Who murdered Madison Avenue?

0:09Hello and welcome to The Walk Podcast. My name is David Tiltman and today we are talking about the economics of the ad industry and where the problems in marketing lie. We're doing so with the help of consultant and author Michael Farmer. He's been chronicling the problems in advertising and the changing dynamics between clients, media and agencies in a series of books. In 2015, he released Madison Avenue Manslaughter, which focused on the problems facing the big agency holdcos. And then in 2023, he chronicled the attempted turnaround of agency group Huge in a book called Madison Avenue Makeover.

0:54Michael is launching his new book, Madison Avenue Revisited. And the headline is, it was murder, not manslaughter. We'll be exploring his latest findings, the troubles ailing clients, how his predictions from the original book have played out. and, of course, what the alternatives might be. We'll bring Michael on in a moment, but first, a message from our sponsor.

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2:06Michael, welcome to The Walk Podcast. Thank you, David. Delighted to be here. Now, we're going to get into your sort of thinking of the new book, but I think it would help for anyone who doesn't know you just to explain your background and how you started sort of looking at the relationship between advertising agencies, clients, and the broader economy. I'd be happy to do so. It was all an accident, as most interesting things were. I have an MBA. I've been a business consultant my entire career. After I got my MBA, I worked at the Boston Consulting Group and later at Bain & Company, where I ran Bain in the UK.

2:46And after doing that a number of years, I left to start my own firm because I was interested in getting back into consulting. After a few years of that, working with corporate clients, I was contacted by Ogilvy UK in 1992, who said, we've just been bought by Martin Sorrell, and we're already not making our numbers, which, you know, has been a 30-year history for most. That was a warning sign. Yeah. And so they said, I think we need a strategy consultant rather than an advertising consultant. And I said, well, you're in good hands because I don't know anything about the industry. So I said, but what I think I can do is to treat you like you're a factory that makes ads.

3:28And I will analyze you as if you're a factory, which means how much work do you do for each of your clients? How much do you get paid? And what kind of resources does it take? And they said, great idea. Just don't use the word factory around here. So this is in 1992. They were still on commission. Digital and social hadn't happened. And then I started the work and discovered that they, as every other agency I've looked at, did not keep very good records about what work they were actually engaged in or how much work it was for the calculation of fees. And so I ended up developing a practice where I would go into agencies and reconstruct what work they were actually doing for each of their clients.

4:20Is this in terms of the number of hours they're putting in? No. Well, first of all, the first thing I wanted to know, David, was what deliverables are there? What ads are you making? And at the time, that was TV, radio, print. The work was all original. There weren't many adaptations at the time. And then the question was, how many people does it take? And what I had to do then, and which was extremely helpful, was to work with the creatives to figure out how much time it actually took in an efficient agency to do a TV ad, to get it through all the reviews, et cetera, depending on how many teams they used and how much rework there was.

4:57And so that first effort back in 92 was not only to figure out what work they were doing, but to turn it into a model where if we knew the work, we knew the different types of deliverables, that we could figure out some sort of an algorithm that would turn it into headcounts. And I knew at the time they had 52 creatives, 75 account people, and about 40 production people. And so we developed a model that would explain that number of people, bearing in mind sick days and vacation days and all that. So we had what was then called the farmer resource model, which took that work and figured out how many people it should take.

5:40And the goal of that was to really understand the economics of the agency. Exactly. It was to say, how much work are you doing and how many people should it take and how many people does it take? Because there was a gap between what it should take and what they actually had allocated. I didn't know that at the time. And you've been studying this ever since? Is this something that you've just... Unfortunately, I have been developing scopes of work for agencies in media and creative now for 35 years. Right. Okay. Okay. So that has not changed. That's not changed. So that was in the early 90s. By the time you got to 2015, you were writing a book, Madison Avenue Manslaughter.

6:20Many people will know you from that, subsequently sort of reprinted several times. And there you argued that the sort of industry's decline was sort of almost like accidental. It was sort of caused by, you know, bad decisions, naive management, and you called it manslaughter. Tell us about how you've gone from there to the new book, Madison Avenue Revisited, where you've updated the charge from manslaughter to murder. All right. May I first answer the question of why I thought it was manslaughter at the time? Now, one of the things that I could do with the data that I was developing, and I worked for Ogilvy around the world for another five years because you fix one office and then they say, well, we'd like you to look at Frankfurt and we'd like you to look at Paris and Madrid, etc.

