Volume 143: The Schrodingers Cat of Business.

1. The Schrodingers Cat of Business.

tl;dr: Generative AI: Be neither hype-bro nor Luddite.

Shortly after starting my first job in branding in December of 2000, an aged production specialist regaled me with tales of the beforetimes when he used to typeset client presentations by hand. And while he talked of these all-night typesetting sessions with a distinct sense of rose-tinted nostalgia, I remember being horrified at how labor-intensive something as seemingly innocuous as preparing for a client meeting used to be.

Moving forward, I expect this same feeling of shock when the next generation of talent listens to someone like me regale them with tales of how everything used to be done by hand on a computer screen…using a keyboard, mouse, or Wacom tablet. Wut?

This is because the Schrodinger’s Cat of Generative AI is upon us. 

Schrodinger’s Cat because we don’t yet know its limits. So, until we open that door, it has the potential to be either shockingly terrible or utterly amazing at the exact same time. This means I’m equally unwilling to make breathless predictions of what’s possible as I am to make scorched earth pronouncements of why it can’t, won’t, or shouldn’t be used.

So, please think of me as the Schrodinger’s Cat of vacuous talking heads 😉. 

Speaking of talking heads, Mark Ritson recently took an impassioned anti-AI stance on LinkedIn. Yet as I read it, I was struck by the contrast that, even as the likes of Mr. Ritson and others decry AI-driven advertising as being deeply lacking, experiments happening in real-time show we already struggle to tell the difference between human-made ads and those made by machines.

So, aside from the inevitable conclusion that, much to Mr. Ritson’s chagrin, most human-ad making will likely be toast in the not-too-distant future, why can’t we tell, and does it matter? 

Well, at least some of this comes down to a trend that’s been happening for a long time: while the creative services industry pretends to sell creativity, it doesn’t. Otherwise, the largest and most financially successful agencies would be the most creative, and they most certainly aren’t. (As an aside, whoa, try clicking that link. Interbrand has always been shocking at communicating, but I have no clue what these talking heads are on about, and I’ve worked in this business for over 20 years). Anyway, contrast this with management consulting, which sells analytical capabilities. McKinsey is both ginormous and could easily be defined as the most analytical. Corruption aside.

In truth, real creativity -insightful, empathetic, challenging, and differentiating- is a niche product sold to buyers with a higher risk tolerance than the norm. Why? Because creativity is messy, risky, ambiguous, and rebellious. It’s unpredictable and desperately hard to measure ahead of time. For example, the now-famous and very effective Cadbury gorilla spent months in limbo between production and the ad running because the execs in charge were afraid of it. Instead, most of what agencies sell as “creative” is comfortably dull, predictable, middle-of-the-bell-curve, low-risk formulas with the merest gloss of creativity sprinkled atop.

And machines are excellent at replicating formulas.

This inevitably brings me back to the question of what we’re selling and, as a result, what AI will really be mimicking. Especially when the majority of the creative services industry appears to have largely abdicated responsibility for being, you know, whisper it…creative.

Let’s look back for a second to better understand why. Over the past twenty years, VC-backed adtech and martech firms have done an incredible job of weaponizing the so-called Wanamaker Paradox under the guise of “digital transformation.” Persuading almost everyone that the biggest problems in marketing aren’t problems of creativity but efficiency.As a result, efficiency has become the meta-narrative that dominates everything within today’s marketing conversation.

The net result? The best and the brightest creative minds no longer work in the creative services field. They have better opportunities elsewhere. 

As I joined the branding game back in 2000, there were vanishingly few commercial jobs that openly sought creative, imaginative minds, and pretty much all were at the creative services end of the marketing spectrum (advertising, branding, industrial design, retail architecture, etc.). Today, that’s not the case at all. Today’s best creative minds are building their startups; they’re joining tech companies; they’re making TV shows; they’re becoming innovation consultants; they’re building their celebrity on TikTok; they’re adding creative capacity to management consulting firms or private equity; and they’re increasingly becoming software engineers as code becomes the material from which modern-day creativity makes the world. 

And as writing code shifts from logic and math to the fuzziness of natural language, this shift will only deepen.

This leads me to believe that before we reflexively decry the use of AI in delivering creative output for marketing, we must first acknowledge that we human beings haven’t exactly been outstanding in our use of creativity in the field ourselves, no matter how loudly we might proclaim otherwise. 

