Episode 69: WPP's CTO spends over $300 million per year on AI
Summary
TLDRIn this episode of the Architecture Podcast, AR Paparo engages in a deep dive with Eric Franchi and Stefan Pretorius, CTO of WPP, discussing the impact of AI on the advertising industry. They explore Innovid's Harmony initiative for open TV advertising, the evolution of adtech, and the substantial investments WPP is making in AI. The conversation covers AI's role in creative processes, media planning, and knowledge management, highlighting the practical applications and challenges of integrating AI into agency workflows.
Takeaways
- 🌐 Innovid's Harmony initiative aims to open up TV advertising and address challenges by optimizing at the infrastructure level, focusing on efficiency, transparency, ROI, carbon emissions reduction, and viewer experience enhancement.
- 📝 The podcast features an interview with Equative, discussing their investment in SSP, DSP, and curation, highlighting the company's growth and transformation in the adtech industry.
- 🤝 AR Paparo and Stefan Pretorius have known each other since the dot-com era, discussing their history in digital advertising, lead generation, and the evolution of their careers in the industry.
- 💡 Stefan shares his role as CTO of WPP, emphasizing the importance of centralized technology strategies and the integration of AI in content perception, labeling, and recommendation systems.
- 🚀 WPP invests heavily in AI, with $300 million annually, reflecting a significant commitment to transformational technology and its potential impact on the marketing services industry.
- 🎨 AI's role in creative processes is explored, discussing the shift from physical to virtual production, and the use of generative AI and virtual production technologies to create content efficiently.
- 📊 Media planning is identified as an area ripe for AI application, with a focus on finding more accurate theories of relevance and indicators through occasion-based targeting and contextual signals.
- 🤖 Knowledge management in large corporations is highlighted as a significant opportunity for AI, with the potential to build digital twins of organizations and enhance decision-making through reinforcement learning.
- 📉 Google's delay of cookie deprecation is discussed, noting the impact on industry certainty and the move towards alternative solutions like clean rooms and federated learning.
- 🛑 The potential implications of the TikTok ban in the US are considered, including the redistribution of ad revenue and the importance of the platform for media buyers and client engagement.
- 💸 Meta's financial report and stock market reaction are analyzed, reflecting on the company's investment in AI and the potential for open-source AI to create new monetization opportunities.
Q & A
What is Innovid's Harmony initiative about?
-Innovid's Harmony initiative is an industrywide effort to address the major challenges in Connected TV (CTV) advertising by optimizing at the infrastructure level. It aims to improve efficiency, enhance transparency, increase ROI, reduce carbon emissions, and provide better viewing experiences.
What was the purpose of the Blink software platform mentioned in the podcast?
-The Blink software platform was designed to allow users to upload and save their bookmarks across different browsers and computers. However, the business model shifted towards spam as the primary monetization strategy involved sending numerous promotional emails to users.
How does WPP's CTO view the role of AI in transforming the advertising industry?
-WPP's CTO sees AI as a transformative technology that is fundamentally changing the marketing services industry. He emphasizes the importance of building an integrated platform and strategy that can service the current business while transitioning into the future business landscape influenced by AI.
What is the significance of the 'four core brains of marketing' concept introduced by WPP's CTO?
-The 'four core brains of marketing' concept represents AI services that act as AI representations of a brand, audience, channel, and performance. These AI models are designed to provide insights and recommendations for marketing strategies, enhancing decision-making in the advertising process.
How does generative AI impact the creative process in advertising according to the podcast?
-Generative AI is having a significant impact on the creative process by providing tools for ideation, testing ideas, and offering different perspectives from various audience groups or personas. It also aids in the production process, enabling the creation of content through virtual production technologies and 3D rendering, rather than physical production.
What is the current state of AI in media planning as discussed in the podcast?
-AI in media planning is focused on developing more accurate theories of relevance and indicators of relevance. It emphasizes the importance of context, such as time, location, and situation, over demographic details in understanding consumer behavior and preferences.
How does WPP plan to leverage AI for knowledge management within the organization?
-WPP aims to build a digital twin of the organization through the adoption of reinforcement learning, where interactions with software contribute to making the AI smarter over time. This approach is expected to improve knowledge sharing and decision-making across the organization.
What is the potential impact on the advertising industry if TikTok faces a ban in the US?
-If TikTok faces a ban in the US, it could lead to a significant shift in advertising revenue, with potential gains for platforms like Instagram, YouTube Shorts, and Snapchat. The loss of TikTok could also reduce diversity and competition in the digital advertising space.
What was the reaction to Meta's announcement about doubling down on AI investments?
-Meta's announcement to double down on AI investments was met with skepticism from investors, leading to a significant drop in the company's stock price. Concerns were raised about the potential overinvestment in AI similar to past concerns about investments in VR and the metaverse.
What is the potential buyer for TikTok in the US if it is forced to sell its operations?
-Potential buyers for TikTok in the US could include companies like Walmart or Oracle, although both may face regulatory hurdles. Private equity firms or even tech companies like Microsoft or Apple could also be potential suitors, although the high price tag may limit the pool of interested buyers.
How does the podcast host view the future of AI in the context of the advertising industry?
-The podcast host believes that while AI has the potential to automate many tasks in the advertising industry, it is essential to focus on building software that augments human creativity and intelligence rather than replacing it. He emphasizes the choice between building 'black boxes' that produce results without understanding or fostering a renaissance of human ingenuity supported by AI.
Outlines
🎙️ Podcast Introduction and Innovid Harmony Initiative
The podcast begins with an introduction to the Harmony initiative by Innovid, which aims to make TV advertising more open and efficient. The host, AR Paparo, welcomes guests Eric Franchi and Stefan Pretorius, the CTO of WPP. They discuss the early days of their careers in the adtech industry, including their involvement with a digital advertising company and the evolution of their work from lead generation to adtech. The conversation also touches on the challenges and innovations in the CTV advertising space.