7:11We did that in Europe and we did it in the States. And then Gray hired me and that was another five years worth of work. Then I moved from the UK back to the US and I started to work with advertisers who were shifting from commission to fee and wanted to know how do we figure out what's an appropriate fee compared to what we've been paying. In any case, I had a huge database of workloads and fees and resources. And what I noticed was every year the workloads were going up. That particularly was important in 2004 when digital and social came in and added to TV, radio, and print. All of a sudden, the workloads went through the roof.

7:54And this is more asset, more deliverables? More deliverables by a wide margin. At the same time, when the remuneration shifted from 15 % media commission to labor-based fees, clients brought procurement in because they said, this is too complicated for us. We can't figure out how to do a fee on a labor basis, but we know procurement knows how to do that. So they brought in procurement about$2 ,000. And procurement looked at agencies and they thought, these people are so undisciplined. We know we're paying too much. We're just going to whack the fees. So they started whacking the fees. And over time, the workloads were growing.

8:36The fees were coming down. The agencies were accepting the situation. and then they had to start understaffing the work in order to make margins. Now, I looked at that situation after I had been doing this now for, what, eight years plus another for 22 years. I thought, I've got a story here. And the story is it isn't a very good business strategy to accept a random fee for an unknown quantity of work and then to downsize to make a margin. That doesn't sound, well, you put it like that. That doesn't make sense. No, it doesn't sound small. No, but that actually is the situation because what I thought made sense was the workloads are growing.

9:18Your fee should be growing. You should be paying or being paid, I should say, on the basis of how much work you're doing. There should be something that says we know how much work we're doing. That's what we want to charge. And then we will staff it appropriately given that amount of work. But agencies never showed much interest in trying to understand what is the relationship between the number of deliverables we're doing, the number of man hours or FTEs that it takes, and the fees that we should be talking to procurement about. So they allowed procurement to just turn loose and say, these folks are undisciplined, cut the fees, and let marketing, who is worried about growing the brands, raise the workloads.

9:59And then everyone accepted that. The reason I really worried about it in 2004 is that all of the surplus agency resources that they had from the commission era were gone. In 2004, I worked for eight different clients around the world. And in every one of those, my analysis said, you know what? You're being paid appropriately for the right number of people for the work that you're doing. But, and I should mention at this point, a lot of agencies have been bought by holding companies, and the holding companies were directing the agencies to downsize to make their margins. That hasn't changed, by the way.

10:38They've been doing that ever since. That was what Martin did, Martin Sorrell. That was his number one strategy was the agencies are overstaffed to just downsize to make your margins. They didn't put themselves to understanding the task of what is the relationship between the work we're doing, which is undocumented, and the number of people we need and the fees that we need. I said, that's manslaughter. That is sort of an accidental death of the agency through the ignorance about the relationship between the deliverables, the workload, the resources, and the fees. So I thought I can help educate them because I've got all this data.

11:17And if I write a book, miraculously, the industry is going to change because I've been so, So I've done such a great job. Well, it jumped to the conclusion, but I'm not sure it worked out that way. Well, it didn't quite work out that way because I think all authors of books who think they're going to change the world discover that people read the book and they say, that is really interesting. And, you know, that's exactly our situation. But then don't do anything about it. So life went on. I promoted the book. I did podcasts. Yeah. I started writing articles. And in that time, in that time, as you were doing that, because you're talking about a time when, you know, digital comes in and the workload goes like that, that's all mushroomed.

11:57So presumably all the problems that you were talking about started talking about in 2015 by 2022, 2023, as we come out of the pandemic, that's only exploded. Let me give you some numbers on that. When I did Ogilvy UK in 1992, they had 52 creatives, and they did 360 ads. That was it. I did another Ogilvy office a few years ago that had 50 creatives. They do 15 ,000 ads. Wow. Most of those are adaptation. So of the 15 ,000, 2 ,000 origination, 13 ,000 adaptations for social media. But those 13 ,000 account for 40 % of their man hours, therefore 40 % of their fees. The real problem is AI can do adaptation.

