广告门对话苏铭天爵士 : 我离开WPP , 但从未离开广告行业

Adquan Talks to Sir Martin Sorrell: I left WPP, but never left the industry

Adquan:When you first announced the acquisition of Monks, many news headlines read "He’s back." Do you feel like you are returning to the industry or have you never left it?  

Sir Martin Sorrell:I've never left.  

Adquan:AI has become a hot trend, with many companies investing in AI. What is your view on AI?  

Sir Martin Sorrell:Generally speaking, AI is not just a tool, it fundamentally changes how we work, including work modes, participant numbers, locations, and times.AI will fundamentally alter both the tools themselves and their users.  

For example, if you look at revolutionary changes in technology, you can start with the internet in the 1990s, then move to smartphones, followed by blockchain and cryptocurrency, and then to the metaverse, quantum computing, the cloud, and, of course, AI. Each of these represents a technological revolution, and AI is part of this revolution.

Adquan:Apart from viewing AI as a tool to empower marketing, what new development trends are emerging from AI?  

Sir Martin Sorrell:For me, AI will fundamentally change how all industries and services operate, including governmental functions. This transformation is highly significant. We have identified five key ways so far.  

1. Visualization and Copywriting

The creative process has been dramatically shortened. what used to take a week or two can now be completed in just hours. However, this is a double-edged sword. Because we sell time, clients will notice that the time required to produce an ad has decreased, which may lead to reduced revenues for us. Additionally, the number of people we need, such as copywriters and visualizers, will also decrease.  

2. Mass Personalization

This, I believe, is the biggest shift currently happening in the industry, is personalization at scale. I refer to it as "Netflix on steroids," where we apply the Netflix model on a massive scale. This involves using first-party data and signals from platforms to create individualized content for consumers, which is groundbreaking.

This shift means we will produce an even larger number of assets. For instance, in a Netflix campaign, we could theoretically create about 1.5 million different assets and creative approaches. With AI, we can scale this even further. While the cost per asset decreases, the total number of assets produced increases significantly.

This will lead to higher revenues and more employment opportunities. Unlike the first category, where revenues may shrink, in personalization at scale, revenues are expected to rise dramatically. We are seeing strong demand from clients, exemplified by our work not only for BMW but also with General Motors, SC Johnson, and Google.

In this area, we are shifting our business model from revenue based on time spent to one based on asset pricing; the more assets we produce, the more revenue we generate.  

3. Media Planning and Buying

In the past, holding companies might require around 10,000 employees across global networks. AI will significantly reduce the workforce needed for such networks.  

At Monks, we currently have about 7,500 employees in 34 countries. However, we do not have a large media planning and buying network, presenting a major opportunity for us to develop these capabilities in the digital realm at scale. In the future, the reliance on 25-year-old media planners and buyers will be replaced by algorithms that determine the best plans and purchases, resulting in more sophisticated outputs.

4. Overall Efficiency

We are collaborating closely with Nvidia, AWS, and Adobe on outside broadcasting. When broadcasting a sports event, a traditional outside broadcasting truck can cost about $10 million, amortized over five years, resulting in approximately $2 million per year. In contrast, we can provide a remote solution using video technology from AWS and Adobe for about $200,000, representing a cost reduction of around 90%. This illustrates general efficiency gains.

5. Democratization of Knowledge

This involves spreading knowledge effectively within the organization. For instance, our largest client is Google, and we have around 900 people working globally on Google projects. By utilizing a language model that consolidates all the knowledge we’ve accumulated about Google over the years and making it instantly accessible to everyone in the organization, we can operate much more efficiently and effectively.

Adquan:Why did Monks establish an AI studio in Shanghai, China?  

Rogier Bikker:We saw that AI developed rapidly in China and we realized that the best-case scenarios involve combining real-life shooting with AI production. This offers a unique service in the market, attracting a lot of attention from various brands, especially sport brands.  

In our AI content studio, we currently have about 130 well-trained members who are able to produce content at scale for social media and e-commerce specifically for the Chinese market.  I believe this approach significantly uplifts not only the volume of content but also its effectiveness.   

