The Digital Ad Industry is Built on the Wrong Principles & Other Things That Make You Go Hmmm

Summary

CMO Confidential Podcast Episode Summary

Title: The Digital Ad Industry is Built on the Wrong Principles & Other Things That Make You Go Hmmm
Host: Mike Linton
Guest: Tom Goodwin
Release Date: October 15, 2024
Network: I Hear Everything Podcast Network

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1. Introduction

In this episode of CMO Confidential, host Mike Linton welcomes Tom Goodwin, a seasoned expert in innovation and change within the marketing industry. Tom brings a wealth of experience from his roles at Zenith, Publicis, and Habas, along with his contributions as an author and speaker on topics like Digital Darwinism. This marks Tom's third appearance on the show, underscoring his significant influence and the depth of his insights.

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2. AI and Its Implications for Marketing

Discussion Overview: Tom Goodwin delves into the current state of Artificial Intelligence (AI) in marketing, particularly focusing on generative AI technologies like those developed by OpenAI. He highlights both the impressive capabilities and notable limitations of these technologies.

Key Points:

• Generative AI's Dual Nature: AI excels in unexpected areas but struggles with tasks presumed to be simple, such as accurate counting or basic problem-solving.

  Quote:
  Tom Goodwin [02:25]:
  "Generative AI is amazingly good at things that people don't think it's going to be good at, and then it's amazingly bad at things that people presume it would find easy."

• Understanding AI Limitations: Even developers at OpenAI are grappling with fundamental issues like hallucinations (AI generating incorrect or nonsensical outputs) and lack a complete understanding of AI's internal workings.

  Quote:
  Tom Goodwin [02:25]:
  "It does appear that even the people behind don't quite understand exactly how it's working."

• Implications for Marketers: Marketers face challenges in tweaking or adjusting AI-driven tools due to the opaque nature of these technologies. This uncertainty necessitates a cautious and experimental approach.

  Quote:
  Tom Goodwin [03:51]:
  "It's a kind of experiment. Learn, but be very careful."

Conclusion:
While AI holds transformative potential for marketing, its current state demands marketers approach it with both enthusiasm and caution. Understanding its strengths and limitations is crucial for effective integration into marketing strategies.

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3. Misconceptions in Digital Advertising Principles

Discussion Overview: The conversation shifts to the foundational principles of digital advertising, particularly critiquing the reliance on attribution and optimization as primary drivers.

Key Points:

• Wanamaker Paradox Revisited: Tom challenges the traditional notion that only half of advertising spend is wasted, arguing instead that up to 80% of digital ad budgets are squandered.

  Quote:
  Tom Goodwin [09:23]:
  "I think the statement is dead wrong. In today's world, it's 80% of your money is wasted."

• Attribution Obsession: The digital marketing industry's focus on precise ROI calculations and micro-targeting diverts attention from broader, long-term branding efforts.

• Restoration Hardware Case Study: Tom cites Restoration Hardware's experience where purchasing misspelled keywords resulted in attracting traffic that would have occurred organically, thereby inflating the perceived success of their ad spend.

  Quote:
  Tom Goodwin [16:11]:
  "Restoration Hardware found out that the 22 best performing keywords were just misspellings... spending lots of money to make something happen that was probably going to happen."

Conclusion:
The overemphasis on immediate, measurable outcomes in digital advertising leads to inefficient budget allocations and undermines the intrinsic value of long-term branding. Marketers should balance data-driven strategies with investments in brand building that may not yield immediate ROI but are essential for sustained success.

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4. The Importance of Traditional Marketing Principles

Discussion Overview: Tom underscores the enduring relevance of traditional marketing principles such as mental availability, brand strength, and product differentiation, even in the digital age.

Key Points:

• Mental Availability: Consistent brand presence builds subconscious recognition and trust among consumers, influencing purchase decisions over time.

• Branding Over Short-Term ROI: Effective branding creates an emotional connection and long-term loyalty, which transactional digital ads alone cannot achieve.

  Quote:
  Tom Goodwin [06:31]:
  "Branding becomes more important than it's ever been before... new opportunities and new sort of avenues to explore."

Conclusion:
Despite the evolution of marketing tools and platforms, foundational principles like strong branding and mental availability remain critical. These elements foster enduring consumer relationships that data-centric strategies alone cannot replicate.

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5. Concepts Introduced: Wazel Effect, Fredkin's Paradox, Dopamine Culture

Discussion Overview: Tom introduces and explains several theoretical concepts that illustrate common pitfalls and behavioral trends within the marketing industry.