12:48That's it. And that breaks, so that just completely breaks that model there. Absolutely. And listen, procurement really wants to know how AI can help them really smash agency fees. So I said to this particular office, I said, you know, let's say only half of that 40 % is vulnerable, 40 % of your amount. Could you accept a 20 % reduction in fees? And they said, are you kidding? We're out of business. And the holding company, WPP at the time, would be severely crippled if that happened in every Ogilvy office to say nothing of the other brands that they had, VML, Y &R at the time, now that's VML.

13:33It would be a disaster. And now that's the disaster that I'm trying to write about today. Although Madison Avenue Revisited, which says the verdict of the advertising industry, murder not manslaughter, led me to conclude that the holding companies, rather than accidentally milking the agencies, have actually deliberately milk the agencies. So the murder is by the whole codes. It's not by the tech platforms? No, no. I'll say the murder is a number of groups getting together. First of all, you have the holding companies who've acted like bad parents. Why? Because their agencies, at the time when they were shifting from commission to fees, a good parent holding company would say, let's figure out the relationship among the work you're doing, the man hours, the fees, and the resources, and we'll hire consultants or do whatever we need to do so that you're smart about that.

14:35They didn't do that. And after 2004, when all the surplus resources were gone, the holding companies just kept cutting people. And I used to speak to the various holding company CEOs. And I'd say, listen, you're cutting out muscle now. You were cutting out fat up to 2004. Today, you're cutting out muscle. They said, we still got surplus resources that we can take out to make our margins. The agencies are still not efficient because they didn't have the data and they never looked at it. And quite frankly, I don't think they were interested. So you have the holding company's bad parents. Then you had procurement that came in.

15:14And I only know procurement really from the automotive industry where I did a lot of work when I was at Bain & Company. And the procurement people that I knew in automotive had the objective of creating cars that had no warranty claims. Okay, explain that. All right. You've got a car coming off of the Ford product line or off of the Toyota product line or the Nissan or the Austin Martin, right? Right. And if the suppliers have provided bad product and suppliers provide everything except basically the engines and the transmission. Well, not even the transmissions come from outside. So the procurement's job is to make sure the suppliers provide quality product that can go on the assembly line, get attached to the car.

16:03The car goes out and it runs properly and it doesn't break down and have warranty claims within whether it's the first 50 ,000 miles or the first 100 ,000. So procurement really worried in the automotive industry about making sure that the suppliers were doing a great job, didn't need to be inspected. And they put all kinds of procedures in place from what's called the ISO standards, ISO 9001, et cetera. So this is about the quality of the deliverable. Quality of the deliverable. Like they would accept no more than 25 parts per million defects from a supplier. And then they didn't change suppliers.

16:42If they had a problem with the supplier, they wouldn't fire them. They'd put their people in the factory and fix it because they knew that to change a supplier was disruptive. So that's what I knew about procurement. When procurement came in, I thought procurement could be an ally. We can work with the agencies to figure out and to get them to sign on to an understanding of the relationship between workloads and fees and resources. Nope. Procurement came in, and I remember this. there was a procurement guy at Ford that I worked with. I won't mention his name. He was a really good guy. He had bought axles.

17:18That's where he came from. And so he came in and he met with the agencies. Tell me how an ad is made. And they looked at him and said, do you know who you're talking to? It's like, we are a creative shop. We can't talk about how it's made because we don't even know where the ideas come from. And he said they were so uncooperative. He said, I just decided to whack their fees by 10 % per year until they became more cooperative with me. And he said, and I've been doing that for five years and it hasn't changed anything. So procurement actually has absolutely no confidence in the quality or the business attitude of agencies, and they just punish them by cutting fees.

18:03So procurement has cut fees, and they've never worried about whether the workload that was being provided by marketing was growing or shrinking or whatever it was doing. And of course, it's been growing. Procurement could care less. Their KPIs are cut fees, period. So they're a problem. Then if we go to the CMO, CMOs have had a tough time since the financial meltdown of 2008. Yeah. Because brands really stopped growing through the financial crisis. This is a whole low growth economy. And they never picked it up again after that. And of course, that was congruent with the introduction of ad tech and then later programmatic and now even principle-based media.

