Transcription
[Applause] I'm going to start with a few pleas from a behavioral science afficionado to the retail community. One of them is, have you thought of putting premium sugar cubes next to expensive tea and coffee rather than in the baked goods aisle? Okay, no one's going to use sugar cubes for baking, but also if you put them next to expensive tea and coffee, you can charge more for them. Okay.
Uh, another conceptual favor. Maybe you could put the dishwasher [ __ ] next to the washing machine [ __ ] because in my own brain they're the same thing, right? It's stuff you buy that you put in a machine. I was recently in Sainsbury's Notford. I was wandering around the um washing machine aisle buying my wonderful washing machine things and I said, "Where's the dishwasher stuff?" They said, "It's over there in the corner by the pet food." Well, [ __ ] obviously, right?
Okay, few more tips. You can have extraordinary effects. Sell ice and lemons and limes next to the booze because by the time you get to the booze section of the supermarket, you can buy wine, which is ready to drink, but if you suddenly decide you'd rather buy spirits, then all the [ __ ] you need to mix the spirits is at the other end of the supermarket.
Final request, particularly from a bloke who occasionally goes to Boots, but relevant to everybody, put some shopping baskets in places other than the entrance to the store, because not everybody goes into a store intending to buy 15 things. They often go in intending to buy one, and by the time they suddenly realize there's a load of other stuff they need to buy, if they didn't take a basket when they went in, it's too late. And you see people in shops, particularly blossion to boots, could you just have a section just labeled [ __ ] that men might conceivably buy so we can do it all in one place. No man in the history of the world has ever used the word hair care. Just as a tip.
Okay. There are loads and loads of things you can do which absolutely transform the efficacy of the last mile shopping experience. One of the most important inventions undoubtedly in the whole history of retail was the shopping trolley. The second most important invention was probably the medium-sized shallow technically called Japanese shopping trolley. Why? Because when you had basket enormous trolley that looks as if you've got 10 kids, people tended to default to the basket. When you had three choices, the shallow shopping trolley was the one in the middle. And because of something we call the Goldilocks effect, there's an automatic human default when presented with three options to go for the one in the middle.
But I thought I'd just demonstrate here one great way to show the importance and value of effectively of retail advertising of getting your retail communication right is to show a really really bad example of it. And I've always made the point that if you don't believe in marketing, never forget that if you've got the best product in the world, but you fail to sell it, you still fail. I always wanted to do an experiment where you had a brilliant product and just marketed it really really badly just as a demonstrator and of course I could never get the budget to do the experiment and then I discovered two Australian podcasters actually as a joke did it for me. So if you could cue the film please you can use this film in any presentation where you want to justify the value of really really good retail advertising.
Peep shows. They have a pretty bad name. Normally associated with lewd content, but by definition, they don't have to be. So, in an attempt to change that, we took one of the world's biggest performing artist, kept all his clothes on, and set up an Ed Sheeran peep show. Would anyone dare to believe what was written outside, and come in to our very dodgy looking venue.
How you feeling?
>> I don't really know what's going on.
That was fair enough cuz we dressed Hamish as a fairly shady looking spruer in charge of getting customers.
>> I got your shearing. Who wants some shearing?
>> All right. I can hear Hish.
>> Do you think we'll get anyone?
>> I don't think we'll get anyone. It's going to be a brave soul.
>> I wouldn't I wouldn't come into if there was a dude with a beard and a hat saying like come in and see this.
>> Ed was right. This was going to be tough.
>> You want to peep at Ed Sheeran for two bucks?
>> Insurance. Do you want to peep at Ed Sheeran? Your loss. What do you reckon, big fella? Got Ed Sheeran in here. Beautiful ginger head, man. Sitting on a stool. What do you reckon? Two bucks. Got Ed Sheeran just sitting on a stool in there. You want him? Two bucks. Two bucks for a piece. Think about it. It's actually pretty good value.
>> Despite trying, we'd had a total lack of interest for over 50 minutes. It's been some time.
>> We should have got you a more comfy chair, I think.
>> Yeah, I'm all right. I'm all right. Hey big fell, I got all the shearing you need in there. Two bucks.
>> What is it?
>> All the ed shearing you need.
>> All the what?
>> Ed Sheeran.
>> Oh, I don't know what that is.
>> Is it a singer?
>> Yeah. Is that a yes? No.
>> I think one of the big problems is people think Ed Sheeran's a code word for a new drug.
>> How's it going? You guys like Ed Sheeran? Two bucks. Two bucks for a 30 secondond peep.
>> What? Like are they just saying no?
>> Yeah. Category.
>> Dirt sheet peep. Dirt sheet peep. Here we go. Two bucks. Reckon we're pricing it too high and that's why we're not getting people coming in.
>> I think $2 is pretty fair. Here we go, boys. It's a Friday. Get you a cheer and peep show. Two bucks sitting on a stool. Play you a song.
>> If someone actually does think it's a peep show and I quickly give you the go-ahad to take off all your clothes, you're willing to do that.
>> Uh, I've been drinking a lot of beer recently.
>> All right.
>> Yeah,
>> you're not Couple of months ago, maybe. But yeah, I'm uh I'm in shape. It's just the shape of a potato.
2 hours in and Hamish was getting more desperate and Sharon is literally sitting in there on the stage waiting for your $2.
>> We were feeling it as well.
>> But just when we thought this had been a giant waste of everyone's time,
>> you guys like it, Sharon?
>> I love it.
>> You love it, Sharon. Two bucks. Peep show. Just got him sitting on stage in there.
>> No, you're lying. Oh,
>> two bucks. It's going to cost you two bucks. You only get 30 seconds though. You want to come in?
>> I don't believe you.
>> Well, there's only one way to find out.
>> We might be on here. Here we go. Edge and peep show. He's there till midnight. All right, your choice.
>> No, she did the smart thing and walked away.
>> Listen, you if you guys want I'm just saying if you guys want to have a go. He's sitting there by himself. It'll probably get busy later on. Two bucks 30 seconds.
>> I mean, you both can come if you want. Just two bucks ahead.
>> Everything's above board. I can assure you.
