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Marcus Johnson (00:00):

In marketing, everything must work seamlessly. Otherwise, efficiency, speed and ROI all suffer. That's too much suffering. Quad, however, is obsessed with making sure your marketing machine runs smoothly, with less friction and smart integration, much smarter. Better marketing is built on Quad. See how better gets done at Quad.com/buildbetter.

(00:32):

Hey, gang, it's Friday, July 7th. Yori, Jeremy, and listeners, welcome to Behind the Numbers, an EMARKETER video podcast made possible by Quad. I'm Marcus, and before we get going today, I just wanted to let you know that we have some new branding for the podcast. Hopefully, the same great content, our logo is changing to make it easier for you to find the right show for you. Blue logo is for Behind the Numbers, and that's with me, keeping you up to date with the latest conversations happening in the world of media advertising and technology, for about 20 minutes every Monday and Friday. That's the video one. Sarah's Reimagining Retail show is in purple and she'll be discussing everything shopping every Wednesday, as always. And Rob's Banking and Payment show is in green, where he examines the universe of money every second Tuesday of the month.

(01:19):

We also have brand new social media content for you on LinkedIn, Instagram, and more, with behind the scenes looks, polls to get your opinions on what we're discussing, and an ask me anything segment where you can literally ask me anything. I regret this already. All right, let's go on with the show. In today's power packed episode, we have two people joining me for the conversation. Principal analyst covering digital advertising, media and technology, he calls New Jersey home, it's Yory Wurmse.

Yory Wurmser (01:46):

Hey Marcus, how are you?

Marcus Johnson (01:47):

Hello, sir. Terrific, terrific. How are you?

Yory Wurmser (01:51):

I'm doing great, enjoying summer.

Marcus Johnson (01:53):

Indeed. Although it's nearly over, we were just discussing, which is bleak but true.

Yory Wurmser (01:59):

Definitely a [inaudible 00:02:00].

Marcus Johnson (01:59):

It's happening around the corner. Say again?

Yory Wurmser (02:02):

Definitely a half empty tick.

Marcus Johnson (02:05):

Senior director of briefings, living life in New York, it's Jeremy Goldman.

Jeremy Goldman (02:09):

Howdy. And by the way, happy 85th birthday, Ringo Starr.

Marcus Johnson (02:15):

Oh, that's... Wow. Every birthday, I'm like, "I made it." Is that bad? I just don't see 85 in my future.

Jeremy Goldman (02:27):

You have a raucous life sitting in front of a microphone in various-

Marcus Johnson (02:32):

That's why. It's because I'm so rock and roll, I'm like, "Wow, this is going to end real soon," but hopefully not too soon. We've got episodes to do. Today's fact is where we begin.

(02:47):

The average adult will walk almost 75,000 miles over their lifetime. That's the equivalent of traveling around the Earth three times according to the ordinance survey. That's amazing. You'll walk around the Earth three times in your life. Oh, Jeremy, and-

Yory Wurmser (03:12):

[inaudible 00:03:13].

Jeremy Goldman (03:13):

I'm sorry.

Marcus Johnson (03:15):

You are as impressed as I am. All right.

Jeremy Goldman (03:17):

I was just thinking as you said that, how many of those miles are just people walking to go to the bathroom and coming back from the bathroom? Because that's got to be a lot.

Marcus Johnson (03:27):

Yeah, they're not going anywhere that adventurous. It's just taking the same trips.

Jeremy Goldman (03:33):

Yeah. Yeah, just like-

Marcus Johnson (03:34):

But you could walk around the earth three times if you wanted to. If you're very active, you're a more than a 10,000 steps a day person, like five miles a day or whatever, then you could do it six times.

Jeremy Goldman (03:45):

As long as you can pull oxygen from water, but yeah, that's a minor detail.

Marcus Johnson (03:51):

That's true, yeah. And it's also just good for you. Stanford researchers, I was reading about this, say that walking boosts creativity by a lot. They examined creativity levels in people whilst they're walking versus sitting, and the person's creativity output increases by an average of 60% when walking, which is good. I hate walking though. I don't care how creative I could be. I'm creative enough. I came up with that read in the beginning, and this fact of the day, which wasn't that impressive. Maybe I should walk more, get a better one. Anyway, today's real topic, AI and advertising.

(04:34):

So the Economist had an article that we were reading for this episode, and in it, they were saying that Mark Zuckerberg, boss of Meta, has promised that brands will soon, by the end of 2026, be able to tell us, so the brands will tell Meta, the objective they're trying to achieve, how much they're willing to pay for each result, and then they, Meta, will do the rest. Sam Altman of OpenAI believes that 95% of what marketers use agencies, strategists, and creative professionals for today will easily, nearly instantly and at almost no cost, be handled by AI.

