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Pip Bingemann: Alright, we might get into it. I'm sure there's gonna
be heaps of people coming through, because there's, like, 150-odd
who have said yes, but they'll come through. So I'm gonna introduce
James.
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Pip Bingemann: The reason why we're late is that, I was saying to
James, I am disgusted by how successful he is. It seems that
everything James touches turns to gold. He's had an incredible
career in the advertising world.
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Pip Bingemann: He's had a big hand in a bunch of other startups,
like Trucksuit, ideally. There's a new PR company coming out of that
little neck of the woods over in New Zealand as well, which I'm sure
James has had a touch… a play in. And he's also written four books.
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Pip Bingemann: And so, this is his, fourth book, which I'm super
excited to hear about and learn more, because, for me personally, I
remember, trying to tell everyone about this book when it first came
out back in… mid-2015s? Early 2010s, maybe?
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Pip Bingemann: To the point that I actually… I should have brought
this slide up. I sent James a slide the other day of a picture of
him, which was probably 15 years ago, from an old training deck that
I had, and I said, is this really you? And it's quite funny. So,
like, it's kind of cool, not only to chat with James and to know him
on a couple of different dimensions,
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Pip Bingemann: But he's had such a massive, I think, positive impact
in the industry that we all know and love, and so it's cool to kind
of talk through, from the man himself, about the latest book that's
coming out.
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Pip Bingemann: And so, that's what we're going to do today. And so,
as a quick reminder, these SPARC sessions, they're not supposed to
be about AI, they're not supposed to be about anything else other
than helping people develop their own craft and their own taste, and
their own, knowledge into making better work.
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Pip Bingemann: And so it's really nice to kick the second one off
with James at whatever hour of the day it is, 6am over here in
Sydney, I think it's probably 8am over in New Zealand, and maybe…
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Pip Bingemann: 3 or 4 over in the States, PM. So we're probably
missing a lot of people from Europe at the moment, but, that's what
happens when we've got weird time zones. And so we'll kick into it,
and then, it's gonna go for about 20 or 30 minutes. There's gonna be
heaps of questions.
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Pip Bingemann: And so, as you have questions, please, please, please
throw them in the chat. We're gonna have a bunch of books to give
away to a bunch of people as well, and so, we will pick some people
and send them a book.
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Pip Bingemann: At the post about… I think it's either going to be
random, or you might get an extra lottery ticket if you put in a
comment. But I don't know the mechanics, so it's not a… it's a game
of chance, it's not a game of skill, for the T's and C's. All right,
so, without saying anything else, I'll throw it to James, we'll get
into it, and I'll shut up, and then you'll hear from me when we get
into questions. Peace.
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James Hurman: Amazing, thank you, Pip, and hello, everyone. It's
lovely to be with you on this. It's quite a cold, grey morning here
in Auckland this morning, and a little bit past 8 o'clock, so I've
had my coffee, so hopefully I'll be, you know, semi-articulate. I'm
going to talk about my latest book, which is called Future Demand.
The book is about the…
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James Hurman: The… the relationship between performance marketing
and brand marketing, and why marketing to people who aren't gonna
buy from us straight away is one of the most important forms of
marketing that we can do.
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James Hurman: And and the world is full of, of, of woe and scary,
scary statistics at the moment, so I'll just add a few to, to that
pile.
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James Hurman: We… some research last year showed that, we're
beginning to hit, in… in large organizations, a kind of performance
plateau. 75% of US marketers.
James Hurman: We… some research last year showed that, we're
beginning to hit, in… in large organizations, a kind of performance
plateau. 75% of US marketers.
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James Hurman: report experiencing diminishing returns on their
performance marketing spend. We've been through an amazing past,
sort of, decade, 15 years of the growth of digital and performance
marketing, used that for all it is worth, and done a lot of great
work in that space, and made marketing
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James Hurman: You know, in many ways, a lot more efficient and much
more effective in terms of driving immediate sales, but we're
starting to see that plateau out, and the more money we put into the
performance machine.
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James Hurman: Rather than seeing, kind of, escalating growth, we're
seeing escalating costs of acquisition, and, and lower and lower,
kind of, returns back from
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James Hurman: The, the extra amounts that we put into our
performance marketing
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James Hurman: 66% of marketers now say that their performance
campaign metrics look successful on dashboards, yet fail to deliver
any real growth. So, what we're being told by the data versus what
our brands are actually experiencing, if we look at an annualized
growth, kind of basis, very different things. And… and this amazing
stat from the US, US brands now use an
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James Hurman: lose an average of $29 for every new customer
acquired. And so, the amount that we're putting into the acquisition
machine versus the amount that we're getting out is, is faltering.
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James Hurman: And… and I'm going to talk about why this is, and give
you kind of a diagnosis and a way out of this trap, but… but we're
beginning as a community to kind of right ourselves, and at the end
of last year, the top regret for US marketers was over-indexing on
short-term tactics over long-term brand building.
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James Hurman: The book's aimed at the US, and so I'm using U.S.
statistics here, but this pattern we see kind of everywhere in the
world, right? It's not something which is particular to the US. And
the pendulum swing away from sort of such a focus on short-term and
back towards a bit of a bit more of a focus on the long-term is
something that I'm also sensing everywhere in the world, and it's a
very good thing to be happening.
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James Hurman: And we're right to be doing that.
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James Hurman: to be kind of moving back to a balance, this is an
excellent study that was, that was carried out by Google.
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James Hurman: and their research partners last year, it's called the
Effectiveness Equation. What they were able to do is look at
companies, the amount that they, the amount that they allocated, the
amount of budget they allocated toward brand marketing versus
performance marketing, and also look at an annualized ROI of that
total spend overall. So…
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James Hurman: Rather than, you know, we're too sort of obsessed with
looking at ROI on a per-channel basis, or on a per campaign basis,
the most important metric, is, of course.
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James Hurman: the total ROI from our total marketing spend, if we're
a CMO or someone who's in charge of a brand, what's important is how
much are we getting back from everything that we do, not just how
much are we getting back from individual
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James Hurman: individual activities, so…
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James Hurman: what this chart shows pretty clearly is that the
brands that led heavily towards either performance or brand were,
experiencing a lower overall ROI than those that balanced brand and
performance about 50-50.
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James Hurman: And this isn't a bunch of, sort of, you know, brand
enthusiastic CPG companies, this is e-commerce retailers, and so
this is modern digital companies, and what Google found was the
optimal split between performance and brand in those companies was
about half and half.
James Hurman: And this isn't a bunch of, sort of, you know, brand
enthusiastic CPG companies, this is e-commerce retailers, and so
this is modern digital companies, and what Google found was the
optimal split between performance and brand in those companies was
about half and half.
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James Hurman: Now, this, Google's not alone. Analytic partners in
the US, found a similar thing, so they looked at incremental revenue
growth across companies, looked at what they allocated towards brand
versus performance, and they saw, again, that those
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James Hurman: those splitting their budgets about half and half were
much more effective in terms of driving incremental growth over the
short term and the medium term and the longer term, than brands that
went all in on performance or leant very heavily towards
performance. So, a couple of data points there saying the same two
things.
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James Hurman: Not new news for anyone who's been following the
effectiveness dialogue over the past, past couple of decades. Way
back now in the dark ages of 2013, Lisbon and Peterfield and the
IPA.