Key Concepts:

• Fredkin's Paradox:
  Definition: Difficulty in making decisions when faced with two equally attractive alternatives, despite both being beneficial.
  Implications: Even when choices are all positive, decision-making can become paralyzing, hindering effective action.

• Wazel Effect:
  Definition: Tendency to become engrossed in trivial discussions while neglecting more substantial, critical issues.
  Implications: Teams may waste valuable time on minor details, diverting focus from strategic challenges that require attention.

• Dopamine Culture:
  Definition: Society's addiction to short-term gratifications and constant stimulation, leading to diminished patience and attention spans.
  Implications: Marketing must adapt by creating meaningful, enduring connections rather than fleeting interactions.

  Quote:
  Tom Goodwin [25:44]:
  "We've created an environment where people are kind of permanently ... enthralled by stuff."

Conclusion:
These concepts highlight the psychological and operational challenges in modern marketing. Understanding these can help marketers navigate complexities, prioritize effectively, and foster deeper connections with their audience.

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6. Predictions on the Future of Advertising

Discussion Overview: Tom shares his insights and predictions on upcoming trends and shifts within the advertising landscape.

Key Predictions:

• Apple Entering the Advertising Space:
  Rationale: With substantial financial resources and a vast user base, Apple is poised to create a premium advertising experience that emphasizes quality over quantity.

  Quote:
  Tom Goodwin [31:32]:
  "I think Apple is going to get into the advertising game properly... they could make a lot of money from that."

• Challenges with Current Digital Ad Ecosystem:
  Issues: Prevalence of fraud, rent-seeking behaviors, and inefficiencies make it harder for marketers to allocate budgets effectively.

• Shift Towards Premium and Relevant Advertising:
  Trend: Marketers will seek out high-quality ad placements that are not overly personalized but maintain broad relevance, countering the current fragmented and often ineffective digital ad space.

Conclusion:
The future of advertising lies in transitioning from the current fragmented digital landscape to more integrated, premium experiences. Companies like Apple have the potential to redefine advertising by leveraging their strengths in user experience and brand trust.

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7. Fun Story: The Nokia Music Service Campaign Failure

Discussion Overview: To illustrate the pitfalls of misguided marketing strategies, Tom recounts a failed campaign he spearheaded for Nokia in 2005.

Story Highlights:

• Campaign Goal: Promote Nokia's music service, which allowed unlimited music downloads on a specific phone model within one network.

• Marketing Spend: $25 million allocated to media procurement and exclusive album rights, including high-profile artists like Kylie Minogue.

• Outcome: Despite the massive investment, only three people downloaded the service due to its restrictive compatibility.

  Quote:
  Tom Goodwin [33:17]:
  "They spent $25 million procuring all of this music... and in the end, three people downloaded it."

Conclusion:
This anecdote underscores the importance of aligning marketing strategies with product accessibility and consumer needs. High investment without comprehensive reach and usability can lead to spectacular failures, regardless of the campaign's creativity or scale.

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8. Conclusion

In this episode, Tom Goodwin provides a critical examination of the digital advertising industry's foundational principles, highlighting the overreliance on attribution and optimization. He emphasizes the enduring value of traditional marketing strategies centered around brand strength and mental availability. Through theoretical concepts like Fredkin's Paradox and the Wazel Effect, along with real-world examples such as the Restoration Hardware case and the Nokia music service fiasco, Tom paints a comprehensive picture of the current challenges and future directions in marketing. His predictions about major players like Apple entering the advertising space suggest significant shifts are on the horizon, urging marketers to balance data-driven approaches with foundational branding efforts.

Notable Quotes:

• Tom Goodwin [03:51]:
  "It's an incredible tool, but it's probably going to take a very long time for it to make a big difference."

• Tom Goodwin [16:11]:
  "We're unprepared to accept that. We don't really understand how advertising works. We know that it works."

• Tom Goodwin [24:15]:
  "Writing is the art of thinking... the better you get at making points succinctly, the better you get at listening to what people say to improve your arguments."

For more insights and discussions, tune into CMO Confidential on Spotify, Apple Podcasts, and YouTube. Stay informed and inspired to navigate the ever-evolving landscape of marketing.

Transcript

[Mike Linton]

The CMO Confidential Podcast is a proud member of the I Hear Everything Podcast Network. Looking to launch or scale your podcast, I Hear Everything delivers podcast production, growth and monetization solutions that transform your words into profit. Ready to give your brand a voice then visit iheareverything.com welcome to CMO Confidential.

[Tom Goodwin]

The podcast that takes you inside the.