(05:13):

Yori, what's your take on Mark Zuckerberg's and Meta's vision for the future of ads and AI? He's basically saying you tell us what you want and we'll do everything pretty much from targeting the right people, creating the right campaigns, the measurement part of it, and then firing the results back at you so we can iterate and do it all over again. Just give us your credit card and your objective.

Yory Wurmser (05:34):

There's truth in it, but it's overstated. There's still going to be a role for agencies, but it is true that a lot of especially the lower touch advertising, the direct response advertising that Meta does at scale will be made a lot easier and a lot of that can be automated with AI agents. Even some of the lower level strategy when it comes to these campaigns can probably be handled by Meta. So do I think it's going to take all business away from agencies? I don't think so, and I don't think big brands will want that, at least in the short term, but I do think that a lot of the marketing processes that are now done by agencies can be handled by these big platforms like Meta.

Jeremy Goldman (06:31):

By the way, not only are you right, but what's really interesting is this made a whole entire like, "Oh my God, this is going to change everything," these statements that he made. And then you started to see, by the way, a lot of Meta executives walk some of those things back. So two things can be true. One thing is that it's getting easier and easier to run campaigns without the help of agencies and without that much help from human beings, even on the brand side, so that is true. What's also true is that if you want to do really well and you enlist the right kind of creative help, then you can develop a novel strategy.

(07:11):

And I think that Yori is right. I would also add that agencies aren't going away, in part because they will find other things to do. So you're not going to have as much direct social media campaign planning from agencies, but they're going to move towards higher executive level function type of tasks that you can enlist an agency for. So they're not going away, but in the makeup of where they're making the vast majority of their revenue, that might shift over time.

Marcus Johnson (07:45):

The piece from The Economist was pointing out that Meta and TikTok's do-it-yourself tools seem to be aimed at more smaller businesses than the bigger brands that agencies use. And there's a Wall Street Journal article by Katie Dayton. She was saying that execs at the company repeatedly said the tools weren't designed to replace agencies, however, just to speed up their work and help smaller businesses that can't afford agencies. So I guess the hope is that it's going to bring a bunch more people into the fold.

Jeremy Goldman (08:12):

Agencies, they carry a lot of weight in terms of telling a brand, "Here's where you should be spending your money." And there's a lot to be said for if you're a social platform or if you're Google, to have the agency advocating for spending money in your channel. So in that sense, is it in Meta or TikTok's best interest to automate agencies out of existence? Not really, and therefore, they're going to be around. There's an economic incentive towards having people pushing your ecosystem.

Marcus Johnson (08:51):

Yeah. So which direction does this go in then? Because as you said, four out five of the big agency holding companies have seen their share prices fall since the start of 2024. What does this all mean for agencies?

Yory Wurmser (09:04):

I think it does fundamentally change what they do to become more... I think as Jeremy said, they do become more big strategy companies. They also become technology companies. I think you're seeing the agencies adapt by buying the data companies. You saw it first with Omnicom buying IPG, then WPP buying InfoSum. Publicis is buying Lotame. So you're seeing that move to getting the data, and then you're going to see I think insights developed from that data, or already have. And then you're probably going to have to develop these skills as an agency for machine to machine advertising, and that is going to be really high-tech AI agent type of development. So I see that's the direction going, both the big picture strategy, but also almost like a technology consultant using their data and using their technology skills.

Marcus Johnson (10:04):

You said machine to machine advertising. You mean?

Yory Wurmser (10:07):

Brands advertising to AI platforms using agents talking to other agents.

Marcus Johnson (10:16):

Yeah. This part I think is fascinating, because another part the piece was talking about, saying as AI powered agents are increasingly deployed to carry out tasks on behalf of people, humans, advertisers will need to work out how to influence these robot servants. Google recently unveiled a shopping agent that users can instruct to tell them when the price of a product falls below a certain level. Such agents may soon be given discretion to make more complex buying decisions. Sellers of online ads are already debating how much they should charge when these are seen by an agent as opposed to a human pair of eyes. The future maybe one in which AI creates the ads, targets them and then reads them too.

(10:55):

Jeremy, what do you make of this idea, of creating ads for not people, but for bots?

