In-House vs Agency: A CMO's Dilemma

[00:00:00] Todd:

[00:00:08] INTRO/OUTRO: Welcome to Contrary to Popular Opinion, a podcast hosted by IDE Digital. In each episode, we bring you provocative topics and novel perspectives around leadership, business, and marketing that defy the norms because exponential growth demands unconventional thinking and visionary action. So open your mind.

[00:00:32] INTRO/OUTRO: And let's get into this week's episode.

[00:00:35] Kelly: Hey everyone. Kelly McGuire with BU Day Digital. Excited to get into today's topics.

[00:00:40] Todd: Hello, this is Todd Kelly's partner at BU day. Welcome back. Kelly from New York City. We were in New York all week last week where it was 71 day and snowing. The next. Gotta love New York.

[00:00:55] Todd: So for the listeners, Kelly and I were in New York City a week last week with our, indie agency, community group We are a part of called No Dose, and if you're a marketing person. You're looking at agencies and you're looking at indie agencies, I would tell you to look at nos doses 'cause it's a cool group of about 55 agencies.

[00:01:19] Todd: and we had our annual retreat in New York City where we talk about being an indie agency and we talk about all the things that impact our world and marketing and how we should go forth and support, the people that need us most, which are. Marketing people at brands. And there was a panel that had some non-agency people in it, had some New York based agency search consultants and had some fractional CMOs and some other marketing people.

[00:01:51] Todd: And a lot of that conversation was around the value of the indie agency model, compared to the HoldCo agencies and sort of, How their opinion was that they're seeing, and this always ebbs and flows, but they're seeing the indie agency sort of, kind of rise to the top right now and get a lot of, at attract attraction with marketing people and maybe less so of the holdcos than, as you and I have talked for a long time, that really is oftentimes relative to the size of the brand.

[00:02:22] Todd: indie agencies aren't always recipients of brands that are spending. Hundreds of millions of dollars,or only the largest indie agencies are. But one thing that stood out for me in that panel and what was talked a lot about, there no surprise, was ai. and how AI is being used and who's using it, and so on and so forth.

[00:02:42] Todd: And what didn't get talked about was what is AI really doing for agencies in a service-based industry and model? And. What is it doing good? What is it harming? Ultimately, my question was, which I didn't get a chance to ask, which was, how does the marketing community, the brand marketing community, think about talent and technology in a way that somehow it's supposed to be getting cheaper because every pitch we're in, we continue to get squeezed on our price.

[00:03:21] Todd: Yet nothing we do costs less than it did last year or five years ago. In fact, things have gone up every year in double digit expense, salaries, tech costs, and somehow we're supposed to not pass that on to the client. And I don't know what they think we're making, but they must be thinking we're making billions of dollars.

[00:03:45] Todd: we're not as indie agencies, but I wanted to talk about that. Get your perspective on how you thought about that. 'cause we haven't connected since then. And really where I wanna start this is the idea that talent and AI sort of intersect each other in a way that reduces costs And what was widely acknowledged in this meeting.

[00:04:11] Todd: Now after AI's sort of been front and center to us agency folks and marketing people. For, call it two years now, is that really what it's done is enhanced the execution layer and it's enhanced agency's ability to pitch proprietary AI workflows and proprietary AI tools and proprietary optimization frameworks and really beautiful slides that present all this stuff really well.

[00:04:39] Todd: But what it's really doing is it's just simply saying that. That makes everything about economics and it's really easy, and agencies have, as a result, had to remove a bunch of their experienced, high priced people because they can't afford to pay them anymore because clients aren't paying them for those people.

[00:05:00] Todd: and that, that seems to be a problem because now. We're faced with agencies who are really purely process driven. They're process agencies. They're using junior teams, they're using ai, a lot of automation frameworks. and the promises in the pitch is that, well, we have this great system that will figure out all your problems.

[00:05:20] Todd: And what we're trying to go to market with in the indie agency community is, that's just part of the execution layer. And in order for that execution layer to really work, you actually need senior talent and you need judgment driven logic and strategy, and experience and loyalty and tenure to power these systems.

[00:05:47] Todd: They don't just make this stuff up on their own and go forth. It's all coming from really smart humans. So. if process is about the execution layer, but strategy and brilliance is about the people layer. And oh, by the way, the AI and the tech layer costs us a lot more money now and the people aren't any cheaper.

[00:06:10] Todd: How in the world are we supposed to have a sustainable business model and deliver clients this immense value when their thinking is. Opposite. It's about process and commoditization, which should therefore yield cheaper costs. Yet we're saying all that's gonna do is enhance bad judgment and bad decisions, and you're gonna pay for more for it later.

