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The Difference Between Digital Marketing and Traditional Advertising

– I regret tremendously not
spending all my money on Google in 2001 to 2004. When I rewound how I
built my dad's business, it was because I was handed a full house. It was called Google Day
One, five cents a click. My CAC was 10 cents, my LTV was $8. I didn't understand. You got your perspective. (audience cheering) I just wanna be happy. Don't you wanna be happy? Something that's become very obvious to me only in the last couple of weeks that maybe I'll pontificate
a little bit here, which is I think the biggest reasons so many people within the marketing landscape
do have disagreements with some of my points of view is because I really don't think of myself as a marketer, for say. I no question think of myself far more as a business operator who
happens to have a knack or an intuition towards marketing, which has helped me throughout my career, but everything I believe in is predicated on the final
result of what everybody in this room is trying to achieve.

I just think that marketing
and communications is an incredible way to get there. Put it right there. Thanks, D-Rock. For a lot of you that don't
know my career, I was born in the former Soviet Union, I
came to the US and my father grew from being a stock boy
to owning a small liquor store in New Jersey and when I joined
that business, first I fell in love with wine and wine
collecting, which was great because it's always good if
you like what you're doing, but I built my dad's business
from a three to a $60 million business very quickly in the late '90s without any VC capital,
even without a credit line. When I think about how
remarkable that growth was, it was completely
predicated on practicality, which is really my North Star today. If I had the luxury to sit
and have dinner or breakfast with you one-on-one for four
hours and we actually talked about what you're trying to
achieve in your business, so much of what I believe in, whether it's Facebook or
Instagram or content…

Text messaging is starting to
really be fascinating to me because in the US and many
other markets for about a decade we haven't allowed marketing
inside of our text numbers and all of a sudden, I'm seeing
people willing to do that, which you can imagine is
attractive for us marketers and business people. I think the biggest reason
I'm interesting and debating in the marketing landscape
is I'm not a product or a son of Nielsen ratings or
Datalogix or brand lift studies or impressions. If you knew nothing about
marketing and you were a normal business person, you wouldn't
be attracted to low CPMs. You would be attracted to high
CPMs because it would lead to what you're trying to achieve. So, I sit in marketing
meetings from major clients around the world, I sit at
conferences, events like this and people pontificate
on data in the middle that has nothing to do with
the end business result. That is my problem. That is why I'm an outlier. That's why I'm different. I'm not of the machine,
I'm of the business result.

It's really interesting,
by only running businesses for myself my whole life, I only care about long term
branding and marketing. A lot of times, people think about digital as a short term sales funnel. I think of it as reverse. I think Facebook and Instagram
and thank you so much for being a part of this, but
I think that they're doing not a good job in expressing
how much branding is done in their channels because
the conversion is so obvious for math and sales. When I think about this
room, whatever it may be, the business result that
one's trying to achieve, I watch so many of your behaviors
globally in overspending for A-list celebrities in Hollywood that don't have the value they used to and overspending in quant-based
transactional Google and Facebook behavior where
CAC and LTV are the religion and branding is not. I watch a lot of things that
if I bought your business or if I ran it, I wouldn't
believe in, but everything in the system, everything that
the marketing industry has been built on for the last
half century values things that I just don't think
are mapping to reality.

I'm fresh eyes to this industry. I've only been in an
environment where big companies have been part of my
life for the last decade. Prior to that, it was
only entrepreneurship and Silicon Valley. So, it's been an amazing journey
for me the last half decade in watching what is put on
a pedestal in an environment when you don't see every
dollar spent where it goes to, what happens when you fall
too deep into just caring about the value of every
dollar in the short term. To be honest, for my DNA,
it's a bizarro world. An industry that goes to the
South of France to celebrate itself on subjective creative
and uses those awards to justify hundreds of
millions of dollars in spend is fascinating. (audience laughing) It is and the giggles come from a deep understanding of the truth.