Jeremy Goldman (11:01):

So I know that Yori's done a bunch on agenda commerce recently that I encourage everybody to check out. I think that there's a lot of debate about when do we get to this future where you're going to have an agent, where you're going to say, "Here's your budget. Go spend it and then come back to me later," and what that'll do to the advertising economy. I think it's reasonable to say that when we get there, and who knows when we get there? Then you're maybe going to see some other channels where you can actually reach actual human beings go up in value. So imagine out of home advertising. If people are spending more of their time walking outside and not engaged in e-commerce, let's say, because you're getting an agent to go out and buy things for you, then you can imagine that certain platforms and modes of advertising actually become more beneficial and can charge more and will start to grow faster.

Marcus Johnson (12:00):

Yeah. It's interesting this shift in dollars, because another part of that is, and again, the piece was saying clients may pay less than before for ad creation, but they may reinvest the savings with the agency. One marketing boss of a global brand saying she is simply buying more ads with the money saved on the creative side. Marketers, like all managers, want to protect their budget, so the question, Yori, is will money saved lead to more ads? Because saving money because things are more efficient because of AI, will that lead to more advertising, whether it's in the same channel or other channels as Jeremy's saying? Put another way, will AI use in marketing lead to less money spent on ads, money saved from efficiencies, or more folks pouring money in leading to more ads shown in more places or maybe just because of higher prices for the existing imagery?

Yory Wurmser (12:57):

There are a lot of variables at play so it's hard to definitively make a prediction on this, but I think the odds are really good, that digital ad spending and ad spending in general is going to go up. Our digital ad spending is going to go up. For the reasons Jeremy said, each ad should be more efficient with better targeting, so in that way, I expect to see digital ad spending going up. In addition, I think getting your name out there is going to be important, so I think investing in branding in a lot of these new channels that Jeremy mentioned, or existing channels, CTV, out of home places or influencers, places that people are going to anyway I think is going to get more important. I think money is going to continue to flow into those areas.

Marcus Johnson (13:52):

Yeah. I think it's also interesting as well, that same marketing professor from George State University, Mr. Sabu was postulating that in addition to lowering production costs, AI will make it cheaper for marketers to personalize ads to target specific locations and audiences, saying, "You may see a different version of the ad than I can see." So how personalized does our advertising become? Will there be a word where we eventually never see the same ad because it's so customized just for us?

Jeremy Goldman (14:23):

And by the way, Marcus, we're moving a lot closer to that than... If you would've asked us five years ago, I think we would have a very different answer, because people were talking about Personalization and really what they meant was a little bit more like targeting, like we're running five variations of an ad. And now we're moving closer to a world. Where can we get to one-to-one in the very near future? That's not out of consideration, where everybody sees, to your point, a slightly different variation, because it is getting a lot easier to create so many different variations of ads based off of all these different criteria and to manage that amount of creative.

(15:03):

Before, just to even make it, but then to manage it and then to optimize so many different versions of an ad, that would've been outside people's reach. And now that people can use basically natural language to say, "Please select every single one of these ads within a five-mile radius of so-and-so, and increase spend by 20%, or pause those ads entirely." You'll be able to essentially query 500 different ads that you're running and optimize in real time using natural language, and we're getting very close to that.

Marcus Johnson (15:41):

Yeah, that's fascinating. Let's talk about one AI ad in particular. This was an AI video ad that made quite a splash. Is this the future of advertising, questions Bill Chappell of NPR. He explains that a special effects filled 30 second TV ad for Kalshi, Kalshi, I don't know, one of the two probably. It's probably a third way and I've got it completely wrong. It's a betting company, presents a string of characters in wild scenarios making their picks for who would have won the NBA finals. The whole ad was made with Google's AI tools in 48 hours for $2,000 by a chap called PJ Accetturo, who boasted that he got to stay in his underwear for the entire shoot. One week after its streaming debut, the video also racked up over 3 million views on Kalshi's X accounts. Jeremy, is the story a flash in the pan or the future of advertising?

Jeremy Goldman (16:42):

It is definitely not a flash in the pan. I saw very similar things when I went to FreePix Upscale Conference recently in San Francisco where the cost essentially of creating these video generation credits that you have to use, it's so low that if somebody has the right amount of creativity where they're brainstorming, maybe by themselves, maybe with an AI, they can constantly iterate with different shots, and if they don't get the right kind of result, they can just go again. And the ability to put together a really strong 30 second shot using Ingenuity and a whole lot of video credits, that's something that is pretty much in the palm of a whole lot of different people's hands. Like we can put in the show notes if we wanted to right now, here's basically how to follow what Kalshi did there.