18:48So where the media structure of the industry became extremely complicated. And the growth stopped. CMOs said, we're not growing. And this whole ecosystem is so complicated. We don't understand it. We're just going to go for low cost. Almost as if they have been accepting the fact they're stuck in a low cost cost environment, a low growth environment. They don't know what to do about it. So they're just going to go to low cost. So they go to the low cost media. Because that's the option that seems most doable. Well, that's the one that Google and Meta and Amazon and Apple and Yahoo and everybody else who provides the pipelines for programmatic are saying, hey, we can target consumers.

19:31That is a superior form of marketing anyway, rather than doing mass market TV, radio, print. Even though we know that a lot of that has been questioned by other researchers. Well, they don't always accept the questioning. No, no, I'm aware of that. You're aware of that. I mean, Wark knows better than anyone else that the data you've got developed, that there's a real problem. My own analysis shows that since 2009, 40 of the top 60 advertisers are only growing at half of GDP growth. Yeah. So it's not just that we're in low growth, like an overall low growth economy. I mean, these organizations are actually underperforming versus GDP.

20:19Yes, absolutely. Because, you know, productivity in the West, productivity improvements are 2.3%. So you expect 2.3 % growth just to keep up. And inflation is 2.4 % on average. That combination is 4.7 nominal GDP growth. And that's what you should compare to the sales growth of a P &G, a Unilever, a Nestle, or a Colgate-Palmolive or someone like that. So the group of 40 out of 60 advertisers that are heavy advertisers are growing at 2 % per year where it should be 4.7. And that's for 15 years now. And now we've got this sort of, also talk of like a K-shaped economy where actually the middle's being hollowed out.

21:09So companies that have traditionally sold into what you might call the middle classes are struggling with consumers whose living standards aren't keeping up while people were selling more into a sort of premium end of the market and maybe doing a bit better. So you've got a sort of… That is so true. And they have the only growth that they've gotten because they have shareholders, too, is through price increases. And then at the same time, because populations have grown and because retailers have grown, you have a lot of private label products or whatever you want to call it. I teach at a university.

21:49I teach an advertising management course. And I sent my graduate students out to major retailers in the States, supermarkets, big box stores. And I said, I want you to come back with a listing of all the private label products that you saw and what the price gaps were. And these are 30-year-old students. They were shocked themselves at how big the price gap was. The price gap between the sort of store label and label. The store labels were compared to the legacy labels. You know what I mean? Even the placement and the gondolas wasn't like it used to be. So what you have are marketing departments that are massively growing the workloads of their agencies in the hope that they're going to find something in the panoply of deliverables in programmatic media that work.

22:39But that stuff is low cost. It tends to be promotional and it doesn't grow brands. So in saying we are not growing, we're going to go to low cost media. We're going to cut our agency fees. We're going to cut everywhere we can. We're not going to develop as many new products anymore. That's another thing that's gone on. They're locking in their low growth. So who is murdering Madison Avenue? CMOs who are growing their workloads, but not solving their growth problems. procurement who are just cutting fees, holding companies who are milking their agencies and the agency CEOs who just say, I'm trapped.

23:20I mean, I'm being judged by my ability to generate my numbers, not my ability to help clients grow again. And therefore, because agencies have been downsizing now for 30 years, they've really got a bunch of junior people, which seemed okay when they were doing nothing but programmatic media. But it's not very good for doing the top of the funnel advertising where you need good strategy and problem solving. And that's the I guess that's the interesting point we're in now where, you know, we're hearing in Cannes and we're hearing lots of people talking about the need to go back into brand building, the need to go back into sort of driving growth rather than cutting costs.

23:58It feels like I mean, you use the term doom loop. Doom loop because that is a risk for CMOs who have very little credibility anyway. They get fired every three years, right, for failing. Do they brief their agencies on you have to help me grow the brands again? No. They brief the agencies. Here's your scope of work. Procurement will tell you what the fees are, but procurement will tell you the fees are down by, I don't know, 4.5%, 5%, 10%. Nobody measures how much the workload is going up, but it does go up. So CMOs are not using agencies as their partners in helping to solve that problem, nor are they going to BCG Bain McKinsey to say, help me grow again.