🛠️ WPP's Centralized Technology Strategy and AI Investment
This paragraph delves into Stefan Pretorius's role as CTO of WPP and the company's centralized technology strategy. It highlights WPP's investment in AI, with an annual spend of $318 million, which is significantly more than other holding companies. The discussion covers the importance of building flexible platforms that can adapt to the evolving needs of clients and the industry, as well as the challenges of creating original technology in-house versus licensing existing solutions.
🎨 AI's Impact on Creative and Media Planning in Advertising
The conversation shifts to the impact of AI on creative processes and media planning within WPP. It explores the use of generative AI and virtual production technologies to create content more efficiently, as well as the potential of AI to enhance ideation and concept development. The paragraph also discusses the application of AI in media planning, focusing on the importance of context and relevance in creating effective advertising strategies.
📊 AI's Role in Media Buying and the Future of Advertising
This section continues the discussion on AI's role in media buying, emphasizing the importance of understanding audience context to deliver relevant advertising. It also touches on the potential for AI to improve knowledge management within large corporations like WPP, suggesting that AI can help in building a 'digital twin' of an organization through reinforcement learning, thereby enhancing decision-making and strategy development.
🤖 The Debate Over AI's Potential to Disrupt Marketing and Advertising
The speakers engage in a debate about the potential of AI to disrupt the marketing and advertising industry. They discuss the possibility of AI replacing human strategists and creative professionals, as suggested by Sam Altman, CEO of OpenAI. While acknowledging the transformative potential of AI, they also express concerns about the loss of human creativity and ingenuity that could result from over-reliance on AI. The conversation highlights the need for a balanced approach that augments human capabilities rather than replacing them.
🚫 Google Delays Cookie Deprecation and TikTok's US Future
The paragraph discusses recent industry news, starting with Google's decision to delay the deprecation of third-party cookies for the third time. It also covers the potential implications for the ad industry if cookies are eventually phased out. Additionally, the conversation addresses the political and regulatory challenges facing TikTok in the US, including a bill signed by President Biden that could lead to a ban if the company does not comply with certain conditions.
📉 Meta's Earnings Report and Market Reaction
The speakers analyze Meta's earnings report, which showed positive results but was met with a significant drop in stock value. They discuss the market's reaction to Meta's continued investment in AI and the potential long-term benefits of these investments. The conversation also touches on the contrasting fortunes of Meta and Tesla, highlighting the unpredictability of market responses to corporate strategy and performance.
🌐 Palantir's Entry into Advertising and Data Analytics
The final paragraph covers Palantir's move into the advertising space, offering data analytics solutions for inventory planning and campaign optimization. While the details of Palantir's offerings are light, the conversation explores the potential impact of such a move on the industry. The speakers also share their perspectives on the suitability of Palantir's solutions for the fast-paced, innovative advertising sector.
Mindmap
Keywords
💡Harmony initiative
💡CTV advertising
💡ROI
💡carbon emissions
💡AI
💡generative AI
💡machine perception
💡
💡media planning
💡knowledge management
💡federated learning
💡third-party cookies
💡TikTok
💡meta
💡Palantir
Highlights
Innovid's Harmony initiative aims to optimize CTV advertising by improving efficiency, transparency, and ROI while reducing carbon emissions.
Equative, formerly a smart ad server, is investing in SSP, DSP, and curation, indicating significant developments in the company.
AR Paparo and Stefan Pretorius discuss their history in adtech, highlighting the evolution from digital advertising to AI-driven content and recommendation systems.
Pretorius' role as CTO of WPP involves creating a centralized technology strategy for the agency holding company, emphasizing the importance of AI in content perception and prediction systems.
WPP invests $300 million annually in internal original technology, focusing on product data and AI research, including the acquisition of AI research lab Satalia.
The discussion explores the transformation of the advertising industry, emphasizing the need for flexible platforms that can adapt to future business needs.
Pretorius explains the concept of 'four core brains of marketing' in AI, which include brand, audience, channel, and performance brains, aiming to enhance marketing strategies.
AI's role in creative processes is discussed, with a focus on generative AI and virtual production technologies for content creation, reducing the need for physical production.
The potential of AI in media planning is highlighted, with Pretorius emphasizing the importance of context and relevance over demographic data in effective media strategies.
Knowledge management in large corporations like WPP is discussed, with AI seen as a tool for enhancing organizational learning and decision-making.
Pretorius addresses the potential impact of AI on jobs in the advertising industry, arguing for a balanced approach that augments human creativity rather than replacing it.
The conversation touches on the implications of Google delaying the deprecation of third-party cookies, suggesting a lack of progress and potential industry frustration.
The potential buyers for TikTok in the US are speculated upon, with the discussion focusing on the challenges of finding a suitable company that can handle the platform's algorithm.
The impact of TikTok's potential ban in the US on the advertising industry is considered, with Meta, Instagram, and YouTube Shorts highlighted as potential beneficiaries.
Meta's financial report and the market's reaction to their AI investments are discussed, with a focus on the potential benefits of open-source AI for the company's products.
Palantir's entry into advertising with its data analytics platform is noted, with Pretorius expressing skepticism about the suitability of such platforms for the agile advertising industry.