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James Hurman: Showed that in their data set, the optimal split
between what they called brand and sales activation, this was before
the term performance marketing had been kind of invented, was 60-40.
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James Hurman: And and so, back then, they saw the companies that
were spending 40% of their budgets driving short-term, immediate
kind of returns, measurable, visible, immediate sales, were doing
the best, not the ones that were spending all of their money on that
sort of activity.
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James Hurman: And what a lot of marketers don't know is that even
further back, if we go back to 1992, there was a guy called Peter
Kim in New York City.
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James Hurman: worked with a very big database of U.S. marketing
data. He, too, could see what brands split out in terms of their
brand advertising and their promotional activity. So, again,
activity designed to drive very visible, very measurable, very
immediate sales.
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James Hurman: And he found the same thing. The companies spending
about half and half saw a much greater overall ROI than the
companies that were leaning into promotion.
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James Hurman: Which was the performance marketing of old. And…
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James Hurman: you know, doing a lot, a lot lower ROI if they were
leaning too hard into promotion and not balancing those things
properly. So, it's really interesting when we take a tour through,
kind of, very recent history and, and, and very, kind of, as far as
marketing concerns, is concerned, very, you know, deep history.
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James Hurman: It doesn't matter where or when we look. Whenever
anyone looks at this, whenever anyone's able to get the allocations
between budget and brand across many brands and look at that, and
measure that against the overall ROI, the overall growth or
performance of those brands, the companies with the best overall
marketing ROI spend about half and half on brand and performance.
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James Hurman: That was true in the early 90s, it was still true in
the 2010s, it's still true today, and it doesn't matter what
category or what geography we look at, it's always true.
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James Hurman: And… and my, my interest, my fascination has been, why
is this?
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James Hurman: Right, why do these two forms of marketing interact in
this very…
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James Hurman: predictable way, right? What we see… what the data I
just talked you through is what in marketing science we call a
generalizable pattern. What that means is we see that same passion
come up again and again. When we look at different data sets from
different time periods, different geographies, different groups of
companies, different researchers using different methodologies. We
see the same pattern where it's hit again and again and again, and
that's how we know that something is
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James Hurman: a robust kind of principle to follow. So…
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James Hurman: So why? Why are brand marketing and performance
marketing both really powerful on their own? Because they're both,
in all sorts of ways, very valuable, powerful forms of marketing,
but why are they more powerful when they're put together? How does
this thing… how does this kind of whole caboodle work?
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James Hurman: And the answer to that
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James Hurman: it's… the answer is found by going back to what
marketing is kind of fundamentally about. Marketing is fundamentally
about how markets work, it's marketing, and about how humans make
decisions. And once we understand those two
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James Hurman: things, it becomes really kind of clear why branded
performance work in the way that they do, and why they work so well
together, and why the other results that we see from different types
of marketing and advertising activity, why those are the way that
they are.
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James Hurman: So, I'm going to talk to you a little bit about… about
this. I want to start with how markets work. So, this is really hard
to do on a call like this. This is an exercise that I do when I
stand up in front of big crowds. I'll always say, put up your hand
if you're currently in the process of buying a new mobile phone, or
thinks, or think you will do so in the next couple of weeks. And say
I'm in a room with 100 people, one or two people will put their hand
up to indicate that they are
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James Hurman: We're in the process of buying a new mobile phone.
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James Hurman: Then what I do is I say, okay, put your hand up if you
expect to buy a new mobile phone in the next 2 years, and almost
everyone puts up their hand.
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James Hurman: And I do that exercise to make a really fundamental
point that in any market, there are two types of demand. So, there's
what I call current demand, which is the small group of hands that
always goes up first, people who are in the market, currently ready
to buy, currently shopping the category.
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James Hurman: And then there's what I call future demand, which is
the much larger group of hands, which is people who aren't looking
to buy right now, but who will definitely come into the category at
some point in the relatively near future.
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James Hurman: And as marketers, we've, it pays to understand that
this is how markets work, this is how all markets work, and we've
got a job to do as marketers with both of these groups of people.
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James Hurman: as my very scientific hands-up exercise always shows,
the current demand in any market is always a lot smaller than the
future demand, so there's always a small group of people in the
market right now, at any given point in time, and a much larger
group of people who are out of that market. They will buy from that
market at some point in the future, but they're just not in the
market shopping around today.
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James Hurman: So, I took my,
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James Hurman: I took my, my audience experiment, and I turned it
into some actual research, and the US did a representative national
sample study of consumers in the US. Asked them about a bunch of
categories. When do you intend to purchase a new mobile smartphone
handset? Is it in the next week, month, quarter, six months, year?
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James Hurman: Sometime after that, and measured what they said, and
so…
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James Hurman: You can see here, in smartphones, pretty, pretty
similar to what I was saying before, a small amount who are in the
smartphone market this month, 15% say they're looking for a new
smartphone or gonna buy one in the next month, and the 85% are going
to buy a new smartphone at some point after that.
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James Hurman: This is pretty consistent across categories. If we
look at sneakers, people like to buy sneakers a little more often
than they buy new smartphones, and so the shape is slightly
different, but it's still fundamentally the same principle.
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James Hurman: a small group of about a quarter in market for a new
pair of sneakers over the next month. The much larger group will buy
sneakers at some point in the future.
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James Hurman: If we look at international air travel, see a really
similar pattern, 19% current demand, 81% future demand.
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James Hurman: If we think about much faster moving categories, so
FMCG, CPG categories, it's probably fair to say that people are in
the market if they're intending to buy something from that category
this week, as opposed to this month. If we look at beer, we see that
37% of people are going to buy beer this week. 63% of beer drinkers
and buyers will not buy beer this week.
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James Hurman: We'll buy it at some point, in the period following
that.
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James Hurman: And if we look at a relatively new, but really
interesting category, recreational cannabis, we see the same thing,
31% current demand, 69% future demand.
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James Hurman: some people getting high this week, most people
getting high later. So, the pattern holds across, it doesn't matter
what category you look at, this pattern holds across those
categories. This is a fundamental about how markets work, right?
They have a small amount of buyers in them at any given point in
time, and a massive amount of buyers who will come into them later.
This is how all markets work, all categories work.
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James Hurman: There's no category where people are in the market to
buy from that category every day, or 100% of people are in that
category to buy at any given point in time. Markets always have this
dynamic, this shape, and it pays for us to understand that as
marketers, because we're in the game of marketing, and that's about
how markets work. So…
James Hurman: There's no category where people are in the market to
buy from that category every day, or 100% of people are in that
category to buy at any given point in time. Markets always have this
dynamic, this shape, and it pays for us to understand that as
marketers, because we're in the game of marketing, and that's about
how markets work. So…
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James Hurman: if that's how markets work, then how do humans make
decisions within those markets? And there's a really excellent piece
of research that came out of WPP Media and Saeed Business School at
Oxford University late last year called How Humans Decide.
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James Hurman: And this is a study where they looked at 1.2 million
purchase journeys, so people who were out of the market, came into
the market, made a purchase, then left that market again, and they
were able to study what happened in that journey. And what they
found, and what this chart shows, is that on average, 84% of people
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James Hurman: chose a brand, when they purchased, they chose a brand
that they were already biased towards before they came into the
market.
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James Hurman: So, they had a consideration set of brands that they
were, you know, most favorable about buying to before they came into
the market. They came into the market, they evaluated all of their
options, so those brands that they were familiar with and biased
towards, alongside all of the other brands that had, you know, all
sorts of different product offers and promotions and all that kind
of stuff.