24:42They're just kind of, I'm just going to try to keep, I'm going to be a custodian of marketing. I'm going to use low cost media. I'm going to change my agencies every three years to get lower costs. And I know I'm going to get fired in three years, but let's hope that I get a better job next time. And many of them land on their feet because they say, well, I had the goal of digitalizing our operations and I've done that job and I'm ready for a new challenge. In your experience, is this a universal thing or are there certain sectors? No, it's universal. It's universal. Yeah, it's pretty widespread.

25:22And here's the thing. Look, I'm an outsider. I mean, even though I haven't done anything else for 30 years, I'm still an outsider because I don't know anything until I've been in a situation and I have the data in my hands. Okay. Even if I've accumulated it over 35 years and I've written now three books about it, people don't disagree with me. They don't say I'm wrong. Yeah, that was a good point. Does anybody ever go, actually, Michael, you've called this completely wrong? Never. It has not happened. And it's sort of gratifying. And I write an article a week in my substack, and they're fairly provocative, but I'm always relying on the data.

26:01I can say, since I've been in business, fees have halved and the workloads have doubled by my data. And that means that the price for agency services has declined by 75 % real, because I've taken inflation out of it. Let's just dwell on that, because there's this great chart that I know has been shared around in the past few months where you show the declining resources that go into a creative output. Right. And so that's what you're talking about here. It's basically we're paying less for the deliverable than we've ever paid. Exactly. In real terms, 75 % did you say? 75 % real decline in fee.

26:45Now, what is that price? Price is fee divided by workloads. Now, Now, workloads are everything from TV ads to Facebook posts. So you have to normalize them. And I had to create a unit of measure called the Scope Metric Unit, which is nothing more than a TV 30 original piece of work that would normally have two creative teams and two reworks. That's one Scope Metric Unit. Everything else is scaled to that. Okay. So it's like a price per kilo. You want to think about it. And the price per kilo, since I've been in business with my clients, has gone from$435 ,000, Ogilvy 1992, to$110 ,000 today. That's a 75 % reduction.

27:37And that is due of fees coming down by about 2 % per year and workloads growing by 2.3 % per year for 35 years. So each year, a little bit of pain, but we can handle it. But if you accept a 2 % decline in fee and a 2.3 % increase in workload every year for 35 years, your fee, your price is down 75%. And now here's the other thing, David. When I did this Ogilvy work, because we never answered the question, why weren't they making money? The two executive creative directors were putting an average of three teams on every single brief and running about five reworks on every single brief because they were trying to create competition within the agency to improve the quality of the work.

28:31Oh, wow. And so and of course, the guy, Mike Walsh, who was running Ogilvy UK, didn't know that that was the practice in the creative department. The creative department was a law unto itself. So when I went back to him and I said, Mike, I figured out why you aren't making any money. It's because you've got on every single thing that you're doing. You've got three creative teams and about five reworks. And I thought, maybe that's normal in the advertising industry. What do I know? I'm a consultant. I don't know anything about the industry. And he just got red in the face and he called Alan and John in and he said, you know, Mike says this is a situation.

29:10Yep. That's what we're doing. And he said, well, I asked Mike to run it for one team per brief and one to two reworks. And we don't need 52 creatives. We only need 36. We don't need 75 account people. We only need 55. and that would give us a 14 % margin, not the 3 % we're making today. And he said, so that's the way you're going to have to run the department. And they said, no, we can't work that way. And he said, well, you're fired. And he brought someone in who would run it that way. And he restored a little bit of discipline to the way they allocated resources and creative. That's what you had to do.

29:50But he could only do it in the face of the data. So if that was a situation in the 90s and we're at the situation we're at now, do you have a sense of what, a fair price? Or like, you know, if the scope metric is 75 % below what it was back then. It's got to be above$150 ,000. It's got to be, actually, it's got to be more like$175 ,000. Right. So it's not like agencies should be charging twice what they are. No, you know what it is. They're never going to get more fees because the clients have got a bad situation. But you have to take a hard look at the, let's talk about this one Ogilvy office that's doing 15 ,000 deliverables.

30:33How many of those deliverables are adding value? How many of them are just SEO? How many of them are email marketing? How many of them are just Facebook posts and who knows what? And the thing is, if they could keep the fees that they've got and cut the scope of work down and get the crap out, then the price per scope metric unit, price per kilo, you know, could rise to$175 from$110 without the client paying out any more money. And there needs to be a pruning of the scope of work. Well, the only way you can do that is to have an adult discussion around the scope of work data. But since marketing and agencies don't look at that and they don't document it and they don't measure it, they can't do that.