Transcripts
this podcast is brought to you by
innovid and their Harmony initiative
innovid believes the TV should be open
for everyone and controlled by no one
and the time to make that Vision a
reality is now that's why innovid
created Harmony an industrywide
initiative to address the biggest
challenges facing CTV advertising today
by optimizing at the infrastructure
level Harmony aims to improve efficiency
enhance transparenting the troll and
increase Roi all while reducing carbon
emissions and providing better View
experiences for all find out more and
get involved at innovid.com
[Music]
[Applause]
Harmony welcome to the architecture
podcast I'm AR paparo I am joined today
by Eric franchi and Stefan pretorius who
is the CTO of wpp and whom I have
personally known for We're Going on 30
years adtech Stefan thank you for being
here it's wonderful to be here nice to
see you gar uh so we'll talk about how
we know each other in a moment uh just a
quick housekeeping so this week's vendor
interview is with equative which is the
new name for a smart ad server it's an
interesting interview with their cro
about how they're investing in SSP DSP
and curation um so there's a lot going
on with that company you may not have
heard of it's definitely worth listening
to and it's uh free from behind the pay
wall until Monday all right let's jump
in so Stefan you and I know each other
from around the year 2000 and that is
about four or five years before I was an
adtec so many people do not think I had
a life before atch I was just born in
the double click headquarters but
actually I'm a lot older than that and
during the dotc com we work together do
you want to you want to tell the
audience you know how we know each other
I'm not sure it's gonna it's going to
bathe either us and Glory um so um I was
starting I was starting a a digital
advertis in a lead generation business
called acceleration at the time and uh
you remember were trying to flog a
software platform called blink I think
it was called right that where you could
upload your bookmarks and as you move
between browsers and computers you you'd
be able to save your bookmarks yeah
obviously Google solved that problem
with you later and that you know whole
business model disappeared but um but it
was it was fun times because we figured
out how to do large scale lead
generation track results do attribution
modeling and so in many ways I mean it's
like even though they might sound like
errand schemes now they teach you a lot
about the fundamentals and the basics of
of our industry right yeah uh I was in
The Bookmark business I was fogging
bookmarks but the secret to our bookmark
business is that it was really a Spam
business uh we we would basically get
people sign up for bookmarks and the
only way we really can monetize them was
by sending them like six emails a week
with different offers about hey add this
you know money saving scheme to your
bookmarks or golf.com you to golf add
that to your bookmark it was it was
really uh desperate times early signals
business I would say you know I mean
today would be a signal driven AI
business you know with a back by an LM
you know would have scraped all all the
content created a personal GPT for
everyone based on those bookmarks you
know it had legs you just didn't know
before we move on what was uh our our
co-host AR like as a 20-some year old
that would embarrass him but but quite a
lot skinnier yeah it's true I was pretty
skinny he was the cool guy he was the he
was the cool kid of the um of the
digital you know early.com days um he
had this great um Campbell Soup tattoo
on his arm he was like you know he had
he had Swagger um I
mean he was he was pretty he was pretty
intimidating to a lots of people even in
like a rented you know sort of Regis
office in in the B STS building right
yeah that is back here one also side
many people know this but my co-founders
at link um they were from the finance
World they went on to found to Sigma and
are now billionaires anyway I'm here as
a podcast host all right let's get to
the real subject we want to talk about
I've bet if a lot of our listeners don't
even know that wppb has a CTO like then
it's sort of like wpb CTO huh that's
interesting I didn't know they had that
what is what's your job my god um so
I've been I've been C for five years so
sold I sold that same business I I you
know started when I worked with ur2 wppp
in 2012 it became an attech modtech SI
eventually you know we implemented
everything from you know double click to
omniture to you know exact target and
then all the all the sort of subsequent
you know parents of those companies so
we sold that business to wpp in 2012 ran
it um here for a couple of years and
then in 2018 um Mark Reed rcoo asked me
to become CEO for the group you know so
it's been 5 years but you're right
historically agency holding companies
didn't really have centralized
technology strategies you know they they
effectively allowed all the agency
Brands individually to decide what they
build what they buy you know how they
innovate and I think you know it was
sort of not a not a moment too soon
because you know even back in 2018 you
know we already had the early sort of
showings of you know what AI is going to
do to content at least at that time
content perception labeling things like
that a lot of you know AI driven
prediction systems and recommendation
systems coming on board and so you know
I sort of started working really
furiously five years ago on on what does
an integrated platform and strategy look
like for an agency holding company you
know what what's amazing about the past
five years experience is that it's
really an exercise in mapping the
transformation of our industry in our
category to a technology solution so how
do you build software that actually
allows you to service both the business
you have today but also allows you to
transition into the business you're
going to have 5 years from now
you know all of you've built you know
software yourself so you know how
difficult it is just to get like one set
of requirements out and get people to
use it and so on but to build a platform
that's effectively flexible enough to
accommodate that transition while at the
same time supporting multiple different
versions or configurations of our
service offering to clients was actually
remarkably difficult intellectually I
mean technically not that hard but
intellectually very hard you know so
some clients only buy one thing from us
they only buy PR services from us or
they only buy Production Services from
us or only CRM but then other clients
like you know Coca-Cola buy everything
that we do from us end to end and you
know so you have like 6,000 people in
wppp working on the the coke account
doing everything from audience research
to Media buying and activation through
to creative production CRM and
everything in between that's what I've
been doing and um maybe because you
haven't if you haven't heard that much
from me is because I've been super busy
executing that um hope I with know with
all my my AI Keynotes at BTC and next
and things like that I'm I maybe you
know getting out a little bit more but
well I think there's there's this
feeling that when agencies invest in
Tech it's around orchestration Tech
where you're saying well you know we're
going to license an ad server from this
company and an analytics server from
this company and then the tech we're
going to build is coordination piping
you know overlays on top of that how
true is that versus building original
Tech no I I think that's slightly Legacy
view of the world I think what's
happened in the last you know
particularly last few years but but
certainly you know tracing back even
further is that all the the large
holding companies have realized that
they need to have tools and platforms