[Mike Linton]

Drama, decisions and choices that go with.

[Tom Goodwin]

Being the Head of Marketing. Hosted by five time CMO Mike Linton.

[Mike Linton]

Welcome marketers, advertisers and those who love them to Chief Marketing Officer Confidential. CMO Confidential is a program that takes you inside the drama, the decisions and the politics that go with being the Head of marketing at any company in what is one of the most scrutinized jobs in the executive suite. I'm Mike Linton, the former Chief Marketing Officer of Best Buy, ebay, Farmers Insurance and Ancestry.com here today with my guest Tom Goodwin. Today's topic the digital ad industry is built on the wrong principles and other things that make you go Now. Tom has been studying innovation and change his whole career. He started in the agency business and held positions as the Head of Innovation at Zenith, the Head of Futures and Insight at Publicis, and the SVP of Strategy and Innovation at Habas. He's a prominent speaker, wrote a book called Digital Darwinism and publishes Nowism now. Full disclosure, I've known Tom since my time at Farmers, where he impressed me with his practical take on innovation and his willingness to be not just a contrarian, but a complete contrarian. This is his third time on the show. Welcome Tom.

[Tom Goodwin]

Thanks very much for having me. I'm excited.

[Mike Linton]

All right, let's have fun. In past interviews, we use marketing. We kind of have a marketing issue grab bag and we combine those with your desire to challenge conventional thinking. Our listeners do really appreciate that. So let's, let's start with AI, which you think is still in the super hype cycle. And you've said OpenAI. Does it really even understand its own tech? Share your observation on that.

[Tom Goodwin]

I mean, generative AI is amazingly good at things that people don't think it's going to be good at, and then it's amazingly bad at things that people presume it would find easy. You know, we've saw that the kind of latest release of OpenAI this week where they're trying to figure out how to make it count the hours in Strawberry and it's still failing. So it's a really remarkable, transformative and profound technology that it does appear that even the people behind don't quite understand exactly how it's working. They don't quite understand the nature of hallucinations and how to make them stop. And therefore one ends up in an interesting position where, you know, my mind kind of is wide to this. You know, at some point it feels like it could change everything. It could take everybody's jobs, it could automate life away, it could become self aware and then the next minute it doesn't appear to be able to do anything whatsoever. It's quite an amazing technology.

[Mike Linton]

So if I'm a marketer or I'm. I'm just applying this into my business, what you're saying, I think is since you don't understand how this thing works and how it's producing the answers, you can't actually tweak it or adjust it, you just have to keep using that. What is that? And I get the hype cycle component about that. But what does that mean for the users? Like what should they be thinking about now? Is that that a double proceed with caution flag or what's going into your head on that one?

[Tom Goodwin]

It's a kind of experiment. Learn, but be very careful. I mean, it's terrifying that so many people are uploading very commercially sensitive documents to the cloud, you know, where everything is kind of ingested and digested and then shared. So with all technology, we should be reading about it, we should be experimenting with it, we should have an open mind to it being brilliant. We should also be slightly cynical at times about some of the claims being made, but we need to get stuck in. But it's an incredible tool, but it's probably going to take a very long time for it to make a big difference. At the moment, it's a great way to do things that don't matter that much. You know, if you need to kind of translate your instruction manual into Cantonese, it's probably going to be fine. If you need to write product listing unit copy for Amazon, it's probably going to be good enough. But the moment that you start using this to save $10,000 in production costs on an ad that you're going to spend $3 million on media for, it doesn't really make any sense. So I think we need to be careful about where we first apply it, it will have profound effects on how people make decisions about what they buy. It will make the way that people buy things very different. That doesn't mean that branding is dead. That probably means that branding becomes more important than it's ever been before. That probably means that there'll be new forms based on how to ensure that results are promoted by AI. There's all sorts of kind of new opportunities and new sort of avenues to explore out there. But I think it's probably going to take a very long time for it to actually fundamentally rethink the whole industry. We're going to have to go back to all of our workflows, all of our processes, all of our structures and we're going to have to sort of start creating advertising in a different way.

[Mike Linton]

I think this is a topic, I want to just take one more on this and then I want to go to the another topic. But so really AI is you're selling to a model and consumers interfacing with this as it replaces search and everything. You're actually, then as a consumer you're adjusting to the AI model. So it's a model selling to a model. And if you can't tweak that as a marketer, how should you be thinking about this? I mean, I know it's proceed with caution, embrace the technology, play around with it, be comfortable with it, but if you're out there and, and this is becoming one of the fronts of your brand and we're going to go into search in a minute, but if search is returning these answers like the best five restaurants in London or whatever, and you don't know how to tweak that, how do you, how should you be thinking about that?

