Transcription
Well, it's a pretty toasty warm afternoon. All the fans of all the there there's fans in general. I think there's fans of Rory here. So, I mean, it's it's absolute pleasure to. There you go. There we go. Look, round of applause for. I was I was lucky enough at Clavio. We had an event last week with with Rory on stage and this kind man stayed behind for about nearly an hour an hour and a half to talk to a queue of people who just wanted to spend some time get more insights but it was themed as a fantastic presentation. So thank you very much.
>> Well, you you're doing a fantastic job I think as well yourself in creating a real community around what you do because it it can be a lonely job.
>> It yeah.
>> Extremely lonely job.
>> That's it. That's it. And I think so I think in terms of like what we're talking about now is like with with tech and the world from software and and consumer engagement it's you know and AI is is everywhere and everything we we turn and we move but there's a human component to it and how do we humanize it and then we kind of like this session and what we're talking about now is like it's that human algorithm and why relationships are still critical and how do you get the cut through um in that view and approach and I think that's something that we want to touch on right now and Rory I'd love your your views on these. I've got a few questions for you and I know you've got some fantastic insights on some of these. So, if I'm gonna ping some questions in your direction and give some great insights for this amazing audience. Gosh, it is hot up here. So, yes, it is.
>> Um, so with with Clavio, so for those of you who don't know, I'm sure you do, but again, marketing automation um platform um serving some great brands globally around the world and and how we do that through various channels, WhatsApp, email, SMS, and so on and so forth. But anyway, by the buy a lot of it's online shopping and online retail and we did a recent research report and as part of that it was showing that many of us customers and consumers which all of us are today um we're using many channels to buy. So on average 3/4 of us are using more than three channels to consume and then to buy and then 20% of us so this portion of the room here are using more than five channels in which to buy and consume. Like how do brands manage that knowing that it's quite fragmented and distant with how consumers are buying right now?
>> Well, I suppose that's one of the reasons you exist is precisely because you use addressable media. And it's worth noting that you can't fragment addressable media. I I always said when I worked in the old days of direct marketing, you can't fragment the letter box. Everybody only has one.
>> Sure.
>> Uh and the same applies, I think, electronically as well. Um uh but um And unfortunately, it's not going to get any easier because I think AI will create further new channels um and further new modes of uh interaction. Generally, the lesson is there are exceptions to this, but generally the lesson is the more channels through which you sell, the more you sell.
>> So, this isn't something as I said with a few exceptions, this isn't something you can unless your business is all about scarcity. Okay? Unless you have a unless you have a brand which is entirely predicated on the fact that it's difficult to get hold of. Uh generally brands won't have any choice but to become accessible in whatever channel the consumer chooses to use. And you know and by the way I've seen mistakes around this and that does not mean this is I think a fundamental question where marketing is right and finance is wrong. Finance sometimes has a mentality where what we should try and do is drive everybody through the most efficient channel.
>> Now my belief is the way brands grow is uh this this is very Byron Sharpie by selling to as many people with who as you can profitably sell to. Okay.
>> And I noticed I noticed recently that McDonald's was opening new branches of McDonald's where you could only order on a screen.
>> Right. And I can understand exactly the logic by which they've done this which is you can reduce manpower at the tail. I however think it's a mistake. I think you will sell less. And it's worth noting that a lot of people in procurement or finance can claim the credit for cost savings but they never get the blame for lost sales. And that's because costs are quantifiable and opportunity costs aren't. And there's a massive asymmetry there in the way we judge things. And I notice this more and more that everybody's trying to drive sales through a particular channel which is high efficiency. At some point you run counter to the basic bar and sharp principle that you need to be present and available in buying situations and that may be in a very efficient channel. There will always be very efficient customers who come online order don't return anything etc. But that will also include direct mail because and I think I think you have a partnership with programmatic direct mail companies for that very reason. There are certain people for whom you can sell perfectly profitably but only through that channel.
>> Yeah. And I mean, it's interesting you raised that point around the McDonald's example because a lot of us will see like how do you get to the quickest result? Take away the friction. Take away the friction. At some point experience and that magic for its full circle and what's your thoughts on that point?
>> So, just to be clear, I think the screens are great. I think they think they're great. The speed with which they rolled them out, it generally means you don't have hideous cues anymore. Many people in many cir situations will prefer to buy from a screen. It also increases the number of men who have a meal with two burgers in it because you don't have the social embarrassment of requesting that from someone who can tell you're a single customer. Okay.
>> all of those things are great, but I don't think that means you can walk back on other channels to the extent that some people do. And by the way, there's there's a philosophical issue here. A lot of technology arrives as an option and then ends up being imposed as an obligation. The parking app is that example. It used to be a really handy alternative to poem display. Now it's the only goddamn way you could pay, which meant that for the last seven years of his life, my father, you know, in his late 80s couldn't really park anywhere.