that differentiate themselves not only
in terms of how they deliver for clients
you know and the impact that that work
has but also how they work with clients
in other words how they engage with them
intake work track work etc so you know
if you look across the category all our
peers have invested in something like
this um you know or some form of this
kind of strategy in the last few years
so we spend about $300 million a year on
on internal original technology and
that's a combination of product data and
research so and and the research is
mostly on the AI side and we you know
we've invested very seriously in in
capabilities to do that so we we we
bought an AI research lab here in London
called satalia there're about um 200
people now but you know resarch grade
sort of AI researchers from UCL you know
like sort of friends of Demus you know
sort of vintage right and um you know
that's enabled us to do kind of really
really original research in in applied
AI but also you know obviously in the
product development um of you know for
what we do so our platform you know it's
built on on hyperscale of Technology but
our platform is entirely you know built
from scratch you know by ourselves and
then all the the studios that we used
for Creative production media CRM Etc is
effectively tools that we've built
ourselves to not only suit the way that
we work with our clients but also to
effectively go further than the the
regular sassin martic that's out there
um at the moment yeah let's talk numbers
first so I think correct me if I'm wrong
the publicly disclosed numers that
you're investing $318 million annually
in Ai and in in contrast the only other
holding company I was able to find that
gave a number was puess who says that
they're doing 325 million over three
years so that's like onethird the
investment and meanwhile the other the
other ones like densu really were
putting out press releases like hey
we're working with Nvidia
congratulations there was nothing really
to it those numers accurate yeah they're
accurate they're completely accurate I
mean you know we're a publicly listed
company so we can't make these things up
we have to you
know okay
sure not a venture back company you can
say whatever they want no no it it's
they are real and you know the I mean to
but to put it in context right I mean
that's 2% of net sales right you know
and and you you could argue that that is
still probably under investing in a
transformational technology if you say
that that AI is going to fundamentally
transform the entire you know marketing
Services industry and you know one of
the leading companies in the space
spending two 2% of net sales on that
impact you know the question is is
that's enough you know we are delivering
like absolute Gang Busters right now and
going super fast I I mean I personally
can't really you know basically consume
or or or manage much a much faster Pace
right now to be honest but time will
tell and I think it'll be interesting to
look back in a few years time to see did
we invest enough right well let's talk
about the use cases and what you're
investing in uh there was a very good
article that featured you in ad age this
week um that talked through a lot of
things but let's just let's kind of go
through it let's start with creative uh
what do you see as the opportunity in
Creative obviously that's kind of the
first thing that comes to mind for a lot
of people with AI yeah and and and I
think what what's what's kind of
confusing about about this stuff is that
you know if you think about the the
basic kind of image generation Gena of
AI use case people think that you know
in an agency like wpp we have you know
thousands of people who sit around you
know taking photographs and doing video
shoots and things like that all day
nothing could be further from the truth
right I mean most of that is
subcontracted to production companies or
to specialist you know Studios and
things like that you know we we do have
a production business Hogarth which is
about um 6,000 people it's a it's a
large large kind of you know tier one
production business largest commercial
production business in the world and so
we use um AI a lot but it's a
combination of generative Ai and virtual
Production Technologies to create
content so instead of instead of you
know building a car taking it to the
desert filming it and then making an ad
you can just take the cad model you know
render it in 3D and Omniverse add a
generative background you know make it
move and then create the ad and put it
out so there's a shift in in production
from physical to viral production so
that's let me just interrupt you there
how much of that is real right now
versus like that's the vision for where
it's going it's completely real I mean
we by the middle of the Year our largest
Auto client will have all their car
configurators run through that that
pipeline in live consumer facing content
we already have a a car configurator for
buid that was made exactly like that we
have you know several other deals you
know or projects in in flow you know
right now for for delivering that so
this is I mean that's completely real I
mean this is not a not a fictitious kind
of five post- production in terms of you
know maybe the stuff that the the adtech
audience is excited about in terms of
optimization personalization all of that
stuff how much of that is you know real
versus uh versus pipeline or you know
sort of like actual versus pipeline I
think when people think about when they
say creative you know they mean
different things if you ask agency
creative directors what they mean by
creative they they will say it's ideas
it's Concepts it's an inspiration it's a
way to position a product in the
marketplace product you know how to
relate a product to an audience how to
position it in culture and then
ultimately There's a Hero piece of
content there's like a hero you know
sort of you know this is the kind of
style we're looking for this but then
production is the process of taking that
PO concept and hero you know sort of
asset and then you know trans creating
it into 100 languages and adapting it to
you know a thousand different channels
and formats and doing vertical and
horizontal and doing you know things for
billboard and things for print ads and
you know I mean you know all that work
the whole content purification from that
fans out from the core idea that's the
production business now production is
about it's less than 10% of our total
revenue you know but it's an important
part where generative AI is having a big
impact but geni is also having a massive
impact in ideation right so tools to
make you think differently about things
tools to test ideas tools to have
different perspectives you know from
different audience groups or for from
different personas you know that's all
being done through generative AI so we
last year we we rolled out internally a
a creative Studio product which is like
a a gen sandbox with about 50 different
Tools in four marketing functions from
you know reinterpreting the brief to
coming up with you know shower thoughts
you know you know net new ideas about
things to building personas to you know
evaluating summarizing documents you all
these kind of things the key thing is
right and this is the I think we are
really differentiating is that using our
satalia research um Team we've built
this Con concept of the the four core
brains of marketing and brains are
really just AI Services right and the
four are a brand brain an audience brain
a channel brain and a performance brain
and what these are are effectively AI
representations of a brand an audience a
Channel or you know how that will work
all together in actual performance and
so you know simplistically you know if
you know if I was speaking to AR over