Here we are in 2019 whether
in the UAE, America, Europe, all over the world, you have
a game of two individuals. You have people who are spending money and it's not their business
and you have people that are spending money and that's how they feed their family. And those two people, the
way they spend their money and what they believe in
have never been more opposite than today, and that's
what I'm fascinated by. The people that are
incentivized of the health of the business in the short
and long term versus the people that are incentivized on
the KPIs within the machine that they have to navigate through.

I deploy empathy. I used to judge a lot
of people in this room on paper a decade ago. I thought I was smarter. I know I'm not smarter. I just know that I'm
playing a different game. I'm running a marathon in perpetuity. I put out content to be
historically correct, so I can trade on reputation in a decade,
not on what pays my bills in the short term.

So, I have the advantage of the framework that I've stumbled into
within this environment, but it doesn't make it any less true. So, couple things if you leave
with anything, the one word I would leave with if you're
in here today is volume. The sheer volume of content
that is needed by the businesses in this room is staggering. It's staggering. If you get your above the line
creative agency to interpret your TV and make a ton more
content for the internet, if you have a digital shop
that does a lot of content, if you do publishing deals where
Conde or Hearst or Refinery or PureWow are giving you content, if you build internal
capabilities for content, if you have all four of
those things humming, you're still 90% short on
how much content you need in a 2019 world if you
understand how the Googles and Facebooks and Snapchats actually work.

If you are a deep practitioner
of the media capabilities of 2019 across the biggest
platforms, which by the way, in this region, have so much
attention, it's uncomfortable. If you really understand
that, you'll realize, my God, I need 20,000, 8,000 unique
pieces of content for different psychographic, demographic
individuals and as you all know, even Vayner, which I'm trying
to move in the direction of being the disproportionate
leader in quality and quantity, there's no
engine in the world right now that's even remotely close to the needs that we actually have.

So, that to me is the big one. That to me is in the
last six months the thing that is absolutely
synthesized, which is my God, if you really did it perfect
and you really spent it every penny the way I did for
my father's business perfect, you need 20,000 pieces
of meaningful content. For a year, that's about 19,900
more than most people have. So, that I think will be the debate over the next half decade. How do you have quality content
at scale to take advantage of the grossly underpriced
media capabilities of the YouTubes, the
Snapchats, the Facebooks and the Instagrams over
the next half decade, then consumer behavior will
change either to our hope, the prices become appropriate
like they did on Google search or people's attention will
move on like it was on MySpace.

That I don't know. I don't guess. I only trade on the day we live in. What I know is if you
look at the sheer data of what's happening in
this region specifically, and this is global outside
of mainland China and Russia, if you look at the sheer
actual consumption, not a GRP or an impression, which
is a potential reach, but actual reach… If you just look at
YouTube, Facebook, Instagram and Snapchat, this is
the golden year to market in this region and most people
are not taking advantage of it because either A,
they've allocated dollars to traditional places based
on reports of yesterday or B, even if they are,
it's not successful because they don't have enough content to fill the pipes of
the media distribution.

That to me is what's going on. – You mentioned about
how much of the content is actually made for utility
or how much was actually made for ourselves, right? – How much is made for
them or for yourselves. I think utility and entertainment
can be made for them. I think that if you look at
a lot of the communications in this room, I'm sure if
you were to self audit, you'd be surprised how
much is self serving. – Exactly, and that's the
point I wanna come to. There's a level of awareness
that companies need to have in terms of what they're
doing inside the organizations for their own ego and how
do you instill something, a culture in an organization,
that they're actually aware of what they're doing for
themselves versus for all? – That's very hard. You do that by whoever runs
the company sets that tone. Every company's DNA is
predicated on the CEO. Whoever she or he is,
they're gonna dictate that. So, if she or he are
disproportionately egotistical around subjective creative, the whole organization will go up that.

I think that that's something
outside the pay grade of marketing that is just
absolutely operational throughout the entire world. What is being held up
as a religion internally is fascinating. Knowing who's in this room,
you're either mathed out or you're arged out. There are very few organizations
that have a 50/50 balance. You either have a DNA internally
that disproportionately wants celebrities from
Hollywood and wants a one minute video that feels good or you're
disproportionately Google and emailed out for CAC
and LTV and I'm fascinated why most organizations haven't
found that 50/50 balance and understanding how both
matter and then more importantly how do we actually score within that. Creative Scorecard is laughable. It's human subjectiveness or
reports that are so laughably outdated or finally
awards or finally three or four magazines that say
it's a good piece of creative. The way we judge is
meanwhile we live in a world where you can put this
creative in a Facebook or a YouTube environment and you can get qualitative feedback at scale and just listen to the customer instead.