[Tom Goodwin]

Fundamentally, everything ends up coming back to a similar place to where we were, you know, 100 years ago almost. So it's a like such, you know, at the end of the day, in order for AI to be able to render out your products or your brand as a solution, your products or brands need to be written about a lot. In order for your products and brands to be written about a lot, you probably need to buy some media, you probably need to make good products, you probably need to have a brand that people understand. You end up in, in the same position you were in the 1960s, where marketing still becomes about mental availability, it still becomes about innovation, it still becomes about strong product differentiation and, and strong. So in a way, most of modern life is a contemporary interface on mechanisms and tactics and strategies that have had long standing success in advertising and marketing. So this doesn't change everything. Again, in the short term there are little tactical things that people can do. But fundamentally, the way that AI will change our industry will be when we rethink what it is around first principles and what technology makes possible. And that's probably, probably going to take five or 10 years. Many of the things that people talk about in AI are also techniques that we've been using for a while. You know, so we used to call something computer modeling, you know, now we call it digital twins. We used to come kind of big data, you know, now we call it predictive analytics. You know, what you tend to find is a lot of these debates become very clouded. They become full of snake oil salespeople, they become full of hype. And then also with AI, we've got a sort of reaction to this where lots of people are saying is nonsense, lots of people saying it doesn't work, Lots of people say it'll never happen. You know, a healthy place to be and somewhere where I often am is kind of in the middle. You know, this is very, very useful for some things. This is going to change many things, but not everything. This will take some time to actually impact everything. And it's still a vague thing. You know, in its sort of basic form, AI just means very, very advanced computing with lots of data behind it. It's not some sort of magic wand that you can sprinkle across your marketing plan. But people tend to get sold on that. You know, people love the idea there's this black box and everything can be automated and your media plan will be analyzed and you'll know precisely how every dollar that you spend works. And we fail to understand the mystery and the magic behind what we do.

[Mike Linton]

That is a great segue to the topic I want to talk about, which is you posted that the Wanamaker paradox of half the money I spend on advertising is wasted. I just don't know which half. And your opinion is that statement is dead wrong. In Today's world, it's 80% of your money is wasted. Tell us what you're thinking about. And this one.

[Tom Goodwin]

You know, generally speaking, the world of marketing is effectively three at two different worlds. There's the world of sort of small advertisers who have no chance to ever buy mass media, who don't necessarily have kind of literacy when it comes to traditional marketing. And they've developed this amazing playbook of targeting and retargeting and growth marketing and growth hacking, and they do a fantastic job of that. But I would guess that 99% of people listening to this podcast are not in that world. They don't spend $5,000 a month. You know, these are people who are spending 5 to 5 million to $1 billion. For some reason, those people have been sort of tricked into the digital marketing playbook. So we've become absolutely obsessed with this idea that everything can be attributed. We've become absolutely obsessed with this idea that the whole point of digital advertising is micro targeting. And what has slowly happened is people have been using that, the playbook of precision to abandon brand and to focus on advertising that they can see a clear ROI with. So what's happening is money is moving closer and closer to the point of sale. Money is doing a better job of claiming success than it is in creating success. And when I work with clients who spend a fortune on digital advertising, what you really see are these very in the weeds conversations about optimization. Click through rates A, B tests, and yet you look at the ads being made and they're absolute junk. And you realize we become absolutely obsessed with very short term, very precise ROI calculations, which are actually not based on any form of genuine success. They're just based on sort of hacking the systems almost.

[Mike Linton]

So there's a bunch of ways I want to go with this. Let's talk about the principles this is built on. And then I also want to touch on. I think you posted a restoration hardware case, but I'd love to talk about all those and how these all tie together. On the title of the podcast is all these principles are wrong. And so the principle of optimization, or what do you. What do you call it in a great British way? Attributed. I can't say it right. I can't say in the British way, but it was, it was sounded so sophisticated. But let's talk about those principles and then let's illustrate it with a case, if you could.

[Tom Goodwin]

So, I mean, when I first entered the industry, it was about 2002, you know, we'd make ads for Pedigree Chum, which I think exists in the US as well. Yeah. And we didn't know anything about what worked. You know, we'd make beautiful ads with beautiful dogs that talked about how great the dog food was. And about six months later, you'd get sales figures and you'd sort of know that your TV campaign was part of a broader campaign. They involve print, that involve people getting more distribution in store. You know, ATL Investment was used by buyers as a way to get more placements in store. You'd use it.

