Innovation, alongside disruption are two of the most overused words in business at the moment. Like obscenity, many people have their own idea of what innovation is.
Judy Estrin wrote one of the best books about the subject and describes it in terms of hard and soft innovation.
Hard innovation is companies like Intel or Qualcomm at the cutting edge of computer science, materials science and physics
Soft innovation would be companies like Facebook or Yahoo!. Companies that might create new software but didn’t really add to the corpus of innovation
Silicon Valley has moved from hard to soft innovation as it moved away from actually making things. Santa Clara country no longer deserves its Silicon Valley appellation any more than it deserved the previous ‘garden of delights’ as the apricot orchards turned into factories, office campus buildings and suburbs. It’s probably no coincidence that that expertise has moved east to Taiwan due to globalisation.
It can also be more process orientated shaking up an industry. Years ago I worked at an agency at the time of writing is now called WE Worldwide. At the time the client base was predominantly in business technology, consumer technology and pharmaceutical clients.
The company was looking to build a dedicated presence in consumer marketing. One of the business executives brings along a new business opportunity. The company made fancy crisps (chips in the American parlance). They did so using a virtual model. Having private label manufacturers make to the snacks to their recipe and specification. This went down badly with one of the agency’s founders saying ‘I don’t see what’s innovative about that’. She’d worked exclusively in the IT space and thought any software widget was an innovation. She couldn’t appreciate how this start-ups approach challenged the likes of P&G or Kraft Foods.
At the time, when the stabbing of three little girls happened in Southport, I was in Merseyside. Even though I was just miles away from the town, it felt like another country. The locals I was with and I watched on with detached shock as riots unfolded on newsfeeds.
The general sense was that ‘it couldn’t happen here’ But it had. This was usually followed by ‘despite what people see, this isn’t the kind of people that we are’. Yet Merseyside has long had a well-deserved reputation for organised (and disorganised) crime. Apart from a pier and a sea view that on a clear day allowed you to see oil rigs on the horizon, Southport is very similar to most of Merseyside. Rumours had swirled on neighbourhood WhatsApp groups about the attackers background. Secondly the vast amount of rioters being prosecuted, were not neo-nazis from out of town but local trouble-makers whose guiding idea was the joy of the fight. The police were able to arrest many of them as easily identifiable known faces. Pair the trouble-makers with good weather and an inciting incident and chaos ensued. There is continued latent anger for various reasons just waiting for an excuse to break out and the Southport stabbings were a vehicle.
The thin membrane of civility was punctured. The chaotic nihilism on display mirrored the 2011 riots, with less opportunity for profitable looting. Southport is ‘everyneighbourhood’. It represents an underlying volatility in UK society that is deeper than the hundreds of rioters on Merseyside. There is probably more Southport in many people than we would care to admit.
US Firms Warn Against ‘Unprecedented’ Hong Kong Cyber Rules – Bloomberg – technology firms have warned that proposed cyber regulations could grant the Hong Kong government unusual access to their computer systems, highlighting the latest challenge to Western tech giants in the city. The Asia Internet Coalition, which includes Amazon, Google and Meta is among the bodies that have in recent weeks criticized new rules that officials say are designed to protect critical infrastructure from cyberattacks. Critics argue the proposals give authorities overly broad powers that could threaten the integrity of service providers and rock confidence in the city’s digital economy.
Brands Love Influencers (Until Politics Get Involved) – The New York Times – With the presidential election looming, some marketing agencies have started to pitch advertisers on new tools that grade the so-called brand safety of social media personalities. Some of the tools even use artificial intelligence to predict the likelihood that a particular influencer will discuss politics in the future. A tool recently introduced by Captiv8, a marketing firm that helps advertisers like Walmart and Kraft Heinz connect with influencers, uses artificial intelligence to analyze mentions of social media stars in online articles, and then determines whether they are likely to discuss elections or “political hot topics.” The firm also assigns letter grades to creators based on their posts, comments and media coverage, where an “A” means very safe and a “C” signals caution. The grades incorporate categories like “sensitive social issues,” death and war, hate speech or explicit content.
7-Eleven owner receives Japan’s biggest ever foreign takeover approach | FT – huge for Asian grocery retailing. 7-Eleven is the neighbourhood grocery store for Japanese and many other countries across Asia. In Japan, 7-Eleven is the dominant brand, combining it with Circle K would radically change the marketing dynamics. In a market like Hong Kong it’s effectively a duopoly with Circle K. The approach is likely more about 7-Eleven’s US filling station network. Expect the Asian business to be sold on (to private equity) if the deal goes through.
China will launch first satellites of constellation to rival Starlink, newspaper reports | Reuters – A Chinese state-owned enterprise (Shanghai Spacecom Satellite Technology) is launching the first batch of satellites for a megaconstellation designed to rival Starlink’s near-global internet network, a state-backed newspaper reported on Monday.It matches Beijing’s strategic goal of creating its own version of Starlink, a growing commercial broadband constellation that has about 5,500 satellites in space and is used by consumers, companies and government agencies.