The problem is most people
start top down, not bottom up. So, you overspend so heavily
on one video that you're at the mercy of reporting
or Ipsos or ACE testing or all these things that are
just, again, if you don't know anything about them, like
I didn't eight years ago and you actually study… First time I ever heard
award winning work leads to business results, which
was like a big debate I heard in the advertising world, I
just had two people on my team in research and strategy
find out where that started. It was funded by agencies. Sounds right. I think those are the themes
of today, no question. – And themes in terms of
risks, we're seeing this huge disruption across lots
of different industries, Uber, Airbnb, etc., how do
companies try to identify the shifts that are gonna
come, these tectonic shifts that are taking place and
what should they do about it? – Well, I think everybody here should take a very simple stance
like I did a long time ago, which is that the internet
will eliminate the middle.

If you actually understand
what the internet does in its most basic form, it
eliminates anybody in the middle that provides no value. That's the squeeze. So, for me, I think everybody
in this room needs to think about a couple things. If the internet squeezes the middle, that's how it plays out. Airbnb made so much sense
to me if you think about it. It's just inventory that exists that the internet
connected two parties to, mo different than Uber, no
different than everything else. Listen, if you're an airline,
obviously somebody has to then own a plane and that becomes a cog that's more expensive than other things, but rooms have less costs
involved as we've seen play out. And then you start
getting into experiences and other variables,
but you can't just rely on the utility part of that.

You've gotta layer it. It's how I think about what's
happened with television. It's the reason I knew that commercials were gonna be in trouble. It's not that I'm predicting,
it's every day that you see Netflix and YouTube
consumption numbers go up, that's a problem for a network television. And then you just live in
common sense, like consuming a commercial during a television program is a very wild rarity in 2019 when we all have mobile devices. I always laugh when people in the US say, but sports commercials are good. Meanwhile, the data's
very black and white. The biggest spike on social media is during the commercials
of major sporting events because everybody wants to talk about what LeBron or Messi or Tom Brady did. It just feels like one big
game of Inside Baseball where there's a lot of
financial incentives to hold up a facade that no longer exists and unfortunately for the
biggest brands in the world, the executives making
the financial decisions are not incentivized
to do the right thing. They're incentivized to follow the scoring that's been created internally.

That's on the CEO's head. – Given the shifts that
you're talking about, explain some of the other
steps that you would take if you were a marketer, given the environment you just painted. – You know, it's funny. A lot of people razz on me
for my absolute statements, but I think of marketing like poker. If you have the best hand, you go in. I'm a boy and I say a
boy because I was a kid when this happened, I am unbelievably… I regret tremendously not
spending all my money on Google in 2001 to 2004. When I rewound how I
built my dad's business, it was because I was handed a full house. It was called Google Day
One, five cents a click. My CAC was 10 cents, my LTV was $8. I didn't understand because I didn't know. I didn't have experience yet. I didn't know how to quantify it.

It seemed normal to me. I was digitally a native. This seemed like it made sense. Why wouldn't everybody do this? And then it went away. And then 2007, 8, 9 happened. So, for me, we're sitting
in that moment right now. Instagram Story Ads are
so grossly underpriced, it's almost uncomfortable. Actually, this is amazing. Maha, you in here?
– [Maha] Yes, I'm right here. Well, you know this. In four minutes, in five
days, my follow account on my Gary Vee Arabic page went
from 900 people to 30,000– – [Maha] 700 people.