[Mike Linton]

That's what ATL is, above the line.

[Tom Goodwin]

Do you remember those days? Below the line and above.

[Mike Linton]

Everybody wants above. Yeah.

[Tom Goodwin]

And you sort of knew that. Actually, you know what, what affected your sales was the weather, it was the economy, it was competitor activity, it was price promotion, it was new packaging. You sort of knew that we were part of this big Complex world of millions and millions of interactions. Somehow the world of digital marketing has kind of sold us on this promise that advertising is not creating demand. It's not about long term impacts, it's not about a brand being strong enough to maintain a price premium. We've fallen in love with this idea that advertising is the art of predicting who's most likely to buy your product and then sticking an ad in front of them in the, in the false knowledge that if your ad makes, if your ad appears in front of a buyer and they buy that it was your advert that made that happen. I mean, it's completely ludicrous. You know, if you see a mobile ad for a Cadillac on the same day that you buy a Cadillac, it's nonsensical to think that that ad made you buy the car. You know, you probably buy a Cadillac because of 1 million data points you've seen, you know, our reviews, press a.

[Mike Linton]

Car, driving in your neighbor's car or whatever, or anything like that. Yeah.

[Tom Goodwin]

So somehow we've, we've sort of, we've really lost our way. I mean, you see Elon Musk saying that the role of advertising is to appear in front of likely buyers, and if it doesn't appear in front of likely buy is spam. That's not how advertising works. Like, like we're, we're unprepared to accept that. We don't really understand how advertising works. We know that it works. So if I think about the last three things I bought, you know, one was a car battery, one was some new tires, another was laundry detergent.

[Mike Linton]

Well, you are living a large life over there, Tom.

[Tom Goodwin]

I mean, it's a dream. It's crazy. It's a crazy life going on here. I can't begin to expl why I bought those products, but I know that advertising in some shape or form will have had an impact on all of them. And I think as a rule, we need to sort of fall in love with this idea that our instincts are good and that our judgment is good and we should stop sort of moving money closer and closer to the points of attribution. So a good example, you know, is a LinkedIn post I did today about Restoration Hardware. You know, they, they found out, I think this was 2017, their CEO. You know, CEOs don't normally get involved, but they did some reporting on their top performing keywords that they were buying in Google and they found out that the 22 best performing keywords were just misspelling of the terms Restoration Hardware in All reality. You know, someone that misspells Restoration Hardware is probably going to end up finding the Restoration Hardware website. So all you're doing is you're kind of getting in the way of something that was probably going to happen. You're spending lots of money to make something happen that was probably going to happen. And then you're claiming, claiming success. And then when you can show that those keywords, you know, generated $10, you know, for every $1 spent in ROI, it then becomes very difficult to justify something where you don't know the ROI or the ROI becomes lower than that. And I think as a general rule, we see things like the rise of retail networks, we see things like the rise of search, and we've fallen in love with effectively taking credit for things that were probably going to happen anyway. And it makes it very hard to justify things that are flu year or happen over a longer period.

[Mike Linton]

Longer or unmeasurable? Unmeasurable. Harder to measure, I think, is it's the. So this is super interesting because what the counter argument to that will be, look, if there's 20 ways to misspell Restoration Hardware, let's find the 23rd and 4th and 5th way and by those words, because those will be ROI efficient. And then let's look at these other marketing tools you're using where there is no ROI or the ROI is some fuzzy stuff. All marketers are, not all marketers, but a lot of marketers find themselves in this space where the spreadsheets on one side, what you're saying, maybe on the other, the proof point is hard to do. What should marketers do? And what happened at Restoration Hardware after they found this? Did they buy a lot more words or did they cut a lot of stuff? That's like six questions at once. So knock yourself out.

[Tom Goodwin]

I think the main question that you asked is what should a CMO do about this? I remember having this conversation with a very smart guy in marketing about six years ago by the name of Mike Linton. He told me that what he did is effectively he felt like his job was to do two things. His job was to make sure that he had enough data to go into meetings with the CEO and in board meetings to. To prove that what he was doing was effective and the majority of his money should be spent on things that he knew worked but he couldn't necessarily prove. And I think there is this really cruel irony. I was thinking about this the other day when I, when I, you know, occasionally I, I sort of take time out from my job and I just exist as a normal human being. And I, I try not to think about things too much. And when you do that and you sort of notice things in a human way, you realize there's a weird, I think there's almost a perfect inverse correlation between the trackability of media and its precision and its genuine impact. You know, when I, when I see advertising in stadiums, like, like I notice that and it makes me feel something. If I see outdoor ads, there's a scale to an outdoor ad which is basically saying like, you can trust me. You know, it's things like this sort of Michelin guide. It's these sort of top of mind broadcast wasteful activities that are actually subconsciously giving you the confidence that these brands are going to be around forever. You know, you'd never go into a branch of Chase and start performing ROI calculations on what the.

