Is AI Killing Advertising? & Scott’s Best Financial Decision

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2:55Scott Galloway:LinkedIn. Michael says, AI is one of the key drivers behind the recent collapse and irrelevance of the advertising agency industry. What will happen to the whole marketing domain then? Okay. Could you be a little broader in your questions? All right. What's happening in the agency world? WPP, one of the world's largest holding companies, announced a major plan to cut a half a billion pounds in costs by 2028, driven by restructuring and integrating AI tools, and is aiming to return the company to growth by 2027. The new sent their share price to its levels since 1998. Think about that. 28 years later, Omnicom's$9 billion merger with Interpublic Group will result in about 4 ,000 job cuts, which accounts for around 3 % of the company's combined headcount.

3:41Scott Galloway:And then in 2025, total ad agency employment in the UK dropped over 14%, with the under-25 workforce shrinking nearly 19%, driven in part by AI automating roles and reducing demand for entry-level work. So the industry has navigated platform transitions before, print, broadcast, digital, and mobile. Let's bring this back to me. I've been able to reinvent myself and get out of shitty businesses before they got terribly shitty. I started, in my second year of business school, I started a brand strategy firm called Profit. And my basic thesis was, I read something from my brand strategy professor, David Acker, that the only sustainable advantage was the intangible associations of developing these brand codes and then using this incredibly cheap medium called broadcast advertising to hammer home these brand associations of maternal love or European grace or sex or American toughness.

4:34Scott Galloway:And that that was how you created a rational margin. And from 1945 to the introduction of Google, whether it was P &G or Nike or General Motors, they basically, kind of the algorithm for above market shareholder value was a mediocre product with amazing brand values. All that changed with Google. And that is all of a sudden your ability to find, instead of deferring to the brand as a weapon of mass diligence, you could type using your social graph, using Google and search, using different digital properties between, I always used to stay at the trip at the Four Seasons or the Ritz-Carlton when I traveled.

5:16Scott Galloway:Why? Because someone else was paying. I was traveling for clients or speaking gigs. And they always deliver an eight out of 10. And then once there was TripAdvisor and Instagram and Facebook and Google, I now found that, oh, wait, when I'm in Berlin, I want to stay at the show house because it has the best gym. When I'm in London, I want to be at Chilton Firehouse because it has the coolest bar with the hottest people. You know, I basically, I want to be the Beverly Hills Hotel because it has the polo lounge where, you know, I can establish high contact with a lovely Russian lady. That's not true.

5:48Scott Galloway:Anyways, I could find what worked for me and I no longer needed to defer to the institutional brand and that a series of smaller brands or that basically product innovation broke through. that if you had an amazing product, like a 10X better product, people would learn about it without the benefit of advertising. The majority of the companies have added tens of billions of dollars in shareholder value over the last 30 years have one thing in common, and that is they spend a disproportionately low percentage of their gross proceeds on advertising because they just have, they pour all their money into product innovation because digital kind of unlocked this incredible era of product innovation.

6:26Scott Galloway:Tesla spent no money on advertising because it had an individual who created a massive amount of awareness and you could tune up the car over the wirelessly. Google, Instagram, they're 10X better products. So there has been an era moving from brand to innovation and it's mostly been driven by these direct response mediums that have incredible technology, that are automated, that don't require a person to show up and talk about brand codes wearing black and then enter into this exceptionally inefficient, profession, expensive ecosystem where they take millions of photographs and pay Annie Levis a quarter of a million dollars for a shoot of Kate Moss to find a moment in time and then run an ad for Tom Ford and Vogue magazine that costs$180 ,000 that is relevant to 2 % of the market.

7:17Scott Galloway:And Google basically said, we can target people down to teenagers who just got driver's licenses in New York if you're Geico in New York. Anyways, these companies are now in just full-blown structural decline, which means they're going to have to cut costs and consolidate and merge. But you're going to see the next kind of step change down is going to be when these AI companies launch advertising. And they're already beginning to experiment with advertising formats. Conversational AI systems, including ChatGPT, have started introducing sponsored responses and paid placements in certain contexts.