>> Am I going to get anyone?
>> Uh, no. Absolutely not. Like I can't guarantee what Ed'll do, but uh yeah, let's pay you two bucks.
And after 2 hours and 23 minutes, including some final hesitation, we finally found people brave enough to take a peep.
>> Did you guys go to peep shows a lot or some game?
>> There you go, mate.
>> Keep your clothes on. Stay on the seat. Behave yourselves.
>> Just listen to the announcement. Have a good one.
>> Enjoy your peep.
>> Hello and welcome to the Peep Show. Your time will start in 5 seconds.
[Music]
>> Loving you till we're 17.
[Music] Baby, my heart can still fall. Heart of 23. And I'm thinking about how people fall in love. Your time is finished. Thank you very much for
>> All right, guys. There you go. Have fun.
>> There you go. Yeah, there you go.
>> Have a good one.
>> Take it easy.
It's a great way to demonstrate something which is often to show the opposite. Fundamentally, you can have something brilliant, but if people don't believe in it or it's not credible or there's no conviction, you'll still fail to sell it. You know, I do think, by the way, I'm going to make a sort of slightly extravagant claim in this talk, which is that a large amount of what is now called performance marketing is really a business of gaming metrics rather than the proper business of marketing. And one of my contentions is, you know, one of the things that really worries me is I think that the short-termist kind of very narrow metrics of advertising aren't really the proper metrics for building a brand. And I'd also argue that many many large PLC's are now too controlled by these short-term ROI metrics to be capable of doing the things that are necessary to building a brand over the long term.
And um so one of the questions is these are the five IPA gold award winners for advertising effectiveness in 2025. It's a bianual competition. It's incredibly rigorous with a whole heap of econometrics. Some of you may notice something about four of those five winners. Four out of five of them are family-owned companies. Guinness, by the way, is obviously owned by Dagio, but it's run as though it's a family-owned business, doesn't he? There's a Netflix documentary about it. But the Guinness strategy has been 15 years in the making. Okay, it's a long game, and they know how to play the long game. If you're Diagio or your PNG or your Unilver, I would argue that most conventional publicly owned companies are now so obsessed by short-term financial metrics and basically effectively the pursuit of effectively self-justification. Ask covering disguised as rigor that they're just not very good at brand building anymore because the financial situation, the metrics they've adopted are actually enimical to the the practice of building a brand.
And I keep noticing wherever I go in the world, whenever you come across a really interesting business. Any Texans here? Yeah, this is presumably bringing you immense delight. Whenever you come across a really interesting business, uh, um, HB would be another example. There you go. You see, um, whenever you come across a business that customers really, really love, there's a freakishly high possibility that it's a family-owned business, not a PLC. And I could just go John SC Johnson, Fortnham and Mason, Dyson enterprise rental car. Octopus Energy is founderrun rather than familyowned, but the same thing applies. And on the right, of course, for those who know T-Bay Services, which is an order of magnitude better than any other motorway service station, which and possibly because it's actually run by a family.
Now, I think we ought to look at this and I say I don't think this I don't think this is coincidental. I think there's something going on which is that when you're when you're a family-owned business, you're focused on your customers. You're not focused on your shareholders. Secondly, a family-owned business can think of life over multiple time scales, the shortterm and the long-term in parallel. They're not completely fixated on the next quarter. But there's another advantage I think which is if you're focused on your customers and this is a point made to me by the Bank of England economist uh Dan Davis. A customer focus means that you're rooted in the real world. A shareholder focus means you're basically focused on some artificially bad proxy metrics as a way to try and justify your own existence. And those metrics largely emerge from speurious economic theory rather than any genuine information about what's happening in the business world.
And one of the points I'd make about metrics is that really good brands have metrics which are all of their own. Now, if you're an individual, I hope that all of you in the room have slightly different metrics or definitions of success to the person sitting next to you. You know, some of you may have a dream of moving to Wales and selling jocks and some of you may want to race Porsches, right? We're all different. what gives us personality is that we don't absolutely pursue exactly the same ends unless you live in New York of course. Um, but um uh fundamentally some brand metrics should be unique to the brand because that's what makes your brand different from your competitor's brand and that's what makes your customer base different from your competitor's customer base.
And what's actually happened I think is that well I'm going to say this I think that Meta and Google and their running dog lackeyis in management consultancy have somehow persuaded the finance people who now control the marketing world to adopt metrics which not coincidentally are absolutely in the interests of those businesses. Now I'll come on to this in a little moment but this is a wonderful point which is you've probably heard the phrase what gets measured gets managed. You've probably heard it attributed to Peter Ducker who never said it and you've probably heard it said by someone in finance really approvingly. The origins of this phrase first of all Peter Ducker never said it. Secondly, it was intended as a criticism that this was a criticism of what's known as quantification bias, which is you think important what you happen to be able to measure rather than measuring what's really important. There's an Einstein quote which is not everything that counts can be counted and not everything that can be counted counts. But the point here was originally in a paper from dysfunctional consequences of performance measurements and uh written by a guy called I think AF Ridgeway and it's broadly speaking what it actually says is what gets measured gets managed even when it's pointless to measure and manage it and even if it harms the purpose of the organization to do so.
Now when you think about it, if you have everybody pursuing the same metrics, what you do is you effectively create uh redwater competition where everybody is pursuing exactly the same thing. Now if you sell advertising on an auction model, that's exactly what you want, isn't it? You want everybody competing for the same [ __ ] Okay? If you actually own a brand, your job should be as much to say, "How can we advertise in a completely different way to everybody else rather than saying for the purposes of lazy comparison, how can we pursue exactly the same ends as everybody else?"
And so this is this comes from an article written by Adel Bory, who's a fascinating marketing writer. Go and follow him online. He's actually from the most unlikely place. He lives in Benghazi and Libya and he's entirely self-taught, a former boxer, but he wrote this piece called The Greatest Trick Big Tech Ever Pulled on Marketing. And it starts by saying, "It's commercially naive and strategically negligent to assume that firms like Meta and Alphabet, whose core revenue models depend on monetizing behavioral data and industrial scale attention segmentation, would refrain from exerting implicit influence over marketing orthodoxy. It's massively in their interests for people to pursue those things which they sell as being uniquely important and exclusively important. Whereas something they don't yet sell like creativity which is probably a bigger determinant of your advertising success is relegated to the backroom to secondary importance simply because they can't claim a monopoly over it. Does that make sense?