[Mike Linton]

Oh, I was doing that last week. Oh, sorry.

[Tom Goodwin]

You know, like everything that's really important in life, you can't really measure the ROI of, you know, what's the, what's the, the ROI of a leather folder if you stay in the four seasons that holds your menu, you know, what's the, what's the ROI of fresh flowers in an expensive restaurant's lobby? You, you can't go around in life calculating the ROI for everything. You need to sort of understand that as a whole these things work. So I think, you know, marketers would be idiotic for not focusing on ROI on media. That gives them a strong data trail, but at the same time they must also be doing things that they can't prove, but they know work.

[Mike Linton]

I did write a story on this once about if you deconstructed a martini and did it just from the roi, the martini would just be a straight up glass, not in a martini glass, but either just filled with gin and vodka or vodka. And that would be it because that would be the best ROI of the martini. But no one would want it that way. So I hear what you're saying and when you talked about one of the other things you said in one of your articles was advertising, we kind of know it works, which is what you just said. But then you also called it slow and weak. Tell us what you mean by slow and weak. And then I want to go into when you are faced up against a board or CEO or CFO who needs something right away how you defend slow and weak.

[Tom Goodwin]

I mean, the answer to everything in marketing is always it depends. And whenever I do these sort of pithy, you know, you would say contrarian posts on LinkedIn there's always hundreds of people waiting to say, well, actually it doesn't work like that for me. And that's very true. You know, like if you're selling something which is a digital product or something that you buy primarily online, especially if it's a new product, then something like targeted search or targeted shoppable ads are an amazing way to build your brand because you've got no other way. And you know that if someone clicks on your ad and they end up buying it, it probably was the ad that made it happen. You know, I'm kind of moonlighting as someone that sells books and I know that if I make an ad for those books, it's probably being very effective. But again, I'm talking to the majority of people. So the majority of people have still sell products that people buy in stores. The majority of brands have been around for quite a long time. And the reality is that it's probably taken, you know, between 20 and a million impressions for us to buy the things that we do. Many of those impressions have been served to us, you know, 10 or 15 years ago. Advertising kind of layers on itself. Advertising creates shared understanding. You know, I own a Mercedes G Wagon. The reason I own one is because my wife was saying for a very long period of time that it was a snazzy car to get, you know, she needed to know it was a desirable car. I need people who see me driving that car to know is expensive. I need people to think something when they see people driving their car. So advertising works in this sort of very broad, this very long term, this very sort of dissipated, accumulated way. And that's a very uncomfortable reality for most marketers selling most things. You know, you can't just sort of dial up a button and expect amazing things to happen. And probably if you do, you know, if you go to your agencies and you say, I need to get, you know, 10,000 net ads on this new Verizon tariff, they're probably going to do sneaky things to probably claim success for things that were probably going to happen anyway. They're probably just going to move the money into more attributable places and closer to the point of sale. And it's going to become like advertising beer in a pub toilet, you know, where you take it for the fact that the people in the pub ordered your beer when in reality they were in a pub in the first place. What do you think they're going to do?

[Mike Linton]

That's right. I'm going to buy all the misspellings on BMW I'm going to.

[Tom Goodwin]

Hey.

[Mike Linton]

One of the things you, you, you said also is that good writing is an essential but rare skill. Tell us what you mean by that and why marketers should care. Because, you know, you can hear hardly anybody writes anymore.

[Tom Goodwin]

I think, I think this is a kind of response to generative AI. You know, everyone's fallen in love with this fact that you don't have to do any work anymore and you can just put a few words into open AI and it'll churn out an email for you. You know, writing is the art of thinking. Thinking is the art of reading a lot of stuff and connecting dots in different ways. You know, over time, the more you write, the better you get at writing. But also the better you get at making points succinctly, the better you get at listening to what people say to improve your arguments. So there are two things really. One is it's a, it's a useful skill for us to build up. You know, it may be hard work, but so is going to the gym. And no one complains about that. Or if they do, you know, that. And the second thing is, and sometimes my posts on LinkedIn are more like sort of therapy, but I get so many inbound emails and people really have lost the art.