We are collaborating with the e-commerce teams of our clients to enhance their e-commerce performance. Just a few percent increases in, let’s say, click-through rates would already justify any investment.

As the process of AI development accelerates abroad, China continues to make progress in AI with its own tech infrastructure and brand support. However, due to the different characteristics of domestic e-commerce and media platforms compared to those abroad, many brands need larger-scale content production in China.

Adquan:Who are the main clients served by Monks' AI studio in China? What roles do they play in brand business? 

Rogier Bikker:We work closely with brands such as Under Armour, Anta, Arc'teryx, Descente, and FILA to efficiently shoot large volumes of content. Since these brands have multiple product lines, they still need to conduct extensive shooting, and accomplishing this more efficiently and creatively through AI is necessary.  

For example, our work with Under Armour demonstrates this need. Many brands, when faced with numerous SKUs, see content needs increasing. However, shooting each platform's content separately is not cost-effective. Therefore, our solution involves combining a certain proportion of live-action content with AI post-processing to generate AI-mixed original footage. This is the main direction of our team's work.  

In addition to Under Armour, during this year's Chinese New Year, we collaborated with Arc'teryx on an AI-themed project where users could scan their palms to automatically generate a custom dragon scale pattern, much like an amulet. Monks' Shanghai office actively produces such customized content while promoting ongoing development of mass-produce content. Regarding mass-produced content, we have increased not only in quantity but also in content quality.  

Monks is also dedicated to work in the e-commerce field, helping clients improve overall efficiency. Once products are listed on e-commerce platforms, the conversion rate, click-through rate, and final transaction completion rate of the Product Display Page (PDP) are crucial for major brands due to significant traffic. Even minor improvements can significantly reduce costs. Therefore, we decided to establish a dedicated AI team equipped with a powerful e-commerce team.  

For example, Baozun shows strong performance in the creative field but is relatively weak in content mass production. They mainly rely on algorithms to improve conversion rates, while we focus more on improving conversion rates from a content perspective. Our e-commerce team of about 60 people has become a key area for Monks’ business in the Chinese market.  

Many domestic and foreign companies have shown strong interest in the e-commerce field, but due to a lack of full awareness of AI’s importance in content mass production, many clients remain weak in the concept of mass producing personalized content. We believe market communication needs strengthening in this area to help more clients realize AI’s potential value.  

Adquan:Why did Monks decide to rebrand now to Monks?  

Sir Martin Sorrell:There are two primary reasons.  

Firstly, the "Media" prefix was too narrow. It made people think we were solely focused on media buying, while in reality, we are involved in many other areas.  

Monks engages in content creation and emphasizes data analytics, including first-party and third-party platform data. As I mentioned before, Monks doesn't just perform digital media planning and buying but also focuses on digital transformation, impacting the company's three core areas: marketing, sales, and technology.  

Thus, we can reach high-level decision-makers such as Chief Marketing Officers (CMOs), Chief Sales Officers (CSOs), Chief Digital Officers (CDOs), and Chief Financial Officers (CFOs). Therefore, Monks’ service range far exceeds the media domain, making "Media" seem too limiting.  

Secondly, this name could cause market misinterpretations of Monks reverting to the past. Media.Monks was initially founded as a production company in Amsterdam, but this name no longer fully describes our work. Thus, just “Monks” better encapsulates our working model and business scope.  

Adquan:How did the Monks Shanghai office perform in the first 2 quarters of 2024?

Rogier Bikker:We have performed exceptionally well, especially compared to the industry as a whole. In fact, Monks has doubled its size this year. In the first half of 2024, we recruited about 60 new colleagues to join the team. For us, 2024 is a year of efficient growth. This is largely due to Monks’ AI background; clients greatly appreciate and recognize our AI services. That’s also why we established an AI studio in the first 2 quarters of this year.  

Recently, Monks appointed a new Vice President of Growth Technology, who was previously the head of our tech team and has now returned to the company team. The reason is his ability to effectively share complex technology with non-professionals, finding a good balance in the integration of creativity, business, and technology, making it easier for clients to understand and grasp the impact of technology.  