The AI state of the union H1 2024 post came about as we had a number of trends starting to come into view. To paraphrase Charles Dickens the AI state of the union H1 2024 represented both the best of times and the worst of times in generative AI.
Astro Boy | George Oates
Is the current state of AI analogous to the dot com boom?
In this respect, discussions around a dot com type boom around generative AI are less helpful. The dot com boom didn’t have the same naysayers at the time, aside from what would be now called edge lords worried about money. Like with all economic cycles they would eventually be proved right, but not until we had broadband and shopped at Amazon.
Culturally, we are in a very different, darker place and aren’t riding an economic boom. I have tried to lay out some of the nuances in the themes currently driving AI discussions.
I have broken this down into three themes and a focus on Japan.
Vendor knife fight
Trough of disillusionment
Synthetic data
Japan focus
Right let’s get into The AI state of the union H1 2024.
Vendor knife fight
The AI state of the union H1 2024 sees generative AI being added to products and business plans, in a similar way to being web-enabled in the late 1990s. Spring Apps estimated that there almost 58,000 AI companies.
Microsoft, Alphabet, Amazon and Meta increased their investment in generative AI to $106 billion during the first six months of the year. In addition, Meta is looking to leverage the open source model of software development to drive progress in its Llama model. This echoes, how the open source model and software like Linux, MySQL and PHP were used during the dot com boom and the move to web 2.0 to provide greater efficiencies and possibilities.
Some applications such as Adobe Creative Suite has become much more powerful thanks to adding generative AI. Alphabet has finally had generative AI companies parked on its front lawn. Open AI joined Perplexity in providing a search product.
Apple came up with Apple Intelligence that provides a platform and front end for a mix of generative AI models. Microsoft has Co-Pilot that it has been selling to enterprises.
Financial institutions have led the charge to try and get productivity gains such as JPMorgan’s IndexGPT and the continued automation of back office processes.
Meanwhile in China, Baidu’s ERNIE has attracted almost a million developers looking to use the generative AI platform in their projects.
Trough of disillusionment
The enthusiasm for generative AI hasn’t managed to drown out dissonant voices. The number of objections are diverse.
Business issues
Morgan Stanley in a research report quoted a large pharmaceutical company CTO who abandoned the use of Microsoft Copilot in their organisation. The crux of the argument was that they weren’t seeing the value. Presentation creation was described as middle school level. Pharma companies tend to use PowerPoint as a publishing platform rather than a ‘presentation tool’ with data rich busy slides, so I can understand why Copilot became unstuck.
It isn’t only ‘high-end’ knowledge work conducted by large corporates that is underwhelming. McDonald’s is withdrawing generative AI systems deployed at its drive-thru restaurants due it not working as planned. A Gartner survey of IT leaders indicated that McDonald’s wouldn’t be alone with nearly one in three generative AI projects to be scrapped in 2024.
That might not be such a bad thing as businesses are currently in a process of experimentation, so long as the lessons learned are captured and internalised.
Goldman Sachs have pivoted over a matter of months from being bullish about generative AI, to being concerned that the return on investment for generative AI may take far too long.
Societal impact
What if speed isn’t the goal? The process of reading isn’t only about the ability to parse information quickly but also affects other aspects of human thinking and behaviour. There are clear benefits for certain groups of people including neurodivergent and second-language learners. But it also poses a risk to close reading skills which impacts developing or improving existing skills. Secondly, the generative AI can miss key facts from a document, given up as speed is prioritised over nuance and accuracy.
Knowledge collapse – By mediating access through AI tools moving forwards, due to the model’s focus on the centre of of the distribution of its data set. Restricting access to the edges is likely to cause harm to future innovation, human understanding and cultural development outlined in Peterson’s paper AI and the Problem of Knowledge Collapse.
Technology-specific issues
Environmental impact – like web 3.0 and the crypto economy, generative AI requires a lot of energy to run high performance data centres. This means that Open AI is losing money hand-over-fist paying for computing capacity from Microsoft at a significant discount.
Model collapse – the relative lack of human-made data and the rise of synthetic data used in training generative AI systems is likely to lead to a rapid degradation in those models, indicating a ceiling on amount of progress that generative AI based on LLMs is likely to make.
Synthetic data
Synthetic data is probably one of the most difficult subjects to write for AI state of the union H1 2024. On one hand, you have Mark Ritson’s endorsement of synthetic data based on what we saw from B2B marketing generative AI startup Expenza AI. Ipsos have also got some credible interesting offerings that seem to be based on the provision of synthetic data.
Is it any good? A lot depends on how the LLM is trained and the way it’s being used in terms of what you want to achieve. As with any tool, it can be useful for the right jobs. The MRS Delphi Group gave a range of feedback on the way it should be used, some of which seemed to contradict each other. We don’t know how accurate a picture the LLM is creating, what is being called algorithmic fidelity.
Until concerns about algorithmic fidelity is addressed sufficiently well; marketers would be wise to exercise a degree of caution.
Japan focus
I have included Japan in my AI state of the union H1 2024 post for a few reasons.