Marcus Johnson (17:39):

What's interesting about it is people reacted quite positively to this one. However, using AI to make your ads doesn't always work. Coca-Cola revamped their classic Christmas ad using AI. That didn't work out too well. I believe it was Toys R Us who did a similar thing. As you can see from this chart here, nearly two thirds of us adults feel uneasy about AI-generated ads. One third said very uncomfortable, the other third said somewhat uncomfortable, and then there was a third that said somewhat comfortable or very. But most people said, "We don't love it so much." So Yori, what's your take on this ad that was generated by AI?

Yory Wurmser (18:15):

As the technology gets better, and it has gotten better with VO, which is the technology that Kalshi used, it will become less and less obvious that it's AI-generated, and that's I think the difference. It's now something that is approaching realistic level. Earlier AI ads didn't seem realistic. There are glitches in there, there are artifacts of weird movements. I think now that the technology's better, you're going to see it take off, and I also think that people will be less aware that it is an AI-generated ad.

Jeremy Goldman (18:54):

By the way, that Coca-Cola ad, the polar bear one, that was about seven and a half months ago. If you redevelop that ad right now, and again, we're talking about a little bit more than half a year, it would look a lot better. That's how fast things are moving. So I think that it'll be obviously a bit of a challenge where if everybody starts to look at everybody else's prompts and technologies, does everything start to look like everything else? I don't necessarily think so, but yeah, Yori's completely right, the technology is moving incredibly quickly.

Marcus Johnson (19:30):

So the last question for you guys on this, how important do you think transparency is going to be here? Because this chart on the screen comes from one of our surveys showing that most consumers think that media publications at least, media publications should always cite when AI is used. Over 60% saying yes, always. A further 21% believing that they should, media companies should say when it's being used for certain types of content. So close to 80% of people saying, "Yes, it is important." Do we think that there'll be a watermark on ads, on content saying this is generated by AI, or do you think people just won't care in the future?

Yory Wurmser (20:08):

I don't think people care all that much, honestly.

Marcus Johnson (20:09):

Really?

Jeremy Goldman (20:09):

Yeah.

Yory Wurmser (20:13):

I think that... Yeah, no, go ahead.

Jeremy Goldman (20:14):

Oh, no. I think it's... So for the upcoming Fast and the Furious, I don't know, it's like the 19th movie, they are talking about bringing Paul Walker, who died sadly years ago in a car crash, and they're thinking about maybe can they bring him back in some way using old footage or maybe AI or whatever. That's the kind of thing that, yeah, you need to be very transparent about how you're using it. I think the idea that let's say a journalist or an analyst is using AI to some degree in developing great content, of course they are to some degree. I think it's all in the context of how are you doing it? Is it something that could be misconstrued as a deepfake if you're using it in a political ad? So the context really matters, I think, in terms of when people are going to expect disclosures.

Marcus Johnson (21:08):

Yeah.

Yory Wurmser (21:08):

I also think that when something is made without AI will become almost a feature in the sense of acoustic music became a thing, that people will want something that is handmade, that is done without AI. But AI is going to be so pervasive that it's going to be the exception I think, something that doesn't use AI at all.

Jeremy Goldman (21:32):

And the perfect example, by the way, Marcus, I always give people, I think Yori's spot on, is that Google Docs, the predictive ability for it to figure out what you're saying next, it's been doing this since before Google was really talking about AI, consumer-facing at least. That's AI, so we've been using AI without disclosing it because we didn't think as much about it. Now, this is very much a moment where we're very sensitive to it, understandably, and I think that it's going to really depend on the context, but yeah, everybody's going to be using it. So at some point, do you want to see disclosure on everything in the world?

Marcus Johnson (22:10):

Great takes. I like this line from Rebecca Stewart and Alison Weissbrot of Adweek, writing that, "Whilst marketers and agencies have their eyes on the future, the void between their public optimism and private anxiety is hard to ignore." Some great takes, gents, today. Thank you so much for hanging out with me. Thank you first to Yori.

Yory Wurmser (22:31):

Glad to be here as always,

Marcus Johnson (22:32):

And to Jeremy.

Jeremy Goldman (22:33):

Yeah, great conversation.

Marcus Johnson (22:35):

Yes, indeed. And thank you to the whole editing crew, and thanks to everyone for listening in to Behind the Numbers, an EMARKETER Video podcast made possible by Quad. Subscribe, follow. Ratings, reviews, all the things help more than you know, so please do those. Rob will be here tomorrow with the Banking and Payment Show, discussing how AI is turning banking upside down.