And I came up with a phrase. The reason there's a picture of a cat is I read the essay and contacted Adele and said what I'd call this is technopplasmosis. Now, it's a bit weird, but there's a cat parasite called toxopplasmosis. And it wants in an evolutionary sense um it wants to infect another cat so that its DNA can spread. Now, cats don't bite other cats very often, so it's difficult to get direct cat-to- transmission. However, it uses an intermediate host, which you've guessed it is probably a mouse or a rat. Now, when a cat bites a mouse and the mouse becomes infected with toxopplasmosis, the parasite infects the brain chemistry of the mouse so that the mouse is no longer afraid of cats. In fact, it finds male cat urine curiously attractive. And it does this because the the parasite which shares none of the DNA of the mouse wants the mouse to get eaten. And I would argue that to some extent the metrics that have been laid down by companies that sell data, okay, have infected the brain chemistry of marketers to an extent which is to the advantage of the parasite, not to the advantage of the person who actually owns the brand or the business themselves. And I would argue that consulting firms which make a lot of money from these sort of digital transformation and techstack projects have probably connived in this very process. So there you go. That's a bit that's a bit depressing, isn't it?
But one consequence of technopplasmosis is well several things. One of which I think is that creativity this ad only appeared three times but it's one of the most famous advertisements of all time. The second thing I think that gets lost is context. As humans, we don't just absorb a message free of its context. Okay? If you're invited to two weddings on the same day and one of the invitations arrives by email and the other one arrives in a fancy envelope on a card with some embossing, okay, the information contained is exactly the same, but the message is fundamentally different. You'll probably go to the second wedding because there's a strong suspicion that anybody who invites you to a wedding by email is probably going to operate a cash bar. Let's be absolutely honest there, okay? We infer all kinds of things from messaging. And one of the things that makes a message really powerful is not just who sees it, but in which context it appears. And we're starting to see data that shows influencer marketing is making up for some of the deficiencies of a lot of digital advertising because it's a message delivered by a person. It's not just a contextfree weird thing floating on a page.
The other point I'd make is that there when we discovered digital advertising, we got obsessed with the things that digital advertising could do that old fashioned advertising couldn't do. But we forgot to account for the things that old-fashioned advertising did rather well that digital advertising couldn't do. And one of those is just contextuality of consumption. If you're reading a newspaper, I know none of you do that anymore, but what I'm saying is that when you saw a press ad, it was when you're in the mood to read things because by definition, you'd chosen to read a newspaper. And as as the great Howard Luck Gosage said, people don't read ads, they read what interests them and sometimes it's an ad. And you were in a reading mood and therefore you read an ad. And when you saw a TV commercial, you were in a watching a screen mood. And therefore, you were in the mood to absorb a message which was actually in video form. Now, an awful lot, we were just talking earlier about Alan Partridge turning up at a funeral with a Castral logo on his back. Some of you may remember this. An awful lot of digital advertising has no contextual sensitivity at all. You're trying to pay a parking fine and it's trying to sell you a hat. It's simply ridiculous.
So, one of the things I really, really like about retail advertising is it's a new form of advertising which can be as digital as you like and as targeted as you like, but at least it's sensitive and relevant to the moment in which it's consumed. You know, I'm walking into a shop. I'm entering a website. This is an entirely appropriate moment to display a Castro logo, if you like. And so, one of the things is we could never put a quantity on that contextual relevance. So we treated it as if it wasn't important, but I always thought it was hugely important. And one of the great lessons why creativity is so important is because how you display information depends on how we how we perceive it.
Just as a bit of a brag, I proposed what is now known as club card prices 20 years ago, not to Tesco, but to another retailer, and they didn't understand what I was talking about. But as a behavioral scientist, you know that a a discount that is seen as exclusive or earned is perceived as a higher value discount than one that's handed out willy-nilly. And when I said that, literally, this would have been in 1997, people looked at me as if I was batshit crazy. Okay, now this is a beautiful thing. I always show this in my presentations for two reasons. It illustrates my point, but also it could save somebody's life. On the inside, we're all familiar with that. It's a speedometer and it shows speed in the way that humans always present speed. Miles per hour, meters/s. Every single time you see a speed listed, it's distance per time. And two behavioral scientists, a wonderful experiment, just produce something which was the opposite. The blue numbers around the outside of what's called a paceometer. And it shows the information the other way around. Instead of um distance per time, it's time per distance. Exactly the same. Okay, so 60 m hour is exactly the same as doing 10 miles and 10 minutes because 60 m hour is a mile a minute. So 10 as the paceometer, 10 minutes per 10 miles is exactly the same as 60 m hour. And likewise, for example, if you're going at 10 m hour, it's obviously going to take you 60 minutes to go 10 miles. What you suddenly notice when you look at the paceometer is something that's completely non-obvious when you look at a speedometer, which is the faster you're going already, the less time you'll save by going 10 miles an hour faster still. It's described by a mathematician friend of mine as mathematically trivial, but completely counterintuitive. So, if you look at it, um, if you're going at 10 miles an hour and you accelerate to 20, you'll save 30 minutes every 10 miles you go. That, by the way, is why the bicycle was such an amazingly significant invention. It's not that a bicycle is fast compared to a car, but it's unbelievably fast compared to walking. Now, if you accelerate from 10 mph to 20 mph, you save 30 minutes. If you accelerate from 60 mph to 70 mph, you save, I think, a little under a minute. Now, what that means is if if you're going on the motorway and you're already going at 70 mph, actually accelerating to 80 is a bit of a mug's game. Your fuel consumption, your likelihood of an accident, your likelihood of a fatality, the severity of an accident, um, all of those things are getting worse and worse exponentially. The amount of time you're saving is basically flatlining. And you may have noticed that if you've got a satnav or GPS because you're driving along at 70, you go, "Shit, we're going to be 3 minutes late." So you well it much to your annoyance, even after you've been driving at 90 for about 5 minutes, your ETA either hasn't changed or has dropped by a meager minute.