Prior to the current exuberance about generative AI; Japan was doing really interesting things using different parts of AI including fuzzy logic and software agents. The Panasonic rice cooker that cooks rice that’s perfect for your preference. Error correction for video and audio playback, from CDs to Blu-Rays. Complex camera programme algorithms including image stabilisation. Sophisticated non-playable character behaviour in computer games. There has even been synthetic singers like Hatsune Miku and virtual influencers.
If Star Trek influenced the flip phone, the smartphone ( think the tri-corder, especially when used with the likes of Oxford Nanopore‘s products) and tablets (on Star Trek’s next generation), then cyberpunk and Japanese anime have influenced AI in a similar manner. Elon Musk and Sam Altman would fit right in as villains in the Ghost In The Shell series.
Finally, even though Japan influenced cyberpunk based on William Gibson’s experience meeting Japanese students, it has a paradoxical relationship with technology. For instance, the Japanese government recently stopped using 3.5″ floppy disks. Ancient crafts are still highly prized and Japanese brands like The Real McCoy’s and Grand Seiko who provide premium manufactured goods to artisanal standards.
Matt Alt has put together a good overview of the policy and cultural context for generative AI in Japan. It’s less of a clear cut issue than the Japanese body politic seems to believe. The Japanese government believes that its population is likely to view AI positively because of anime plot lines. While Atom Boy is a positive example there are lots of negative examples in the Ghost In The Shell franchise alone. There is also a tension between government aspirations for international exports of increased amounts of media content.
There are also concerns about existing AI relationships in Japan exasperating existing societal problems, like virtual girlfriends or boyfriends.
Luxury beliefs is a term that I came across from the writings of Rob Henderson. Henderson has a similar kind of story to JD Vance. Addiction in the family and escaping his home environment by enlisting in the US Air Force.
After his service Henderson used funding via the GI Bill to go to Yale. He then got a scholarship to go to Cambridge to do a doctorate. Like Vance he had written a memoir: Troubled: A Memoir of Foster Care, Family, and Social Class that highlights the challenges faced in working class American society including violence and addiction. In his book Henderson explores the idea of luxury beliefs, how they benefit the privileged and harm the most vulnerable in society.
What are examples of luxury beliefs?
The luxury beliefs Henderson cites are seen to be widely held progressive views including:
Defunding the police
Defunding the prison system
Decriminalising or legalising drugs
Getting rid of standardised exams – Henderson sees these as helping less privileged children get into college
Rejecting marriage as a pointless concept. – Henderson claims that one of the strongest predictors of success was if they were brought up in a nuclear family.
Henderson believes that the common thread that holds luxury beliefs together is that they are held by privileged people, the beliefs make them look good (and feel good about themselves), but harm the marginalised.
Luxury beliefs allow the privileged to look good by:
Playing the victim
Protest without penalty – which is less likely to happen to more marginalised protestors
Push the less privileged down
Henderson labelled this ‘saviour theatre’. Henderson reminded of previous generation protestors like Patty Hearst and participants in the Weather Underground’s Days of Rage which would seem to fit Henderson’s definition of holding luxury beliefs.
The store, which recently went viral on Chinese social media platform Xiaohongshu, not only sells house-made essential oils – must-have souvenirs for visitors from mainland China thanks to the exposure – but recreates the signature scents of popular malls and other venues in Hong Kong.
On its shelves are familiar – sometimes odd – concoctions. Bottle labels reference K11, a shopping mall in Tsim Sha Tsui, the five-star Rosewood Hotel, and the Hong Kong International Airport. Sportswear brand Lululemon has one too.
The consequences of the psychoboom are both logical and contradictory. As the Chinese economy has expanded and citizens have grown wealthier, the demands of everyday life have grown in number and kind, expanding from physiological and safety concerns to a desire for love, esteem, and self-actualization. At the same time, such desires run counter to traditional Chinese values like the age-old concept of Confucian filial piety and the relatively new ideology imposed by the Chinese Communist Party (CCP), both of which place the well-being of the collective above the happiness of the individual.
Morgan Stanley, Goldman Sachs Say Recovery in Private Equity Deals and Fees – Bloomberg – Morgan Stanley and Goldman Sachs Group Inc. are confident that their most important clients are about to get active after a long spell on the sidelines and help goose the long-awaited revival in investment banking fees. The private equity deal machine has been mostly jammed up for the past two years, leaving many investment bankers twiddling their thumbs while their bosses talked up green shoots that failed to flourish. There are plenty of potential road bumps ahead, but there’s reason to put more weight on the better outlook now even compared with just three months ago: The wave of debt refinancing that has led banks’ revenue recovery this year has also been helping to fix the prospects of many companies owned by private equity firms
Sony is killing off recordable Blu-ray, bidding farewell to disc burning | TechSpot – Sony admitted it’s going to “gradually end development and production” of recordable Blu-rays and other optical disc formats at its Tagajo City plants in Miyagi Prefecture, Japan. Essentially, 25GB BD-REs, 50GB BD-RE DLs, 100GB BD-RE XLs, or 128GB BD-R XLs will soon not be available to consumers. Professional discs for video production and optical archives for data storage are also being discontinued. – the big shocker is the issue for archival formats
“When launching products back then, we didn’t have to have a profit timeline for them,” said a former longtime devices executive. “We had to get the system in people’s homes and we’d win. Innovate, and then figure out how to make money later.”
