So how do you go, James, about building exceptional campaigns to then building exceptional companies? Talk me through the mindset you went through to have to learn and unlearn.

Yeah, it's strangely similar.

the process.

So in the advertising agency, I was a strategic planner.

So what that means is I'm the guy that figures out what to say in the ad.

And then the creatives are the people that figure out the best way of saying it.

Right.

What's the difference between, you know, sort of thematically between the hits and the misses?

But what framework for advertising do you sway by?

Yeah, so I mean the book is called Future Demand and Future Demand is basically a framework for understanding how advertising works and so the easy way to explain it is that in any market you have a group of people who are in the market and ready to buy right now and then there's a much larger group of people who are not ready to buy from that category right now but who will come into the category at some point in future.

And marketing has a job to convert the people who are in the market and build the brand among those who aren't yet in the market.

So when they come into the market, they are more biased towards our brand, right? They're more familiar with us, they feel better about us, then that makes them more likely to choose us when they arrive in market.

So, the really simple thing that I do on stage is, say I'm talking to 100 people, I'll say, I want you to put your hand up if you're currently in the market for a new mobile phone, right? You're going to buy a new phone in the next, say, couple of weeks.

And one or two people put their hand up.

And then I say, okay, now I want you to put your hand up if you're going to buy a new mobile phone in the next two years.

What can they do to get brand building? But then also, how do they balance it with performance, like immediate, let's just get money

Are there things that you're kind of going, okay, I'm going to start looking at that next? I

think there is still some unanswered questions questions so there's been lots of cross-sectional analysis which basically tells you what correlates with what but there hasn't been as as much longitudinal research that tells you what causes what um and so i think like one of the things that's going around at the moment and andrew i'd be really keen for your um your your kind of thoughts on this um Like, you know, the effect of emotional connections.

So if you, you know, go by the behavioral science, there's a thing called the affect heuristic, which basically means that the more we like things, the more we're likely to place value in those things and see them as less risky and choose them and all the rest of it.

If you take the Ehrenberg-Bassian point of view, they would say that emotional affect comes after actually choosing the product and using the product and then you kind of develop an emotional connection to it.

The alternative view is, no, you can create positive emotional affect using advertising and that leads people to feel better and then be more likely to choose that brand.

And so I think we've got sort of like sprinklings of evidence about which direction it runs in, or maybe it's both directions, but which direction emotional affect runs in.

But we don't have anything like super conclusive just yet.

I mean, you've got

And James, why did you start with Telstra as one of your first playbooks?

Well, firstly, it's a really good one.

You know, it's a really good example of a CMO being able to lead an organization towards a better balance of those two jobs, right? And for a company like Telstra, converting the current demand in the market, making sure they make the sale today and, you know, the sale doesn't go to Optus or doesn't go to one of their other competitors.

is critically important, but so is building the brand among the buyers that will come into the market over the next couple of years.

And so a good case study, a good story of a CMO that was able to educate the organization and lead them towards a much better place.

And I think that is really, you know, the last probably three or four years, one of the toughest things for marketers is actually convincing the non-marketing stakeholders around them to let them do the right thing.

And I think as kind of someone who has been involved in effectiveness research for a really long time, I don't think that the next breakthroughs in advertising and marketing effectiveness will be uncovering new principles or doing new research because we now have a very high fidelity understanding of how these things work.

In this AI era, do you think we're going to see a resurgence of getting back to people and in-person and the craft? Or do you think we'll continue to see, you know, the opposite?

More commonly known as BCG right now, right?

B- BCG, yeah, BCG Boston.

And they, um, they looked at, you know, one of the- Most common things which has been studied over the last kind of, you know, 20 years, um, which is this kind of interaction between brand and performance, and if we s- if we lean more into brand or we lean more into performance, what are the outcomes? And they've got yet another piece of work which shows that the companies that invest more in brand see a better overall return on investment from doing that.

And so, um, and so every time, you know, we look at US data and we say, does, do these principles hold in the US, you know, every time the answer is yes.

And, and that is because, Fergus, these principles are really fundamental, right? They're, they're not...

We're not talking about the tactics and the execution.

We're talking about fundamentally how do marketing and advertising work, and fundamentally marketing and advertising are about two things.

... what's involved in that.

When you look at those early adopters, are there any verticals, uh, you know, uh, industries that actually are more likely to be those early adopters? In other words, they sort of don't, they're actually probably happier looking at the product and less, less about the brand familiarity than other industries or verticals.

Yeah.

It's an interesting question.