And that’s important because when we hear about NVIDIA doing a global deal with WPP to offer things like AI versioning, post-production services retouching, background replacement, etc., we must remember that this use-case has little or nothing to do with creativity. Production re-touching could reasonably be viewed as low-value manual labor that can now be automated for speed and efficiency. Equally, much of the manual labor currently labeled UX design will likely be automated, as will those things agencies like to charge free/intern labor for doing, like designing the mechanical variants for CPG packaging or creating brand guidelines. Yes, this shift will have a material impact on business models, but it isn’t replacing creative work. It’s replacing the manual labor profit pools that creative work has traditionally surrounded itself with.

So, what about the creative work itself? Clearly, this will face AI-driven disruption, and I’ll be curious to see how that pans out. And while I promised not to make predictions, I do have a totally unsubstantiated theory I’d like to share (A distinction without a difference? Dunno, but I dug a hole for myself when I oh-so-cleverly referred to Generative AI as the Schrodinger’s Cat of business, so now I’m digging my way out of it any way I can). Anyway, here goes:

• The ad-tech/mar-tech narrative around efficiency has played out, and clients are now (quite rightly) beginning to look at the tech stacks they’ve been sold as sources of inefficiency, ripe for cost-out transformation.

• The tech co’s aren’t daft and know this is coming. As a result, they’re about to pivot from media efficiency to creative efficiency as their focus. In the past, creativity was ignored because you couldn’t build a tech solution to solve for it. Now you can.

• The impact will be intense as generative AI is pushed into every area of creative services, likely before it’s ready for prime time, before we have a good handle on what it’s good and bad at, and before people really know how to use it. Adoption will be rapid because 1/ Clients value efficiency and predictability more highly than the riskiness of creativity, 2/ We struggle to tell the difference between AI-driven and human-driven creative output anyway, 3/ Billions of dollars worth of VC and management consulting hype will tell clients the Schrodinger’s Cat is utterly amazing at this creativity lark, 4/ Corporations, especially public corporations, are under intense Wall Street pressure to show they have “an AI strategy,” and, 5/ Because it’ll be cheaper.

• At least one of the major advertising holding companies will self-immolate during this transformation as they gleefully slash human costs while continuing to charge fat fees. Well, they’ll try to anyway. This will backfire because clients don’t trust them, and Silicon Valley will be busy turning creativity into a tech solution in the exact same way it turned media into a tech solution. 

• Over time, diminishing returns from AI will kick in. Like anything everyone can access, any advantage it once provided will be competed away. And, as more work becomes generative, purely AI-driven creativity will stall. With less human creativity for the machines to learn from, we’ll be left with a synthetic loop, which will increasingly struggle to provide novel or interesting creative solutions as it gets stuck in a rut of predictability…

• …which will precipitate a phoenix-like rise of “idea shops” from the ashes AI leaves behind. Only these will be different. They’ll be a lot smaller in headcount. The days of advertising agencies with a thousand people in a single office will be long gone by then. Manual labor jobs will have been automated, many “creatives” will now be machines, and we’ll be left with a few smart, talented, highly creative people pulling the levers. Many of these idea shops will likely work solely to inspire the machines - improving the creative quality of the model - rather than making ads, logos, or other creative assets themselves.

• Aside from the VCs, data vendors, and a new generation of creative tech, small businesses will be winners. They’ll now have access to professional quality creative assets generated cheaply. What happened before when technology firms massively democratized digital media will happen again, only this time in the production of creative assets. 

But again, please don’t read this as a prediction—merely an unsubstantiated theory. In other words, I’m probably full of shit. 

2. Google Enters The Finding Out Phase.

tl;dr: New revelations that Google serially defrauded its advertisers.

It’s a popular misconception that Google became as big, profitable, and influential as it is because it’s a brilliant tech innovator with the smartest people, platforms, flywheels, and suchlike. This is a smokescreen. In truth, Google is as big and as profitable, and influential as it is because it was a brilliant dealmaker that saw the potential for online advertising before anyone else did and serially gobbled up its competition through acquisitions to the point that it now monopolizes all sides of the ginormous business of digital advertising.

As a result, it could reasonably be argued that Google’s success has more to do with a failure of antitrust regulation than with Google’s innate capacity for innovation. 

The challenge with being an unregulated monopoly is no longer having to find ways to match or exceed your competition because you have none; instead, you must now resist the temptation to place your fingers on the scales in ways that benefit you at the expense of your customers.

And this is a challenge at which Google increasingly appears to have failed. Now appearing to enter the “finding out” phase as a result.