To do that, the team had to keep prices low. Amazon sometimes even gave away versions of the smart speaker as part of promotions in a bid to get a larger base of users.
Another Danish biotech can help investors’ hunger for obesity drugs | FT – this probably explains why Zealand pivoted from taking its medications to market to becoming research and selling on as its not big enough to exploit this opportunity on its own. (Full disclosure, I worked briefly on the diabetic emergency injection product until the company pivoted).
Age of Ozempic: Predictions for the luxury industry | Vogue Business – Analysts agree that the pop culture influence of weight loss drugs is giving luxury labels and mass-market brands, alike, licence to refocus on straight-size. “Luxury brands have long been staunchly unwilling to cater to plus-sizes outside of the occasional token representation, but typically premium and mass players would invest more readily in plus-size,” says Marci. “Now we’re seeing the effects of Ozempic and weight loss culture on retail as a whole.”
Already, a host of US-based retailers and fashion companies including Rent the Runway are seeing boosted demand for smaller clothing sizes, and falling demand for larger sizes, according to The Wall Street Journal. Retailers have been investing in fewer products that offer larger sizing
EssilorLuxottica expands into streetwear with $1.5bn Supreme deal – the deal was a “no brainer” and had happened “very quickly” because VF was under pressure to divest its most “iconic asset”. EssilorLuxottica planned to use Supreme’s wealth of customer data and its Gen Z fans in China, Japan and South Korea to target new consumers – it shows how good a deal James Jebbia got with private equity and VF Corporation
Lewis Hamilton Named Dior Ambassador | BoF – formula 1 driver and pit lane dandy has also worked with Dior men’s artistic director Kim Jones to guest design a collection of clothing and accessories set to launch in October
Even Disinformation Experts Don’t Know How to Stop It | New York Times – Researchers have learned a great deal about the misinformation problem over the past decade: They know what types of toxic content are most common, the motivations and mechanisms that help it spread and who it often targets. The question that remains is how to stop it.
A critical mass of research now suggests that tools such as fact checks, warning labels, prebunking and media literacy are less effective and expansive than imagined, especially as they move from pristine academic experiments into the messy, fast-changing public sphere.
Zynternet is a portmanteau made up of Zyn and internet. If you’re reading this internet is self-explanatory, the Zyn in question is tabacco-free Skoal bandit type nicotine pouches. Zyn comes in a tin and has various flavours.
According to journalist Max Read, the Zynternet is a kind of 90s to early 2000s sports obsessed ‘lad’ type culture; but in the 2020s. There are shades of ‘white van man’ in there as well.
a broad community of fratty, horndog, boorishly provocative 20- and sometimes (embarrassingly) 30-somethings–mostly but by no means entirely male–has emerged to form a newly prominent online subculture.
Despite Read’s definition defining it as a 20 to 30-something thing, the subculture seems to bleed into 40-something Dads and draws on creators like Barstool Sports. They’re less extreme than the Andrew Tate acolytes. They care more about sports and professional golf than they do about current affairs and politics. But they’ll be voting Republican. They like college sports, sports betting, light beers and Zyn nicotine pouches.
The culture has grown prominent on the laissez-faire Musk era Twitter.
Zynternet stretch
It would be very easy to point to the Zynternet audience and draw parallels to the ‘proles’ of George Orwell’s Nineteen Eighty Four. And then go down a dystopian k-hole.
I’ll leave the last words to David Ogilvy for those despairing about the Zynternet:
You aren’t advertising to a standing army; you are advertising to a moving parade. Three million consumers get married every year. The advertisement which sold a refrigerator to those who got married last year will probably be just as successful with those who’ll get married next year. An advertisement is just like a radar sweep, constantly hunting new prospects as they come into the market. Get a good radar and keep it sweeping.
David Ogilvy
TL;DR if you’re not reaching the zynternet, you’re probably not doing political marketing properly. More related content here.
Content or couture? Balenciaga’s 30-minute dress becomes the flashpoint of the season | Vogue Business – “It feels a little like a fast fashion iteration of haute couture,” says Victoria Moss, fashion director of The Standard, of the swirling mass of black nylon. “This feels at odds with what fashion at this level should be, which is exquisitely made pieces that somewhat justify their extreme pricing.” She adds that many invest in couture to have garments perfectly fitted to their bodies — and made to last for years.
“Is it beautiful? That’s debatable. Is it impressive? Not really. Is it brazen? Absolutely. Is it a meditation on the creative process? Maybe. Are we bored of these kinds of gimmicks at Balenciaga? Clearly not, as Demna’s work continues to be both a lightning rod and a conversation starter. “Call it ‘pret-a-polarize’,” says fashion journalist and ‘Newfash’ podcast host Mosha Lundström. “To my eye and understanding, I see this look as content rather than couture.”