>> Sure.
>> You know, so we need to be we need to also realize there's also a moral dimension to this as well in terms of accessibility and availability particularly to people who are for example old, disabled or whatever it may be.
>> Yeah. Yes. So, it's almost like going to that it's a it's a it's a an evolution than a revolution changing different ways in that approach.
>> It's okay to do more than one thing. I know that it's anathema to the procurement mind and it's anathema to the finance mind. I made the argument I think at our conference, one of the things I love to test is giving consumers a choice of who delivers.
>> Yeah. Absolutely.
>> Okay. Because many consumers have a very strong preference for one delivery company over another. It also means if something doesn't turn up, they blame themselves or blame the delivery company. They don't blame the retail brass. Okay. Now, my hunch is that that decision is never taken by marketing. It's taken by someone in procurement who wants to drive everything through one particular distribution company.
>> Y I think I fundamentally think that's a mistake. I think it's one of the worst aspects of e-commerce. If I'm paying for delivery, I should [ __ ] well choose who delivers. Anybody else agree?
>> Yeah. Thank you. Okay, that's enough people. Okay, it's not everybody, but it's enough people to be a sizable proportion of the market.
>> And so you've mentioned, I mean, famously mentioned around marketing being fat tailed um and that approach moving forwards and that, you know, it's kind of like marketers can help to rather than change the world, but change how people see the world.
>> And and by the way, a lot of marketing effects of really big marketing ideas are enduring. Okay, if you create a positioning as we did for Dove at Ogulv, that's just one example. If you invent the Uber map, if you uh you know come up with a better UX for your website, those things can bring you literally millions of dollars of incremental revenue in perpetuity. And yet marketing only gets to claim the credit for the effect over the first quarter or the first financial year. Now, that's like having a pharmaceutical company where, you know, the the R&D division is only allowed to claim the value of a drug's first quarter sales.
>> Y Okay, this is bollocks. Okay, it's simply the wrong way to judge marketing. Um, and the extent to which that happens strikes me as fundamentally problematic. Okay, imagine a world in which you wrote a book, but you were only paid royalties on the sales in the first 6 months.
>> Exactly.
>> right now. I think the first the first print run of Harry Potter, the first Harry Potter book was 4,000 copies with 500 in hardback. Okay. Right. Okay.
>> The point is that you know that business works because you claim credit for the subsequent value of things you created in previous financial years.
>> Y in marketing, you're held responsible for every single unit of cost, but you can only claim credit to a small amount of the value you create. That's not a symmetrical way to judge the value of marketing. It's bollocks.
>> Yeah. I think it's in terms of getting that balance and that relationship internally with from a finance point of view and having that long-term gain of like what are we trying to achieve as a brand?
>> Y but also what >> either way I hope given you know Clavio's prominence. I hope your clientele are as enthusiastic as at testing top of the funnel stuff using addressable media.
>> Y as now I grant the fact that it's slower. It's less attributable and it's slower but you can use mail to create real loyalty, repeat purchase, extraordinary things like that. Um, one of the most underexplored areas in marketing I think is actually generosity if you are disproportionately generous to a customer. So you don't say you can have this free if you spend £9 or more. You say you can have a free pair of socks with anything you buy. Okay. Generally, that changes the nature of the relationship that the consumer has with the brand.
>> Yeah.
>> Okay.
>> It's not tested nearly enough, not because it doesn't work, but because it's slow to prove it.
>> Yeah.
>> But that doesn't mean you shouldn't do it.
>> Absolutely. I think it's almost like in in software in some spaces, you get the the free trial and something we've probably all done in some way. Great. Get you hooked, get used to it, and then guess what? You're paying for something. But then there's a balance where there's the value exchange of what you can achieve off the back of that, too. So I was talking to a man from Kaggi which is a pay it's actually a subscription search engine which is um should we say less uh in shitified than other search engines. In other words, if you search for a hotel, it's k agi um comma or I think or or if you want to try it out. Okay.
>> If you search for a hotel, it actually brings up the hotel,
>> not hotel comparison website or things like
>> now. One of the things I persuaded them to do uh and the reason I said to do it was that I said once you get big, the finance people will never let you do this. It has a subscription, a monthly subscription. If you don't use it in any given month, they refund you all your money.
>> Oh wow.
>> So, it's automatically an honest subscription. And my argument was we'll never be able to prove this works. And I I'll be honest with that because we don't have a parallel universe. Okay. However, my hunch is that the effect it has on willingness to try the service will outweigh the cost of occasionally refunding the people who are defecting. And if you've got a great business, do you really want to make your money out of customer inertia anyway?