But the reason I make that point about creativity is there is a fundamental truth about human perception, which is how you present information changes how people react to it. And if we all had paceometers in our car, we'd all drive totally differently. And if there had been a paceometer in the room, no one would have bothered making highspeed 2 that fast because you have a huge amount of extreme energy cost in getting a train to go 220 m hour. And on a journey between London and Manchester, the time you save is barely noticeable.
And so I'm a big fan of things that are great marketing ideas that nobody realizes are marketing. So this is the overground is one of the greatest marketing ideas of all time. As many people travel on the overground as use the Elizabeth line. The Elizabeth line cost20 billion pounds. The overground which was sort of refurbished and tarted up a bit cost200 million. A few miles of track were added. That was all. I actually used this before it was called the overground. It's called Silverlink Metro. The more tragic among you will remember it. I traveled from Stratford to Richmond on it because we had a client in Richmond. It was like tumbleeed. I was the only person on the train. What did they do? Well, they did improve things materially a bit, but they did something much clever. They pretended it was a tube line and they added it to the tube map and suddenly everybody wanted to use it. Uh I had a colleague of mine, his daughter said, "Dad, I want to live in Peekom because it's really handy for Shaw ditch." Which interestingly is a sentence which in the 1980s would have got you sectioned. Okay. And fundamentally the human brain can't look at two maps at once. If you try and make a journey where you've got a rail map and a tube map, it's mentally absolutely impossible. If you put everything on one map, suddenly people can make a decision and see exactly what they have to do. So this was, I would argue, 20 billion pounds worth of infrastructure created with pixels and ink and branding rather than with rails and and and locomotives and rolling stock.
And this was another brilliant idea. Okay, so I was staying in a hotel, you'll be pleased to hear, in Houston. I had a choice of room and you normally the choice of room is like, do you want a small one, a big one, a club suite, junior suite? And someone had realized that some rooms happened to be close to the pool and some rooms happened to be close to the gym. And so they designated these pool access rooms. And the ones that were close to the gym, which I was obviously less interested in, were designated as gym access rooms. And they charge 20 bucks extra. Now, whoever had that idea has made half a billion dollars for the hotel industry over the next 10 years because every hotel can steal that. You know, I like being close to the pool because you don't have to wander around a load of corridors in a towing robe looking like bloody Jeffrey Epstein, do you? You know, you can just go straight out of your room into the pool, right? And so there are marketing ideas literally which are just pure genius by the way, which also last forever.
I started as a direct marketer. I still consider myself a direct marketer. I love direct marketing because you can measure and test everything you do. Okay, that's the bit I like. The bummer about being a direct marketer is you're not allowed to do anything you can't measure. And secondly, you can only measure the extent to which your activity succeeds in achieving a predefined objective. Any other rollover positive externality effects that your direct marketing achieves are counted as zero. Famously, there was a when back in the 1980s, there was a bank loan campaign where they said, "The direct marketing isn't very effective. We've only got X% response rate." Then someone thought to check and they measured the number of people who'd received the mailing who went into their bank to discuss a loan and they discovered the response rate was more than double what they thought it was because they were only measuring success in a very predefined way. Now, if you went to a party cuz you wanted to meet someone and you ended up not meeting that person, but you went to the casino afterwards and won 30,000 quid, you wouldn't rate that as a [ __ ] evening, would you? That's a pretty good evening. But the way we often do marketing is we only define the payback of marketing to the extent that it obtains a very narrow objective that we've defined in advance. Most marketing works in multiple ways. It makes you more famous. It changes the weather. People have now heard of you. So, they come to you six months later. Whereas, if you hadn't done the marketing, that wouldn't have happened. You know, when you're a famous brand, when your chief executive rings somebody, they call back. Now, you can't measure the value of all those things, but that's not to say they're not valuable. And that's the reason why I'm not a direct marketer, which is I always thought that it was too narrow in its aspirations and too strict in its idea that the only things you're allowed to do were things you could immediately prove over the short term. And then the bastardized version of this, I would argue, is performance marketing to a large extent.
But let's be kind to the bottom of the funnel for the moment because the bottom of the funnel is great. You can achieve extraordinary effects at the bottom of the funnel. We've changed the choice architecture on a website and made a client sort of 15 million pounds of incremental revenue for the last 10 or 15 years. By the way, we got paid 25 grand for that just just to have a bit of an agency winge if you don't mind. Okay? But you can achieve extraordinary things. Secondly, the bottom of the funnel is the thing you should focus on first because if the bottom of the funnel isn't operating efficiently, if you're not converting, if no one's coming in to see Ed Sharon, there's no point in doing top of the funnel activity because all that will happen is it will just encounter the bottleneck you still have lower down. So, I'm totally in favor of optimizing bottom of the funnel conversion as the first thing you do. The problem I have is when people get fixated on it to the exclusion of absolutely anything else. It's a bit like there's no point in widening a road if there's a really badly phased set of traffic lights 300 yards further on because all you're doing is just moving a traffic jam to a different place. Get the traffic lights sorted. Then you can decide whether you need to widen the road. So I'm totally in favor of a really heavy bottom of the funnel focus. I just don't like it when it excludes either consideration of or evaluation of anything that doesn't happen at that point.
