then you can start to see some places. But the difficult thing about being me is I firmly believe that technology is changing the world. And I firmly believe that that's happening quite fast. And I firmly believe it's a threat to most companies, and it's an opportunity to most companies. But I don't believe any of this extreme thing, you know, like the idea that big companies are doomed for death unless they change everything immediately.

23:32And then you also, you have different opinions on AI threatening entry level positions. Because one of the things you think is, it actually can enhance some positions i think broadly speaking what we're doing with ai is completely wrong because we're applying it where we can apply it most easily and almost every single um way it's sold in is now you can do things faster and cheaper and easier so great news like now you can send a million emails to people like great news and you can personalize 10 million emails at speed Yes. And I think when we're in the faster, cheaper, easier way of thinking, then entry level work is kind of screwed because most of the time AI is better than an intern.

24:27Now, there are two sort of issues with that. One is I think it's incumbent on us as professionals to keep the ladder in place that we climbed up. and I think every company needs fresh blood and every company needs people to to come up through the ranks and you know younger people and less experienced people are invaluable in many different ways I think the second thing is we need to not be focused on cost cutting but instead be focused on new possibilities you know I myself if I work for a big company now I'd actually be really excited to have a team of people reporting into me because I could be saying to them you know go out and explore and experiment with this stuff and have fun with it and come back to me at the end of every week with a couple of projects that you've done on the side that you know four years ago would have taken you um a hundred thousand dollars in a year and now you can just give to some sort of agentic workflow or you can give to any good examples of that like that you can share i'm gonna have to make this quite vague because it comes from a client of mine but i have a client that's basically kind of dabbling in this stuff all day long um and they're not the kind of person you'd expect to do this because they're in the sort of latter stages of their career and they're not a technologist by any scheme of the imagination um but they will routinely pick up on projects that are not really theirs to do and they'll effectively sort of play around with them um with i think enclosed in their case and effectively kind of spar ideas against each other.

25:59So they may, and I'm going to deliberately make this not the real example, they may say, you know, what destination should this airline be flying to? They may play around and say, give me some examples of the unit economic changes that would happen if we completely rethought economy class and made it even more expensive and made it better. And effectively, what they're doing is they're just sort of co-collaborating and co-instigating lots of discussions and lots of questions which they never would have ordinarily have time to consider. And then as a result of three or four of these experiments, they'll find one or two interesting hypotheses to take further.

26:42Over the weekend, I asked AI to do dozens of things for me. Please help me make this dishwasher start working. Settle a debate between me and my partner. Is it safe to sleep at 80 degrees? It's not. Please help me find a robotics kit for a five-year-old operating at a middle school level. And even help me compare the Scrunch Agent Experience platform with Adobe's LLM Optimizer. In every one of these interactions, I never once visited a website. In this day and age, what's your website actually for? The truth is almost everything on your website is now for AI consumption. The Scrunch Agent Experience platform helps manage, optimize, and deliver content directly for AI to retrieve.

27:37There's another thing I want to flip to, which is your belief that social media is becoming even more shallow and vacuous than it was before something many thought to be impossible tell us what you're seeing i'm going to sound like really grumpy and sort of anyway you know we love that about you if you can't be grumpy who can be grumpy you are licensed to others to be grumpy i mean here i go so i'm going to sound like a snob as well but i mean you know eight years ago you'd um you'd sort of see how people were spending their time on their phones and it would be quite tragic you know people would be watching terrible tv and people would be watching awful you know influencer films on tiktok you'd see some you know really sort of pathetic viral content and the general quality of what you would see on algorithmic feeds in a user-generated world was really awful you know the quality of celebrity was was low quality production was tiny the ideas weren't very good and most of what people were watching if you actually asked them to afterwards to explain what they saw or what it was they wouldn't be able to remember it and they wouldn't feel very good about it except for cat videos they always remember the cat videos and it's kind of weird because now i look at those times almost with a kind of nostalgic glow of how good it was because it was real people crafting films and doing their dances and overlaying their music and now you see feeds and it's not just that it's made by ai it's it's quite sinister so either it's kind of fake news for things that didn't happen um either it's deliberately kind of misleading um films to kind of gore people into being angry um whether it's kind of just cheaply made stuff that is essentially trying to maximize odds in the casino.

29:30I mean, I am routinely pitched by these companies and there'll be one which says, Tom, just turn every single article of yours into a 45-minute podcast and we can produce 1 ,000 of these podcasts. I don't need there to be 1 ,000 really badly made AI-generated podcasts of me. And as a result, you kind of look at the, average fare that's on tiktok or instagram or google shorts or or youtube and it's just like genuinely of no calorific content um but somehow the algorithms are so good at kind of knowing quite how hopeless and lost we are um that we're all there kind of like stuck to our phones like a kind of moth that keeps on flying into the bloody heat because Because somehow we kind of.

30:21So after this, we should go to the dentist for an uplift. Let's let's write marketers and agencies into the story. You you believe everyone should stay true to the craft of building a brand, because in the end that the brand does drive sales and is a sorting mechanism for consumers. What else should marketers do today? and I agree with you, the function of marketing as it was is in great transition now. And it's unclear exactly how it shakes out to me. What should marketers be doing now? I think, first of all, one needs to recognize quite how challenging the situation is, because I actually think that what they know to be right and what their instincts tell them to do is still very much the way to do the job.

31:11But I think it's becoming increasingly hard to kind of fight that battle when every single week there's a kind of press release saying this will automate your marketing and this will increase the return on ad spend by 2.9 percent you know so i think i think first of all is they need to kind of stick to their guns i think they need to make sure that they're still experimenting with this stuff and they have an open mind to it and they're happy to kind of make some changes and to try new things i think there's an enormous opportunity to use digital media as a way to build brands for some reason just because you can micro target and just because you can produce content that people click on that doesn't mean you have to make stuff like that for digital screens you know my kind of big hope for the future is that people would take stuff that looked a bit like old school outdoor and looked a bit like tv and they would effectively be placing that as sort of digital forms.

32:13You know, I don't understand why on Twitter, I'm not shown like beautiful burgers that kind of glimmer. I'm not sure why a digital ad on my phone doesn't kind of come alive when I when I turn my phone slightly. But and the reason is because people have always assumed that digital media is a place to do performance rather than brand building. I think they need to get up to speed with AI and what it means. I do think it will be quite a big threat for a lot of people's jobs in the short term, not because it's amazing, but because people will think it's amazing. And people will take some of the average quality work that AI does and they'll think it's good enough.