Rory Sutherland and Tom Goodwin Fix Marketing (Part 1)

0:00Hey everyone, just before we get into the show, I just wanted to give a really big shout out to my founding sponsor, System One. As many of you know, I worked at System One and before that, I was actually a client of theirs. Now, the thing I love about System One is when I need to make a big decision, they have been there to help me. Because what System One does is use the power of emotion to help predict the likely impact of my innovation or advertising. So when I've been stuck in the boardroom needing to justify why we're going to pick one creative route over another or launch this innovation over that one, it has been indispensable.

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0:56Ladies and gentlemen, welcome back to Uncensored CMO. Now, what would happen if we took two of the most popular guests of all time on the podcast, put them together in the same room, and let them talk for as long as they wanted about the biggest questions in marketing? That's exactly what I did with my next two guests, Rory Sutherland and Tom Goodwin. And the result was amazing. Now, we do talk for quite a while. So what I'm going to do is I'm going to split this episode into two. this is the first part and then tune in again next week and you'll get the second part it's absolute gold you don't want to miss this so tom you often talk about digital overload don't you and the amount that's going on at the moment and i know rory you're very good kind of mental shortcuts and how people make decisions and something i've noticed is like the amount of choice customers have to make now is just insane right we're just making more than we ever have done but there's definitely something here i mean i think um to be alive today is to be overwhelmed and I think we live in the age of abundance where we haven't realized that more choice is not a good thing.

1:58I think the first thing people use is a brand to make sure they're not making a bad decision. And the second thing is personally, I now shop in places where they have less selection. I'm not a big fan of Amazon because you're surrounded by millions of identical products. I really like shopping in the real world now because inventory is limited by what they can put on the shelf and therefore if you go to somewhere like Costco, it's amazing because you don't actually need a million different types of bread to buy you just want one that's good enough um and that's my way of dealing well it's interesting that i suppose both amazon and ebay and the other retailers in a sense practice choice reduction in that generally they make it quite hard to find page two of the search results and i've always wondered that if you're buying a toaster okay choosing between maybe 18 24 toasters that's a tolerable mental effort you can pick it on a few variables like color and so on um once you get down to page two or page three and you've now got you've now looked at 75 you've reached a level of paralysis where i mean there are various ways in which you explain it one of which is that people like making a decision uh where uh they minimize the risk of regret yes i wish i hadn't done that and the same probably applies to things like tinder you see if you are overexposed to options effectively your confidence that you've made a decision that you're not going to subsequently regret diminishes uh with profusion of choice it's but it is kind of fascinating i mean you could argue that that was partly how the usp worked we focus on the one thing that our product has that nobody else's product has we amplify that thing to an extent where it suddenly obtains a very large importance in your mind because if you're paying attention to it it becomes important and therefore effectively what you've done is you said this is what makes this unique which is therefore effectively translates into you can now feel comfortable buying it which i think is weird because i actually think there's a whole school of advertising which could help people in this regard because we've always thought advertising is about saying everything about a product which makes it really exciting actually i think there's a level of advertising thought that could go into the art of making people feel better about decisions they're about to make even down to things like the name of something like if anyone ever shops for a printer yes it's incredibly boring it's full of numbers that don't really mean anything to you and then you end up confused if there was just a printer called like the best fucking printer for your house it could be a shit printer if it doesn't drop off the wi-fi it's the best printer as far as i'm concerned just have a simple choice architecture of good better best yes to just have something with a name that makes sense for people to not actually know that much about it but know it's good enough I think these are all things for advertising types of people to think about there also I think I think there's something there that can inform new product development yeah in the sense that adding what you might call Easter eggs to apply so I'm eternally grateful the wonderful art when When I sort of helped the people launch Flat White or Fuck Off, the wonderful people at Sage gave me a dual boiler coffee machine.

5:11They really didn't need to. So obviously my reciprocation bias kicked in, and when I needed to replace our toaster, I looked at Sage toasters. One of them has a button entitled Just a Little Bit More. Yeah, amazing. Oh, that's amazing. So your toast pops up. Absolutely amazing. It actually serves two functions, which is this crumpet isn't quite brown enough, but I don't want to toast it twice. It'll come out looking like it's been cremated. Or else the other problem is, you see, you put the toaster on, you wander off, you get distracted, you come back, the toast is cold. So you can just put the little bit more button on your sage toaster and then effectively it revives what would otherwise be a rather sad piece of toast.

5:52This Easter egg thinking should be everywhere. Easter egg thinking is tremendous. I used to have a Mercedes. It was quite an old one, but it was a really fancy one. And when you went round a corner, half of the seat interior on the seat would inflate. And as a result, you felt like you were on a mission to Mars or something every time you drove anywhere. So the squab of the seat would basically inflate to... I think it's sort of like, it had sort of airbags that came in. Got it. And then one side would inflate massively when you went round a corner one way. And it just made it incredibly thrilling to drive without being any faster.