So final little question. I don't think you should get whatever you do as retail media media guys don't get stereotyped as bottom of the funnel performance marketing people. First thing I'm really excited about as a behavioral science guy. Okay. If all you retailers out there spent your trade budgets with 10% of the creativity with which you devote to your consumer marketing budgets, you'd see vastly greater uh differences in uptake. I'm a I'm not an advertising person. I don't care where the money comes from. What I always say when I talk to a package goods client is, can you just give us 1% of your trade marketing budget and see what we can do? Because the weird thing is there are two budgets which are designed to achieve in many ways the same end but they're spent with a completely different mindset. The one has lavish research placed on it. It has hundreds of people going off to [ __ ] think tanks in the middle of nowhere, you know, to do a workshop on the brand direction. And the trade marketing budget which is three times as big is someone writing a [ __ ] check. Okay, now I'm no okay I'm stereotyping you people. It's a bit unfair but you get my point, right? that the attention and thought about what is the creative opportunity of this money is already, you know, wellstudied in a in a consumer marketing budget, in a trade marketing budget. I it it's basically much more transactional. And, you know, that's where the opportunity lies, I would argue, is in putting some of the same creativity we find in the one into the other. But don't get stereotyped if you're if you're um a retail advertiser because actually yes you can be measured as bottom of the funnel activities and you should measure the effects because it's important but also remember a thing called goodart's law which is any metric that becomes a target loses its value as a metric because the act of pursuing it distorts the information it actually carries and that's goodart's law quote that in a meeting he was a bank of England an economist. It was originally said about the money supply, but people realize that's almost a universal law in quantification bias that people fixate uh over one thing and the very act of pursuing the metric that that's one of the great perversities with a lot of bonuses and incentives within corporations once you incentivize a particular behavior actually in in many cases it actually loses its value.
So the other view I'd have is actually you are also as well as being bottom of the funnel performance marketing you are also and can also be considered as contextsensitive brand advertising which is brand advertising that appears in a really relevant and sensible place. Don't be ashamed of saying that this is one of the best ideas. Anybody come across this thing tickle? I've written about it on LinkedIn. It's an online ad where the call to action is not click here, it's save to wallet and you can distribute a voucher or an incentive or value on or just a reminder or a ticket or anything you like. And you distribute it where the call to action is effectively add to my Google wallet or add to my Apple wallet rather than click here. They see extraordinary success because most advertising in that medium is good idea, wrong time. And this acknowledges that by saying, "I know you don't want to do this now, but why don't you save this for later?"
Direct mail, physical direct mail, still works really, really well because the average piece is kept for 5 or 6 days. It's looked at for 124 seconds and it's engaged with at a moment of the consumer's own choosing, not when the advertiser demands you look at something. It's simply contextsensitive as a medium because we get the mail. We don't have to open it as soon as it comes through the letter box. We put it in the toast rack and we wait for a suitable moment. This is doing the same thing I think with some uh performance advertising. I think it's an absolutely fantastic idea. And this is exactly what you might see. Okay, that's a Nars one. I think that's one of their clients add to Apple wallet. you're contextsensitive brand building. And never allow yourselves to lose the right to claim the value of that because that's exactly what you're doing and it has huge value and it's all the more valuable because even if the person isn't in market at the moment they walk into the store, you've still hit them at a really relevant moment.
I mentioned that thing about direct mail. A lot of advertising I always say is a lot of great advertising is kind of an answer to unasked questions. You know, it's a question the consumer hasn't necessarily asked out loud, but it's a question their unconscious needs an answer to. And I always say the most successful advertising doesn't just answer the question why this. It also answers the question why now? And that's why timing is so important. It's not just about why should I buy this thing. It's also about what makes me think I should buy this thing now. And so any advertising which appears in a place which is obviously in some ways an answer to that unasked question is going to be more effective.
So final thing before we go into the Q&A I mentioned the fact that you can change the choice architecture of a website at the bottom of the funnel and make 15 million pounds incremental revenue. This was because what airline websites did is if you asked for an economy ticket they just showed you economy prices. They didn't show you premium economy prices. And if you wanted premium economy prices, they just showed you premium economy prices. And we explained as good behavioral scientists that the human perception of price is relative. It's not absolute. Okay? To economists, price is a number. To consumers, price is a feeling. You know, does this feel expensive? That's why, by the way, I think clown is a brilliant idea because in my brain, three times £150 is a totally different price to 450 quid. I was going buying one of those Dyson air purifier things. I get onto the website, it's £450 quid. I go, now you're taking the piss. It's absolute bollocks. Three times £150. Oh, that's a good deal. Okay. Price is a feeling. And you can't buy a premium economy ticket unless you know what the economy ticket would have cost because you need to know what the premium is you're paying. It's not an absolute value exchange of that's worth it. It's a question of well, is the difference worth paying? And that was why this was so hugely successful. We made 25,000 quid out of that idea.
Oglev in Australia came up with the idea of putting names on Coke cans. It's probably made Coke about a billion dollars. Uh do you know what they made out of it? $350,000 Aussie dollars. That was the sum total the agency made. Okay. So you come up with a billion dollar idea, you get to buy a small flat in a [ __ ] part of Sydney. It's not really commensurate reward, is it? Right now, someone at Oglev in 1967 had the idea of putting memberins on the American Express card, which in terms of card member retention has, and this is someone at American Express speaking, been well well more than the billion dollars because nobody wants to leave because they think, well, if I ever rejoin, I'll be member since 25, which makes me look a bit of a loser. Well, if you're 59. Okay. Right. Occasionally, AMX sends out the wrong date by mistake. They send a load of people a member since 25 card when they've been a member since 94. More than 50% of people ring up and complain and demand that the original date is reinstated. What does that cost to do? [ __ ] zero. Okay. How much is it worth to them? About a billion quid.
And my criticism of marketing is that we're turning marketing into a bit like opencast mining where you know it's like grind in get a 1.27% ROI keep on going. The real value of marketing is marketing is fat tailed. 1 2 3% of what you do is just insanely valuable like that. But you don't get paid for it. Now this is now I thought okay this is an agency problem. Agencies have a [ __ ] business model which they undoubtedly do because they're charged by the hour even though the value we create has absolutely nothing to do with the time we spend. And the only reason we have to charge by the hour is so that procurement can beat us over the head. Okay, basically if you go to a client now and say, "We've got a really good idea." They say, "Can you quote us for three TV commercials and five press ads?" And we go, "It's a stupid question, but we can probably do something of that kind." But actually, we've looked at your business problem. You don't need to do three TV commercials and five press ads because we've got a better idea which will cost you a third of the money. And they go, "We're not interested. We want you to quote for the same thing." And he said, "But we've had a better idea." And the procurement people go, "Yeah, but we're not interested in better ideas. We just need to be able to compare you with everybody else on a like forlike comparison. So anything innovative is inherently unattractive to procurement because it removes their ability to make fatuous comparisons between equivalent bidders. Okay. If the first iPhone had been bought by procurement, they would have refused to buy it because the battery life was so bad. It's a really terrible problem and nobody talks about it because we've got a whole cult in business of people who can claim the credit for reduction in cost but never get the blame for lost opportunities. So it's a completely asymmetric way of measuring a business activity.