As we mentioned before, the "foundation agency model" and "mass personalized content creation" are relatively new concepts to the market.  

We need more time for market education initially, using language that non-experts can easily understand. So Monks appointed a person dedicated to this work, allowing more people to understand that AI shortens the time for writing copy or creating visual content and offers more possibilities, especially in the services provided by Monks.    

Through such communication and education, the market will gradually recognize our outstanding capabilities and extensive services in the AI field, further enhancing trust and willingness to cooperate with Monks.  

Adquan:Post-pandemic,what changes have foreign brands made to their attitude toward the Chinese market? What trends are developing in Chinese brands?

Sir Martin Sorrell:We have observed two major trends. Firstly, foreign multinational companies have become more cautious about the Chinese market.  

The pandemic disrupted the focus of these companies, and the international market environment remains uncertain, significantly impacting the entire global system. Especially facing supply chain issues, foreign multinational companies exhibit some hesitancy.  

This hesitance can be divided into two categories. If a company holds a substantial market share in China, accounting for 10%, 15%, or 20% of its global sales, they face a dilemma. Companies like Tesla, Apple, or BMW, focused on the Chinese market, need to decide whether to further expand in such a high-risk environment. On the other hand, companies with smaller market shares tend to expand aggressively.  

Overall, foreign multinational companies remain committed to the Chinese market. Companies with smaller market shares are eager to grow, while those with larger market shares behave more cautiously.  

Secondly, Chinese brands are not only consolidating their domestic market post-pandemic but actively venturing into the international market. This trend is particularly evident in brands like SHEIN and TEMU, significantly expanding their global influence.  

This international expansion reflects in the growth data of Western technology platforms. Companies like Alphabet (Google), Meta (Facebook and Instagram), Amazon, and TikTok have seen significant growth outside China, mainly driven by the overseas expansion of Chinese brands. This aligns with a typical brand growth strategy: establishing a solid foundation in the domestic market and once saturation is reached, expanding internationally.  

Thus, these two trends define the post-pandemic business landscape.  

Adquan:What challenges do Chinese brands face in the globalization process?

Rogier Bikker:I believe Chinese brands face three major challenges in globalization.  

First is the issue of brand trust. Currently, there is relatively low trust in Chinese brands globally. To address this, many Chinese brands, such as BYD, choose to sponsor events like the UEFA European Championship. Most sponsors of the European Championship are Chinese brands, aiming to solve the brand trust issue by increasing exposure and associating with credible events.  

Secondly is the high cost of customer acquisition. Data shows significant increases in spending by Chinese brands on platforms like Meta (Facebook), Google, and TikTok. The high customer acquisition cost requires these brands to enter new markets and compete, involving expensive marketing budgets.  

Lastly is the complexity of globalization concerning organizational structure. In China, brands deal with a relatively homogenous environment with unified language and cultural backgrounds. However, expanding into regions like Europe requires tackling 22 different languages, 22 unique cultures, and 22 different ways of conducting business, adding a layer of complexity that should not be underestimated.  

Adquan:How can Chinese agencies better serve these outbound Chinese brands?

Rogier Bikker:It requires an agency that addresses the three major challenges mentioned above.  

Building brand trust requires a long-term commitment to brand building and Corporate Social Responsibility (CSR), which can foster trust across global societies. Sponsorship and entertainment play important roles in this strategy, hence the sponsorship of major events such as the European Cup to enhance brand visibility and credibility.   

At the same time, managing customer acquisition costs is crucial. Brands need a strong, performance- and data-driven agency globally.  

For example, Monks excels in this regard because it understands the complexities of social, performance, and data across different markets, becoming a "foundation agency" adept in managing high customer acquisition costs.  

Finally, dealing with organizational complexity is critical, and an agency with strong consulting and digital transformation services can help. This can facilitate organizational change within brands, enabling companies to grow into global entities that actively operate across multiple country markets.  

Just as with strategic agencies and a foundation agency, an implementing agency can provide consulting services to help brands implement necessary transformations, making them adaptable and achievable in multiple international markets.  