appli he would say oh well that's just a
model right said yes of course it's a
model but it's a model with lots of data
that's been validated that's been
exposed as a service that can be
consumed in software right and so let me
give you an adte example just to kind of
bring it back to the core the core
audience here one of the most impactful
applications in attic is to do is not to
do dco live but to simulate dco and
understand the best performing variance
before you go live right so you you
basically take a performance model that
says here are 100 content features you
know from the text to the logo to the
composition to the color schemes Etc
that link to some kind of performance
metric so brand lift studies for
instance that allows you to build a
model that says that creates both a
recommendation as well as explainability
so this variant will work better than
that variant because 1 2 3 4 5 if you
want this variant to work better expose
the logo at the end for another 5
Seconds you know change the position of
the product make the the brand bigger
you know whatever the case is now when
you've got a normal dco process right
you would spend the first x million
impressions optimizing your million
variants down to the high performing
ones right which means you've got
underperforming media Impressions but if
you run that entire process on the model
beforehand you only go live with the
with a Content that you know is going to
perform well right that solves a big
problem for dco solves a massive problem
for dco and I mean that that's what we
what we launched at um at Google Max
last week with um in the in Thomas's um
keynote and it's the thing you know
there's nothing generative in it it's
perception right it's the opposite there
the flip side of generative AI which is
machine perception but it's a massively
useful you know use case in in in
advertising yeah that's fascinating
let's move on from creative to media
planning sir Martin cell spoke at um at
the adtech investor conference um that
both Eric and I were at yesterday and he
specifically called out wpp just I just
want to mention that he said wpp has
45,000 people in media planning and AI
could currently do their job better than
they could it's that's a paraphrase what
he said I'm not g to ask you to respond
to that then he gave some anecdotes
about hanging out with Vladimir Putin so
that's how he
rolles
that's
anyway media planning does seem like an
area where it's all numbers it's all
data you have a ton of historical data
seems pretty ripe to have fewer human
beings doing it and more machines so
what are you doing in that area yeah I
mean it's a huge area right I mean I
think I think what's um look I think the
the first thing I would just want to say
is that that not all AI is Gena of AI
and and not all useful not not all
useful things you do with numbers and
formulas you know is necessarily an
algorithms is necessarily AI right so
there's lots of problems in media which
are just like basically discrete
mathematics you know optimization
problem they they're not they're not
necessarily AI problems right so we have
a little bit of an industry definitional
problem that everyone wants to call
everything Gena of AI or they want to
solve every problem through generative
AI which is you know not always you know
the the case but but what I would say is
in on the media side which is which I
find the most exciting is that besides
the the kind of creative optimization
and and and content intelligence is this
whole notion of finding more accurate
and better theories of relevance or
indicators of relevance right so this
whole idea of you know you can only be
effective in media planning and buying
if you know who someone is I think is
you know has to be completely debanked
right so this this notion of if I know
who you are then I can be relevant to
you is actually a fallacy because very
often who you are is a far weak weaker
indication of what your needs and and
desires are than where you are what time
of day it is what's the context that
you're in right so you might behave
entirely differently when you're at the
football on the Saturday afternoon in
the stadium then when you're sitting at
home you know with your wife watching
series you know 11:00 versus when you're
in a Superstore 10:00 on a Saturday
morning right same person same
demographic details same identifiers
right same person in the in the CRM
database but your context and what you
open to is entirely different I mean for
us things that that I'm the most excited
about is the the areas where we've
managed to use things like occasion
based targeting right or a combination
of time space and and other contextual
you know signals to understand what will
resonate with people and what I love
about that is that all that work is done
at kind of a cohort or aggregate level
right I mean sometimes in these sort of
you know these sort of cells of maybe
like half a mile right it's they they
they're not they're not sort of small
cells but for many of our clients one to
one is a complete fantasy right I mean
if he's selling fizzy drinks or he's
selling you know kind of washing powder
I mean you know no one wants to receive
you know a direct email from you know
you you're washing up Liquid right I
mean it's like not the case you know
this this super exciting stuff happening
on the onetoone side as well and all the
kind of the clean room stuff we've
always been doing and all the you know
the kind of the data matching and all
the probabilistic matching and all the
Federated learning I mean all those
things are great but for me it's like
the it's the new theories of how do you
how can you be relevant to someone that
I that I find the most interesting sure
sure no I get that um so the other area
that sir Martin called out not to just
toot his one but I thought it was pretty
interesting he said one of the Bigg
opportunities for AI in agencies is
knowledge knowledge transfer and that
it's a huge inefficiency to get everyone
on the team pointing the same direction
knowing the same things Etc and I think
your your competitor um omnom or pist
that came out with Claude uh and I think
people laughed a little bit because it's
such a silly name but that was their
first you mean Marcel Marcel was that
which one was that CLA is the anthropic
AI model yeah Claus anthropic yeah
Marcel I'm sorry U there was like a chat
bot That was supposed to uh get everyone
on the same page so how do you how do
you think about that about Knowledge
Management in a giant corporation like
wpv I think that's that's that's a
correct observation I think the in any
knowledge um based organization whether
it's a law firm or a you know a
consultancy or a you know Investment
Company I mean you know we all trade on
on knowledge and and sort of experience
and and expertise right now you know
what what I think not not to get too
philosophical but I mean AI is really a
technology about intellig
and so it's one of the first
technologies that that makes the way we
think and the way the way we process
information and and the way that our
Chain of Thought works and the way that
you know different perspectives
influence decision- making is sort of
made overt right and so I completely
agree with with the with the the notion
that it's one of the biggest
opportunities and the question is is how
do you make that kind of organizational
change so that not only is your are your
knowledge stores available but you are
building a reinforcement learning into
your software so that people people are
constantly making it smarter right so in
our creative Studio we have this this
sort of almost like a creative pinboard
you know for projects where the way that
people are interact with those things
and move things up and down and like
them and dislike them and pin them is a