Japan declares victory in effort to end government use of floppy disks | Reuters – yes stories like this are funny because ‘modern’ Japan with its flip phones, fax machines and floppy discs are an anachronism. But there’s a few other things to consider. There might be issues in terms of investment a la the NHS and critical systems that for whatever reason can’t be ported on to modern systems (like the problems had with security based on ActiveX).
Dumb systems also have security benefits, you can’t steal nearly as much data on even a compressed floppy disk as you can on a USB stick.
Interesting use cases for generative AI in China which sounds like a plot line from Ghost In The Shell.
Baidu – World No. 1? – Radio Free Mobile – is Baidu ERNIE really the number one generative AI service? It depends on if the numbers are true. 14 million developers, 950,000 models within the eco-system
China plays down importance of lithography tools in semiconductor challenges – Interesting report from Taiwan’s DigiTimes semiconductor trade magazine: China seems to be deliberately playing down the importance of lithography tools as it identifies the challenges for the development of its semiconductor industry in a recently published dossier.
This post on the end of culture as inspired by a presentation. Pip Bingemann of Springboards.ai presented at Cannes in Cairns – a marketing festival for Australians who wouldn’t be able to go to the Cannes Festival of Advertising. Pip’s presentation touched with things I had seen about the end of culture and had some interesting points within it. I didn’t agree with a lot of Pip said, some of it was down to nuance, but appreciated the journey that it took.
I have built the main headers around Pip’s slides, strap in for the end of culture.
What’s wrong with advertising?
Bingemann’s presentation as in praise of the disruption that (generative) AI was bringing. The thesis he put forward was that ‘machines’ had already messed up the advertising and media industries.
Advertising became self-service in nature.
There had been a move in online media to relevance over distinctiveness
We became slaves to numbers
Let’s look at those elements first.
Advertising became self-service in nature
Like the technological disruption of banking in the past with:
Postal banking
Automatic teller machines
Telephone banking
Online banking
Meta and Google’s advertising platform democratised media buying. Years ago a guy I have lost touch with used to be a manager at a McDonald’s branch in the west end of London.
Before cellphones became commonplace he had a side hustle. He used the restaurant telephone to phone up the newspapers, to book small ads. The newspapers had advertising sales teams, that he would speak to. He did it once for a friend and then word got around. Eventually, he was calling for businesses across Soho. Premium line suppliers, porn publishers and adult mail order catalogue companies. Eventually they needed the ads to be designed. This work was done alongside creating porn DVD covers and other marketing material.
He built a small successful agency off the back of it based in Soho. The agency remained in Soho until it was priced out by the fund management firms who moved in. Lots of other small businesses did the same for their plumbing business or hair salon. Their adverts would run in local newspapers across the country.
For more sophisticated ads like large print ads, television or cinema advertising; help was needed. This help got the ad ready, made sure that the publication received the artwork on time and in a format that they could use. They made sure that the artwork was presented in the manner agreed. With the likes of television, the advert might have to go through regulatory approval prior to publication.
If you were a larger brand with a national or international campaign, further help was needed in pre-testing and orchestration. Expertise might be needed to access more regulated markets while remaining on the right side of the law.
Technology allowed newspaper type adverts to be easily accessed by both agencies and brands.
TLDR: Advertising has been self-serving for decades, but I will grant that online allowed more sophisticated formats such as videos, colour photos and carousels. AND regulation has been slower to police advertising online, for instance YouTube ads don’t get the scrutiny that TV ads get.
Relevance over distinctiveness and slaves to numbers
The move to relevance over distinctiveness in online media was down to where online media was in the customer journey. It was (and for the most part still is at the bottom of the funnel).
Relevance made sense, particularly in search advertising. The first online adverts such as Craigslist classified and display ads were conceptually similar to their equivalents in the back pages of newspaper advertising. Newspaper ads were served in sections: cars for sale, homes for sale, local businesses, cinema listings, vets or pharmacies with a late closing time.
Search and many banner ad campaigns for that matter are about the last step (hopefully) before purchase. In the old pre-internet world, they would be direct mail or the direct response adverts that used to appear in magazines or the special offers beloved of shopper marketing.
Distinctiveness appeared further up in the funnel building long term memory models through brand building. It was TV advertising, radio jingles, magazine print advertising and billboards that evoked emotion and still evoke nostalgia decades later.
Saatchi & Saatchi for Gallaher
I would argue that the issue is less about relevance at the expense of distinctiveness, instead it’s about short-termist mindsets facilitated by numbers. The media industry is about to double down on this error, with initiatives like the European Programmatic TV initiative. And so I can empathise with Pip’s last point about becoming slaves to numbers. It’s ironic that the PowerPoint-friendly charts used by Google search advertising to explaining its value for marketers took off and drove marketing thinking.
Technology marketing itself came from broken origins and still is basically sales strategies by another name. A good deal of what data is created is based on what technology companies can see; rather than what marketers need to measure to get the balance between long term and short term marketing needs.
This MIGHT BE about to change if marketing expert Mark Ritson is to be believed. He posits that marketing technology start-up Evidenza.AI will provide business-to-business marketers with the kind of insight previously driven by market research, but much faster. From then on he sees it doing a better job at communications and media strategy. I am trying to keep an open mind on this at the moment.