31:19So I've always said, why don't you get serious about documenting what's in your scope of work? And then the two of you make judgments about how many of those deliverables are really needed and don't change the fees. And if that's all they would have to do, if the agency understood that their mission was to help the clients grow, not just to be efficient and low cost.

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32:28So you talked about AI earlier, but let's just bring AI into that because I guess it guess one of the more obvious applications of ai within this world would be to create a lot of that uh whether we want to run it or not but create a lot of that sort of long tail of of assets that the variations that create or or manufacture manufacture yeah without people yes yeah um and you know you've got you've got the platforms talking about you know meta called it last year infinite creative where which just sounds awful but like you know they you you sort of uh you just plug i can't remember exactly what the quote was basically you plug uh meta into your bank account tell them what you're trying to do and they'll just do the rest with constant iterations where does that all fit in because i mean from a sort of compared with what you're you're saying about what was happening in the 90s it sounds quite dystopian but it is all you know there are plenty of companies talking about this as the future of creativity.

33:32It is absolutely possible. It would be a disaster because I think we've got to get back to the fact that in a capitalistic world that we live in, growth is paramount. Growth is how people make more money, people get promoted, products serve the marketplace, there's innovation. And if you just have machines that are grinding out deliverables that don't add growth, then what have you got? And so I think that it's a very interesting consulting question is, why did the growth stop in 2009? How much of it is due to private label competition and 25 % to 40 % price gaps? What can be done about that? And I think that what agencies need to do is to start to answer that question with their clients.

34:26Why don't they say, look, let's change the nature of our relationship. Let's figure out why you're not growing. And what in a media or creative scope of work would need to change for us to start growing again? Maybe you need to start developing some new products. Maybe, well, there are a lot of things that could be done. But if they dedicated themselves to that, I think they would find some answers. Then they would say to the client, we're going to use AI to do these low funnel deliverables. We will get rid of our junior people. But don't take that all in fee reduction. Take 50 % of it in fee reduction.

35:06Let us keep the margin improvement that we can get from the other 50%, and we will invest it in strategic people and - Small senior people. So kind of going the other way. That we fired, or that WPP or Omnicon or IPG fired over the last 30 years to lower their cost. And there's, by the way, there's a precedent for that because back in 2004, I was hired by Toyota to work with Saatchi. Toyota wanted Saatchi to become their digital agency along with their normal creative agency. And what Toyota said was, look, we will hire Farmer to help figure out where you can be more efficient in doing your advertising.

35:52We're going to let you keep your fees where they are, you take the additional profit from those fees and reinvest in digital people. And then we're off to the races. And that's exactly what we did. So there is an ample opportunity for advertisers to allow their agencies to get strong again by keeping some of the benefits from AI and not taking it all in fee reduction. Now, that means that procurement needs to be educated, that they've got to stop being hostile to agencies and they have to stop thinking that their job is just to cut fees. Their job should be to help their agencies become effective as strategic advisors.

36:32Do the work that's needed to grow the brands again and then everyone flourishes. And if they succeed from an outcome standpoint, let them raise the price for the deliverables that they're going to use as the basis for their pricing rather than the man hours. That's what I think should happen. fascinating so um you mentioned sort of media and creative there and i think you like many people feel like the division of media and creative has been you know a big part of the problem it really was it it wasn't bad for media when wpp split out media from creative uh publicist did the same thing omnicon and ipg all did the same thing that was not bad for the media operations because it opened up the playing field.

37:18They could go after any client. It hung the creatives out to dry because when they did the split, the media agencies were going to clients who were then paying 15 % commissions and said, we'll do all the media work for five. Well, that left 10%. And were they going to pay 10 % on media for the creative agencies? No. So that led to labor-based fees, one of the things that encouraged labor-based fees. And that's when procurement said, these guys have been getting 10 % of media spend to do the creative work. That's way too high. It should be half of that. So that's when they started cutting the fees.