[Mike Linton]

I agree with this.

[Tom Goodwin]

Being concise, being relevant and being sort of clear. You know, the number of people that want to sort of get a coffee to maximize synergies, you know, or people think it's having a bit of a chat, you know, to learn more about each other and ways that we could collaborate on future endeavors. You know, if you want me to read your book and write you me a blurb, you know, just say that, you know, if you've got like a data list you're trying to sell me, you know, just tell me that. Like, I think we've, we've lost the art of the realization that people are quite busy, they've got a lot of stuff to do and you just need to get something into their head, head that's going to create a bit of a seed that grows.

[Mike Linton]

I agree with this. And you, I think you made a comment there about people just getting right to the point. And you watch a lot of people in business meetings or business town halls where they will raise their hand to ask a question and proceed it with a seven or eight sentence discussion about something and then finally get around to the question and, and it's like you're actually giving a speech, you're not asking. Yeah, that's a good point. You Know, I couldn't help but notice as I scrolled through your stuff, three things. The Wazel effect, Bredkin's paradox, and the dopamine culture. Can you talk about. You can pick any of those or all three of them. I mean, they were just things. All right, just want to know what they are.

[Tom Goodwin]

I mean, dopamine coach is amazing. I think we, we've let technology into our life without really pondering what it means and, and if we should. And as a result, I think everyone's got addicted to a sort of short term rush. So people don't think they have time, you know, to, to read things at length. People think that everything needs to be sort of salacious and fascinating and, and sort of poker their, their primal fears and their, their sort of need for things to be exciting. And I sort of worry a bit that we've created an environment where people are kind of permanently sort of enraged and they're permanently kind of like enthralled by stuff. And this is quite useful for a marketing conversation, I think, because we go around saying that people don't have time. You know, you see all sorts of decks. You know, the target audience is a busy mom, they don't have time. The target audience is a millennial. They don't have time in their heart.

[Mike Linton]

I've never actually seen a deck that said these people are wallow around with excess time and don't know what to.

[Tom Goodwin]

Do with it, but people don't have access time. But, but people are really lost. I mean, I think the, the prevailing emotion in the world today is that people are a bit bewildered, they're a little bit misguided, they're quite overwhelmed. They actually have more the money than they've ever had before, but they have no idea what they're doing. They don't have time to, they don't have the mental capacity to make decisions. Well, and actually this is the environment, I think, in which branding works really well. You know, our job as marketers is not to find the right person and to slam a message just as they were about to buy us anyway. Our job is to create meaning to products. Our job is to create a feeling that people have when they choose us. Our job is to make people feel better about decisions to buy our products and to feel more confident in those decisions to buy it. And I think sometimes we sort of forget how helpful marketing and branding is as a sort of mechanism to do that.

[Mike Linton]

And then how about the Waszel effect and Fredkin's paradox? If you want to talk about those.

[Tom Goodwin]

Fredkin's paradox is amazing, actually.

[Mike Linton]

I want to hear about Fredkin's paradox.

[Tom Goodwin]

You know, I think a lot of the world is about creating good problems. And I think, you know, people assume that kind of rich people don't have problems. Rich people just have better problems. You know, rich people, poor people have problems like, I need to see my dying mom and my car's broken. Rich people have problems like, I need to get to Davos, you know, and the private jets been used by my husband. How do I get a first class flight that's going to get me there on time? But the weird thing is these problems seem as big as they are. So this paradox is basically when you're faced between two alternatives that are both amazing, we find those decisions hard, whereas actually those are very easy decisions because they're both amazing choices.

[Mike Linton]

I got it. And then the Wassel effect.

[Tom Goodwin]

The Wasel effect is basically the degree to which we get sucked into trivial discussions. So we become so overwhelmed by things that are difficult and complicated that we end up focusing on problems that are much, much smaller. I'm going to forget the name of it, but there's something called the Betteridge or the Baines Fair bike shed principle. And the idea here is actually amazing. I mean, I'm going to go into this properly, but the idea here is there's a kind of. There's a metaphorical nuclear power station being built, and all sorts of people have to be part of the process. And it involves all sorts of horrible conversations to do with raising $50 billion and regulation and health and safety and environmental impacts. And this committee of people charged with all of these vitally important discussions about the type of reactor end up spending all day long talking about the color of the paint in the bike shed for the employees and what this is. And I see it all the time, actually, people on this podcast probably don't realize this, but I do do consulting. So I spend my time in actual meetings where people are talking about stuff. And the number of times you're in a meeting where the big business challenge is that the company's kind of. And that Chinese competitors are going to completely destroy the business, or that a new regulation coming out will mean that it'll be illegal to sell your product, and you spend all of your time in meetings with a spreadsheet, you know, talking about whether the blue ad performed better than the red ad.