6:22and as a result I would always choose to drive this car every single time and it's again it's a sort of example of a little thing that made a big difference that no advertising campaign ever talked about to my knowledge. I mean in the good old days they would have done yeah you know because you know they'd go and find a USP and basically bang a drum about it but and actually I've always been intrigued the other way that the USP works in a way is through loss aversion which is it It makes a very big deal of the one thing you won't get if you buy the product from somebody else. So it's very clever in terms of exploiting, I think, loss as well.

6:58So I'm coming back. You know, it was very fashionable to disparage the USP. But my knowledge of behavioral science actually teaches me that it was probably cleverer than we realized at the time. I love that. The USP is coming back. I once pitched an idea to the Domino's marketing director in a lift because I thought they should invent a panic button, which is when you get to your fridge and you open it and you just cannot decide what to do there's one flashing button that is pre-loaded with your favorite dominoes order i think that was done in the uae has it i think somebody did it i don't know if it was dominoes but somebody did it in the uae which was effectively one push yeah amazon did experiment with amazon one push which little button yeah and effectively you know when you ran out of bog paper um or whatever it might be you could just push the button you could have lots of these like red wine beer cleaning products push for champagne at bob bob ricard so of course there's an example of that i mean there are some cases where unwittingly someone has just destroyed the choice architecture yeah um hotels that that's common yeah absolutely 27 different brands none of which you understand anything about and so actually i was joking about that saying partly i use the marriott bonvoy loyalty program just to reduce the pain of choice.

8:15But even then they have so many different brands within them. You're there thinking, is this a Spring Hill Sweets or is this like that? I discovered yesterday morning I'm part of Marriott Bonvoy. I didn't even know because I went to Citizen M, which to me is my favorite place to stay. It's only very recently become part of the program. Oh, is that why? So Moxie is Marriott's very own Citizen M, effectively. And when I praised the Moxie, lots of angry Dutch people started attacking that the idea was started by Citizen M and that Marriott copied it. But I'm a very big fan of both. And actually, suddenly, that's an interesting case because you go, OK, there's no laundry, there's no room service, but there is really good coffee and shit available 24 hours a day on the ground floor.

8:57That'll do it for me. You know, it makes things very easy in many cases. I think a bit of Will Goddard thinking in this because when I checked into mine yesterday, they asked me if I'd wanted to use the rooftop pool. And I didn't realise it had a rooftop pool. So they've obviously saved money on 12 floors. They've saved money by creating the smallest room possible to sleep in. Which are very nice. They're well thought out. They have just the minimum amount that you need. But you've got a rooftop pool to use whenever you like. Unusually, although they're Dutch, they do actually have curtains and blinds.

9:27Is that what in the Netherlands? They don't have curtains at all in the downstairs windows of houses. And they regard you as being basically secretive and up to no good. so if you if you take an after dark train journey in the netherlands it's like a moving version of hitchcock's rear window it's completely bizarre that's amazing yeah but but no i mean actually i mean that's possibly an example where sometimes quite often i every year in can i stay at the moxie in up of the hills because everything else but everything else is a total scam and actually but i always find the moxie kind of i can't make up my mind it's always great it's you know it's always pretty good yeah you know this is scott galloway's seven out of a ten sort of theory isn't it yeah you know he stays at that absurd place on captain team doesn't he yeah he does and he burbles on about how attractive the people are and i say look scott people at the moxie are pretty attractive they're not russian and they don't charge by the hour um anyway sorry top tip for can this year save money and also it's above it's in the hills above can and after about six hours in Cannes.

10:33You just want to get out of there. I want to convert to Buddhism and go and find an ashram somewhere, frankly. I mean, it is, you know, I'm a right wing, shallow, materialistic bastard that I find Cannes practically unendurable, to be absolutely honest. It's also shockingly boring. I mean, you get so many interesting people and then give them an expense account and then somehow everything that people says is boring. It's boring. I don't know how you do that. No, it's an amazing achievement. but but oh no this is really interesting i mean the choice reduction question is is fascinating because if if you have a choice with of which the consumer can make no sense now nespresso made this mistake briefly when they launched the virtuo machine because they had two machines the virtuo which you open manually and the virtuo plus which opened automatically and then they priced them at the same price that's the kind of thing which you can destroy enormous amounts of value if let's say you have two products in your range but you don't explain what you get with the more expensive one or you have one product that seems to offer more but is the same price once people can't basically effectively construct a kind of mental matrix of what's going on what actually happens you don't sell anything at all because then they're no longer confident enough in making any kind of decision i think dyson have done this recently if you ever go on the dyson website it's all sorts of vacuum cleaners with names and numbers that make pets oh nine dog like they have like the weird submarine version which apparently just means it can like suck up water or something but there's absolutely no ability for anyone remotely normal to understand anything that's going on and and again i think this is where i think about sort of advertising thinking being like these things may not be the domain of advertising people but the beautiful thing about working and advertising is it's your job to represent a normal person looking at everyday things and if you work for dyson and particularly if you're an engineering led company of course you're obsessed with the submarine feature and you're obsessed with the fluffy code you also you also have a numbering system which you yourself understand because it was based on the model last year that got discontinued the third three digits reflect the horsepower or whatever it all companies just need to employ a couple of people to just say that makes no fucking sense to a normal person i've always Is that the theory that Saab died?

