Scott Galloway (2:32)
Welcome to Office Hours with Prop G. This is the part of the show where we answer your questions about business, big tech, entrepreneurship and whatever else is on your mind. If you'd like to submit a question for next time, you can send a voice recording to office hours of prophetymedia.com Again, that's officehoursoffertymedia.com or post your question on the Scott Galloway subreddit and we just might feature it in our next episode. Question number one our first question comes from Michael on LinkedIn. Michael says AI is one of the key drivers behind the recent collapse and irrelevance of the advertising agency industry. What will happen to the whole marketing domain then? Okay, could you be a little broader in your questions? All right, what's happening in the agency world? Wpp, one of the world's largest holding companies, announced a major plan to cut a half a billion pounds in costs by 2028, driven by restructuring and integrating AI tools, and is aiming to return the company to growth by 2027, the new center share price to its level since 1998. Think about that 28 years later, Omnicom's $9 billion merger with Interpublic Group will result in about 4,000 job cuts, which accounts for around 3% of the company's combined headcount. And then in 2025, total ad agency employment in the UK dropped over 14%, with the under 25 workforce shrinking nearly 19%, driven in part by AI automating roles and reducing demand for entry level work. So the industry's navigated platform transitions before print, broadcast, digital and mobile. Let's bring this back to me. I've been able to reinvent myself and get out of shitty businesses before they got terribly shitty. In my second year of business school, I started a brand strategy firm called Profit. And my basic thesis was I read something from my brand strategy professor David Aker, that the only sustainable advantage was the intangible associations of developing these brand codes and then using this incredibly cheap medium called broadcast advertising to hammer home these brand associations of maternal love or European grace or sex or American toughness. And that that was how you created a rational margin. And from 1945 to the introduction of Google, whether it was P and G or Nike or General Motors, they basically the kind of the algorithm for above market shareholder value was a mediocre product with amazing brand values. All that changed with Google and that is all of a sudden your ability to find instead of deferring to the brand as a weapon of mass diligence. You could type using your social graph using Google and search using different digital properties between I always used to stay at the Trip at the Four Seasons or the Ritz Carlton when I traveled. Why? Because someone else was paying, I was traveling for clients or speaking gigs and they always deliver an 8 out of 10. And then once there was TripAdvisor and Instagram and Facebook and Google. I now found that, oh wait, when I'm in Berlin, I want to stay at the Sohouse because it has the best gym. When I'm in London, I want to be at Chiltern Firehouse because it has the coolest bar with the hottest people. Basically I want to be the Beverly Hills Hotel because it has the Polo Lounge where I can establish eye contact with a lovely Russian lady. That's not true. Anyways, I could find what worked for me and I no longer needed to defer to the institutional brand. And that a series of smaller brands or that basically product innovation broke through, that if you had an amazing product like a 10x better product, people would learn about it without the benefit of advertising. The majority of the companies have added tens of billions of dollars in shareholder value over the last 30 years, have one thing in common and that is they spend a disproportionately low percentage of their gross proceeds on advertising because they just have. They pour all their money into product innovation because digital kind of unlocked this incredible era of product innovation. Tesla spent no money on advertising because it had an individual who created a massive amount of awareness. And you could tune up the car over the wirelessly. Google, Instagram, they're 10x better products. So there has been an era moving from brand to innovation and it's mostly been driven by these direct response mediums that have incredible technology that are automated, that don't require a person to show up and talk about brand codes wearing black, and then enter into this exceptionally inefficient, expensive ecosystem where they, they take millions of photographs and pay Annie Levitz a quarter of a million dollars for a shoot of Kate Moss to find a moment in time and then run an ad for Tom Ford and Vogue magazine that costs $180,000. That is relevant to 2% of the market. And Google basically said we can target people now to teenagers who just got driver's licenses in New York, if you're Geico in New York. Anyways, these companies are now in just full blown structural decline, which means they're going to have to cut costs and consolidate and mer. But you're going to see the next kind of step change down is going to be when these AI companies launch advertising and they're already beginning to experiment with advertising formats. Conversational AI systems, including ChatGPT have started introducing sponsored responses and paid placements in certain contexts. That's going to be really fucking strange when your AI, which knows your history, starts serving you ads. And the best ads are the super bowl, hands down. I think we're anthropic, mocking the idea of ChatGPT going into ads. Those ads were just, oh my God, they were outstanding. In sum, I just want to relate this to. So AI is another tool that will continue to kick the shit out of traditional masters of the universe from the last century, and that is the ad agency guys. So let's bring this back to me. Best consulting gig I ever had was right out of business school, a guy named Warren Hellman of Hellman and Friedman. I met him, we hit it off and he said, I got a great assignment. I'm going to pay you for two years to come to the board meetings of Levi Strauss and Company. At the time, it was the most valuable private company in the world. Everyone at Levi's