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James Hurman: And 84% of the time, they ended up choosing something
that was on that original consideration set. So we, this is
fascinating, and really breaks with the idea that if we just put the
right amount… right sort of marketing, the most persuasive argument
for our product in front of people when they come into market,
they're likely to choose us. Well, no, they're not. They're actually
still likely to choose something that they already felt good about
before they came into market.
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James Hurman: already biased towards.
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James Hurman: And this is the truth about how humans make decisions.
When they come into a market, they gravitate towards the brands that
they feel most familiar with. We have a bias
James Hurman: And this is the truth about how humans make decisions.
When they come into a market, they gravitate towards the brands that
they feel most familiar with. We have a bias
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James Hurman: within us, which is a familiarity bias that biases us
towards things that are familiar. We like and trust and choose
things that feel more familiar to us. In the
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James Hurman: In the behavioral science, they call this the mere
exposure effect, that we tend to like things merely because we've
been exposed to them before.
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James Hurman: If we've seen something before, if we've kind of had
an experience with something before, we're more likely to like it
than something that we've never seen, something that's fresh and
completely new and completely unfamiliar to us.
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James Hurman: And this is why brands like Coca-Cola do these sorts
of activities. So Coke branding every convenience store in the world
is not so much about reminding you of Coke, so that when you walk
into that store, you buy a Coke. Actually, its much bigger impact is
that
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James Hurman: this marketing keeps us feeling familiar with Coke at
all times, so it's very difficult for us to walk through any big
city in the world without seeing the Coke logo a bunch of times.
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James Hurman: what happens when we see that logo is our kind of
familiarity with Coke, our sort of memory that Coke is something
that's around us and in our world all the time, is continually
topped up. What Coke's doing here, I call familiarity
infrastructure. They're making sure that the Coke brand never gets
unfamiliar to anyone, and it's one of the reasons why, in a very, in
a really, really competitive category with a very low
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James Hurman: price of entry, Coke has maintained its market
leadership for decades and decades and decades. Part of that
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James Hurman: is the fact that Coke is always the most familiar
brand to all of us in the soft drink world.
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James Hurman: So this is how humans make decisions. As people come
into a market, they come with a powerful bias toward a small number
of brands that usually results in them choosing one of those brands,
and this often happens regardless of whether there is an objectively
better product available from a brand they're not biased towards.
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James Hurman: Now, this is, in a classic economic sense, irrational
behavior. Why would we choose something
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James Hurman: that is inferior when a superior choice is available
to us. And the reality is that, as behavioral science has shown us,
we are predictably irrational creatures. We have brains that make
decisions based on
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James Hurman: you know, the subconscious biases that we have, and
then rationalize those decisions. We don't really have rational
brains, we have rationalizing brains.
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James Hurman: And…
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James Hurman: What this means for marketing is when we make people
familiar with our brand before they enter the category, they're
biased to act on the marketing that we do to drive immediate sales.
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James Hurman: These two things go together, this kind of warming up
and biasing of people towards our brand before they come into
market, and then our marketing to drive immediate sales, which
closes the deal when they arrive in the category.
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James Hurman: At one of my company's Tracksuit, we, we decided to
put this theory to the test, and, and so this idea that if people
are more familiar with a brand, they're more likely to act on its,
on its short-term marketing, its marketing to drive immediate sales.
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James Hurman: We, so Tracksuit is a brand health tracker. We track
awareness and consideration and preference and those sorts of things
for now thousands of brands around the world. We took our brand,
brand health data, we gave a bunch of it to TikTok.
James Hurman: We, so Tracksuit is a brand health tracker. We track
awareness and consideration and preference and those sorts of things
for now thousands of brands around the world. We took our brand,
brand health data, we gave a bunch of it to TikTok.
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James Hurman: they say you should never give TikTok your data, but
we did in this particular case, but it came with some very clear
stipulations, of course. But anyway, the marketing science team at
TikTok
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James Hurman: took our brand awareness data and compared that
against their performance marketing data. So, did those companies
with higher or lower brand awareness see any differing performance
efficiency?
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James Hurman: And what this chart shows here, this very messy chart,
basically this is showing that there's no observable correlation
between
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James Hurman: click-through rate and brand awareness. So, what that
means is you can be the most familiar brand in the world, you can be
Coca-Cola, or you can be a brand that no one's ever heard of. If you
make a cracking bit of content on TikTok, people will click on it.
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James Hurman: But, marketers, we are not here to drive clicks.
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James Hurman: Click-through rate has been now proven several times
in several different studies to have no relationship with any kind
of important business metrics. Click-through rate does not matter.
It's a pure vanity metric, and we shouldn't pay much attention to it
at all.
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James Hurman: But what does matter is conversion rate. That's what
we're here to do, drive conversions, drive sales, grow the business.
And so, if we look at the correlation between awareness and
conversion rate, we see a very strong correlation. As awareness gets
higher, so does conversion rate.
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James Hurman: And the differences are very meaningful. If you're a
brand with 40% awareness, your conversion rate's going to be about
1.5 times a 20% awareness brand. If you're a brand with 60%
awareness, your conversion rate's going to be nearly three times as
high as if you've only got 20% awareness. So this is some evidence
that shows that if brands have done the job of kind of building
familiarity among lots of people.
James Hurman: And the differences are very meaningful. If you're a
brand with 40% awareness, your conversion rate's going to be about
1.5 times a 20% awareness brand. If you're a brand with 60%
awareness, your conversion rate's going to be nearly three times as
high as if you've only got 20% awareness. So this is some evidence
that shows that if brands have done the job of kind of building
familiarity among lots of people.
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James Hurman: before they come into market. When they do, they tend
to buy, click on the performance marketing, buy something from that
journey. And so, conversion rate is really, is not so much a factor
of how good the performance marketing is. Conversion rate is
actually more a factor of how good the brand marketing is.
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James Hurman: If we're a brand that's done a lot of great brand
work, we've made ourselves very familiar to a lot of the market,
we're gonna see better conversion rates from doing that. And so…
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James Hurman: And so this really kind of proved out this thesis that
making our brand more well-known makes our performance marketing
more efficient and more effective. If we want more efficient
performance marketing, we should not try and, you know, twiddle the
knobs and try and make that performance marketing more efficient
within itself. We should actually look at what we're doing on the
brand side of our marketing and make sure that we're growing our
awareness, self-familiarity.
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James Hurman: growing our brand in that sense to make our
performance marketing more efficient and more effective. And that
really argues, with one of the sort of principles that we've grown
up on, this idea that
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James Hurman: ads work and are more effective because they're more
persuasive. If we look at the most familiar brands in the world, the
Apples and the Nikes and the Coca-Cola's, they actually don't take
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James Hurman: the lion's share of sales because their ads are more
persuasive. Their ads actually work better because their brands are
so much more familiar to so many people.
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James Hurman: And one of the really interesting bits of research
that's been done, I think three times now over the past 20 or so
years by Paul Dyson is the multipliers of profit ROI in advertising.
And the number one is brand size, right? If you're a bigger brand,
you have an immediate effectiveness advantage, just because lots
more people are familiar with you, and so they're more likely to
James Hurman: And one of the really interesting bits of research
that's been done, I think three times now over the past 20 or so
years by Paul Dyson is the multipliers of profit ROI in advertising.