7:51Scott Galloway:that's going to be really fucking strange when your AI, which knows your history, starts serving you ads. And the best ads of the Super Bowl, hands down, I think we're anthropic, mocking the idea of chat GPT going into ads. Those ads were just, oh my God, they were outstanding. In sum, I just want to relate this to, so AI is another tool that will continue to kick the shit out of traditional masters of the universe from the last century, and that is the ad agency guys. So let's bring this back to me, best consulting gig I ever had was right out of business school. Again, Warren Hellman of Hellman and Friedman.

8:25Scott Galloway:I met him, we hit it off and he said, I've got a great assignment. I'm going to pay you for two years to come to the board meetings of Levi Strauss and company. At the time, it was the most valuable private company in the world. Everyone at Levi thought advertising was just it. The right ad campaign could change everything for them because they had an okay denim product and they wrapped it in amazing grand coats. It cost them eight to produce these things, and they sold them for$38 at JCPenney's and$150 in Germany. And I'm not exaggerating. I haven't seen an ad man or an ad woman in a board meeting in 20 years.

8:59Scott Galloway:No one gives a shit what they think. Don Draper has been drawn and quartered. And so the advice is kind of the following. These are just shitty places to invest and work. Now, having said that, if you're over, say, the age of 40, 45, and you already have good momentum there, and you have clients that like you, you are always going to need people to interpret changes in marketing and advertising and AI for clients who are willing to spend their company's money to help them navigate an ecosystem which is increasingly complex. But every year, their business gets smaller and smaller and shittier and shittier.

9:37Scott Galloway:So you're over the age of 40 or 45, and you're a chance to get out of the fucking, get on the helicopter out of Saigon because traditional kind of image-based broadcast-driven advertising, oh my God, that's a shitty business. It's like going to work in cable news right now. So what happens to the whole domain of traditional marketing? Pain. Thanks for the question. Question number two also comes from LinkedIn. Noah Frank asks, what is the most underrated financial decision you made that had nothing to do with investing?

10:17Scott Galloway:Easy. I married a competent partner. I married someone who's a decent person who's competent. I have a lot of friends who are men and women who don't have a competent partner. And it means they have two jobs, which means they can't be very good. you know, don't half-ass two things, whole-ass one thing. You end up half-assing two things if your partner, if your husband or your wife isn't competent. You're managing the relationship, you're managing the household. So building something with someone who's competent and loving and understanding and makes you feel good about yourself and manages the parts of your life well or the home well, who brings in their own money and is smart.

11:10Scott Galloway:I mean, one plus one equals three. The majority of very, very wealthy people are married and have a competent partner. And my dad always made good money. And it goes the other way. You want to be a good partner as well. My dad always made good money. He was talented. He ended up, at the age of 60, ended up broke without a pot to piss in because he got married and divorced four times. So it goes both ways. One, the most important decision you will make financially and in terms of your own psychological well-being, hands down, is finding the right partner. And what I don't like is all this shit that's, especially on TikTok, telling women that, you know, if he doesn't open your door, he's out of there.

11:52Scott Galloway:Like, find red flags and everything. Well, that's not helpful either. But the question is, all right, how do you select a good partner if that's the most important thing? And I think most people would probably say, okay, that makes sense. One, it's sex and affection. You're saying, I choose you. I think it's really important. And I think you constantly need to reaffirm that and work on it and express physical desire. I think, let me say it, I think women want to be wanted. And I think sex, it brings peace and harmony to a relationship and says, I choose you. Two, values. I think it's important that you're generous and very open with each other about things like religion as it relates to your kids, how close you want to live to your family, and that you're generous with each other around those things.

12:35And then the third is, I was jokingly saying,

12:38Scott Galloway:never let a woman be cold or hungry, pashminas and power bars at all times. The biggest blowups I've had in my relationships have been when someone didn't have lunch. They skipped lunch. Watch out.

12:53Scott Galloway:Where am I going with this? Anyways, picking the right partner. And then also, so how do you pick the right partner? Volume. What do I mean by that? Get out. Yeah, it's great to sit at home and eat an edible and hang out with your dog and watch Netflix. No, fucking get out. Find friends. Go out. Be friendly. Somebody asks you out for a coffee and it's not like sparks right away. Okay, go to a second coffee. You might find that you, over time, you're really into, start to get more into him or into her. Get out, meet friends, express romantic interests, be bold, approach strangers, put yourself in situations where the serendipity of meeting somebody, be bold, be brave.