thought advertising was just it. The right ad campaign could change everything for them because they had an okay denim product and they wrapped it in amazing brand coats. It cost them 8 bucks to produce these things and they sold them for 38 bucks at J.C. penney's and 150 bucks in Germany. And I'm not exaggerating. I haven't seen an ad man or an ad woman in a board meeting in 20 years. No one gives a shit what they think. They literally Don Draper has been drawn and quartered. And so the advice is kind of the following. These are just shitty places to invest and work. Now, having said that, if you're over, say the age of 40, 45, and you already have good momentum there, and you have clients that like you, you are always going to need people to interpret changes and in marketing and advertising and AI for clients who are willing to spend their company's money to help them navigate an ecosystem which is increasingly complex. But every year their business gets smaller and smaller and shittier and shittier. So you're over the age of 40 or 45 and you're doing well, fine. But if you are under the age of 40 and you have a chance to get out of the, get on the helicopter out of Saigon because traditional kind of image based broadcast driven advertising, oh my God, that's a shitty business. And it's like going to work in cable news right now. So what happens to the whole domain of traditional marketing pain? Thanks for the question. Question number two also comes from LinkedIn. Noah Frank asks, what is the most underrated financial decision you made that had nothing to do with investing, uh, easy. I married a competent partner. I married someone who's a decent person, who's competent. I have a lot of friends who are men and women who don't have a confident partner. And it means they have two jobs, which means they can't be very good, you know, don't half ass two things. Whole ass, one thing. You end up half assing two things. If your partner, if your husband or your wife is incompetent, you're managing the relationship, you're managing the household. So building something with someone who's competent and loving and understanding and makes you feel good about yourself and manages the parts of your life well or the home well, who brings in their own money and is smart. I mean, one plus one equals three. The majority of very, very wealthy people are married and have a competent partner. And my dad always made good money. And it goes the other way. You want to be a good partner as well. My dad always made good money. He was talented. He ended up at the age of 60, he ended up broke, without a pot to piss in because he got married and divorced four times. So it goes both ways. One, the most important decision you will make financially and in terms of your own psychological well being, hands down, is finding the right partner. And what I don't like is all this shit that's especially on TikTok, telling women that if he doesn't open your door, he's out of there. Like find red flags in everything. Well, that's not helpful either. But the question is, all right, how do you select a good partner if that's the most important thing? And I think most people would probably say, okay, that makes sense. One, it's sex and affection. You're saying, I choose you. I think it's really important and I think you constantly need to reaffirm that and work on it and express physical desire. I think, let me say it, I think women want to be wanted. And I think sex, it brings peace and harmony to a relationship and says, I choose you. Two values. I think it's important that you're generous and very open with each other about things like religion, as it relates to your kids, how close you want to live to your family, and that you're generous with each other around those things. And then the third is, I was joking. They say, never let a woman be colder, hungry pashminas and power bars at all times. The biggest blow ups I've had in my relationships have been when someone didn't have Lunch. They skipped lunch. Watch out. Where am I going with this? Anyways, picking the right partner. And then also. So how do you pick the right partner? Volume. What do I mean by that? Get out. Yeah, it's great to sit at home and eat an edible and hang out with your dog and watch Netflix. No, fucking get out. Find friends. Go out, be friendly. Somebody asks you out for a coffee and it's not like sparks right away, okay, go to a second coffee. You might find that you, over time, you're really into, start to get more into him or into her. Get out. Meet friends, Express romantic interest. Be bold. Approach strangers. Put yourself in situations where the serendipity of meeting somebody. Be bold, be brave. How did I find the mother of my children? I saw a woman I was attracted to at the hotel pool, the Raleigh Hotel. I went out to get my. I promised myself I was going to speak to her before I left. I didn't. I went out to get my car and I'm like, fuck. And I grabbed a. I told the valet guy to hold onto my car and I went back in and I rolled up and said, hi, my name's Scott. Where are you guys from? And I don't know. Eighteen months later, our first son's middle name is Raleigh. My point is, it's easy to say, okay, you're going to get it. Partner is the most important financial decision, right? You're probably like, if you're not nodding your head, okay, you don't get it. It is the most important decision. The most important decision. I think you can sort of control two. All right, great. How do I find a great partner? Putting yourself out there, going out, being kind. If you're a man leveling up, level up, for God's sakes. Young men need to level up because young women are leveling up. And it's only natural and understandable that their standards are going up as they would if you were fucking leveling up the way women are leveling up. Anyways, where am I going with this most important decision? Financial, Emotionally, psychologically, who you decide to build a life with. How do you find the right partner? You get out, you level up yourself, you make yourself more attractive, you develop resilience, and you put yourself in a ton of situations where you could meet somebody. Thanks for the question. We'll be right back after a quick break.