12:54Just make it a bit more expensive because then we'll feel a little bit wanky when we buy it. Do you remember Saab? If you contrast that with BMW, they used to have a car brand called Saab. There was a Saab 901 and there was a Saab 95, was there? Yeah, 95, yeah. Anyway, I asked someone who was a Saab driver, what's the difference between the 901 and the 95? They didn't know. And I kind of go, you know, it wasn't as if they had that large a range, but it was not clear, you know, Whereas BMW would have been the opposite, where it was absolutely blindingly obvious to people who had only the most passing knowledge of BMW.

13:30You know, engine size, range, perfectly clear. Beth Barry, brilliant planner at Ogilvy, always said that one of the other things we do is we tend to overcomplicate. We love those sort of two or three dimensional matrices where you put lots of brands in different places. I always remember Beth Barry saying, to be honest, a lot of the time, the consumer logic is you get what you pay for. There's more expensive and better, and there's cheaper and maybe a bit crap, and you want to find your space. Now, it's not only a matter of how rich you are, although that's obviously a factor. It's also how much this category means to you and how significant it is, and you want to be in the right place in that line.

14:10And actually, this is my great defence of the moxie. I wouldn't stay there for seven days, but if you're staying anywhere for one two or three days and you know you want to be absolutely sure it's pretty good um it basically hits the sweet spot you know your honeymoon you wouldn't spend at citizen m probably um you know unless you're you know quite unless you're staff and met that yes but um but nonetheless i mean i think you know i always remember beth saying we're always looking for these incredibly complicated nuances in terms of people's decision-making patterns and quite often it's is it worth another 17 quid for that by the way there's one little detail if are we recording now yeah there's one little useful detail which is that quite a lot of people used to say oh the paradox of choice experiments don't replicate yeah and i said well you wouldn't expect them to it kind of the the whole initial experiment was that more people bought jam if they could choose from seven jams from them versus 27 and it was in a kind of supermarket environment where you were kind of mugged by a jam salesman you weren't even intending to buy a jam in the first place and then people did the experiment differently and said well it doesn't replicate and i said well obviously it doesn't replicate because if you've driven 15 miles to visit a shop called world of jam right you're not going to walk in through the door and go oh god i can't cope with this there's just too much choice right if you go to ikea you've probably mentally prepared yourself for that kind of choice yeah but i think the digital environment i mean And one thing that seems to me, you were saying absolutely perfectly that the thing that really annoys me about advertising agencies is that they confine their creativity to such a narrow range of activities.

15:51Now, you could probably make a fortune, you could make an absolute fortune for, for example, McDonald's or KFC continually experimenting with the design of the screen terminals. okay yeah one of my complaints is i want to be able to order the food by degree of spiciness i go to kfc because i consider mcdonald's a bit bland right so you know if i'm going to go to kfc i want something pretty hardcore and so i want to be able to rank it by degree of spicy you know scoville levels of extreme spiciness now i'm absolutely convinced that you know experiments with effectively presenting menus differently designing choices differently and i don't just mean the number of choices you have but how they're actually highlighted and how they're ordered can deliver enormous amounts of value and yet ad agencies don't really and the problem actually i'd slightly blame clients in this because clients don't really do anything if there isn't a job title attached to it do they and because you don't have a director of choice architecture i've always said clients should have a director of trivia you know who sorts out all the little pissy things that are really sodding annoying but that fall between too many stools when it comes to actually fixing them and this is the big problem with the go-to-market proposition of ad agency thinking for not advertising yes that one you need the client that has this within their remit and two there needs to be a purchase order that gets made out for the thing that you're buying and there's not that many procurement departments that want to make out a po also the person that challenges in the meetings or the person it's worse now because there's not much discretionary budget kicking around because procurement of demand is that you define everything you do in any given year in advance yeah for no readily apparent reason yeah and consequently if someone comes to you with a really interesting idea for which you haven't budgeted yeah uh you're scraping together pennies from the back of the sofa talking about donald's actually in choice prices one of the coolest things they did with wiley and kennedy a few years ago is that Did you see the famous orders?

17:53Yes, genius. Absolutely brilliant. Brilliant idea. Yeah, so basically they picked a celebrity and asked them what would their favourite order be and just put that on the menu. It was a British guy, I think, at Wyden who was the planner on that, who had this fantastic brief, which is McDonald's decided he was a very good planner but he didn't know enough about the United States so Mollis paid him to drive around. Yes, Taz, Taz. He was the one I was interviewing. Yeah, Mollis driving around the US eating at McDonald's. We were on a big road trip as part of the idea. But, I mean, everyone listened to that and they were like, this is phenomenal, what a great thing to do.