And the number one is brand size, right? If you're a bigger brand,
you have an immediate effectiveness advantage, just because lots
more people are familiar with you, and so they're more likely to
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James Hurman: convert from the ads that you do, which are a bit more
short-term, or a bit more product or offer-based.
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James Hurman: And this really argues with something that we've grown
up believing, which is this idea that advertising works by causing
sales, by putting the right argument for our product in front of the
right people. This idea that this is how advertising works
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James Hurman: Eventually, it originally came out in 19… it was the
very early 1900s. A guy called Frank Dukesmith, invented the concept
of ADA.
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James Hurman: And Frank was actually not an advertising or a
marketing person, he was a salesperson. His discipline was sales, it
wasn't marketing. And he said a good sales process involves creating
awareness for whatever you're selling, generating interest in that,
causing desire for that, and finally prompting action and getting
someone across the line to buy.
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James Hurman: And this was subsequently picked up by a group of
advertising, early, sort of, 1900s advertising people, and adopted
as a way to explain how advertising worked and what a good ad did.
That an ad caused sales by putting the right argument for our
product in front of the right people.
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James Hurman: And this was based on a model not of how advertising
works, but a model of how sales works. And it was a great model to
explain how sales works, but a terrible model to explain the
completely different discipline of advertising. And the reason that
we know that advertising doesn't work in this way
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James Hurman: let me take you through some numbers. If we look at
the conversion rates of advertising, the overall kind of conversion
rates looking across, across lots of different media and types of
advertising.
James Hurman: let me take you through some numbers. If we look at
the conversion rates of advertising, the overall kind of conversion
rates looking across, across lots of different media and types of
advertising.
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James Hurman: conversion rates are never over 15%. They're sometimes
up to 5% in really strong cases, and they're usually around 1%,
right? So normally, advertising results in about 1% of the people
that have seen the ad.
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James Hurman: go out and buy the product. And sometimes, in very
rare cases, that's up to, kind of, 15%, or there or thereabouts. But
it's never higher than that, right? And the interesting thing about
these numbers is, if you go back 100 years, these numbers were
exactly the same. So.
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James Hurman: We have been through 100 years of introducing greater
and greater creativity to advertising, introducing ever more
sophisticated media planning, buying, targeting technologies. We
invented the strategic planning discipline to help us make more
persuasive ads. We invented the
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James Hurman: copy testing and creative testing discipline to help
us figure out which ads were going to be better at driving sales.
With all of those massive advances in resources and skills and
technologies, we have not shifted these numbers at all.
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James Hurman: So, if advertising worked in the way that we thought
it did, we would have, after all of that progress, seen these
numbers change at least somewhat. They haven't changed at all.
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James Hurman: One of the other things that we would definitely see
if advertising caused people to buy products, logically, we'd see
the very best advertising causing most of the people that saw the ad
to buy the products. There should be at least some cases of
universally persuasive ads, but there are no cases of universally
persuasive ads. Why? Because advertising actually does not work in
the way that we thought it does.
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James Hurman: And this is kind of a really important and slightly
shocking point that I'm going to make. Advertising doesn't cause
sales, marketers. Advertising does not cause sales. It does,
however, ensure brands win a gracious share of them.
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James Hurman: And… and so, the way that advertising does this
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James Hurman: is by doing these two equally important things. One is
creating future demand, warming up the large group of people who
aren't in the market yet, so that when they do come into market,
they bias towards us. And secondly, by converting current demand, by
getting as many of that small group of in-market people as possible
to act on that bias that we've created.
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James Hurman: and choose us. That's why advertising has the
conversion rates that it has, because not many people are in the
market at any given point in time, so when you run a campaign, not
100%, or 50% or even 20% of that market is going to run out and buy
the product. You're not actually in the market, but if we've done a
great job with our advertising, all or most of the people in the
market at that point in time will gravitate towards us.
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James Hurman: and choose us. So we've got these two things to
manage. The amount of demand that we're creating in the market.
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James Hurman: Versus the amount of work that we're doing to, to
convert that demand.
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James Hurman: If we don't continually create future demand,
continually top up the familiarity of our brand, continue making
that, you know, keeping that top of mind for people, then what
happens is our level of demand stays flat.
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James Hurman: And as we grow, we can grow really quickly under that
level of demand, but as soon as we sort of get up to that, our sales
start to plateau, which is what we've always seen in young companies
and startups going through this period of rapid early growth and
then plateauing. We're now seeing it in most large organizations
around the world. We're hitting the ceiling. And even though we
might choose to keep spending more and more and more, that… that…
those sales, those conversions still
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James Hurman: flat line, and that's what we're seeing at the moment.
That's what the performance trap's about, this performance plateau,
this thing that's happening where we're spending more and more
money, but seeing less and less returns from that.
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James Hurman: If we continue to lift our demand ceiling by
continuing to create future demand, continuing to build familiarity
among that very big group who are going to come into the market
later, then demand can still be converted at a sustainable rate, and
as we spend more, it's still going to be converted sustainably, and
we're still going to see the same sorts of returns. We've got to do
these two things handily.
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James Hurman: hand in hand. Otherwise, we find what we're finding
right now, which is that the results plateau out.
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James Hurman: So we've got these two jobs to do, convert current
demand, create future demand, and so I want to talk now about what's
most effective at converting current demand versus what's most
effective at creating future demand. We've actually got to the point
where we've optimized,
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James Hurman: performance marketing, the conversion of current
demand, really excellently. We've done a great job of optimizing
performance marketing, we really know how that works. We need to do
just as good a job of optimizing brand marketing, the creation of
future demand. So, to give you an example, so…
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James Hurman: if you were one of those people who put your hand up
to say you're in the market for a new smartphone, I bet you'd stop
and read information like this. So this is typical kind of
functional information about two options from the smartphone
category, prices, star ratings, facts and figures, and features and
benefits, and fors and against, and all those sorts of things.
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James Hurman: If you're in the market for a smartphone, chances are
you'll stop and read this. It's fundamentally interesting to you.
You're in the process of thinking about these things, you want to
make the right decision. You will very likely stop and read this
information if you are in that market and haven't not already made
your final choice.
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James Hurman: If you're not, though, if you're not in the market for
a new smartphone right now, unless you're weirdly interested in
smartphones, you're not going to stop and read this information.
It's not… you have far too many other things going on in your life
to stop and read a bunch of functional information about a product
category that you're not intending to buy from in the near future.
That's not to say that a
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James Hurman: Mobile phone brand could not engage you in some way,
it would just need to happen on very different terms, not the facts
and figures and specs and features and all that kind of stuff, which
you will naturally filter out.
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James Hurman: Here's another example. This is an ad for a truck.
It's a perfectly good ad for a truck. We've seen plenty of them in
our lifetimes. Big picture of the product, a not very good headline,
a bunch of waffle about the features and benefits of the truck. Call
to action at the end. If you're in the market for a truck, if you're
in the market for a commercial truck, chances are you'd stop and
read this ad. But I'll get you to ask yourselves, are you in the
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James Hurman: market for a commercial truck. I'm guessing that
everyone's thinking in their heads, no, I am not. It's very unlikely
that you would stop and read that ad, but I bet you all watched this
one.
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James Hurman: Oh, the sound's not playing, that's unusual.