In addition to facing two EU antitrust investigations, there have also been US court revelations vis a vis an allegedly illegal sweetheart deal with Facebook, codenamed “Jedi Blue” (very quickly, Google and FB are accused of illegally colluding to lower advertising costs for FB in return for it killing something called “header bidding,” which competed with Google’s Open Bidding alternative). And now, a WSJ article (paywall, sorry) accuses Google of having serially failed to meet its stated standards, possibly defrauding its advertising clients in the process. 

It’s a doozy.

Put simply, advertisers have been paying to run ads on Google-owned YouTube, but they don’t run there. Instead, they’ve been running on 3rd party sites, where the ad often isn’t viewable—running muted off in a corner somewhere. In financial terms, the issue is significant because YouTube ads are roughly 20X more expensive than running a video ad on these third-party sites. Worse, the sites these ads have been running on were found to be generally low quality, often espousing misinformation and hosting pirated content. In other words, the very last place any blue chip brand wants to be seen, assuming real people saw the ads at all. 

Google, of course, refutes that it did anything wrong, but advertisers are likely to take a very different tack. Especially since those named in the article, such as Disney, J&J, American Express, Samsung, and the US Army, aren’t exactly lacking in legal firepower.

So, what next? Well, in addition to going on a major apology tour to placate its biggest advertisers, Google will almost certainly have to pay back a tonne of money that’ll likely represent a significant financial hit even to a business that prints money the way Google does. Not to mention the fuel it adds to the already rising antitrust flames.

Beyond that, I suspect we’ll see further fallout as advertisers that no longer trust Google start looking more deeply into their relationships and begin auditing what’s really been going on. And, I deeply suspect that where there’s smoke, we’ll probably find more fire…

And ultimately? Well, for me personally, I want to see Google broken up. Not because they’re -allegedly- fraudsters but because whenever a company finds itself with unregulated monopoly power, it has adverse societal effects. Innovation and competition get stifled, costs rise, and the chances of thumbs being placed on scales increase. And in the specific case of Google, there’s a direct thread between its excess monopoly rentsand the financial collapse of publisher business models.

Instead, we should treat them like Standard Oil or the Bell Telecom Systemand break them up. And no matter how much whining we might hear, it would be a good thing. Government-mandated corporate breakups almost always lead to a more valuable and dynamic set of new corporations than the monopolist that was originally there.

The capitalist thing to do is to break them up. The crony capitalist thing to do is to leave them alone.

Anyway, expect this story to run and run. 

3. Distinctly Barbie.

tl;dr: One of the vanishingly few brands to be distinctive.

If you’ve spent any time on LinkedIn or Twitter recently, you’ve almost certainly come across someone pumping the marketing tactics utilized to promote the forthcoming Barbie movie.

And it’s a fun thing to look at, Barbie being one of those franchises that’s so non-threatening that it’s super easy to get other brands to come along for the promotional ride, opening up all sorts of co-branding opportunities. Barbie-themed AirBnB in Malibu, anyone?

I have no proof to back this up, but I also wonder if the recent spate of underperforming movies, in addition to the inevitability of sequel fatigue, has something to do with a pullback in marketing spend by studios facing deep financial concerns as interest rates rise, cinema audiences fall, streaming media continues to be a money pit, and cable TV revenues decline? If so, it might suggest going big on Barbie to improve its chances of breakout success.

However, it’s the distinctiveness of the Barbie brand that makes these lists of tactics look so impressive. With JKR recently sponsoring a proprietary report into distinctiveness that shows only 15% of brand assets have any,this is the thing that stands out an absolute mile for me. (As an aside, thank goodness someone has finally done this research, and thank goodness JKR didn’t pursue the path of least resistance, which every other agency does…and create a list. The easy thing would’ve been to create a list of the “most distinctive” brands. Yawn.)

Anyway, as I look through these LinkedIn posts and Twitter threads, my primary response is that the promotion of the Barbie movie reads like a love letter to the distinctiveness of a Barbie brand Mattel has done an incredible job building over decades. 

How else could you do a billboard with nothing but a single color and date and have anyone know what it’s for?

I have no idea how the movie will do at the box office, but I would suggest that anyone client-side look at their brand through the Barbie lens. Chances are, somewhere in the region of 80+% of what you find won’t be distinctive at all.

And if you decide to do something about it, keep those Barbie images handy as a reference. Because the truly damning indictment here is that the very same branding agencies that might reasonably be viewed as guides through a process of creating distinctiveness are exactly the same agencies that spent the last twenty years blanding the crap out of everything and making the terminal error of conflating good design with good branding when it’s so often anything but. 

So take that list of Barbie tactics and be explicit, “I want my brand to be as distinctive as Barbie.” 

And nothing less will do.