reinforcement learning process to
actually tell the machine what is good
and what is bad now the longer you do
that the B it becomes I mean you know
the reason why chbt was was so uncannily
good so fast is because had 100 million
people training it day and night for the
first few weeks right so then anything
that gets launched feels a little bit
like kind of like awkward and a bit like
the the sh kid you know who doesn't
quite know the the social codes right
until it gets trained and then it
becomes better and so I think that's
that's that's the the the trick right is
is to basically build a a digital twin
of your organization through the
adoption of reinforcement learning you
know in the way that people interact
with the software yeah you can imagine
uh a big impact on account management
where the client calls up their account
person and says hey we're thinking about
doing digital ad in Supermarket
checkouts what do you think and
currently the account manager may or may
not have any ability to answer that
question but I'm sure there's a lot of
people at wppp who really could answer
that question extremely well and I
already have so that was a huge
opportunity there well and and and I
mean just to give you one one example
practical example of how how augmented
you know people can become through these
these tools right so if I say to you um
okay you work on the Fant account right
and I want to I want to know what the
best ways to to execute Fanta on Tik Tok
What are you going to say but if I say
to you here's the the Fanta brand brand
platform Playbook right it's a 100 page
PDF it's been done by strategist you
know it tells you exactly how to execute
Fant it tells you exactly what the proof
points are what the kind of the the cut
throughs are etc etc and I then tell you
here's a 200 Page Tik Tok best practice
execution guide right now you can go and
read those and then make a whole bunch
of notes and you know ponder about it
the whole weekend or what you can do is
you can upload both those documents to
our creative studio and say at the
intersection of these two things how do
I execute the Phantom brand platform on
Tik Tok it will give you an amazing set
of starting ideas an amazing set of
starting ideas none of them will be
wrong some of them will be very good you
could argue none of them are going to be
truly inventive because they are within
the it's maybe interpolation and
extrapolation within the the boundaries
of what they have but it's going to be
ne new invention because it hasn't
doesn't have the you know the ability to
do that yet but for as you said I mean
you're you know if you're an account
person the client says to you hey um you
know I feel we're a little bit
underweight on Tik Tok what's the best
way to execute our new brand platform on
Tik Tok you can come back to the to to
the client within five minutes with a
pretty good answer that's the the real
practical example of of where good input
information right so crisp articulations
of Brands good understanding of
platforms markets Etc combined with
you know well structured AI tools that
are safe secure Etc can get enormous
augmentation of of of outputs right and
clients hate paying for strategy right
so effectively you're you're boiling
down a lot of strategy for them I'd
argue clients hate paying for account
managment more than
anything Stefan um are you familiar with
the Sam Alman quote about uh Ai and
agencies I I am yes it did it did make
it
round yeah I'd imagine so so for for the
listeners I I'll blow through a fast and
then I'd love your reaction and I quote
from Sam Alman uh CEO of openai 95% of
what marketers use agency strategists
and creative Professionals for today
will easily nearly instantly and at
almost no cost be handled by the AI and
the AI will be will likely be able to
test the creative against real or
synthetic customer focus groups for
predicting results and optimizing again
all free instant and nearly perfect
images videos campaign ideas no problem
that's um that is the thought experiment
right it's exactly the thought
experiment and you know when we we
spoken publicly about this um you know a
capital Market day early in the year
when we set out on this journey I mean
we effectively had the sort of three
layer pyramid for our AI strategy you
know the first one was just getting into
productivity software get everyone you
know working faster and better second
layer is put AI into all our products
and systems and make sure that we build
better tools that differentiators the
third one is total disruption basically
put money in the one end get results out
the other end and no humans in the in
the process right and what you've just
described what what Sam probably
extrapolated in his mind there is
effectively that right where where there
are no Brands side marketers there's
only a CFO that says I'm going to spend
12% of my gross profit on marketing and
I'm going to feed it into the marketing
Magic Machine and I'm going to get you
know results out there then now I think
we we are you know there's another
another AI entrepreneur who famously
said you know people
people both underestimate the the the
pace of change but also overestimate the
the the the pace of impact right and to
some degree you know this is the case
with with that that Sam Alon quote
theoretically he is entirely correct it
will take us years to get there
practically because the the process of
marketing and the process of of you know
Commerce and running large brand
organizations is way more messy than
that and you know I also think that it's
not a particularly optimistic or
humanistic view of the world right
because if if that is true of marketing
advertising that's also true of law
Finance Consulting coding right and so
what do we all do you know we sit around
eating you know eggs and pesta all day
um which is you know sounds kind of nice
but it's not going to you know make us
very happy um so so I think I think
where he's wrong is that he's sort of
analytically right and and practically
wrong technically it's possible to build
systems like that they will not be free
I massively disagree with him you know
the the capital expenditure of of
building these systems and the gpus that
support them you know if you went to the
Jensen Jensen Wong you know rocks Rock
coner the other day you will know these
systems are incredibly expensive so
they're going to be monetized and they
will they will be monetized you know um
through customers so they won't be free
but could you theoretically automate a
lot of what What's Done in our industry
today um I think the answer is yes but I
think you will destroy an entire
category of human Ingenuity and
creativity in the process and so you
know I think we have a choice right to
say we either want to build black boxes
that make that get good results but
basically make us all stupid or we can
build good software that makes us a lot
more effective augments our creativity
and makes everyone smarter so it's like
go back to the Middle Ages you know and
the Inquisition is run by you know by
the AI entrepreneur
um or do the Renaissance that's the
choice we have and and what a mic drop
yeah let's let's call it let's let's
call about that that quote um all right
we're gonna take a quick break come back
with news the week around Tik Tok BR
meta paler a lot of exciting news this
week oh yeah and also
cookies this podcast is sponsored by
Adelaide you've probably heard of
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AFP for more information and we're back
um I'm still reeling from that L quote
to fun so uh so so work with me folks
we've got a lot of uh news this week um
so we'll we'll prioritize on the ones
that are you know probably affecting the
largest markets uh I trillion dollar
companies so first is maybe a surprise