18:28That's what the job used to be. Yeah, of course. I mean, back in the 2000s, if you worked in advertising, it was your job to go to the supplier meetings. It was your job to go to the annual convention for retailers that sold your phone. My wonderful colleague, Jules Chalkley, has a brilliant plea. He's the creative director at Ogilvy. He says, bring back the factory tour. Yeah. Because the factory tour delivered the kind of insights. it's most famously Forsprung Dirt Tank that was a factory so I need to so Justin Timberlake hasn't been involved in the campaign but feel free to give me some royalties if you take that on up but Stormzy was the face of the UK one Travis Scott that was who I was thinking Travis Scott was the OG it was Travis Scott was the OG and then the following year Mariah Carey as well at Christmas I can't imagine her eating many burgers to be honest yeah I can't either it seems more like a sweet green there you go famous orders um i guess yeah would have shifted a few more salads what i find amazing though is the number of times where we will talk about campaigns that we've seen and i always wonder whether people in the real world have done that i don't want to kind of bitch on can too much but i feel like in every single can session there should be a normal human being and they go do you understand anything we talked about or have you ever seen any of these campaigns like in real life and the answer would always well i used to get a bit pissy at can as a copywriter because if you if you ever wrote an ad which required a knowledge of like jane austen opening sentences everybody goes far ridiculously intellectual how but the degree of visual literacy they expect in the audience yeah because i would literally occasionally wander around some of the more art directory parts of canon just go i'm gonna fucking clue what's going on there and i pretend i understood and go marvelous and sort of twiddled my imaginary dali mustache but in truth i haven't got an effing clue.

20:13Well, I'll tell you what, for this conversation, why don't we start with the incredible Kerry and Anna, who came up with this idea of the Illuminati, which I just thought was inspired, which is getting together people that should be on stages, and also to get together to solve complex problems by bringing together people that think differently, industry experts, that kind of thing, of which all three here are part of that. So I thought this would be quite a cool conversation, because we have you two together, who I love both of you, because of the way you think differently to how everyone else thinks you know you take an opposite position to how the industry might think about something and that's where we get kind of creativity that's where breakthroughs happen by the way i only realized very recently partly a large part of why i do think differently and it's something i never i never made the connection at all which is i'm actually quite good at maths okay i'm not i'm not making this idea level and s level maths now the problem was my brother is an astrophysicist and he was on the uh uk maths olympiad team which is the four best mathematicians in the uk in like 1980 which is like world's greatest nerd competition basically and so growing up in that environment i always just assumed i was really crap at maths okay because obviously it's a bit of an unfair comparison right and then i suddenly realized that actually in marketing if you've got a level maths you're practically sort of john von neumann okay right and um uh and i actually actually even even i would regard the maths used by most finance people as ludicrously over simplistic in other words they're trying to cram the whole complexity of a business and a market into an excel spreadsheet which is basically ill-equipped for handling the complexity of what's going on but also i'm going to weirdly sort of make a big rishi sunak plea here i thought his his basic proposal that people should study maths into the sixth form wasn't a i'd i'd couple it with something like creative problem solving but the extent to which do being reasonably good at maths actually help you approach problems because often mathematical problems very similar to creative problems which is the trick is actually to change the question in other words you're presented with a question which seems insolvable but if you sort of redefine the parameters it suddenly becomes obvious and so you know one of the weirdest things you're not going to expect is you know i would like more marketers to spend a bit more time brushing up on particularly statistics i totally agree with you probability my degree was in finance and economics and it's one of the best things ever for i think because the other point of course is marketing operates in the context of business people forget this don't they yeah you're there to drive a financial outcome and the more you understand how businesses make money the better i take slight issue with this this sort of idea that we're people who think differently because i don't think i think differently i think i i think i experience things differently yeah i take times to go on a bus um i go to really shitty hotels um i listen to people in shopping centers i'll go to boots and super drug and the weird pharmacy with the strange people um like it's just my job in the u.s yeah i do yeah because i feel like it's my job to understand what it is to be a human being today and therefore you have this corpus of experience and then occasionally you're in a marketing meeting and you think this is fucking bullshit like everything that people are talking about is nonsense and i'll just have the confidence and an english accent and a way to to sort of exert myself where i'll just say something like are we sure that's true or we're talking about numbers to four significant figures like i know how we got them but what do they mean and people will think that's contrarianism or they'll think that's thinking differently and actually i'm just asking questions yeah i'm just i'm just curious about stuff and i'm not afraid to ask questions i guess so on that then let me ask you both these questions yeah if what are the biggest marketing myths today that you think need to be challenged?