[Mike Linton]

All right, what about the color on the. On the mast head or the. I remember being at a paper company where there was an argument about how many Sheets of toilet paper had to be showed hanging from the roll in a print ad. And it's like, oh my gosh.

[Tom Goodwin]

But okay, and, but you realize what's going on there because, because for a while I was quite critical and I thought that people must be a bit sort of stupid or something. And then I realized it wasn't that, it was just that a lot of people sort of run their, their careers a little bit like a sort of filibuster. You know, a lot of people are not trying to make great decisions. A lot of people are trying to get through the day. Through the day is to make decisions about things that don't really matter and to spend a really long time making those decisions. And I think it's useful in our jobs to be aware that, you know, it's useful to empathize. You know, what is it like to be a marketer these days? Like what are you thinking about? What is it like to run an agency? You know, what are people scared about? Because often if you have those conversations, you can, you can have much more sensible discussions.

[Mike Linton]

Got it. Thank you for that. So you, you predict a lot of stuff. So top prediction for something that happens by next summer, like so by next September.

[Tom Goodwin]

There are lots of things, but you ask me for one. I think Apple is going to get into the advertising game properly. I think there's, there's so much money to be made. You know, I'd love to know your thoughts and I'd love to know your listeners thoughts on this, but I, I think a secret problem that we're not talking about enough is that marketers can't spend their budget. You know, TV is not dead, but it is a difficult way to reach a lot of people. Print is not dead, but it's not a great way to reach a lot of people. So people have billions of dollars they need to spend on reaching people. And the entire digital ad ecosystem is full of fraud. It's full of.

[Mike Linton]

And also AI may obliterate a lot of it.

[Tom Goodwin]

It's full of rent seeking and therefore people really need to find sort of premium places to put decent ads that are not personalized but they're vaguely relevant. And I think Apple could be the company that makes a kind of more premium advertising experience and makes a lot of money from that.

[Mike Linton]

Well, I do think, look, I agree with everything you said. The marketing tools, the old tools are declining faster than new tools are replacing them in terms of fact. And I think if I'm also a big company, like whether it's Apple Walmart or Netflix, and I'm trying to make some. I have to find a way to grow. So this is a very logical place to grow. I have the customer, I have the platform. Yeah, I can charge for it. I have a lot of data. I think that trend continues. So we're at time. So we have a traditional last question, funniest story you could tell in the air, or practical advice we haven't discussed yet. You have to take at least one of these. You can take both, but you must take at least one.

[Tom Goodwin]

You know, my funny story is, I mean, it's not that funny, but it's quite sort of. It's a good indication of the industry and what we get wrong about 2005. I was trying to sell a music service for Nokia. So this was before itunes, it was before the iPhone. They had an amazing music service where they created a policy which allowed people to have as much music as they wanted on their phone for free, forever. They spent an absolute fortune on procuring exclusive rights to all sorts of albums, like Kylie Minogue was one of them. They wanted us to spend about $25 million on media to help people download this music service. The only problem was that the music service only worked on one particular variant of one particular model of one particular phone, theirs on one particular network. So I spent about six months arguing with my client, who was not here at the time, saying, look like the total addressable audience for people that can actually take out this service is only 50,000 people. There's no way that this campaign can ever demonstrate any proper ROI, because the best case scenario is 50,000 people want to do it at the time. Nokia has so much money, they just didn't care. They said, let's do it. So he ended up spending $25 million procuring all of this music, doing a massive takeover of newspapers, and in the end, three people downloaded it. And it always makes me laugh because it would have been cheaper to fly Kylie Minogue to everyone's house.

[Mike Linton]

Everyone's house.

[Tom Goodwin]

But I had to do like a private gig and give people the best day of their life than to do that.

[Mike Linton]

It sounds a little bit like the Wazel effect. I'm just saying. So thank you, Tom, and thanks to everyone for listening to CMO Confidential. Look for more shows on the I Hear Everything Network, Spotify, Apple and YouTube, which include marketing the battle between believers and non believers, parts 1, 2 and 3. Why is B2B marketing so bad and what to do about it? What your agency wants to tell you but won't and Tom's previous shows, including A Contrarian's View of Everything everywhere all at once. Hey, all you marketers, stay safe out there. This is Mike Lindsen signing off for CMO Confidential.