37:58You talk about there being an obsession with cheap CPMs. And, I mean, is there a media quality issue at the moment as well, rather than just a sort of fee issue? Well, I think there's top of the funnel, bottom of the funnel distinction in the book here, and I probably won't be able to find it. But I did find some very current data on what CPMs would be for over-the-air television or CTV or something like that, like$32, let's call it, versus doing a typical programmatic ad, which is less than$10. Yeah. And that's been part of the thing is that we've kind of seen all reach as equal. And if I can get it for 30 cents over here or$30 over here.

38:40If I can do a deliverable, why should I do that? And that comes back to the question that you posed me, David. You said, well, why doesn't everybody get together and focus on growth again? Because you'd have CMOs having to go to their CFOs and saying, I'm going to spend more on media because I'm going to start buying expensive media again. And we're going to stop taking fees away from the agency because we need to build them as strategic partners. And procurement, we're going to bring them along for the party. CFOs are going to have to say, are you kidding me? You know, when are you going to deliver the goods?

39:16Yeah. And they say, well, maybe it'll take three years, but we'll get there. And then what happens to our share price in the next three years? See, I don't think that there's a right attitude towards risk and investment today. I think that people are too sensitive to what happens to the share price. Within marketing or within corporate? like at P &G, at Unilever, at Nestle, or at Colgate-Palmolive. So you mean the general management is sort of increasingly risk-averse? Totally. Yeah. Because they have to promise, they have to support their numbers and their share price. And so if they said, we're going to significantly increase our media spend in order to return to growth, you know what Wall Street or the city going to say, well, when's growth going to happen?

40:07When you can see the results of this? Because what it's probably going to do is depress margins for the next couple of years. It is the right thing to do. But the way Wall Street and the city have moved over the years, they don't have a tolerance for risk either. They want steady quarterly growth. Otherwise, they punish the companies. Nobody wants to be punished. So final topic, which sort of relates to this, because I guess it's about how you make the case. You start focusing on measurement in the book. You talk about market mix modeling. You call out Mutinex as a particular example of that. Obviously, there are a number of vendors in that space.

40:53What's the role you see of that sort of next generation measurement tool in trying to resolve the situation you talk about? The MMM, like Mutant X, are very sophisticated programs that look at all of the elements of the marketing mix and the spend versus sales. And I think that because the marketing mix is so complicated today with so many channels available and so many different ways of spending the money, that only a sophisticated computer program can figure out what works. I think it's beyond human capability. So I think CMOs need Mutinex or other MMM programs to tell them what should be in their scope of work in what proportion.

41:45And this could be where, I mean, AI is a very broad term, but AI and machine learning can really start to have a benefit because, as you say, the ability to see what genuinely works within millions or billions of dollars of media spend is beyond human capability. So we're going to need that sort of sophistication. Yeah. And where, David, where the AI comes in, and MutantX is a program that I know the best, the program will just do its analysis and it will say, you know, this is what you will get for growth for this mix and this spend. The AI part of it is where a CMO can say, what should I change in the next quarter that will have a visible impact on my growth?

42:35And then the mutinex will come back and say, you should treble your radio spend. So what they've all are starting to build in is a front end like. That's the sort of generative AI. It's generative AI that allows a normal, you know, non-AI type person to ask plain English questions about what changes should I make that will accelerate my growth and get an answer. That's the real key part of the AI, I think. Fantastic. Michael, we're going to let you go, but I guess final question. This is your third book now. What are you going to do next? I think that what I want to do now is to continue my consulting practice and to take the lessons from three books to encourage SWE-SEAT people to take action.

43:30I think we've so many of us have documented the problems of the industry. I don't think there's anything new to be said about it. I think, if anything, maybe I've gone too far in writing three books about here are the problems. You know, I don't want to talk about the problems anymore. I want to find the companies that do something about it and have results to show. So I want to dedicate myself to that. Then my next book ought to be about someone that actually did something and what did they do to get out of the doom loop that the industry seems to be in. So I'm looking for those companies. Anybody out there?

44:06Give me a call. I'd love to talk to you. Oh, perfect way to end it. Michael Farmer, thank you so much for joining us. David, thanks for having me. It's really been a pleasure talking with you. Well, that's all we've got time for for today's podcast. A big thank you to Michael for joining us. If you liked what you saw or heard, then please do follow us on your podcasting platform of choice. And if you really liked it, please do leave us a review. Until next time, thanks for listening.