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James Hurman: As I say, I'm playing your input.
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Pip Bingemann: Don't know why, at least.
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James Hurman: It's coming out of my… I can hear it coming out of my
headphones. Hang on. Sorry, gang, I'm just gonna try and fix this.
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James Hurman: Can I fix this?
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James Hurman: Bear with.
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James Hurman: How about now?
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James Hurman: No, I stand here before you. What you see is a body
crafted to perfection.
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James Hurman: A pair of legs engineered to defy the laws of physics.
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James Hurman: And a mindset to master the most epic of splits.
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James Hurman: Can't say we're low.
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James Hurman: And who can say if you love the rose as your hearts?
Only time.
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James Hurman: It's a beautiful ad. We all watched it when it came
out. It was very effective. 100 million, views in a matter of weeks
after it launched. Sales increase for Volvo Trucks, the CEO of Volvo
Trucks was very happy about all of it. And and so really effective
piece of communication. What that ad did, though.
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James Hurman: is it created a shit ton of future demand. The reason
that it did that was that, just like it reached all of us who are
not in the market for a commercial truck and probably never will be,
and have no reason to kind of really watch that ad, it reached all
of us anyway.
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James Hurman: And it reached… who it also reached was all of the
people who would come into the commercial truck category over the
next few years, and gave them a bias towards Volvo trucks.
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James Hurman: And that's why we see
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James Hurman: If we look at the trajectory of Volvo Trucks after
that ad.
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James Hurman: over the next few years, their market share just went
up and up and up and up, as more people came into the market who had
been impacted by that very creative piece of communication that
everyone saw, and they came with a bias towards Volvo trucks, and a
lot of the time, they ended up acting on that bias and buying a
Volvo truck. And so, two very different styles of communication, one
which is all about talking to people who are currently in the
market.
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James Hurman: That ad on the left was probably in a trucking
magazine, some kind of contextual media, which is likely to talk to
people that are in the market for buying trucks. And the ad on the
right was.
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James Hurman: a very, very different style of communication, indeed,
that was engineered to reach the big group of buyers who would come
into the category later, and impact on their future purchases. And
so.
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James Hurman: The way that that ad worked, was by planting memories
in the heads of future buyers, and creating future demand is all
about planting positive memories of our brand in the heads of the
huge group of future buyers who will buy from us, not tomorrow, but
next week, or next month, or next quarter, or next year.
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James Hurman: And that requires 3 things. It requires creativity, it
requires emotion, and it requires reaching a lot of people. I'm
going to talk through these things. By creativity, what do I mean? I
mean original ideas that are designed to engage people rather than
just communicate at them. There are a few good examples that we're
all familiar with.
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James Hurman: And we know from the historical data that creatively
award-winning advertising, or advertising that has those qualities
that I just described in droves, is much more efficient and
effective at driving market share growth than ads that don't have
those same characteristics. Less creative ads are much poorer at the
same relative amount of media spend.
James Hurman: And we know from the historical data that creatively
award-winning advertising, or advertising that has those qualities
that I just described in droves, is much more efficient and
effective at driving market share growth than ads that don't have
those same characteristics. Less creative ads are much poorer at the
same relative amount of media spend.
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James Hurman: Than the highly creative ads are driving market share
growth over time.
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James Hurman: Why is this? This… the reason that this is, is that…
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James Hurman: If we think about the more rational ads that convert
current demand, the small group of people who are in the market
naturally pay attention to those ads. Just like if you're in the
market for a smartphone, you pay attention to that information about
smartphones that I showed you earlier. If you're in the market for a
particular category, you're likely to pay attention to the ads for
products in that market.
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James Hurman: Even if they're very informational and fact-based,
because you're currently interested, that's currently relevant to
you. If you are not in the market, you need something to earn your
attention. Why did we all watch the Volvo Trucks ad, even though
none of us are ever going to purchase a commercial truck, and it's
legitimately a waste of 60 seconds of our time? It's because of the
creativity. The creativity in that ad earned our attention, even
though
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James Hurman: We're not in the category to, to purchase a commercial
truck.
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James Hurman: And that's really the case for creativity when it
comes to building future demand. Creativity earns the attention of
that much larger group, and so it's got a shot of planting memories
that that group will bring into the category as they come into the
category later.
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James Hurman: Howard Gossage, back in the… back in the 1950s, said,
nobody reads advertising, people read what interests them, and
sometimes it's an ad. And it was as true then as it is today. Nobody
pays attention to advertising, people pay attention to what
interests them, and sometimes that's advertising. And when
James Hurman: Howard Gossage, back in the… back in the 1950s, said,
nobody reads advertising, people read what interests them, and
sometimes it's an ad. And it was as true then as it is today. Nobody
pays attention to advertising, people pay attention to what
interests them, and sometimes that's advertising. And when
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James Hurman: We're in a category, we will gladly pay attention to
advertising for that category, and that's why we see that when it
comes to driving very large immediate sales effects, converting
current demand.
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James Hurman: Actually, it's the not-creative ads that are more
effective at doing that. When people are in the category and they're
interested in the category, they actually are quite happy to read
functional information about that category. They don't need their
attention to be earned by creativity. Just giving them the facts is
the right thing to do. Same goes for emotion. If we want to convert
people who are already in the category, we don't need to take an
emotional approach. We're better just to put the rational
information in front
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James Hurman: one of them.
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James Hurman: But when we want to talk to everyone else, and if we
want to drive anything other than large immediate sales effects,
we're better to go emotional. So what this shows is that, if we look
at any meaningful longer-term brand metrics, such as base sales
growth, market share growth, pricing power, loyalty, awareness,
trust, differentiation, whatever we look at, it's the emotional ads
that are much better at driving those sorts of outcomes.
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James Hurman: films.
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James Hurman: And why is this? It's because it goes back to
something that Maya Angelou once said, which is that I've learned
that people will forget what you said, people will forget what you
did, but people will never forget how you made them feel. We know
that to be true because we're humans, but it's as true for brands as
it is for people.
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James Hurman: And actually, what the, what the neuroscience has
shown us, there's a professor, Robert Heath, in the UK, spent his
life studying how the human brain stores information.
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James Hurman: We have two forms of memory. One is called implicit
memory, it's where we store feelings. One's called explicit memory,
it's where we store facts. They're two different parts of the brain,
and our explicit memory, where we store facts, decays very quickly.
We forget facts really quickly. Where we store feelings, our
implicit memory decays very, very slowly. We remember feelings for a
lot longer than we remember facts.
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James Hurman: So, so when we…
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James Hurman: come into, if we want to implant a memory in someone
who's going to come into our category in 6 months' time, we want
them to remember us when they do that. Giving them facts is no use.
They will have forgotten those by the time they get into the
category. If we make them feel something, they will carry that
feeling into the category with them in 6 months' time. That's why
emotion is so important.
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James Hurman: Emotion's also important for increasing profits.
Emotional campaigns are much more likely to, to increase profits or
be profitable as campaigns. And the reason for that is, that, when
we feel good about something, we're more likely to be okay with
paying more for it. There's a, there's a bias in
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James Hurman: the behavioral science called the affect heuristic. It
means that we tend to judge things that we feel good about as being
more valuable. That means we're happy to buy them when they're not
on special, or when they cost a little bit more than the competitor
costs, and that's where all the profit lies, right? Not discounting
things and charging a little bit more.