– 700 people to 30,000 because
we found a single piece of content that I converted
into Arabic from a piece of content that is achieving
1.9 cent follows on Instagram. If you understand the friction
to get somebody to follow you based on an impression,
think about how inexpensive I'm getting in front of
every Arabic speaking person that is on Instagram to
get 1.9 cent follows. So, when I found out on a $200
spend that that was working, I just poured all my
money into and by the way, I'm gonna pour all my
money into it in perpetuity cause I wanna extract the
underpriced nature of the media and I figured out how to
create the volume of content that broke through to eventually
get me a 1.9 cent follow because we've gotten on
our 30th piece of content, we got there, not on our first. People are making one video
and then putting it on YouTube and Facebook and then
saying, does it work or not? We're not producing creatively
natively contextually to the platforms that
we're advertising on.

We're using television
mentality for the internet. It's remarkably wrong. Not even Vayner and let alone
all the traditional agencies are not in a position to
create the work needed for the realities of the marketplace. – Talk us through a
couple of things there. You mentioned Instagram and
obviously, there's a shift towards video. Talk us through creating
great content for that and also in an increasingly mobile world, can you build a brand on mobile alone? – Of course you can because
you can build a brand on attention and the sheer
amount of attention on mobile is extraordinary. As a matter of fact, to
me when I look at outdoor and I like outdoor. There was a nice little digital outdoor of me speaking today.

I get excited about that, I
like outdoor, but I don't like outdoor pricing in a world
where while I saw my little outdoor piece, I looked around
the cars on the way here and every single person not driving was looking at their phone. Even the drivers, to your point. I'm a very simple guy. Tell me where the attention
is, tell me what the cost is associated with it. Do I think that's right? Can I then create creative to
fill it at a low enough cost that I can test seven, 10, 15? This is not A-B testing, this
is A to quadruple Z testing. So, for me, it's about
producing quality content at a low enough cost.

Quality being contextual and empathetic, not high production. Let me say that very slow
cause it's super important. Quality being contextual
to the distribution and being empathetic. You have to know how to overlay
a sticker or an animated GIF on an Instagram story to
get people's attention cause that's native to that
platform, not doing matching luggage of your TVC for a
short form 15 second video for YouTube. That's what big companies do. – Yeah, talk us through how
companies are getting it wrong. You mentioned there what we can do– – They start with television. You've already lost. You make a TVC or a brand
campaign and then you ask somebody whether it's that agency or
somebody else or internally to cut it down for Facebook
and Instagram and YouTube. You're already in trouble
for a couple reasons. By nature, brand campaigns
and television are vanilla cause you're trying to reach
everybody with the reach of that campaign. If you start from the bottom,
you can go after ex-pats from the UK versus ex-pats from the US.

As you can imagine, if you know
that that's who you're gonna reach, your message is
gonna be slightly different. I'm filming right now
everywhere I go, me and D-Rock. I'm standing outside with
these beautiful views and we're here a little
early and I'm saying, hey Snapchat, find out
why I'm here at the UAE. I'm literally filming for the distribution just by saying, what's up
Facebook, as my opening line disproportionately
increases the shareability and earned media because
I made the creative native to the distribution.

I didn't make one video
that's gonna be super glossy and then try to use everything. Everybody views these
channels as distribution. I view them as contextual
creative platforms. I'm not trying to get
reach that isn't achieved because I didn't make content for it. Everybody's playing in a GRP
and reach world without having a common sense layer over it
of are you actually getting that reach and then number
two, does your content speak to that reach. We didn't have that with
television, but now I can attack the seven million people in this market in 31 cohorts that matter. Men and women are different. 18 year olds are different
than 49 year olds. Making a million dollars
a year is different than making $40,000 a year. We do not take that
into account in creative because creative costs are too high.

The machines for creative
aren't built for scale. That is the rub in our industry. The media people know this. When I announced our
framework that leads off of what I'm talking about in September where I started my company meeting with, I'm gonna put us out of business
before somebody else does, it was the media people that most liked this creative strategy. The creative people like to
hold onto the political power of making a subjective call,
not letting the market.

It's reactions quant and qual
dictate creative adjustment. So, it's a very, very
interesting time right now. We have way too many
conversations in the ad world about the media side of things. We are not having the proper conversation of the subconscious bias against
the wrong creative process for this story. (ethnic music).

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