TLDR: Advertising hasn’t become about relevance at the expense of distinctiveness, but instead about short-term at the expense of long-term marketing effects; partly down to technologists having a poor understanding of marketing.
Technology outputs data which marketers paid an inordinate amount of attention to; reinforcing the short term bias. Machine learning techniques now becoming available might turn this around by providing better marketing insight.
Machine learning tends towards the mean
Pip’s presentation went on asserting that machine learning tends towards the mean. Generative AI synthesises content based on what has already been done, which why Pip assumes that everything tends towards the mean. But that depends on how one uses these tools that we’ve been given.
As a strategist, I have used generative AI to knock out too obvious propositions, so I give the creative teams something interesting to work with in the creation of distinctive assets.
Apparently creative teams have been taking a similar approach in terms of ideation.
One thing I’ve heard more than once recently is how creative teams are using LLMs for brainstorms. But not quite how you’d expect… Because these algorithms answer back with the most likely predicted outcomes based on available data, you get the mean. The average. In creative terms that means the well worn “cliches”. So when starting a brainstorm or ideation session, quizzing the LLMs leads to a list of suggestions of what creative teams are generally most likely to suggest. At which point the team knows what NOT to do. The already well trodden ground. The list of the obvious. That also somehow gives a wonderfully smug angle on the use of AI in the pursuit of original work.
TLDR: generative AI will tend towards the mean, BUT that can be used creatively.
Agencies and clients screwed advertising
Pip’s slides don’t necessarily dig into the reasons why this happened. But I can put together some hypotheses and provide evidence that may indicate their validity or lack of it.
Clientside factors
Shareholder value ethos – Shareholder value the way we understand it now can be traced back to the 1960s. While Milton Friedman popularised it in an essay A Friedman Doctrine: The Social Responsibility of Business Is to Increase Its Profits, the idea had surfaced years earlier in an opinion editorial published in Fortune magazine. The so-called Friedman doctrine became a lode star for investors and boards including the likes of ‘Neutron’ Jack Welch at General Electric. While this thinking still dominates the tyranny of the quarterly numbers that CEOs of publicly traded companies operate under; it is not the only perspective in the c-suite.
The financialisation of businesses – related to the Friedman doctrine, businesses became increasingly financialised thinking about short term financial decisions. A classic example of this is how post-regulation, legacyairlines in the US have been managed. Another example is Brazil’s private equity firm 3G Capital who managed to destroy billions of dollars in shareholder value with marketing cuts. Financialisation has definitely had an impact, but it varies from company to company. We also see it showing up on the agency side, with the move to using more freelance staff and burning out those staff that they do have. They have a fig leaf of mental health care in their talent acquisition literature, but it’s largely BS.
What gets measured gets done – Google advertising’s success was as much down to it being easy to tell a story about the marketing spend conducted on the platform as it was about effectiveness. The dashboards lended themselves to being easily reproduced in PowerPoint and spoke in the universal c-suite language of line graphs and pie charts. This was really important for Google to survive and thrive in the post dot com bust and the 2008 recession.
Marketing literacy – since before I have gone to college the c-suite was largely marketing illiterate. It doesn’t matter if they are a self-starting boy or girl made good, or minted from an Ivy League business school with an MBA. I have worked with both and they had a similar marketing knowledge level, the only thing that varied was the level of self confidence despite this gap. Neither do the management consultants that they may employ. Which is the reason why the team at 3G Capital were surprised when they cut marketing costs and destroyed brand and shareholder value.
Procurement – practices to systemise purchasing and avoid issues like nepotism and corruption have introduced a muscular procurement function who know the price of everything and the value of nothing. Margins across disciplines have been squeezed to breaking point. This has led to a decline in entertainment and side benefits, my LinkedIn feed had advertising folk explaining that the cost of attending the Cannes Festival of Advertising was likely paid through budget cuts in: training, subscriptions for tools and publications and even head count. We might not have had an end of culture, but this is no longer the industry portrayed in Mad Men.
Agencyside factors
Splitting creative and media – prior to the mid-1970s creative and media buying were two departments in the one advertising agency. That allowed the free flow of research between the departments and the creative use of context as well as content. It also meant that margins had to support two management teams. Secondly, the options to best defend margins was in the media-buying side of the house, depending on how integrated into the media technology stack the the media buying agency became.
Change in north star from FMCG to technology companies – the rise of the internet completely changed the nature of marketing. Prior to the internet becoming mainstream, having FMCG experience as a marketer helped your career. In the early 2000s, Google, Yahoo! and later Facebook became the brands marketers wanted on your CV. The difference was that FMCG brands had subscriptions to the likes of the Ehrensberg-Bass Institute for Marketing Science. Yet American and British academia saw that most thinking from even the most prestigious schools can be boiled down to being the considered common sense opinion of tenured professors like David A. Aaker and Philip Kotler. Kotler was reportedly not interested in engaging with marketing science as consumer behaviour was too complex and difficult to model.