24:15I could talk for quite a long time about this and I don't want to talk over Rory too much but my basic hypothesis is almost everything that we knew about marketing in 2005 was based on about 200 years of marketing knowledge and all of that knowledge is completely relevant today. So the benefit to... I thought you were going to say the opposite. The benefit to consistency, the benefit to making things easy, the benefit of making things that are memorable so taglines jingles wastage like wastage is an amazing drug because it basically allows you to reach people who in 10 years time or after a promotion or when they get old will buy your stuff so in 2005 almost everything we knew about marketing was completely right and completely helpful and then the internet created all of these new tools and all of these new approaches and all of these new philosophies and we're still metrics as well and we're still metrics and for a lot of companies those things were amazing if you're a local landscape architect and you sell um kludger hedges your ability to go on facebook and buy ads against people that have shown interest in privacy hedges is fucking amazing if you're uber and you're trying to get downloads of your app and your ability to see how people respond to your ads is amazing but what the problem is that we took that playbook of performance advertising that was amazing for about 20 percent of clients and then that also new it was new it was new it was sophisticated it was short-termist it had a rich data trail and it was sort of digital and you have to remember an ask coverers charter if you wanted to justify your own existence within an organization that entire playbook is brilliant and it's brilliant today for those companies the big thing that's a problem to me is that every single large company now looks at the small companies.

26:13And because it was new and it appears to be sophisticated and it appears to be efficient, then we've got Coca-Cola thinking, oh, if only we could have a one-on-one conversation with people. We've got like Unilever thinking, oh, wouldn't it be good if we could like personalize ads? We've got P &G thinking, wouldn't it be great if we could measure click-through rates in real time and then optimize things? And basically what's happened is the playbook that made people like Shopify and Spotify and Uber and Metro Bank and all of these up-and-coming companies that had limited budgets. Because it made them successful, big companies are copying it.

26:47And actually, it's completely wrong. Because almost everything for a big company today, when it comes to advertising, almost everything that worked in 1970 would work a lot better than anything that the other companies are doing. I think that's absolutely fascinating. You know, one thing is no advertising agency ever goes in anymore. Well, one of the effects of that, by the way, is it completely distorted the relative power of media agencies versus creative agencies. Yeah, yeah, yeah, absolutely. And it suddenly took the conversation into this very nerdy media arena of kind of quantification and self-justification and, you know, a load of nonsense like that.

27:23and actually even Google who benefit quite a lot from that trend admit that occasional breakthrough creative slogans if you want to use a really unfashionable word that actually really breakthrough creative is what really makes the difference and that's never changed but you can't predict what's going to be breakthrough before but that's funny enough my other thing about what everybody's wrong about marketing's fat-tailed and everybody's trying to pretend it's thin-tailed I mean, Richardson says very well, the average is the enemy of the marketer. That when you aggregate information and you average it, you lose what's really significant and interesting in the act of averaging.

28:01But the other point is that it isn't the fact that half the money you spend on advertising is wasted. The trouble is I don't know which half. That's a thin-tailed expression of the problem. The real thing is 10 % of what you do in creative advertising delivers about 195 % of the value. you don't know in advance what it's going to be to it to some extent and i mean i you know i've got chapter and verse on that because nassim taleb who's like the world's biggest expert on fat tail distributions we're in a restaurant in amsterdam and we were talking about marketing he said marketing is fat tailed yeah you know in other words a small amount of what you do will just have extraordinary effects a large part of your job is to look for those amazing outlier effects but instead what we've got is that let's optimize at the optimize things at scale to make them four percent more efficient yeah that's fine by the way it's not a total waste of your time and it keeps the wolf from the door while you're doing it but it's not why you do you do marketing because every now and then you hit a ball out of the park you know you you stumble on something which is just spectacular and yet what we're trying to do is we're trying to turn it into a it's fat-tailed and probabilistic and we're trying to turn it into a thin-tailed predictable um you know it always like a sort of you know crappy game of you know affect painting my numbers as well and if you go into a senior meeting armed with the types of words that people like rory and i will use to describe what we know to be effective you sound like a complete chump relative to people with the charts so if you the performance marketer will go in and go for every dollar that we spend we're going to get 7.14 back it's going to take an average of 3.2 hours to do that we've got this mysterious black box that optimizes the creative to ensure that we get one and sucks out extra budget and then the next person is going to come in and be like we should do sponsorship um why because we know it's a good idea and we can take the clients from verizon and we're going to get them drunk and actually like this bit of business is coming up soon and because we kind of know it works and actually you know when I was little I used to have the shirts on my wall you sound like a complete idiot relative to the kind of the pool has been peed in basically by the tech people.