Any fans of Roger L. Martin here as he said any idiot can cut costs. It's not difficult to do. The trick is to do it in a way where your customers don't notice. And I would argue one of the reasons I mentioned those family-owned businesses at the beginning is that with PLC's, customers are increasingly noticing. They're increasingly finding dealing with large organizations fundamentally psychopathic. You know, the entire focus is around efficiency, not the quality of a long-term relationship. Anyway, I suddenly realized this isn't just an agency problem. It's a marketing problem. All of you who are marketers suffer the same problem, which is you're held accountable for every single penny of costs that you incur, but you can't carry over the value of anything you did 3 months ago, 6 months ago, 12 months ago into the positive side of the balance sheet. So that's like going to JK Rowling and saying, "Yeah, we'll give you royalties on the Harry Potter books, but only on the first edition." If you have a system of ROI over marketing where every single penny you spend is immediately your responsibility and set in the debit pile, but a brilliant idea you had which is still paying off 5 years later isn't allowed to be put in the credit pile, then you're being [ __ ] over basically, aren't you? You know, that is literally like saying to JK Rowling, "Yeah, yeah, yeah, I love it." By the way, there were I think the first edition, which is now worth about 20 grand, I think there were 5,000 printed. I may be wrong. Okay, you the marketing is judged in a completely asymmetric way where long-term value it creates is discounted whereas all the short-term cost. That's like running like a pharmaceutical research laboratory where you go, did you invent a blockbuster drug today? No, you're all fired. It's [ __ ] right? And yet because accountants accountants basically are [ __ ] mathematicians, right? You know, all they do is add and multiply and occasionally use a percentage. And yet because they use numbers we account them a kind of veneration which they fundamentally don't deserve. This is the guy Dan Davis quotes the guy who founded Molten Bicycles who said if you understand a business you can learn quite a lot from a balance sheet. If you look at a balance sheet without understanding the business you will come to conclusions which are absolutely stupid because you know what's happening on the on the Excel spreadsheet but you don't really know the why of what's going on.
So anyway, sorry about that rant. Um, but the thing is efficiency. These people love certainty. They love predictability. They hate surprises to a point where they eradicate things which might create positive surprises as well as negative surprises. You don't generally find entrepreneurs in a chess club, do you? You find them in a casino, right? You go to a casino and they're packed with entrepreneurs. And that's because effectively innovation and marketing are fat tailed things. If you're a poker player, I'm not by the way, I'm not a gambler, but if you're a poker player, you will realize that every time you go home, three or four hands determine 90% of whether it was a good evening or a bad evening. Marketing is like that. You do things not because they're right, but because they have a chance of you getting lucky, right? They have a high positive upside potential. And yet, if you're run by finance, everything is basically done to minimize variance. And the hidden cost of that is not only does anything bad happen and not only do you waste any money, you don't get lucky either. Anyway, that's my rant.
Anyway, some of your metrics should be entirely your own. Just as in your personal life, you should actually think what's really important to me that makes me different from everybody else. I think a really healthy brand, luxury goods brands know this to an extraordinary extent and they're the people who really make the money out of branding. Okay, they will actually have metrics and whole kind of creative philosophies which are entirely at variance with their direct competitors. What we've suffered from is technopplasmosis where we've been encouraged to pursue exactly the same things as everybody else, not to the betterment of our own brands, but to the betterment of the people who are selling attention as a monopoly good. Sorry to depress you. I hope that's been valuable. Lee, welcome back on stage and we'll do a few Q&As. Thank you very much, Lee. A couple of things that stood out to me. The edge shear imput would you have gone in?
>> Uh no probably not because it fundamentally the trust was lacking. you see the implausibility of the thing and and that experiment where you can literally have brilliant products but if you fail to present them in the right way uh you you fundamentally fail and you know that that's why I always show the pesometer because you suddenly realize that how we react to information what we see entirely depends on how it's presented and by the way there is far too little creative experimentation in all fields of marketing at the moment largely because the media people having been unfairly suppressed for too long. I mean, if you're in an ad agency in the 1980s, okay, the media people got two slides at the end of the presentation. Unfortunately, as
Soon as the boot was on the other foot, there was a completely absurd reckoning where everything went to the other extreme, where suddenly the entire discussion became about where the ad appears, to a point where nobody was actually bothered with what was in the ad. Okay? And I'm, I'm only half joking there, you know? I mean, it's very rare that I see online. I'm a copywriter, I've been a copywriter for 25 years. About once every two weeks, maybe three, I see something online where I go, "Someone's put a bit of love and thought into that. It hasn't just been written by a typist or by AI. Someone's actually put some real empathy or feeling into that line." And it's, it's weird because it makes me feel something.
Can we dig a bit more into that? So, if you think about, uh, the biggest sort of misunderstanding that consumers make when making a purchase decision in retail, what are the things that that stand out? Obviously, we've looked at that Ed Sheeran example, and that's obviously quite unique to that environment. But if we flip that to a retail environment, what are the things that are going through consumers' minds, and what are the things that are perhaps blocking them from making a choice?
One of the things that's important is that behavior has changed over time, in that the shopping list hasn't died out, but increasingly people make decisions in store. There's loads of evidence. Design companies, in particular, package design companies have discovered the extraordinary potency of decisions taken at the last moment. Uh, and, and of course, according to context, that's the other thing. What your competitors are doing is almost just as important as what you're doing in many cases, because, you know, if you're 20% off and the competitor's 30% off, effectively you could discount your promotion completely. But without understanding the wider context.
Yeah. And you're looking at the wrong thing. Certainly from the, uh, the research and the conversations that we have in the session yesterday with Sarah from e-marketer, talking about, despite either US, UK, somewhere between still 70, 80% of people are still going into that shop and they're still purchasing in live format.