maybe no surprise Google has delayed the
deprecation of cookies for the third
time okay question number one surprise
or no surprise I was on the record
saying I thought they would do it on
time just because of the embarrassment
Factor uh but most other people I know
who are smart were predicting it would
be delayed um and they were right and I
was wrong and it is embarrassing so I
was right about it being embarrassing
what's most embarrassing about this
Google announced cookies going away now
I think we're threeyear anniversary and
the progress has just not been very
impressive I think that it feels to
everyone involved like it's a process
that's out of control that Google
probably shouldn't be running the
process uh because their conflicts of
interest and their antitrust issues uh
that the solutions being offered are are
overly complicated and not necessarily
as private as some simpler Solutions and
people are just frustrated it's been
going on for so long what do you think
happens from here do you think they kick
the can down the road again or is Q2 of
next year which is going to come fast um
is Q2 of next year like actually going
to happen so and and what what happens
what what impacts the industry if if
anything yeah I I think that at this
stage of the process it comes down to
nitty-gritty details in the spec and in
the apis and in the testing and I'm not
really a practitioner anymore so I'm not
doing that but if you talk to people who
are very smart like Paul banister uh who
are working on this they are finding
problems in terms of latency there's
some issue where it only really works
with gam as an ad server which is
obviously a problem antitrust wise uh
and the CMA the UK competition group is
going to look at these very fine grain
detail to see if it gets launched or not
so as a result I would say that whether
launches or not is not so much a
political issue as it's now at the level
of a sort of technical issue Stefan any
take on this yeah I mean look and just
to be precise right it's the dication of
third party cookies right right since we
all adtech nerds here or reformed adtech
nerds not having certainty for the
industry is not great but I think
practically um you know most most large
Brands and and you know agencies have
actually virtually absorbed the the the
impact in the news and have you know
have have many several years ago started
Building Solutions to to understand kind
of you know signal accuracy and so on
you know in different ways and so I
think the market is actually moved
significantly on I mean there are more
implementations of clean rooms and
Federated learning and things like that
now than than there probably still are
largely scale third party you know um
cookie Solutions or you know yeah in
Practical terms um I mean I'll I'll let
aric comment on the the sort of the the
industry perception and everything else
but I mean in Practical terms I don't
think it's it's going to have much of an
impact on us I I think people are
working on it there is a lot of activity
going on to improve the situation and um
and giving people another three to six
months is probably helpful the other
thing was that no one was happy at all
about this idea that the implementation
of the deprecation would be during Q4
for the technical reasons so that was an
issue second announcement and a bigger
announcement Maybe the biggest
announcement R to uh to paraphrase your
Tweet is um is this Tik Tock bill so
Congress passed and Biden signs a bill
that could threaten Tik Tock in the US
bite Dan has until January 19th 2025
again right around the corner basically
uh subject to a 90-day extension if a
deal is in process otherwise uh they
face a ban so this is this is crazy this
is moving forward the company bite dance
uh they plan to sue because they don't
want to sell largely because they don't
want to relinquish the uh the algorithm
and and for you know Tik Tok the
algorithm is is everything so two
questions top of mind for for me outside
of the fact that this is you know pretty
wild that this is actually moving
forward so um number one who is the
potential buyer for this this will
probably be like a hundred billion
dollar price tag and then number two if
there is no buyer and this disappears
and it's a little tough to figure out
exactly how how much the approximately
$15 billion of AD Revenue you where
where does that go so let's talk about
question number one who who is the
potential buyer for Tik Tok in the US I
think the standard buyers meta Google
Etc won't be allowed to buy it uh right
so you have to look at who's big enough
outside that I think it was I think it
was Alex krawitz um who suggested
Walmart was a good potential Target um
Oracle comes up with the conversation
because they're the hosting provider and
but I don't think Oracle has the
consumer chops to do it uh those are
some ideas it's a big chunk Microsoft to
Apple yeah Microsoft would be an
opportunity I mean they have a pretty
diverse set of businesses under their
umbrella right now GitHub and Linkedin
and all these interesting companies
could happen it could be private Equity
maybe I maybe just to make it public
that's a very big private Equity deal I
think the biggest one in the history of
private
Equity yeah yeah Stefan what's your
what's your bet no I I I have no idea I
mean honestly it's a it's an
unprecedented kind of um kind of move
you know I I don't think it's great for
geopolitics I mean I think it's sort of
a it sets us back right and and so from
that perspective I I'm I'm sort of you
know disappointed by the whole the whole
thing going through I mean the more
interesting question for us is is where
does the where does the ad Revenue go
right and I I think if there's a
prolonged period of uncertainty um you
know that that would obviously be be the
worst thing for everyone because then
you know you simply don't know what kind
of longer term commitments to make right
I mean I think I think the you know
whatever you think about the this the
sort of consumer engagement um you know
impact I do think the growth of Tik Tok
has been very good for for media buyers
and for clients you know looking for new
channels um and for more diversity more
competition in the in the space I mean
there's you know apart from from Tik Tok
there there's only a handful of really
large scale Global digital platforms
these days right so it would be a you
know a negative impact on the industry
if if went away as a um as a significant
player I saw a chart in a semaphor uh
this morning that showed that when Tik
Tok was banned in India virtually all of
the revenue went to meta to Instagram
some went to some local providers but it
was pretty much a flip 100% to Instagram
I don't see that being very different in
the US maybe snap could pick up some
yeah so the thought experiment is it's
you know Meta Meta properties um you
know specifically reals on Instagram
it's potentially YouTube shorts which
has a you know similar experience a lot
of Brands just Port them directly to
YouTube shorts and it's and it's snap um
what's interesting about about this you
know from a timing perspective and we
can talk about the next one now um is
this had uh no positive impact on meta
who reported after the Bell last night
so we we'll jump right into into meta So
Meta reported uh 36.467853
year-over year and they beat
expectations they now reach across all
of the the various properties uh the
family I think they they call it
3.24 billion users and other metrics
were were similarly positive and the
stock dropped at one point last night it
was down 19% I don't know what it opened
at um but like I think the largest
potentially one day drop of any company
from a market cap perspective because of
two things um number one soft guidance
uh for the year and then number two