I mean, if we look at the sort of diffusion of innovation, it's, it's, it's pretty much the pattern holds across categories.

Take Tracksuit as an example.

We're selling to marketers.

There's probably a perception that marketers like shiny things maybe a little bit more than, I don't know, like accountants or lawyers or people that are buying, um, software in gov- government organizations or whatever.

Mm.

Uh, is that your experience?

Yeah, that's right.

Yeah, absolutely.

I think, um, I think the question that I get a lot is, um, you know, we've had how brands grow in the long and short of it for like 16 years or whatever now.

like why have we why are we still doing the wrong things yeah right um and i think um that we uh that's only partially true i think lots of companies have have actually you know ingested that and uh and we can see that comes through in the effectiveness papers um but still a large majority haven't really And I think a part of that is not so much the marketers not knowing it, it's the non-marketing stakeholders around them still operating under an invalid mental model of how advertising works.

And part of it is that, you know, I was with, I got to meet Brian Cox, the physicist this week.

Only in Cannes.

Because it makes the assumption that the best time to reach somebody is just the moment they're about to get to a shelf or something.

Again, there's still more I need to do in future demand.

I mean, when I read the first book, it was actually back in 2022, maybe.

And the first book I wrote because I was, you know, in our company, we invest in a lot of startups and we work with a lot of startup companies and we work with a lot of venture capital companies.

And those folks, particularly kind of like technical founders and venture capital people, they did not kind of, tend to believe in brand, right? Or put a lot of focus on brand.

And I knew through all of the evidence that we now have that that would have been limiting those companies in the long term.

And as an investor into those companies, I want those companies to become very big and very valuable and not just kind of end up sort of getting a little bit bigger than petering out.

And so I felt it was in my interest as an investor to actually make sure that the venture capital folks and the startup founders understood why brand was important and so the the idea of future demand which is kind of like a rebranding of brand yeah yeah i felt that that was important to frame it in that way so it's more easily understood to those folks who are a bit more engineering mindset but more finance mindset um and so that was the first book and it was only really ever meant to be something that we printed a couple of hundred copies for that small network of of sort of companies around us in new zealand And it ended up taking on a bit of a life of its own.

What advice do you have for those kind of brands? Because they, yeah, it's

What have you seen the best marketers doing to take these concepts in, like, practically in their marketing? What actions are they taking that's different from those more performance short term sort of trapped brands?

Sure.

I mean, number one, I think the allocation of investment.

And so if we think about, you know, how much we spend on brand marketing, how much we spend on performance marketing, brand marketing, and what I mean by brand marketing is much more broad reach, much more creative, and much more emotional marketing.

It's marketing that is i- really designed to engage people rather than just communicate facts at them.

And so what we see in the data, and we've now got several very strong data points over many, many years, is that the companies that spend about half and half on brand and performance are the companies that see the best overall marketing ROI.

So I don't mean ROAS on a particular ad.

Mm-hmm.

Yeah.

And, and then showing the kind of the 5% to 10% stuff, 'cause that's again, you know, pretty robust research.

It varies pretty wildly, so if you're like a small brand in the digital marketplace category, for example, you're gonna sp- need to spend way more than that to kind of get traction.

If you're a very, very big brand like Amazon, you're gonna need to spend a little bit less.

I think they spend, you know, 3% to 4%, something like that.

But largely, you know, generally speaking, if you're spending between 5% and 10%, you're probably within cooey of the-- of, of having the right, you know, the appropriate amount of share of voice to be able to grow.

So yeah, that's the way I'd make the, I'd make the, the argument.

Mm-hmm

And secondly to that, I think it'd just be good to introduce at a high level what is future demand.

Yeah, great.

So the easiest way to explain it is probably through by describing an exercise that I do with audiences when I talk to them and I ask them a question.

I want you to put up your hand if you are currently in the process of buying a new mobile phone or think you will do in the next couple of weeks.

And say I'm in an audience of 100 people, one or two hands will go up.

And then I say, okay, put your hands down.

I want you to put your hand up if you think you'll buy a new mobile phone in the next two years.

What are the things you've seen work in terms of to get businesses actually thinking around balancing future demand, current demand?

Like, you know, well

put together team.

They're amazing.

I mean, Matt and Connor have, you know, led the business from the start.

Just exceptional.

like operators of a startup.

It's amazing.

And to be fair, I've talked with Dan and Jasper about this on the podcast, where we've looked at acquisitions like Puppy or Rode, and it's brand equity that is a good product, like all the other good things, but brand equity's been a huge part of those brands growing, so you can't deny, and yes, advertising has changed, but marketing is still