Chris Stephenson, APAC Head of Strategy and Planning, PHD, was in India recently to present the agency’s vision for the future. He spoke about ushering in a new era, which today sounds like science fiction.
Handing over Merge – the book that portends a future where humanity and technology will both virtually and biologically, merge, Stephenson says, “Merge is all about the coming together of humans and technology, to the point where you can’t tell where one stops and the other begins.”
“We’re about halfway through that journey, and we’re in the third of the five stages. Where we are now is interesting for marketers. But where we are going next will have huge implications on how products and services are delivered,” he said.
Stephenson spoke to exchange4media about PHD’s latest product, Investment Planner, which will advise a client on budgets and effective spending. Stephenson believes that disrupting the agency model itself and offering Strategic Consulting can give agencies an edge over management consultancies that are making serious bids to become preferred partners to marketers. And thus began a conversation about how marketers can leverage machines and technology smartly and effectively.
Where are we going next?
Everything is underpinned by machine learning and artificial intelligence, chatbots and increasingly by VPAs (Virtual Personal Assistants). Right now, they’re (machines) responding to us; we ask for it to do something and it responds. The 4th stage is where we don’t have to ask, technology would be able to anticipate what we need. Stage 4 is anticipation. Stage 4 will have huge implications for marketers. Once technology is serving up goods and services for us, they are not going to wait for us to ask for these goods and services.
From a marketer’s point of view, they will not have to try to convince humans to buy products and services; they’ll be convincing machines to buy for humans. A whole new host of questions will arise, such as how do I make sure Google recommends me if you’re planning a trip to Atlanta?
These are the big questions and the question for marketers in that world would be around how they organise their data, how do they surface their data so their products and services can be found seamlessly and instantaneously, not by a human, but by an algorithm and by a machine. Keeping track of the different ways of visualising and seeing the world, such as augmented reality, virtual reality and mixed reality, so that when that data is surfaced, it is surfaced and redeveloped in convenient ways.
There is a fear that AI will take away the CMO’s job. Do you think there is a certain inhibition from the marketing community, or how do you see the marketing community treating what AI can really do?
Firstly, I’d be very surprised if AI takes away a CMO’s job. There are going to be changes in jobs and how we work, but we are good at that, we’ve done that before. How many jobs do we do today which existed a hundred years ago? We shouldn’t be afraid of the nature of work changing, as we’ve done this before.
What is different this time is that we will be working with something new. We’ll be working with machines. And if you try to compete with machines, you’ll lose. But the same is true for machines. The best chess players in world today are not machines, they are not humans. The best chess player in the world is Centaurs. Centaur is human working alongside a machine. That is the future of jobs, working alongside machines. It is not just the machines doing it, or just us doing it, we’re tuned together. In the future, we’re not going to be judged by how better we are than machines; we’re going to be judged by how well we work with machines.
Some say that the old guard of marketers in India are yet to adapt to new technology. If you had to judge the current scenario in APAC and India, how would you say we are doing?
I don’t know that well enough, especially how India is doing. I think it would be unfair for me to guess that. More broadly from an APAC perspective, I think as an industry, we’re not moving fast enough. I also think we’re not investing enough in the right places. We are not automating or restructuring fast enough, and we must do a much better job at rebuilding the plane whilst keeping it in the air.
As an industry, if we don’t get better at this, there is a danger that other people will do it for us. We know the threat in the industry is coming from management consultants and huge tech players such as Google, Amazon, Facebook, Apple and Alibaba.
P&G is experimenting with this new agency model that breaks barriers and brings the best together. What do you envision the agency of the future to look like?
I think the agency of the future is much more agile and malleable. The idea that you work exclusively with anyone is going to be unusual. Agencies in the future will work in teams and that includes clients. For example, if you are strategically thinking about organising your data and technology to surface it into searchable ways for algorithms and VPAs, I think most clients wouldn’t know where to start. Agencies are great places to build those skill sets, and we must invest in those skill sets and create those new roles.