>> Yeah. You know,
>> and I think going back to that, like we're in this world of like it's the it's algorithmic, it's AI, it's but then like I said, going back to that point, it's it's human. So, every time we take a message to market, we want it to connect with an audience. But sometimes we all like I'm I put my hand up. I'm guilty of it. You're you're too busy focused on well, we need to sell this product, but then you miss the gap of like how do I connect better with that person in that audience or in that segment as an example. So you have this fundamental asymmetry as I said which is if you do bottom of the funnel stuff and you do cost reduction you get instant quantifiable results. If you do great marketing you often get delayed and hard to prove results. Okay. And sometimes impossible to prove because I said there's no you know you can't always test every the famously John Roberts giving away the branded AO bears to anybody they deliver to who has kids. Okay. He said look I'll never be able to prove this. The reason I do it is that we deliver our own our own goods. Consequently, all our competitors can't do this and we can. So, we're simply taking advantage of a a game theory. We're taking advantage of, you know, an unusual privilege that we have. Will can I prove the value of the $1 million check I wrote to buy new bears? No. But I'm going to keep on doing it. Now, he's fortunately the CEO and the founder, so he can do that kind of stuff. I was saying actually at Nudgetock on Friday in this very same stage that one of the things that's worrying me about business is that a disproportionate number of really good brands come from family-owned companies.
>> Okay.
>> And what that suggests to me is there's something about the finance control and structure of public limited companies which makes it hard for them to do good marketing.
>> Right? So, if you looked at the four out of the five winners of the IPA advertising effectiveness awards in this year were Yorkshire Tea, familyowned.
>> Yeah.
>> Uh McCain, familyowned.
>> Um, let me get the other two. Specs, familyowned,
>> right?
>> And I can't remember the fourth one, but the fifth one was Guinness, which is okay. It's Dagio owned, but it's >> there's a family element. It's it's that element of the of a business. But I mean, four out of five IPA advertising effectiveness award winners being family-owned businesses is actually I think an you know in an empirical-minded person that's actually a warning that something about the way in which financial control has permeated the organization to an excessively granular extent is destroying our ability to build brands. I there was an online retailer from which I my wife buys more than I do. Luxe Leopard it's in Kent. Yep. And um at Christmas they just sent us a load of presents. Now if I'm being desperately cynical, I'm sure these were things they would have put on sale anyway. Okay. But they just send us a box of presents. Okay. Now the effect in terms of incremental the effectively the the effect in and relational value and therefore both frequency and loyalty and basket size going forward. I'm sure easily paid for itself. Okay.
>> Now, I'm not saying that everybody needs to test this. It's just weird how few people do. Generosity, by the way, is one of the most underexplored tools in marketing.
>> Yeah.
>> And the other one is, by the way, encouraging your customers to be generous to their friends is also underexplored.
>> It's and it's going back to the like those brands you mentioned. It's it's staying true to to the values of of what that is. where you kind of like you can inherit a brand and then you kind of lose sight of why we were here in the first place. I think that's true and I love the the gifting element and now it's a matter of like great we're now on stage talking about it and it amplifies it to an even further crowd and then how I'm always a crowd makes a crowd you know like what's everybody looking at and how does that build up and I think that's that's a kind of key component to like now we're talking about it and it just leverages that growth moving forwards and for the cost of quite a minimal cost and the great thing is with these experiments if they work as I said they work in perpetuity now what's unfair with the treatment of marketers, which is where the whole fat tail thing comes in, is if you have an exceptional result. Okay? If you're JK Rowling, you get to make an enormous amount of money.
>> Yep.
>> All of that money that's being made through good marketing ideas that people had in 2022 is now appearing on the balance sheet as revenue. It's not marketing driven revenue. In other words, it doesn't buy the marketing department any future indulgence to invest in future futures.
>> Yeah,
>> that's that's that's just the wrong kind of maths. Okay. And fundamentally, it it it is a ludicrous it is ludicrously dangerous to use what you might call thin tailed deterministic maths in a probabilistic fat tailed activity.
>> So, does it relate to then looking at the the view of almost like you got two speeds going? You got to play the long game, but also you got to play the short game, put food on the table at the same time. So, you got to do the the two in parallel. So, so this is something which various academics believe is a universal law in any dynamic living system.
>> Y
>> including by the way algorithm design and it's called the explore exploits trade-off.
>> Okay. My contention is that it's because of our western mindset. We see it as a trade-off because we automatically see doing two different things as being a compromise.
>> But actually the two different things can be complimentary. And so it's found in apologies for everybody who's heard this before. Bees have a waggle dance which is a very efficient way of harvesting known sources of pollen. Okay? And the bees do a dance and the other bees obey the dance and they go off in the direction to the distance that they've been instructed and they come back with even more pollen. Great idea. Very, very efficient. That's kind of performance marketing for bees. Okay.
>> Yep.