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James Hurman: The third thing, besides creativity and emotion, that
helps us build future demand is very broad targeting. So, what this
chart shows is that when we target broadly, when it comes to market
share growth, we see a much, much, much stronger outcome than when
we target tightly, narrowly, sort of try and hyper…
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James Hurman: target and really personalize stuff to small groups of
people. It's actually broad targeting, which is much better at
creating future market share growth. And again, the reason for that
is when we're creating future demand, we need to be talking to that
massive group of people who aren't in the market just yet.
James Hurman: target and really personalize stuff to small groups of
people. It's actually broad targeting, which is much better at
creating future market share growth. And again, the reason for that
is when we're creating future demand, we need to be talking to that
massive group of people who aren't in the market just yet.
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James Hurman: It's no point talking to the very small group of
people who are in the market right now. We should be talking to them
with our performance marketing and with the marketing that we do to
drive immediate sales, but when we want to create future demand, we
need to be talking to that very big, very dispersed group of people
who we need to reach through much more broadcast forms of
advertising. So.
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James Hurman: Broadcast media or digital media, which is, which is
set to, set on the basis of reach, as opposed to on the basis of
targeting.
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James Hurman: And so that gives us a tidy little list of the right
type of advertising to use for converting current demand, which is
more rational, creativity, not as important. It's more based around
a call to action. We want people to click here and buy now. And it's
about tight targeting. If we can just target the people that are in
the market.
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James Hurman: Through the use of retail media, or through the use of
contextual targeting, or through these sorts of tools, that's the
best thing that we can do.
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James Hurman: If we want to create future demand, it's the opposite.
So we need creativity to earn the attention of people who aren't yet
in the market. We need emotion to stick in their memories so that
they recall us when they come into the market in 6 months' time.
We're not going for an action. They're not in the market yet.
They're not going to click here and buy now. We're going for
memorability. What are they going to remember when they do come into
the market naturally?
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James Hurman: over the next few months. And we need very broad
targeting. We need to reach all the people who are not in the
category. That is a much larger group, a much more dispersed group,
and we need to target them in a way that uses broadcast media to
reach them.
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James Hurman: And that's what we kind of classically think of as
performance and brand.
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James Hurman: Now.
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James Hurman: it's no news to any of us that have been working in,
you know, the brand marketing field for many years that brand
marketing makes companies larger and more valuable. If we look at
the work that Kantar's Brand Z initiative do, they study the most…
the strongest and most powerful brands in their portfolio of
companies that they track, compare those companies against the S&P
500, and
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James Hurman: for forever and ever and ever, not only in this
current age of the Mag7 and all the rest of it distorting the, the
public markets, right back to, way before those companies were so
impactful, we always saw the brands with, that… or the companies, I
should say, that had stronger brands, more familiar, more well-liked
by more people.
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James Hurman: Delivering better share market performance than those
companies that just had great fundamentals, but didn't have a great
brand on top of that.
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James Hurman: But we've not been very good at telling that story. I
talked to Dara Tressida, who was then the CEO of CMO of Peloton a
few years ago. She said to me, you know, James, marketing has not
done a very good job of marketing marketing.
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James Hurman: And it's a really pithy statement, but she's
absolutely right. We've often done a great job of marketing the
products and the brands that we serve. We've not done nearly as good
a job of marketing the discipline that we are a part of, letting
non-marketing stakeholders know how marketing works, and how it
contributes value, and why we should invest in it. We've been not so
good at doing that. We need to get a lot better at that.
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James Hurman: Because too often, we've been asked the question, how
does brand marketing add commercial value? How does this kind of
good, fun.
James Hurman: Because too often, we've been asked the question, how
does brand marketing add commercial value? How does this kind of
good, fun.
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James Hurman: fuzzy stuff actually, you know, contribute to the top
or bottom line of this company? And often, our explanation for that
has been, you know, one which is not particularly good in terms of
an explanation. We tend to stare into the distance like rabbits in
the headlights.
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James Hurman: So, so a lot of my, kind of, past few years has been
about answering that question and squaring that circle, right? And…
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James Hurman: If you want to… if you get asked what the point of
brand marketing is, how it adds commercial value, this is the
answer. Brand marketing is the creation of future demand. It makes
people who aren't in the market yet familiar with us and emotionally
positive toward us, so when they enter the market, they gravitate
toward us, and they pay more for us. That is what brand marketing
does. That's why it's important.
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James Hurman: And when we don't do it, we end up with poorer
outcomes than when we do do it in a good balance, alongside our
performance marketing. I'm going to finish with a story. Love
telling the story. This is from a guy called Jeremy Bullmore, who is
one of the most famous and most productive people in the advertising
industry in the UK over the past many decades. He said.
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James Hurman: In a WPP annual report, he told this story. Many years
ago, the late Len Heath, then in his mid-40s, sold his interest in
an advertising agency and took me out to lunch. Afterwards, he
offered to drive me back to my office. I protested. My office was no
more than 10 minutes' walk away. But Len insisted, and when we got
to his car, I understood why. It was a shining, stunning, elegant,
arrogant, latest model Aston Martin.
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James Hurman: It was the first time I'd been inside an Aston Martin,
and it didn't disappoint.
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James Hurman: You may be interested to know why I bought this car,
said Len. I bought it because I saw an advertisement for it. Well,
fancy that, I said. But that's not the interesting bit, said Len.
What's interesting is that I saw that advertisement when I was 14.
James Hurman: You may be interested to know why I bought this car,
said Len. I bought it because I saw an advertisement for it. Well,
fancy that, I said. But that's not the interesting bit, said Len.
What's interesting is that I saw that advertisement when I was 14.
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James Hurman: And I love telling that story because it really brings
to light the reality that a lot of the advertising, the marketing
that we do pays off over a longer term. Now, most of us are
fortunate not to work in luxury automotive, where that longer term
means decades and decades. Most of us are working in categories
where the future demand that we're creating with the brand marketing
that we do right now pays off, and
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James Hurman: 3, 6, 9, 12 months' time. But it's true that we need
to be doing that sort of marketing. That's how we drive sustainable
growth. That's how we keep the ROI of our overall marketing
portfolio as strong as it can be, is by making sure that we do both
of these things well.
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James Hurman: And I will end there. Thank you very much for allowing
me to talk about the new book, and I'd love to take some questions
if there are some.
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Pip Bingemann: Definitely.
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Pip Bingemann: Before we jump into questions, there's a couple in
there that I'm gonna read out. I just want to say a massive thank
you.
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Pip Bingemann: A lot of the stuff that you've put in here, like,
People know intuitively.
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James Hurman: Hmm.
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Pip Bingemann: But really struggle to communicate it eloquently.
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Pip Bingemann: And I think what you do so beautifully is just make
it so damn fucking obvious.
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Pip Bingemann: that people need to see this, and I… and I… I thank
you for putting the work in and making it easier for everyone else
in the industry to take some of the work that you've done, which
you've done for a very, very long time, not just with this book, but
other things that you've done.
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Pip Bingemann: To not, like, convince or pull the wool over of
anyone's eyes, but to just to do better work.
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Pip Bingemann: And I think this, like, gives people the ability to
do it. So, a big, big thank you.
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James Hurman: Thank you for saying that, and I mean, that's a big… I
mean, I think because we need to get better at marketing, marketing,
because we need to get better at communicating these things, it's
incumbent on us to make them really simple, so… so thank you for
saying that, and yes, that's a very intentional, thing that I do.