Relative recent awareness of marketing science. For reasons that I don’t fully understand marketing science is both old and a new phenomenon. The late Andrew Ehrensberg originally founded his Centre for Research in Marketing in the early 1990s and had been turning out marketing science academic papers for decades before that. Ehrensberg eventually moved to His work on the myth of ‘heavy consumers‘ and polygamous brand buying (smaller brands suffering a double jeopardy of fewer people purchasing them, and those that did purchase them, did so less often) was done back in the 1950s for Attwood Consumer Panel (would eventually become part of TNS). Some agency strategists knew about Ehrenberg, such as Stephen King of JWT. Some of this thinking was likely hidden by the decline of market research projects in agencies and the split between media buying and creative. In addition, Andrew Ehrenberg theorised why marketing science had a low adoption outside his center’s FMCG clients, which also encapsulated the gatekeeper role American academics played in overall mainstream academic adoption:
I also realised slowly that our kind of theorising – which at base describes and explains already-established and generalised empirical discoveries and which thus post-dicts them – was anathema to many American academic marketing colleagues. They espoused much more ambitious and complex-looking econometric procedures which never worked in practice, with the recent citation for a Nobel typically not referring to any established empirical patterns
Channels – I don’t know who thought that a video view could be just a couple of seconds, but digital platforms benefited from it. Some of the wisdom from this years Cannes Festival of Creativity was that short adverts don’t work that well as they fail to build memory structures. Somehow agencies, platforms and brands suspended belief to develop marketing campaigns that only made sense in 1980s cyberpunk fiction like Max Headroom. Even at Cannes, platforms like Tiktok believed that they operate like, and a have similar impact to a TV advert…
Research – like most strategists I have found that I am often operating with less qualitative research than I would like. One of the biggest programmes I managed to work on the research for was the global launch of a now famous weight management product. Even then we didn’t do enough interviews around the world to understand cultural nuances in play. I remember reading about strategists in the 1970s spending a good deal of time listening to focus groups hosted around the country. There was a mid-week ritual of taking a drive or a train to a city or town outside London for this research. Social listening has been touted as a possible research for product tracking and can be a useful source of consumer soundbites sometimes.
Testing – hand-in-hand with a decline in research has been a decline in types of testing. Content still gets tested, but brands and agencies didn’t test channels to the same degree. Which is why we’ve had short form ad formats for years, yet the knowledge that they’re not as good at building memory structures doesn’t seem to be embedding into clients and agency teams.
OK, but that’s advertising, what about the end of culture?
Pip claims that advertising is just one part of our world that has been under attack (from technology). Alex Murrell’s essay The Age of Average was cited as the source of this insight. Murrell makes his case on the common looks in car designs driven by developments in aerodynammic design over time, architecture and cityscapes, coffee shop styles, logos, book covers, video game franchises, packaging design and product design.
Part of the reason for the architecture was Le Corbusier and his his function over form theory of design and architecture (modernism) captured in Towards a New Architecture.
Murrell harked back to a time of distinctive cities like Victorian London. However what Murrell’s explanation overlooked was that even back in Victorian times London was becoming ‘standardised’. Chimney pots, bricks, cast-iron beams, windows and even church stained glass windows came out of catalogues. The same designs repeat over-and-over-again. The church stained glass windows went around what was then the British empire. It is a similar situation today. Buildings are made of standardised materials and design tools as we understand more about engineering.
Technology over time allowed buildings to get taller and let in more light thanks to improvements in construction, lifts (elevators) and environmental control. Where things get interesting is when governments and societies make decisions on what they want to keep or rebuild. Shanghai has preserved only a little of the Bund and few of its hutongs. Hong Kong has so far managed to keep some examples of its composite buildings. However once you get to street level you see a distinct evolving local culture despite their apparently similar skylines.
This mix of standardised components bought from a supply chain, improved engineering and regulation has also driven similarities in other products, such as motor cars which Murrell cited as an example. But again those similarities are more about operating at a macro-viewpoint. On closer examination, diversity in car culture and driving experiences start to build clear lines of distinctiveness.
And the car industry for decades has indulged in badge engineering where one vehicle truly does look like another.
Wolesley Hornet
Austin Cooper Mini
Innocenti Mini
Riley Elf
The examples I used above were all based on the Austin Mini. Wolesley was a luxury brand owned by BMC at the time. Italian care manufacturer Innocenti licensed the Mini from Austin until the agreement was cancelled by British Leyland. Lastly, the Riley Elf was a slightly more expensive alternative to Wolesley, both were owned by BMC.
General Motors were the masters of badge engineering using ‘common platforms’ as far back at 1909.
As for the complaints about logo design, books and later the web allowed influential design motifs like Neville Brody’s work at The Face, Arena and The Guardian went around the world, collected in three volumes by Thames & Hudson. His cover designs were in Tower Records stores from New York to Tokyo. Design is an industry sensitive to global influences that you see spread around the world. A second reason for the simplification and flattening of logos is the world that we now live in. Before the web logos only existed in the physical world. Digital brings common requirements:
Works in a website template that can be used globally.
Works in email headers and footers.
Works in a favicon and in a mobile app button.