>> But they also a percentage of bees go off at random. And at first they thought this was an inefficiency. And then they realized that of course we live in a dynamic system. Pollen gets exhausted. New sources of pollen appear. Okay. There are sources of pollen that have always been there of which you're just unaware because nobody's ever traveled that far in that direction.
>> Yeah.
>> And they realized that without the exploratory bees, the exploitative bees get trapped in a local maximum and the the hive starves to death or the nest starves to death. Okay. Now, interestingly, accountants would look and procurement people would look very approvingly on the waggled bees because they are very easy to measure. It's a simple cost, you know, it's a simple double entry bookkeeping system of energy expended, energy recovered, and it's an efficiency optimization problem. Okay. But the other part of the bees activity is a discovery optimization problem where what you're trying to do is come back not with pollen but one journey in 150. You come back with something much more valuable than that which is information about a new source of pollen. Okay. Now marketing I think sits heavily in the vector of expiration. It should be treated as a branch of R&D and it should be financed accordingly. But instead and I blame the tech world to not not specific industry but I blame I I blame you know Meta and Google to an extent and the consulting firms who are deeply comfortable with efficiency optimization which they also find deeply lucrative for distorting marketing so that it's it's more about gaining a 3% efficiency improvement at the bottom of the funnel than it is about discovering something that will actually bring in literally ally billions, you know, in some cases the pumpkin spice latte. Okay. Billion dollar discovery.
>> Yeah.
>> Okay. Share a Coke with billiondoll marketing idea. Okay. Now, that's really the point of what you do. David Oglevie said that in his whole life, he'd only had five big ideas.
>> Now, what that meant was presumably in the 35 years he worked at Oglev, the finance department should be massively pissed off with him for 30 of those years. But the simple fact is it doesn't work like that. Okay? There is no particular proportionality between effort expended and value created. And so trying to make it look like a kind of, you know, iron or mining when really what you're doing is treasure hunting is actually a perversion of what marketing should be.
>> 100%.
>> And by the way, you know, I'm not I wasn't paid to say this. I'm not blowing smoke up your ass, but I think yours is a great experimental platform.
>> Because it's a two-way, you know, Jeff Bezos, it's a two-way door, right? Try it. Don't argue it to death. Don't say, "How can we do a costbenefit analysis?" Don't say, "We need evidence of this because there's no evidence for doing anything new." And that's because it's [ __ ] new, right? Okay? Nobody's done it before. So, by definition, there is no data to support doing it. Although there might be analogies which support doing it, or there might be parallel companies that support doing it. instead just go, it's probably cheaper to try this than it is to argue about it
>> because it's reversible. Now, Jeff Bezos made this wonderful distinction between decisions which were a two-way door and decisions which are a one-way door. And he said, "Most people treat all decisions as if they're a one-way door." Now, he said, "If you're building a 20 million square foot warehouse outside Nashville, right, you can't really reverse on that once you built the bastard, right? You know, that's a big commitment and you can argue it to death. By contrast, Amazon Prime, which by the way, everybody but Jeff hated when he first had the idea. Amazon Prime, not the movie part, but the free delivery, that's a two-way door. Test it. If your customers don't like it or you have a huge number of customers who buy so many small items that you lose money, stop doing it. Okay. And yet Jeff's point is Jeff's very interesting in that um of course he got married, didn't he, over the weekend, but um uh his decision science, I suppose. Yeah. Anyway, um well, I'll park that one. I'll park that one. Okay. Um but um the interesting thing there is that I mean, funny enough, Amazon Web Services, there wasn't a very good case made. And Jeff just said, "I don't understand why we're arguing about this. It's a two-way door. We've got to do all this stuff anyway. If we can sell it on to other people at a at a profit, whoopde-doo. Uh if we can't, we'll stop doing it." And actually, we've created this kind of financed paranoia around failure. But there's a huge difference between a small failure in pursuit of a massive gain.
>> Correct.
>> Okay. And a small gain in avoidance of you know sometimes small gains the alternative to a small gain was a massive gain you were too afraid to try.
>> I think that's the thing. Look, we could go on for hours and hours and hours always a pleasure.
>> No, I think I think your platform is welcome because if more people try more things inexpensively and I'm not paid to say this.
>> I wasn't paid to say this. No,
>> not at all. No, but bear in mind I grew up in direct marketing. So I I I can only like it.
>> It's another challenge.
>> because the joy of direct marketing was every great Britain bird who is the he was and is indeed the doen of direct marketing. Very very hard-headed businessman. But he said something which was surprised me. He said you don't do direct marketing to make money. We're getting music. Oh, sorry. We got to get into the music. Sorry. Okay. I wasn't looking at your direction.
>> You do this to learn.
>> So a big round of applause please for Rory.
>> Thank you very much indeed. Thank you.
>> Always a pleasure.