How do we make this so simple that it's easy to pass on to others,
right?
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Pip Bingemann: And it's an incredibly hard thing to do as well. It's
a massive gift, so it's super impressive. Alright, I'm going to
interrupt for 10 seconds. I'm going to show one thing in our
product, because I want to get one thing across to people, which is
important for this stuff, and then I want to get to questions. I'm
not going to show a deck, I'm going to show a new thing we've
launched called DiscoTab, because it helps you identify some of that
good work, and so I am going to share this screen just mega, mega
quick.
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Pip Bingemann: So… This is the newest thing we've launched, it's
called Discovery Tab.
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Pip Bingemann: You can click that, and you can search 10,000 plus of
the world's best campaigns across history, but you can filter that
for campaigns that drive nostalgia.
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Pip Bingemann: And the strategic intent is to, say, build fame. And
so this is, this is such a incredibly powerful resource, if you then
need to go find examples of that. But more than that, you can drag
these into chat, and you can say, tell me about this. Yeah.
Pip Bingemann: And the strategic intent is to, say, build fame. And
so this is, this is such a incredibly powerful resource, if you then
need to go find examples of that. But more than that, you can drag
these into chat, and you can say, tell me about this. Yeah.
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Pip Bingemann: Or you can put it onto your canvas, and you can brief
your creative teams in of, like, this is how that problem's been
solved before, or you could smash two campaigns together, and you
can go do that. And so…
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Pip Bingemann: There are tools to help you get better at showing
that work once you've actually gone through the rest of it, but this
is something that I've been so excited about to get into the world,
and it's super cool. So I'm gonna stop sharing that.
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Pip Bingemann: And get into some questions, because that is, like,
fucking cool, go play with it. So, there's a couple of questions in
the chat that I want to get straight to. I've got my own questions,
but I want to give the questions to a few other people first. So,
Stephanie Resort, and I probably pronounce your name wrong every
time I read it in my mind, Stephanie.
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Pip Bingemann: Had a great question, was, given the power of
familiarity infrastructure.
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Pip Bingemann: Should brands be shifting from intense bursts models
for brand activity to more of a continuity model? Budgets permit, of
course. So, the old flight in, are we burst, are we always on? What
are your thoughts around flight in, in regards to everything you've
just taken us through?
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James Hurman: Yeah, absolutely. I mean, when it comes to brand
marketing, we should, you know, take the…
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James Hurman: let me ladder up. When it comes to budget allocation,
like, let's say we've got a total amount of money for our
advertising over a year. We should divide that in half, and take
half of it as brand marketing. Then we should take that half of it,
divide it in 12, and spend that much every month.
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James Hurman: And… and that's a really simple way of thinking about
it, and of budgeting. So yeah, the whole thing of the idea that
would take the whole budget and spend it on a two-month campaign,
and that's our brand job done for the year, I mean, absolutely
fallacious. There's no…
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James Hurman: In any market at any given time, there is all of this
future demand out there, and we need to be continually talking to
that group, topping that familiarity up. It's an always-on job, it's
not a kind of one-and-done or once-a-year-and-done job.
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James Hurman: And so, yes, absolutely, we should be doing things
which are very, very consistent. And that doesn't mean within that
kind of 1 12th we spend every month.
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James Hurman: We just do exactly the same things over and over
again. We can do all sorts of different things, but they should be
emotional, creative things that talk back to the position of the
brand, and which engage people in a way that makes them remember us
when they come into market later.
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Pip Bingemann: That is some of the best advice I've heard from media
planning ever, and I wish they heard that a very long time ago. And
so anyone who's watching this on the recording, just listen to that
one comment if you're a media strategist or planner. It will make
your life easier. Alright, next one.
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Pip Bingemann: What are the most common pitfalls you see with
businesses when trying to plan for this future demand? So what are
the big, biggest traps they fall into?
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Pip Bingemann: And what best practices do they need to unlearn at
the same time? So what are the traps, and what do they need to
unlearn?
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James Hurman: I think the traps are, you know, number one trap is,
is…
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James Hurman: believing that advertising works by causing sales.
That means that we end up… the whole process gets organized to try
and find the most persuasive message, which, you know, we tend to
sort of default to kind of rational stuff and try and persuade
people. Then we try and cram everything into one ad, how are we
going to build brand and drive sales? Once we understand what I've
just talked about, the reality of markets and how
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James Hurman: make decisions, that enables us to, you know, think
about these two steps that advertising takes and organize around
those in a much more productive way. So, you know, when we're… when
we're converting current demand, we don't need to… we don't need the
big creative idea, we don't need the big emotional thing. We can be…
we can do the much simpler job of just putting the information out
there, and we can automate most of that using AI now. When we're,
thinking about how to create future demand.
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James Hurman: we need the big guns, we need the great creative
ideas, we need the emotional content, we need the stuff that
springboards is going to help you, help you find your way towards.
We need that in droves. And so we… so that helps us kind of get past
that silly argument that we all have, which is, like, tussling over,
you know, whether the ads, you know, the message outtake is clear
enough, and then are we
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James Hurman: emotionally storytelling enough, and, you know, trying
to find a balance between those things and one execution is
impossible, and we all end… we always end up with a bunch of shit.
If we separate out those two tasks, things become far, far easier,
and we've always got the ability in the budget to make two
executions under the same campaign, one that's tightly targeted,
more rational, more kind of informational, and another that is
broadly targeted, more
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James Hurman: More, emotional, more creative.
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Pip Bingemann: How are you for time? I want to be respectful of
that. I've got more questions, you good? Okay, we'll do just 2 or 3
more questions, and then we'll wrap it, because I want to be
respectful. Good follow-up question to this is,
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Pip Bingemann: Given the comment on, or Dyson's comment on brand
size, what's your advice for a small B2B client that doesn't have
the recognition to drive future
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Pip Bingemann: Demand. But also doesn't have the big budget for big
branding campaigns.
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James Hurman: Yeah.
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Pip Bingemann: B2B, don't have budgets, all the recognition. Are you
fucked, or what are you doing?
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James Hurman: And brand building and the creation of future demand
is… is a, it's a sliding scale, depending on where you are in the
category. So if you're… if you've got…
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James Hurman: 1% market share, and you want to get to 2% market
share, you need a lot less money than if you've got, you know, 50%
market share and you want to get to 80% market share. They're really
good things, and so… so when you… when you're thinking, you know,
the idea of brand building isn't about doing big, expensive things
and reaching the entire market. The idea is doing creative,
emotional things and reaching an audience that's much bigger than
your current
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James Hurman: current customer group.
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James Hurman: Right? So if your current customer group is 100
people, and you're reaching 1,000 people, you're doing the right
thing. Reaching that 1,000 people does not cost a million dollars.
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James Hurman: And being creative and emotional is not about doing
massive television campaigns, it's about doing creative, emotional
stuff at what any ever scale you can afford to do. So, every single
big brand was a tiny little brand once, and they had tiny little
budgets, and all they did was incrementally kind of move up and up
and up and up, and each year make sure they were spending enough
money to reach, you know, more people than they were currently at as
customers.
massive television campaigns, it's about doing creative, emotional
stuff at what any ever scale you can afford to do. So, every single
big brand was a tiny little brand once, and they had tiny little
budgets, and all they did was incrementally kind of move up and up
and up and up, and each year make sure they were spending enough
money to reach, you know, more people than they were currently at as
customers.