Adquan:You often mention the "foundation agency model." Could you elaborate on that?

Sir Martin Sorrell:For example, our collaboration model with General Motors comprises two parts: strategic big ideas and content engines (or foundation agencies).  

In the upper tier of the collaboration model, four brands are involved: Cadillac, Chevrolet, GMC, and Buick. In the new structure, each of these brands will have a strategic agency. For General Motors, these strategic agencies are small, independent agencies.  

Under these strategic agencies, we develop all content and provide four big ideas for these four brands. Our cooperation with General Motors is an example of a foundation agency model, akin to a content engine or content factory producing content on a massive scale. We call this hyper-scale personalized content production. 

This structural model will be implemented globally. The situation with BMW in Europe is the same. A strategic agency and foundation agency, or implementing agency, work simultaneously.  

Adquan:Which layer has higher profit margins in these two tiers?

Sir Martin Sorrell:If you add up all the strategic profits, the aggregate equals our profit. So I would say half of the total profit goes to the strategic agencies, and the other half to the foundation agency.  

Adquan:With the development of local Chinese brands, we observe a decline in sales for some foreign companies in the Chinese market. In the face of a relatively complex market environment, what opportunities and challenges do you think foreign companies face in developing within the Chinese market? 

Rogier Bikker:There are still plenty of opportunities for global brands in China. I think two main ways exist to address this issue.  

One way is aligning with growth areas within the Chinese market, which involves understanding Chinese consumer behavior. Post-pandemic, Chinese consumers increasingly focus on a broad sense of a healthy lifestyle. Therefore, domains like travel, sports brands, nutritional supplements, outdoor activity products, and health-related products continue to exhibit double-digit growth rates.  

This trend represents significant growth areas that brands can seize. This trend has been present for some time, but growth has accelerated notably in the past year. For example, within the Anta Group, brands most aligned with an outdoor active lifestyle are experiencing the fastest growth. Similarly, FMCG companies are also turning towards promoting healthier lifestyle choices.  

The second method to identify China’s growth points is recognizing post-pandemic, Chinese consumers are increasingly value-conscious. This means brands offering better price-value propositions are flourishing as consumers become more cautious with spending. This trend indicates growth in both high-end luxury markets (unaffected by economic uncertainty) and value-oriented markets, while the mid-range market is being squeezed.  

Thus, when people ask about China’s growth situation and whether the market is still growing, the answer is not simply "yes" or "no." Instead, it requires identifying specific growth points. Brands and agencies need to understand where these growth opportunities lie, whether from an industry perspective or from consumer behavior.  

By focusing on these areas, brands can find and capitalize on China’s growth points. Such nuanced understanding is crucial for effectively handling the current market environment.  

Adquan:We've observed fewer entries from China at recent Cannes Creative Festivals, and the results aren't particularly outstanding. Can you share your insights from attending Cannes this year?  

Rogier Bikker:There are a few reasons. On a macroeconomic level, we see a divide between the West, China, and even other parts of the world. This divide can also be seen in places like Cannes. The real question is whether it’s because the West has no interest in China or because China has no interest in overseas markets—I don't have a definitive answer, but it may be both.  

Perhaps the reason for so few Chinese submissions, judges and winning works is due to pragmatism.  

If there's something Chinese CMOs or Chinese brands are particularly good at, it’s tactics. They excel at launching products on a large scale and driving results, with a strong focus on results. However, works recognized at Cannes are not about the best tactics; the award categories don't include "Best tactics" Cannes primarily supports projects focused on long-term brand building, creativity, and those having enduring impacts on brand assets.  

Especially post-pandemic, everyone is focused on short-term results, such focus hasn't changed. Performance pressure on both foreign and domestic brands in China doesn’t currently allow them to create works that can win at Cannes. It's unfortunate because, in a few years, we might find that Chinese brands possibly missed a huge opportunity to build strong brand assets.  

Chinese CMOs demand differ from Cannes’ award standards. The current reality remains the same as last year, if not worsening, and Cannes still lacks a "Best tactics" category. If there were a "Best Strategy Award," Chinese winners would dominate.