We know it is coming and PHD is excited about that. It may happen in 5 years, it may happen in 50 years, but it will happen.
Be it AI, technology companies or management consultants, they are disrupting the current ecosystem. We have seen a different breed of companies in India such as Jio and Patanjali disrupting the telecom space or the FMCG space. How would you advise clients to tackle disruption at such a large scale?
There is only one answer: disrupt yourself. That’s the only advice I can give. Disrupt your business before somebody else does, because you can do it safely and in a tested and learned way, with better knowledge of your business. Other people are guessing at how they can disrupt your business, you’re not. You know your business, so experiment and test, not blindly, but strategically. You must invent new business models from within.
What are the new business models you would suggest for agencies?
For agencies, I think there’s a model around strategic consultancy. There are whole new business models around selling, machine driven and consultancy.
PHD is already doing that. We have a new product called Investment Planner. With it, we advise a client on how much they need to be spending and what their budget should be. That question has not been answered very well, until now. At best, the answer to that question has been based on econometrics and share by share market. Econometrics assumes the future will be like the past and share by share market assumes that everyone else is behaving in the same way that you are. At our worst, we’ve just been looking at what everyone is spending and it’s not the same. What we want to do is look at the relationship between media or marketing spends and revenue generation.
We must build revenue curves when we invest in marketing and media. We must look at what revenue we generate. But this is specific to each category and market. To do that, we must build thousands of revenue curves for each category and for each market. But because of the differences in the markets, consumers, volumes, product metrics or pricing, we cannot build those thousands of curves manually. We must use machine learning to do that. We’ve used AI to build a data landscape in which those curves exist. It is fascinating because it is a whole new way of planning. Because when you build a curve in that landscape the curve which emerges from that is based on the questions you ask it. It is a new model for us and we’re launching it this month. PHD is passionate about inventing the future so that we can predict it better than anybody else.
Will this model be launched in India as well?
Yes. But there will be a launch for our existing clients first. Our absolute priority is our clients and they will get first access to new products, tools and services.
It is the best example of how we are using technology to create new products and services for our clients and to be able to give our clients strategic consulting in this new way.
Do you see marketers in the APAC region being more concerned about GDPR implementing safeguards and realigning their business here?
I see it across APAC and I think it is a conversation which marketers want to have. There has been an unnegotiated contract that brands have had with consumers for quite a long time now. In stage 1 and 2 of the merge, the value transaction was around attention. So people gave media attention, and this media attention was sold to brands, so brands were able to then fund free things to people such as news, TV shows, journalism and music on radio. All of that was paid for with attention.
Around the turn of the century that changed. As stage 3 got underway, the contract changed, and we didn’t pay with our attention, but we paid with data. And we did get valuable things such as photo sharing sites, video sharing sites, social media, movies and music. But no one negotiated that contract; no one said it is not free.
Most marketers have been very aware that they have been dealing with consumers with an unnegotiated contract. What GDPR does is allow us to negotiate that contract and it is a good thing. Marketers are embracing it because it is the right conversation to have. It is good to be absolutely clear with consumers on what their data is extracting and what value they’re getting for it.
What do publishers have to gain? What would happen in this new ecosystem?
There are going to be a lot of different responses. It is still early to say what the winning models are going to be. But any publisher is now very used to digital disruption and this is just the latest in a series of things presented by the Internet that digital publishers must navigate. Obviously, the responses will depend on where you are geographically, but all these strategies and models are around the right conversation. If you’re doing it (GDPR) in Europe, it makes sense to do it everywhere.
In context of the Cambridge Analytica data breach, GDPR and what we know about consumer behaviour so far, do you see the consumer behaviour changing?
Absolutely not, we’re in this great age of extraction. The contract, although unnegotiated, is still a good one. Giving advertisers and platforms access to our data has given us huge value. Presented with that choice, there aren’t many people who would opt out of that choice of the great products and services. The contract is a good one, but now we must make sure everybody knows what the contract is.