13:34Scott Galloway:How did I find the mother of my children? I saw a woman I was attracted to at the hotel pool, the Raleigh Hotel. I went out to get my, I promised myself I was going to speak to her before I left. I didn't. I went out to get my car and I'm like, fuck. and I grabbed a, I told the valet guy to hold onto my car and I went back in and I rolled up and said, hi, my name's Scott, where are you guys from? And I don't know, 18 months later, our first son's middle name is Raleigh. My point is, it's easy to say, okay, you're gonna get it. Partner's the most important financial decision, right? You probably, like, if you're not nodding your head, okay, you don't get it.

14:10Scott Galloway:It is the most important decision. The most important decision I think you can sort of control. Two, all right, great. How do I find a great partner? putting yourself out there, going out, being kind. If you're a man, leveling up. Level up, for God's sakes. Young men need to level up because young women are leveling up. And it's only natural and understandable that their standards are going up as they would if you were fucking leveling up the way women are leveling up. Anyways, where am I going with this? Most important decision, financial, emotionally, psychologically, who you decide to build a life with.

14:46Scott Galloway:How do you find the right partner? You get out, you level up yourself, you make yourself more attractive, you develop resilience, and you put yourself in a ton of situations where you could meet somebody. Thanks for the question. We'll be right back after a quick break.

15:09Scott Galloway:Support for the show comes from Vanguard. The role of financial advisor is to do everything you can to set your clients up for success. There are plenty of ways you can go about it. Maybe a leveling up of your fixed income strategy, but bonds can be tricky. The market is huge, rates shift, and risks hide in plain sight. That's why having a partner with skill and expertise matters. Vanguard brings both. Vanguard bonds are institutional quality. Institutional quality isn't a tagline, it's a commitment to your clients. It means top grade products across the board. The lineup includes over 80 bond funds that are actively managed by a 200 person global squad of sector specialists, analysts, and traders.

15:43Scott Galloway:A lot of firms love to highlight their star portfolio managers, like it's all about that one brilliant mind making the magic happen. Vanguard's philosophy is a little different. They believe the best active strategy shouldn't be locked away with one person. They should be shared across the team. So if you're looking to give your clients consistent results year in and year out, go to see the record for yourself at Vanguard.com slash audio. That's Vanguard.com slash audio. All investing is subject to risk. Vanguard Marketing Corporation Distributor.

16:16Scott Galloway:Support for today's show comes from I Am 8. It's not easy to get all the vitamins and minerals you need in a day. And I Am 8 wants to keep things simple with their daily ultimate essentials drink. My colleague Ed Elson, another user experience from someone who signs the back of checks and is living off daddy. I tried it and I did love it. And I do love it. I Am 8, I use it pretty much every day. It's hydration. shin. It makes me feel healthy. I can't tell if it's actually making me healthier, but it's making me feel healthier. And that is what matters the most. But big fan of IMA. That sounds nice.

16:50Scott Galloway:And let me just say your complexion is sublime, Ed. Start feeling your best self every day with IMA. Go to im8health.com slash propg and use code propg for a free welcome kit. Five, three travel sachets plus 10 % off your order. That's I-M number eight, H-E-A-L-T-H.com slash propg. Code propg for a free welcome kit, five free travel sachets, plus 10 % off your order. im8health.com slash Prop G, code Prop G. These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease.

17:29Scott Galloway:Support for this show comes from VCX, the public ticker for private tech. For generations, American companies have moved the world forward to their ingenuity and determination. And for generations, everyday Americans could be part of that journey through perhaps the greatest innovation of all, the U.S. stock market. It didn't matter whether you were a factory worker in Detroit or a farmer in Omaha. Anyone could own a piece of the great American companies. But now that's changed. Today, our most innovative companies are staying private rather than going public. The result is that everyday Americans are excluded from investing and getting left further behind, while a select few reap all the benefits.