30:16One advantage to being 60 is you're less worried about looking like an idiot. And the two most idiotic but true sentences you can utter if you're in an advertising agency is we're going to make you famous because it's good to be famous and it's bad to be obscure yeah that that and the other one is wherever you can put an animal in it yes yes both those things to be empirically true long observation i'm delighted to say by the way that ogilvy is bringing back the dulux dog oh brilliant if you want to know about fat tail distributions by the way the dulux dog emerged completely by accident they were at a shoot shooting a newly painted room in a house that they'd rented it so happened that the owner of the house had an old English sheepdog which wandered into shot and the photographer was astute enough to go it looks a lot better with the dog in it okay so that is literally a billion dollar brand property that basically that's what I mean by fact I think most success is like that it's that in retrospect we're all geniuses aren't we yeah yeah we always rewrite the story and the problem is now that people will look at things like a dog and they'll sort of codify it and what are the symptoms of work that is brilliant and what are the symptoms of a culture that is amazing people think that they can play back those ingredients in a sort of causal way such that by putting a dog in every paint ad will do better or by having a table tennis table in the office people will like each other more and i think that's the weird thing about the types of conversations that we're trying to have where you have to say things like oh be lucky or be serendipitous or be patient or go with your feelings or trust you to make good decisions and all of these things are antithetical to this world of you know big data immediate decision making, ratifiable processes.

31:59I have to say, this is why I'm such a big fan of Orlando Woods and his Lookat book, because he actually codified over like 25 years of data to make the point that animals are more likely to capture our attention, create an emotion and create a long-lasting memory than anything else. Soundtracks are more likely to make us remember, you know, jingles are more likely to work. I mean, he's literally kind of provided all the evidence. And people aren't doing that stuff. Not as much as they should be. I mean, they need to read his book. I mean, can you remember any tag taglines for any recently introduced companies.

32:27What, a new tagline? Or even old taglines. I mean, you know, if you had to think about, like, the big taglines in our heads right now, it would be people like Avis, we try harder. And it would be things like BA, the world's favourite airline. And both of those things. Yorkshire Tea is one I use quite a lot, where things are done proper. I know it's a very British example. Yeah. But they've got an insight about Yorkshire-ness and properness. And they've carried that for 10 years. But if you imagine how many brands there may be in our life. Specsavers is a good one. Specsavers. That's almost 20 years old.

32:59By the way, two family-owned companies. I think we should make that point. Yes. And then you have this question, okay, so what's the ROI on the tagline? We'll never know. We just know it's a good idea. And that's how I think we should do our jobs. We're empowered to be trusted with our ability to make it. Actually, that fat-tailed what's the value of a tagline question is really fundamental because marketers are ill-treated by the finance function because as a marketer you are held responsible for every penny of costs but when you hit one of those extraordinary breakthroughs you don't get to claim much for the upside so ogilvy and australia who came up with or helped coke come up with the share a coke with names on the coke can idea they made 350 000 australian dollars from there okay now that's not enough to buy a shit flat in a crappy part okay now my point is that's this is not a reasonable way to assess the value of of any part of your business if every now and if when they really really win big you only allow them to keep 10 of the upside and then only for the next financial quarter but you hold them responsible for every penny of cost i mean my question is who's getting the credit for that idea 10 years later sales probably is it or you know or the or people are writing in articles in mckinsey quarterly saying owing to our successful supply chain management we've increased our profit it's not the marketing people who are getting the credit for that well i did this i did this uh uh survey with tiktok of cmos to find out what they really think about things and one of the brilliant quotes in there this person came back and said the short uh the uh the short hang on sorry i've forgotten the quote oh hang on hang on that's really annoying sorry I think this is very true.

34:45If you were to look at my behavior in a supermarket, or if you were to go around my apartment, or if you were to look at my bank statements and try and figure out the brands that I now buy, the center of gravity of the ads that I will have seen will go back to media buys that were done in the 1980s and 1990s. And no marketer can do their job a bit like Philip Patek, where you're not investing in your brand, you're investing in your predecessors. You douchebag son. Yeah. I mean, one weird problem with marketing and advertising people is they're too fucking young. Yeah. And I suddenly realised that you might not even know this.

35:28John, you probably remember the Purcell British Rail promotion of the 1970s, do you? Not quite. Not quite. The infamous... I've heard. But when I tell people that there was this extraordinary successful way of getting people to use the trains, which is you got four box tops off Purcell. You sent off and bought a family rail card, which should be newly launched. So they launched the family rail card with a brand partnership with Unilever. And as a result, I think with your four box tops, you also got like a free return trip somewhere in the UK with your family. And that was much more important, I think, than Jimmy Savile in actually reviving interest in train travel because it got people to adopt the behavior through a really clever brand partnership.

36:12And of course, I suddenly realized that I'm the only person in the room who has any memory of this whatsoever. And I'll also occasionally go in and say, as you will do, undoubtedly, you take something from the 1970s. I had a class the other day. I said, look, don't underestimate the value of total bullshit words. Which I said, nobody knows what organic means, right? Nobody knows what sourdough means. Find a word. Now, what they would have done in the 1950s if they'd introduced a new form of cheaper packaging, They wouldn't have made it, they said, cheaper packaging. They would have said, you know, it's fresh-o-matic, right?

36:46Okay? You know, they would have added o-matic to it. But that kind of bullshit, the fact that you bothered to come up with a bullshit term for something, kind of imbued it with a kind of significance and value, which is completely missing if you don't bother to do that. I love that. You know, and so, no, it is fascinating. I think your point is absolutely fair, which is that what happened was, the digital added an extra string to our bow. Yeah. And weirdly, people got fascinated with the string to the point where they almost threw away the bird and the pre-existing string. I have remembered the quote now.