One interesting point came out when Murrell (and Bingemann) looked at media where there was a coalescence of homage images and content based around a success. But these in turn created their own genres like the sweary covers on self-help books. How is this marking a low point in culture was beyond me.
I thought of genres like the European ‘gallo’ films or the European takes on the western films of which spaghetti westerns are the most well known. A lot of the films were dreadful. In the case of European westerns many of them borrowed a characters name from more successful films. So you saw ‘apparent’ franchises around ‘Ringo’, ‘Django’ and ‘Sartana’.
(Film director Alex Cox published one of the best works on the Italian western film genre 10,000 ways to die. It’s based on his university thesis and a fascinating read, if you choose to jump down that rabbit hole.)
You had a similar experience in the Asian martial arts film industry with countless variations on the the star name Bruce Lee, as the industry coped with the loss of most famous star.
This doesn’t mark the end of culture, but the manufacture of culture. What’s good or great is then strained through the filter of time and changing social attitudes.
As for the cinematic superhero cul-de-sac, there are clear parallels with the end of the western and the New Hollywood movement. This time its distribution in the driving seat rather than a new generation of directors. Like the New Hollywood movement there will be both successes and car crashes along the way and I am largely excited by it.
Bingemann also cites Adam Mastroianni’s essay Pop Culture Has Become an Oligopoly. Mastroianni hits on what is called a long tail. In scale-free networks with preferential attachments, power law distributions are created, because some nodes are more connected than others – so Taylor Swift will sell more because of the size of fan base she has grown over time. They have been studied since at least 1946 and Benoit Mandelbrot who is better known for his work on fractals was one of the main researchers. Wired magazine touched on it in 1998 when it published The Encyclopaedia of the New Economy written by John Browning and Spencer Reiss and the influence showed up in Wired contributor Kevin Kelly’s work New Rules for the New Economy. So one can guess that the ideas were being thrown around then.
Wired editor Chris Anderson wrote about it in a magazine article for Wired in October 2004, and turned it into a book. Algorithms in online services create bubbles and rabbit holes in different areas and surface media winners like MrBeast. But again culture has thrived despite of popular culture out of sight of the general public for decades will continue to do so. Examples include Northern Soul, punk, the Chicago house music scene, UK garage, grime, drill and donk, the long tail does not mark an end of culture.
TL:DR: Could the current culture eco-system be better? Yes, absolutely. But it isn’t broken in the way and extent that Bingemann believes. We definitely aren’t at the end of culture and it doesn’t need to be ‘saved’ by generative AI.
So what can AI do?
Bingemann believed that generative AI offers society a way out of the end of culture. So presumably it offers a way to enhance and create culture. He believes that it creates, I would finesse this a bit to say that it emulates, synthesises and combines elements to meet consumer instructions – since it is the sum of its training data.
Ironically, Bingemann bases his thesis on how surreal and abstract art represented the ‘death of traditional art’ and reinvented the meaning of art and unleashed a large amount of creativity. Traditional art didn’t die per se, there are still several artists selling realistic pieces including painting and sculptures alongside the ‘new art’ movements.
Generative AI puts tools in the hands of creatives that previously would have meant a lot of work. In the same way that desktop publishing and Photoshop reduced the cut-and-past compositing on layers of glass panels which were then photographed and image retouching done by hand in the past.
In advertising Bingemann sees five opportunities enabled by generative AI:
Move to value-based pricing (presumably based on substantially reduced cost of production). It’s what Huge tried to do with their pivot and what thinkers like Michael Farmer have been recommended. We’ll see what happens when this aspiration meets client procurement teams. I hope Bingemann is right.
Design AI around people. So far the progress has been mixed around this. We have been some companies like Klarna using ‘good enough’ generative AI to automate jobs out of existence. Adobe have taken more of a creative enablement approach. Based on my experience working on ads in the past with collaged backdrops and photoshoots for global campaigns, this could save tens of hours or more in art working.
Embrace the newcomers. Just like social and digital before it, when we had new agencies like Crayon, AKQA and Poke; Bingemann thinks that generative AI is likely to bring new businesses to the advertising eco-system.
Spend 10x more effort developing the next generation. Given that the advertising industry manages to continually churn experienced people out of the industry and no one was found to have retired last year from the industry according to the IPA – this is going to be a tall order. It would make more sense if AI was used to make advertising more representative.
Unite. Clients, agencies and technology. It’s a nice aspiration, but when clients are looking for good enough and efficient content, agencies looking for a margin and trying to put effectiveness in there as well and technology companies trying hold back their natural instinct to suck all the value to themselves, it will be a hard feat to achieve.
Bingemann argues that this is necessary for advertising, but also for creativity and considers advertising’s role to break culture rather than just reflect it. Culture and creativity will exist without advertising. Even during the Soviet Union, there was still creativity, art and culture – both mainstream and underground.
A Final Thought To Leave You On
GZero Media quoting Douglas Rushkoff (of Media Virus fame) on what generative AI means for culture moving forward.
While its not the end of culture as we know it, Springboard.ai are putting out some interesting tools that I could see competing with the likes of Julian Cole, Mark Pollard and others who are filling the ‘how to strategy’ gap for brand planners.