Yeah. And, and I mean, it, it obviously varies by category a bit. If you're buying weird electronic items, you know, physical retail is going to take a bit of a hit perhaps. But there are all kinds of reasons for that, including, by the way, I think a really important insight into consumer behavior. And this is the best thing I ever learned from a futurologist, which is there aren't trends, there are vectors. And what she meant by that is there's always a counter-trend. Now, the counter-trend I absolutely love because it's in a sense absurd, is the farmers market. Okay? Because the farmers market is a massively inefficient way of shopping, where you have to make six transactions rather than just one. And weirdly, you pay a premium for buying direct from the supplier. Okay? It defies all economic logic. But the way to understand the farmers market, it's like the yin shadow of Tesco Metro. Do you see what I mean? And then actually, just as we will move our behavior in one direction, we tend to find there's a countervailing trend where we also like the opposite. And so I think, you know, one of the dangerous mistakes you can make with metrics is metrics tend to work on the basis of, as you move along this line, it gets better and better. But actually, one of the things I've often quoted on as saying is the opposite of a good idea can be another good idea. You know, there are two great ways to check into a hotel. Either you walk straight into your room, up to the floor, and your phone unlocks the hotel room. That'll be cool. Or someone takes you up to your room and makes you a cup of tea, which once happened to me. That's also cool. The middle is probably not the place to be.
So, if I bring it back into, I suppose, retail and brands specifically, it is a complex retail ecosystem. I think we taught that, uh, uh, through your session as well. If you're a brand, how do you know what changes to make? We know small tweaks can make a big difference. The Coke example that you demonstrated is a, is a good testament to that. And is there a way, is there a theory, is there a system to help uncover what those opportunities look like?
You've got to make the decision for yourself, because what makes a brand is, is very largely in part, its differentiation.
Sure.
Uh, you know, it may be not necessarily selling to different people, but it, it might have a different sort of user imagery or a different implied target audience, for instance. The way in which it's will be different. But there are some really important things, I think. One of which is, I think, you know, we shouldn't ever forget the work of people like Byron Sharp and so on, which is that the, the whole idea of the repertoire and double jeopardy, that the bigger brand is in the repertoire of more people, and within that repertoire, it gets bought more frequently.
Yeah.
That there's a winner, you know, there is a kind of disproportionate, not quite winner takes all effect, but there's a disproportionate advantage simply for greater mental and physical availability.
Okay.
And by the way, that's a relevant point, because I think in the idea of making advertising efficient, we've forgotten the fact that fame is actually, in a weird way, a product of advertising inefficiency. So, you're not really famous if somebody's heard of you. You're famous if someone assumes that everybody else has heard of you, you know, and there are all these kind of second-order effects. Yeah. But one of the things that always bothers me is simply being famous for all kinds of complicated reasons, which are probably hard to disentangle, is incredibly valuable. But it's hard to measure the link between one particular piece of fame-building activity and the consequence. And just because it's hard to measure doesn't mean it's not valuable. And this is the thing: should we optimize ourselves around value creation, or should we optimize it around proof?
Sure.
I think because of technopplasmosis, people have basically created this belief that if you can't prove it, it doesn't exist. But I mean, there's a wonderful phrase by a neuroscientist called Matt Johnson, who investigated brands. He's not a marketing guy at all. And his conclusion was, and I think it's a beautiful phrase. He said, "Having a great brand means you get to play the game of capitalism on easy mode." And everything you do, you know, as I said, when your chief executive phones someone up, people call back. You know, people can buy you as a present because other people know what the brand means. There are hundreds and hundreds of benefits to just being more widely known. Not least the fact that you discover customers you never would have found for yourself, because people come to you rather than you having to go to them. If you're non-famous, you have to find all your opportunities for yourself. If you're famous, people come to you with opportunities that you never would have conceived of yourself. And all of these things are hugely complicated to measure. It's a massively complex system. But just because you can't isolate the cause doesn't mean it's not valuable. And I think this was my great complaint about direct marketing. I loved it because you could measure and test. But it came with the opposite problem, which is if you couldn't measure and test it, you weren't allowed to do it. And I think that's a mistake.
Hi. Um, great presentation, as always, Rory. Paul from Cody. Um, my question is just challenging on that idea of save for later. Like, when's the last time you bought anything from your Amazon wish list? For me, it's like, almost never.
Almost never.
Almost never, because I was in a moment, then the timing was right. Now, when I'm looking at it later, it's not right. So, do you not see it as a failure of, you've got the kind of timing wrong, or maybe the process of making the purchase is wrong, that we could learn from?
The value of this is to advertisers who can't sell direct realistically, because you're not going to build an entire shopping occasion online around a shampoo offer. I mean, you might, but it, you know what I mean? You're not going to go, "Okay, so shampoo is 50% off. Therefore, I will do a whole £100, uh, card shop, uh, in order to capture this value." Whereas you might pop something on your phone and go, "Next time I'm in Tesco, Sainsbury's, I'll just click on this thing and reawaken the voucher." Paper vouchers are still, I mean, physical direct mail, by the way, is still amazingly successful. One of our clients described it as "annoyingly effective," which is a very strange word to use when you think about it. But the reason I think they find it annoying that direct mail's effective is that they have to keep justifying its use. Nobody ever questions digital spend. You know, it's one of those things. It's a bit like buying a house. People automatically, they never, when they're spending money on something, on moving something from analog to digital, they never consider the opportunity cost. You know, they just go, "Well, it's digital, so it's better." And I think that's been, you know, a fundamental mistake. That actually, and direct mail, of course, looks like, it's obviously in terms of cost per eyeball, it's massively expensive, but it has certain unique attributes which still make it really, really effective. Um, and one of, by the way, not least, and there's a lot of evidence for this, among younger consumers who hardly get any mail and don't remember the days when you got a lot of direct mail, for whom receiving a letter is unbelievably exciting and significant. So, I mean, there are also, you know, wonderful things like programmatic direct mail that's now possible, because there are a lot of people who are impossible to reach through email, for instance. But there are lots of reasons, and I think I think we have made a mistake, which is, let's look at all the amazing things you can do in advertising now you do it digitally. Perfectly sensible question to ask, by the way, perfectly sensible focus. But nobody actually asked the corresponding question, "Well, what is this not doing very well that the old stuff was quite good at?" So it was a kind of sort of a bit of a lemming-like rush in one direction, you know, where I think a lot of babies got thrown out with a lot of bathwater, to be honest.