37:20All right. I finally got it. The short pays off today. The long pays off after I've been fired. Yeah. And this was a thing in the survey, right? Because all these CMOs are saying they know they need to do the right thing, but they're putting all their money in the short term because they don't believe they'll be around in the long term. Well, interestingly, that's true of all fat tail businesses. So archetypal fat tailed businesses would be venture capital would be, you know, in other words, five percent of your success is pay for everything else. Hollywood is massively fat tailed. The music industry is unbelievably fat tailed.

37:49Football, of course, you have that thing, don't you? Now a manager, I don't understand football, but managers get fired because they lose three games in a row. It's all but it's all noise and no signal. but in Hollywood it happens all the time that this guy you know the head of the studio gets fired because you have two loss making years the other guy comes in they make a fortune entirely off films that were greenlit by the previous guy who was fired there's a finance fantasy that you can turn a business into something which is entirely mechanistic and newtonian where every penny of cost is matched to a penny of incremental revenue okay and it's all beautifully proportionate i mean the reason marketing is fat-tailed is because real life is fat-tailed nearly everything about our lives you know you know there were three days in our lives where if we hadn't got out of bed in the morning our entire lives would be totally different right you know a large part of being famous is probabilistic it's you increase your surface area exposure to upside optionality yeah because if you're famous people come to you with things in In other words, if you're famous, customers find you.

38:58If you're not famous, you have to find customers. It's a phase transition. It's huge. I guess the point that I always get to with this is you basically have to try and persuade our clients to do a better job by building equity in a brand that's not going to pay off on their watch by using their judgment. And that's quite a hard sell. Unless we all sort of agreed to enter this sort of weird world where we're going to make life easy for the person that comes back afterwards. and that's where you get to this weird thing where I think real life is a very good analogy for this where in a culture where you're forced to show the ROI of every decision that you make if you look at reality like what's the ROI of meeting a friend like what's the ROI of living in a nice apartment what's the ROI of going on a date with the person that might become your wife or your husband another way of framing it is if you don't do any of that stuff you'll never get lucky you might have three slightly better quarters but you're so i mean what's quite interesting is ai people really understand this they talk about the explore exploit trade-off all the time it's not a trade-off by the way they're two complementary activities exploit funds your exploration exploration directs what you exploit they're entirely yin and yang and they're complementary and they understand that actually you have to do two different things one of them is quite easy to measure it's quite short-termist and it's an efficiency game the other part of it is a discovery game which where the maths is totally different you know i mean literally you know there are areas like pharmaceutical research where most people who work in pharmaceutical research spend their entire working lives never working on a drug that makes it to the market that's too extreme for me okay but effectively what happens is that one in a hundred of those things pays off and those are the odds you're playing now what finance people want is complete short-term predictability and certainty consequently i'm going to be a bit controversial here i thought it was pretty significant and lawrence green wrote a fantastic article about this that of the five ipa gold winners in 2024 for advertising effectiveness four were family-owned companies yeah mccain yorkshire tea lathwaites and spec savers and the fifth one was guinness now you know diajo played a lot diajo aren't totally it's right they don't go we'll just launch a world famous spirits brand overnight you know they realize that these things really really take time my argument is that i'm not sure that plcs are capable either of meaningful innovation or of uh or of brand building so the two things that drucker said were fundamental to value creation which is marketing and innovation i'm not sure they have the patience or the uh comfort within uncertainty now a family-owned business can operate over multiple time frames simultaneously they can go this is what we're doing to make more money next week and this is what we're doing to make more money in 15 years time if you're forced into this very narrow fitness function of basically justifying yourself through EBITDA reported every quarter okay bear in mind what that means is you're optimizing for only one thing now the idea that you can handle something as imagine if you okay imagine if you did that in your own personal life you just chose one metric and said this is going to stand for everything in my success okay you know well no one would claim that in real life you can reduce success in life to a single variable over a single time frame yeah and yet for some weird reason business people you know think that's a perfectly adequate kind of i mean john k rants about this all the time in the ft yeah i think it's nuts stuff but i think it's nuts but again my my question on all of this is how do we change this and and how can we get people to do the right thing not just on the basis that it's the right thing to do and the the challenge has always been with this stuff that if we are going to measure success in a multiple of different ways then those things are probably going to have to be things that look good on a spreadsheet and they're probably They're going to have to have a robust, fairly efficient way to measure them.