18:02Scott Galloway:Until now. Introducing VCX, the public ticker for private tech. VCX by Fundrise gives everyone the opportunity to invest in the next generation of innovation, including the companies leading the AI revolution, space exploration, defense tech, and more. Visit GetVCX.com for more info. That's GetVCX.com. Carefully consider the investment material before investing, including objectives, risk charges, and expenses. This and other information can be found in the Funds Perspectives at GetVCX.com. This is a paid sponsorship.

18:40Welcome back.

18:41Scott Galloway:Question number three. Hey, Scott. My wife and I both inherited reasonable amounts of money from our families. We worked our asses off, managed it well, and now we're sitting on significant wealth that we need to tell our 21 - and 24-year-old kids about. Our goal is to give them the freedom to do the work that they love without financial pressure. But our fear is that we don't want to create spoiled brats who think that finding themselves is a career. How do my wife and I thread this needle? And what's the script for you never have to worry about money, but if you stop working, I will haunt you from the grave?

19:21I need the Galloway playbook here on how to avoid raising waiters. You know, people who just wait around for their inheritance instead of building something with their lives. Looking forward to your advice.

19:34Scott Galloway:So this is what you call a good problem. But it's going to be a problem because there's going to be a ton of generational wealth transfer over the next 10, 20, 30, 50 years. So I love these member clubs because my Arrested Adolescence tour continues unfettered. I'm in the midst of a midlife crisis. That's the bad news. The good news is I think I'm going to get through it in about 30 or 40 years. But part of that manifestation is I join all these members clubs, mostly in New York, but there's some here in London. London actually invented them, but it's been infected in New York. And I like going to a place where I know I'm going to get in.

20:10Scott Galloway:It's going to have like a curated group of people. Hello, douchebag. That's right. Daddy, first word douche, second word bag. Whatever. I'm just leaning into it. And one of the members clubs I go to is Casa Cipriani downtown in New York. And I went there with some friends, three of us, a couple, mostly appetizers, a few drinks, 700 bucks. And I met the GM and I said, I see all these young people here, people in their 20s and 30s, who can afford this? And he said, well, one, none of the women are paying for anything. And two, most of the men here, it's not their credit card. It's their parents' credit card.

20:47Scott Galloway:And it's a lot of trust fund kids from New Jersey. And it just struck me that I wonder if about a third of the people in New York, their parents are putting them through Manhattan. There's just going to be so much inherited wealth. Now, this is a good problem. I technically share this problem. I have some economic security that I hope and trust at some point my kids will have access to. The way I think about it is the following. One, a lot of it isn't up to you in the sense that you'd like to think that we like to think as parents that we are engineers, that all of our behavior will mold this block of clay into a wonderful person.

21:30Scott Galloway:And if we're not careful and we chisel off the arm that we raise assholes. Yeah, some of that. I can see that. But what we don't recognize is that a lot of it is in the batter. First Lady Obama, who I think gives great parenting advice, said that they come to you. And there were more than being engineers, we're shepherds. And that is, we choose the fields they graze on. We point them in the right direction, but they kind of come to you. And as evidenced by an approach to money, I have one kid who I bought a cashmere hoodie for that was 240 pounds. And he liked it. And then he saw the price tag and said, this is too expensive.

22:04Scott Galloway:And I said, well, I bought it. I can afford it. Don't worry about it. went and returned it and credited my credit card because he just was uncomfortable with me spending that much money on him on a cashmere hoodie. Whereas I have another one of my kids is, we just found out, is spending 100 pounds a day on Deliveroo and Uber. So a lot of it is in the batter. Now, having said that, my approach, I think about this a lot. And that is, how do you not raise assholes or spoiled kids? And the Warren Buffett adage is really a good one. And that is you want to give your kids enough money so they can do anything, but not enough money so they can do nothing.

22:42Scott Galloway:The way I approach it is the following. And I learned this from Morgan Housel and I like this a lot. I am going to scale up or scale down my kid's life with my money or lack thereof. What do I mean by that? If my kid goes to college and wants to be a high school math teacher, I'm going to scale his life up. If he gets up every morning and decides he wants to teach math to high school kids and he lives a good, honorable life, I'm going to give him enough money to buy a house and have a nice life. And I'm going to make sure that he doesn't have the economic stress of most teachers. Is that a total, you know, nice to have moment of privilege?