people didn't like the fact that uh you
know Zuck said they were you know
doubling down on AI Investments which is
a little hard to you know kind of wrap
your head around because on the one hand
I understand that you know people felt a
little burned by the um metaverse uh
Investments but then all of these great
results they're posting are largely
because of the Investments they've
already made in AI so what am I missing
here and how did the Tik Tock you know
rumor not help them at all positively
I'm not an expert in public markets but
seems like Madness to me because if you
such short-term memories just two years
ago or even less 18 months ago The Meta
stock was getting hammered because of
overinvestment in in AV um virtual VR
sorry and it was all the same thing it
was like too much capital investment
it's going to take down the stock and
Zuck pulled this amazing turnaround and
the stock is skyrocketed since and all
the metrics are great so why don't give
this guy a little a little slack here
you know I think he knows what he's
doing right yeah I think so they were
getting hammered for overinvestment in
VR and you know uh the impact of uh
Apple at which again through investments
in AI they turned around everything any
cut costs and and and revenue is is
outperforming so and it in contrast we
have Tesla which offers a horrendous
quarter everything bad is happening to
Tesla no one's buying their cars
everyone hates Elon they're getting
kicked out of China he has nothing to
offer the street and then he just says
oh and by the way we're making a cheaper
car and the stock skyrockets he has no
plans to make a cheaper car there is no
cheaper car underway it's not launching
this year he's so full of the guy
is a known liar and he he just somehow
convinced all these people that their
stop should be at a you know multi
hundred PE ratio Madness I love this
it's almost like it's not a podcast um
the um I thing I would say is is kind of
I mean I had a similar response to you
Eric I I was like I was convinced that
of the the back of the no you know news
that um that meta would actually rally
and um what he's spending money on is
basically infrastructure to build open
source AI right and there's something
you know there's going to be a direct
benefit of all that open open source AI
on the The Meta products right the
family of of of products but there's
also a larger you know future
monetization opportunity now maybe the
again like I I'm not an expert in public
markets so you know this is not
investment advice or or financial
analysis but you know certainly it's
strikes me that from a technology
perspective there's a massive
monetization opportunity around the open
source AI that is bringing to Market I
mean Lama 3 is very impressive extremely
capable they've got a fantastic team
there you know there's nothing hindering
them from building a very significant um
you know sort of ancillary Commercial
Business around the the core open source
models so and and ironically you know
the the company that's bulying them you
know all the all the gpus to build this
infrastructure is doing very well off
the the back of this of these
Investments right so not entirely
consist and we're recording this too
early to hear the Google announcement
but it'll be very interesting to hear
because unlike meta Google has
everything to lose for AI and uh their
search business could be in Decline we
don't know yet and it's a much more
interesting story there whereas meta
pretty much is all upside from AI That's
right um I I was playing with the uh The
Meta AI just the the interface um to you
know just you know kind of create images
and everything like that and it's great
it's like fast it's accurate I think
it's on par with some of the other ones
um so uh I think I think you're right
we'll see what happens with uh with
Google one more to uh to close it out
this been been awesome so um paler which
is a company that specializes in uh you
know software platforms for big data
analytics noteworthy because it was um
co-founded by Peter teal um Alex karp
Joe ondale a bunch of guys that have
done some pretty incredible stuff and
you know noteworthy and perhaps you know
somewhat notorious because uh the US
government from a defense perspective is
a big customer of paler there was a a
story about paler now uh selling into
agencies and selling in the paler
Solutions uh as a way to have various
use cases on things like inventory
planning and programmatic sales campaign
optimization it was It was kind of light
in terms of details but interesting in
that you know this company is you know
packaging up some of these data services
to to agencies um and Stefan you have to
comment directly on you know if if paler
has been knocking on the doors of of wtp
but since since we have you on what's
what's your reaction or perspective on
this and if it's a no comment totally
cool no no I I'll I'll definitely can
I'm happy to talk about it no I mean
they they're clearly a capable business
right and um I don't actually know the
details of of who they're selling to and
where they're actually deploying their
Solutions in the um in the wild and and
exactly for what use cases um but I
think the you know certainly my my
strategy has always been that very
strong platform and vendor lock in is
not a good thing in a in a fast moving
you know Innovative space
and so you know we've taken a far more
kind of platform and and you know vendor
agnostic approach in terms of building
our own Solutions we obviously work with
the large hyperscalers we work with all
the large Foundation model companies and
many the the software you know SAS
companies in the space but you know if
you really want to innovate I think you
need a lot more flexibility you know
there's an interesting notion one of my
my product managers has this um riff at
the moment he you know when he when when
he's thinking about um generative AI
based Innovation he says you have to
lean into the emerging capabilities of
the new models what it means is that
you've got to explore the kind of the
full extent of the impact in
applications of these new model
capabilities rather than think about
historical and negative ways of doing
stuff so if you can have a million token
Contex window for a large language model
which Gemini you know 1.5 gives gives
you now you can basically upload two
volumes of war in piece um before you
ask it to to give you an answer right
part of your prompt is two volumes of in
piece now that means effectively large
parts of what we used to do through ETL
and things like that just go away right
you don't need it in fact you don't even
need robotic process automation because
you can just take screenshots of of
screens and have gptv or you know some
version of of you know chin Vision read
the text in the screen and then input it
into the next process right so I mean
slightly diverging but my point is I I
don't think models like that or
platforms like palente are are ideal for
very fast moving very Nimble very agile
kind of um categories and industries
probably great for defense probably
great for security maybe great for for
you know Health Sciences or or kind of
medical practitioners but you know I I'm
I don't think it's ideal in my opinion
for our C that's awesome perspective all
right anything on that no that was I
learned something learned something new
today same year I learned several things
today all right let's call it uh Stefan
thank you so much for being here
wonderful AR it's great to see you guys
again this is a pleasure thank you yeah
you too thank you thank you for
subscribing to marketecture new
interviews are added every week at
marketecture dotv and your favorite
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[Music]
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