43:03And something like brand equity or awareness is notoriously expensive. I mean, just customer focus would be a start, wouldn't it? If you think about family-owned businesses, they tend to see their customers as the source of their wealth. They're not fixated with endlessly reporting to some stock market analysts or whatever. yeah and so it is kind of worrying to me that if you look at when you find british businesses that you really admire one of two things basically seems to be the case they're either family owned or they're founder led or both so you okay let's roll it out octopus energy ao two i know very well um dyson family owned jaguar land rover family and jcb family owned okay you know ocado kind of you know founder-led and so you you kind of go well what's the actual what are plc's actually doing for us as consumers because i'm fucked if i know have you read the founders mentality i'm always dropping this into conversation there's a brilliant podcast as well called founders is that it's not linked is it no no it's not okay it's um these two um bain guys looked at they they split the s &p 500 into founder-led companies and management-led companies and they saw this massive disparity and they basically worked down there were three things i think they that founded companies did frontline focus they spent time with the customer bias for action they made things happen and an owner's mentality they they acted like everyone in the business acts as if they owned it i mean it goes into more detail than that but there's probably also some element that the person in charge has spent some time in front of the mast you know i think it's not irrelevant that willie walsh used to be a pilot yeah and it's not irrelevant that the guy who runs marks and Spencer okay started his working life pushing trolleys around the car park well you you're talking about spec savers I so I met Mary Perkins so oh wow yeah I think I think he's about 80 I hopefully haven't aged her unnecessarily but I think I think she's that kind of age she still takes the bus and it's legendary so everyone talks about how she takes it has conversations everybody on the bus into work about about their glasses and what they think and this kind of thing so it's staying connected to your customer isn't it despite the fact that's a multi-billion see my rocket science either it's a guernsey bus so it's probably quite she she i did amusingly about taking the bus uh i was just talking to someone at the hotel in miami who went back to la for four days and didn't bother to hire car and she thought okay i'll go and try the bus and she said it was absolutely lovely you know i actually you know reconnected with community she said it was wonderful until day two when somebody boarded the bus and started shouting that elon musk had injected something into his penis and at that point you want to get off the bus and you want to disconnect from community i think but there we go um there you are by the way just for the purposes of legality i don't think elon had injected i think we ought to clarify that just a fact check the uh the random person on the bus community note you never know did not inject anything into this just just change it pick up something you said earlier about prediction actually um i i was fascinated i had this conversation near i hour recently on the podcast talking about how our prediction of something influences how he feels.

46:11There's an experiment done with monkeys, and they were serving them juice, and they looked at the dopamine that the monkey had when they actually drank the juice. And then what they worked out is that the dopamine started kicking in when the lights turned on, because they started to associate the light turning on with being served with juice. Now, so what happened was the dopamine started to kick in in anticipation of a reward. then they then then they tried turning the lights on and not serving the juice and then of course the dopamine went the other way they suddenly felt disappointment and what they concluded is that basically there's this thing called a reward prediction error which is if we're expecting something to be good or expecting something to be bad and it doesn't happen we're basically surprised and that is what creates the kind of dopamine so actually the book there's a great book on the neuroscience of this which actually is is written by a guy who's a pupil of carl friston who's there it's all about there's it's a weird neural theory about how the brain works and it gets into lost energy something or other anyway um but it's called the experience machine by andy clark and the idea is that most of what we perceive is actually driven by an expectation a prediction of what's going to happen exactly what effectively constitutes by the way it goes back to the 19th century this theory uh it's very similar to how your tv works so the reason jpegs work and mpegs work is that for every pixel there's an expectation value and the only data you need is to what extent a pixel differs from the expectation now if you didn't have that particular architecture your sky dish would have to be like jodrell bank or something okay you know you know in other words you know every photo in raw mode if you're if you're a digital photography person The brain doesn't work in raw mode because it's inefficient use of bandwidth.

47:56So what it does is it goes, you know, basically, OK, I'll ignore all of that because it's basically within expectation. And that thing is really weird. So I'll pay attention to it. But if you think what advertising is doing, advertising is creating predictions, isn't it? It's creating anticipation. So this is why I think people always complain about BA and never complain about Ryanair. Because in Ryanair, they've managed your expectations of experience so low that you expect it to be bad. whereas with BAs your expectations of it are going to be so high. The only reason I don't fly Ryanair is really interesting.

48:26My actual experience of flying Ryanair, unless it's a Friday afternoon flight to Prague, by the way, where you're the only sober person on the plane, I don't recommend that one. But all my other experiences of Ryanair have been excellent. The reason I don't fly Ryanair is for the 24 hours before I fly Ryanair, I'm terrified. I'm absolutely convinced that something will be found wrong, that my carry-on baggage is one millimetre oversize and they will immediately put me in a room and pistol whip me with Serbian personaries or something, right? And so I'm so frightened beforehand. That's why I don't fly Ryanair.

49:01Every time I've actually been on Ryanair, it's actually pretty good. Perfectly fine. They've managed your expectations so low. But no, you're absolutely right. It's kind of got me thinking about the element, the role of surprise in advertising. And actually, this blew me away. actually, I got System 1 to analyse the reasons people are surprised, positively and negative on the database. They looked at every single reason everyone's ever given in a survey, why they're surprised. And the thing that stood out beyond everything was positively, it always came down to the experience of the product relative to expectations and negatively was exactly the same thing.