Yeah. Hi Rory. Uh, it's Dean from the Co-op. I get the impression most people would agree with everything you've said, but when we all go back to our day jobs, there'll be a little bit of, "If you can't beat them, join them." So, how do you think we kill the parasite?
It's very difficult to do without a fundamental cultural shift in how people think of a business and what it's for. Now, last week I was at a thing called the Mont Pelerin Society, which is a kind of, uh, classically liberal Austrian school economic conference. And it's very interesting, because most people, since the shareholder value movement took hold, most people think the purpose of a business is to make a profit. None of you in the room even question that. Now, the Austrian school of economics, interestingly, saw business not as an efficiency competition. They saw the purpose of a business as being a discovery mechanism. So that over the longer term, the value of a business lies in its continual exploration of adjacent possibilities for creating value, during which time it's necessary for you to make a profit. And the bigger the profit, the better. But that a long-term business philosophy is really about continual discovery and exploration. It's much more Darwinian. Their model of a business is much more akin to kind of ecology and understanding an ecosystem rather than fixating on a single metric. And what I think we might say confidently is, okay, the book you need to read is called "Obliquity" by John Kay. And John Kay argues that a lot of things, profit is best pursued obliquely. By which he means, he said, the businesses that focus exclusively on short-term profit over the medium to long term are actually less profitable than those businesses which have some other objective and see profit as a byproduct of the pursuit of that objective. So there is a, what is astonishing to me, because, you know, politically I'm kind of right of center in the advertising industry, but I always find it slightly weird the extent to which this idea that pursuing very short-term profitability is necessarily the only function of being in business. And I think in the short term, it obviously makes complete sense. But what it does is it basically creates a lot of cost-cutting activity, the hidden cost of which is destroying a lot of opportunity. So, one of the first characteristics you'll see is that marketing spend gets cut and R&D spend gets cut, because in the short term, those things look like an inefficiency. Looked at more widely, they're the reason the business exists. That Peter Drucker actually said, since the purpose of a business is to find and keep a customer, the only valuable activities in business are marketing and innovation. Everything else is a cost. Now, not coincidentally, Peter Drucker was Austrian. His dad was best mates with Joseph Schumpeter, the Austrian school economist. And in the Austrian school of economics, they fundamentally looked at the purpose of business as being exploration and adaptation. And for whatever reason, unsurprisingly, the people in finance who now effectively have right of veto over any, is there anybody in the room, by the way, serious question, who can make a decision on their own about anything? I mean, it's a worthwhile question, isn't it? Okay. So, is there anybody who you don't have to talk to HR, you don't have to talk to finance? You could. Now, funny enough, the last time I did that, there was one person who put up their hand, and they were from P&G, which of course has a completely different structure where, if I'm right, the brand manager has P&L responsibility. Is that right? Okay. Now, what's weird is P&G are obviously really [ __ ] successful doing this, right?
Technical term.
Oh, sorry. Sorry. Okay. But no one's copied it. Has anyone else noticed this? The, a very, very successful company, which has had literally a century in the sort of, it's really rare for companies to be that successful for that long, and they do things differently, but nobody copies it. But nobody can make a decision, and finance have the right of veto over everything. And anything that involves discretionary expenditure on anything gets cut. So the classic example of this will be how you see your call center. Okay. And most people in a business literally look at a call center as a cost to be minimized. They're fantasizing about the day you can automate it. Talk to someone who's working with James Dyson, and he had a call center presentation, which was all the usual metrics about wait time and efficiency and call handling, minimum call handling time. And James Dyson just said, "This is all rubbish. We should treat it as an honor and a privilege when one of our customers tries to get in touch with us, and we should respond to them accordingly." Now, my dad, who is half Scottish, and uh, uh, no, no, I'm getting into stereotyping here. My dad was quite stingy. Okay. All right. Straight to the punch.
Weirdly, he had, I'm half Scottish. He had three Dysons, one on each floor of the house, at sort of £700 each. And I could never really understand this. But early in the days of owning his first Dyson, he'd phoned up because a part was faulty, and they sent out a replacement part for free the next day, even though the thing was out of warranty. There are these moments like, which some people call brand quakes. A human interaction has an extraordinary effect on people's brand perception, far more than lots and lots of money spent on kind of impersonal communication. And yet, for most of these companies, the call center is not treated as a business and relationship-growing opportunity. It's treated as a necessary evil. One guy I met from a consulting firm said that there was a single thing that distinguished companies that had a great customer service culture from companies that didn't. One thing. And he said it was more or less infallible. It was whether the call center staff were allowed to call out. In other words, you could check whether a problem had been solved. You could follow up. If someone got their call cut off, they'd ring the person back on their mobile. If the call center people could call out, generally everything else was being pursued with exactly the right frame of mind towards seeing it as an investment in the value of a relationship, not the minimization of the cost of a transaction. The last five years of my working life will probably be spent creating a kind of RSPCA for call centers. Okay? Defending the absolute importance of this in terms of customer confidence and relationship building against people who go, "It's expensive." Fundamentally.
Um, you mentioned in 1996, you're on a stage. In 1996, I was 13 years old and, uh, in high school, and I wouldn't have thought I'd be on the same stage as you.
That was a presentation where I suggested Clubcard prices, and no one would listen. So I thought I'd just, by the way, by the way, I don't want to look like I'm Mr. [ __ ] clever all the time. Because also about 13 years ago, someone came to me and said they had this great idea for a drink which they thought would be really popular, which involved fermented tea, uh, which was called kombucha. And I told them it was about the stupidest idea I'd ever heard. So, yeah, we're not wrong about a lot.
A big, massive thank you and round of applause for Rory.