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James Hurman: And building from there. And if you're lucky enough to
be able to, you know, secure a massive budget to drive some really
fast growth up that market share curve, then good on you. But if
you're not, you know, it's just kind of… it's still the same
discipline that you use in the larger organization. The principles
apply just in a scaled-down way.
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Pip Bingemann: I'm gonna ask one last question, and then I've got a
request for you as well, before we close it out. My last question
is, is like.
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Pip Bingemann: And this is from me, is that you've shown us the
evidence for 20, 30 years that we've known this.
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Pip Bingemann: We've known it for a very long time.
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Pip Bingemann: Why are we still, or why is the industry or marketers
still making the wrong mistake? Why are we still putting more money
into performance? Why is efficiency still going down? What do we
need to do differently to wake people the fuck up?
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James Hurman: Yeah, I think,
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James Hurman: A couple of things. So, one, I think we have had the
information, it's just not been… I think we've still tried to apply
that information to a mental model that was the wrong mental model
for how advertising works.
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James Hurman: I think what I'm trying to do with Future Demand is
introduce a new mental model that helps us make sense of all of that
research in a way that makes it very applicable.
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James Hurman: And so hopefully that lands. And the second thing is
non-marketing stakeholders, right? They are the handbrake on
everything. They still operate under an incorrect mental model of
how advertising and marketing works. They are uninformed of all of
the marketing science and effectiveness research stuff.
James Hurman: And so hopefully that lands. And the second thing is
non-marketing stakeholders, right? They are the handbrake on
everything. They still operate under an incorrect mental model of
how advertising and marketing works. They are uninformed of all of
the marketing science and effectiveness research stuff.
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James Hurman: And so, and so that's our… that's our real big
challenge at the moment. How do we educate the non-marketing
stakeholder community, whether that's CEOs, CFOs, boards, or anyone
else around us in the organization. I'm doing a ton of work on that
at the moment, but every marketer in every organization should be
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James Hurman: Trying to take this information, package it up, give
it to their non-marketing stakeholders to read, so they understand
where they're coming from, because we've not done a good enough job
of that, and if we want to really make things
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James Hurman: you know, consistently better. We need those folks on
our side.
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Pip Bingemann: Yeah, I think the VCs need to hear this more than
anyone else, but that's a debate for another topic tonight. Alright,
this is my last request. Those slides you had on each of the
categories in Market Future Demand are some of the most powerful
slides I've seen to sell this point.
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Pip Bingemann: I would love it if there was a website where people
could drop down market, what do I look at? Because that is the
evidence that
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Pip Bingemann: people need. It is just such a blatant way to go, oh,
fuck, why are we spending all this money in performance when 90% of
the market is not in the market? And so, that is the request I have
of you, is to share those things as widely as possible, because I
just think they're so powerful.
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Pip Bingemann: Yeah, yeah.
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James Hurman: It's a really good, it's a really good nudge,
actually, because I think I've done that using survey data, but
there's probably a way with AI and synthetic data that we could
actually get pretty close to estimating what those demand shapes
look like in any category. So, let me take that away to Claude and
do some vibe coding and see…
James Hurman: It's a really good, it's a really good nudge,
actually, because I think I've done that using survey data, but
there's probably a way with AI and synthetic data that we could
actually get pretty close to estimating what those demand shapes
look like in any category. So, let me take that away to Claude and
do some vibe coding and see…
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Pip Bingemann: Yeah. Alright, actually, last question, because
you've mentioned AI, I wasn't going to mention it. Is this going to
get better or worse with AI?
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James Hurman: Yeah, so, let me show you… I, I… do you know what I
did? I,
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James Hurman: I'm just gonna do, this again. Let's say…
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James Hurman: The full screen? Okay.
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James Hurman: Look at this. So, with AI, so we're… at the moment,
we're having lots of, lots of conversations about agenda commerce,
about, GEO or AEO, whatever we want to call it, optimizing for, a
potential future where agents do all of our shopping for us, or at
least, you know, people are buying stuff that they're seeing in LLM
answers.
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James Hurman: So, these are just some points that, you know, from
the current state of the research, that I can assure you of. So,
firstly, LLMs reward fame. So, the recent studies show that twothirds
of LLM visibility can be accounted for by brand equity,
right? By the stuff that your company has done in the past to build
its brand. Current marketing activity is about a quarter.
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James Hurman: citation volume, only about 10%. So, citation volume,
when we're looking at GEO and AEO, you know, tools that are all out
there to get you as many sort of citations as possible, that's only
accounting for about 10% of what LLMs care about. So, LLMs care
about the same things that humans do. They are trying to triangulate
what will be a safe choice for the human they're serving.
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James Hurman: And those, safety… that safety decision is a
probabilistic one based on, all sorts of signals like, trust and
consistency and category entry points and, and all of these sorts of
things that we use in the real normal world. LLMs are making
decisions in a very similar way to how humans make decisions when
they're thinking about brands.
James Hurman: And those, safety… that safety decision is a
probabilistic one based on, all sorts of signals like, trust and
consistency and category entry points and, and all of these sorts of
things that we use in the real normal world. LLMs are making
decisions in a very similar way to how humans make decisions when
they're thinking about brands.
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James Hurman: Secondly, the idea that agents will go and buy
everything that we, that we need in the future is, is not right. So
the agents will help us shortlist things, but the human will still
pick. And…
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James Hurman: even if agents do end up taking over and making
purchases from us, for us, on our behalf, I should say, even the
most aggressive, forecasts, Agentic commerce will make up 10-14% of
total consumer spend. So the other 86% to 90% will be done the nonagentic,
normal old way. So we should not kind of suddenly throw it
all out and pivot towards Agentic commerce
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James Hurman: Because we'll do very well with the 10% to 14%, and we
will lose the rest of the business, which is still being built the
old way. So, yes, so we're… I'm publishing more about this, in the
near future through Tracksuit, but…
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James Hurman: you know, it's very clear that a brand is going to
become no less important in an AI LLM agenda commerce future than it
is right now, so we need.
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Pip Bingemann: Me too.
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Pip Bingemann: I've got a thought on GEO, and how it's a little bit
of a scam, but that's a conversation for another day. So maybe I'll
show you a few things in future, but I just want to say thank you
again, James, and thanks for everyone who's attending, and for the
people that watch later.
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01:07:03.210 --> 01:07:11.730
Pip Bingemann: this, like I said in the startup, this, I think, is
some of the most important stuff people need to know in the market,
and again, thank you for taking
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01:07:11.840 --> 01:07:12.770
Pip Bingemann: something.
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01:07:12.890 --> 01:07:22.160
Pip Bingemann: that is complicated to communicate and simplifying
it, which I just think is so important for… for what we all try and
do. So, thanks, James, for everything, mate. It's massively
appreciated.
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01:07:22.160 --> 01:07:34.549
James Hurman: Yeah, so welcome. Thank you for having me on. I'm
gonna go and get in the shower now and fix this hair, which is just
not behaving. Lovely to see you, Pip, and thanks, everyone, for
coming along.
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01:07:34.770 --> 01:07:37.130
Pip Bingemann: Sounds good. Thanks. Have a good one, guys.
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01:07:37.240 --> 01:07:38.010
Pip Bingemann: Bye.