[00:06:40] Todd: So that's just sort of the umbrella theme that I want, unpack and talk about. where do you wanna start with this? Like, I, that's. that's the theme.

[00:06:48] Kelly: Yeah. I think for me there's a million different ways to tackle this. I think one of the starting points in my mind is trying to settle in first and foremost, what is a client trying to accomplish when hiring an agency or an RFP or whatever it goes in.

[00:07:07] Kelly: And, because I think that fundamentally. Sets the stage for finding the right answer here because just that answer alone can have such a wide spectrum of, I simply want a. Media buyer that can execute for me. I just want someone who can go into the meta platform and buy ads or the Google platform and buy those.

[00:07:29] Kelly: That's the simplest one end of the spectrum. The other end of the spectrum is all the way through. I want a deeply embedded, intelligent, sophisticated partner who is gonna anticipate my needs and learn my business. Ask questions that I don't even know what to ask and fix all of my systems so that I am ideally set up.

[00:07:48] Kelly: That's the other end of the spectrum

[00:07:49] Todd: process versus human. That's basically what you just laid out,

[00:07:52] Kelly: and I think far too many of these processes start with thinking that you're a brand that can go on the first end of the spectrum, which is, I just need someone who can buy great Facebook ads for me and I'll get this amazing return and everything's gonna work.

[00:08:10] Kelly: Like marketing's super easy. I think that is a dangerous assumption. And you know what I've labeled before is the zero sum game, right? I simply put money in, someone buys me ads, and I get the outcome that I want, and I think it completely loses the nuance of marketing, especially now. even if you just won't, don't even want to take it.

[00:08:32] Kelly: Marketing, if you just wanna go with paid media is incredibly difficult. It's incredibly fragmented, it's incredibly noisy. It's, there's a million different things you could do. So determining what I can do versus what I should do versus what I'm set up to do. Well, making those determinations and then adapting,

[00:08:52] Todd: I, I gotta stop you right there.

[00:08:53] Todd: Who makes those determinations?

[00:08:55] Kelly: That's what I'm saying is that's what a brand has to figure out. Is the brand themselves, do they even realize that needs to happen or do they think they're doing it themselves and they're getting execution partner, or are they hiring someone who can do that?

[00:09:08] Kelly: And then if they're hiring someone that can do that? Are they thinking that there's a machine that just magically does that? Or is it to your point, highly sophisticated, talented people that are able to do that and are enhanced in certain ways? So these are the really difficult questions that I don't know that anyone takes the step back to really evaluate and think about properly before engaging in making these types of decisions.

[00:09:32] Kelly: I think it's easy to just. Look at marketing as a problem to solve and listen to a bunch of pitches and say, I like that solution to the problem. I certainly like the pricing to that solution. Let me throw that at it and see if it works. And I don't know that's a fundamentally good way to approach what I would believe.

[00:09:54] Kelly: Every brand and company is looking to do, which is set themselves up for long-term success and really to think into the future and build a, an engine and an expertise and a foundation that is going through. I think a lot of these things are taken as a short-term solution to a short-term problem. I need more sales and more customers.

[00:10:13] Kelly: I can only spend this much and I just need it to happen really fast. I don't know if that's a product of the CMO lifecycle being so short now and everyone needing to prove themselves, or the belief that it is that easy to just throw some money at something, get those immediate gratification and build upon that, versus what I think it should be is it should really be that long-term view that.

[00:10:36] Kelly: I need a marketing foundation that is sophisticated as an intelligent and is adaptable to a constantly changing environment that is unique to my business and my needs. And in order to do that, I need a really dedicated team, a really smart team, a really well motivated team to give me that time of day and that energy and that effort.

[00:10:58] Kelly: and I think that gets missed far too much, I think. People get drawn in by the shiny object of, well, they did it for that client, or they have that case study, or they have that really shiny process or AI tool or whatever, and I can just buy that and it's a zero sum. I buy it, I get it. It's gonna work.

[00:11:16] Kelly: And I think most people get burned in that because when it's all said and done, AI is an incredible tool that is empowering amazing things if used correctly. I've said this ad nauseum a million times over. it's, it's like anything else. it's good in, great out. It's garbage in, garbage out. It's whatever it is.

[00:11:35] Kelly: But one of the things that I think the cost fallacy creates is this almost this inherent motivation to laziness, which is I'm supposed to use this tool and all I'm gonna do is. Regurgitate this brief or this simple structure and the AI system's gonna analyze it, and it's gonna spit it out, and I'm gonna go follow those directions.

[00:11:58] Kelly: And because the cost benefit has been whittled down to its lowest con common denominator, you have to kind of follow that mechanical process and hope that it works. And the nice thing about AI is I think it'll paper over some of the cracks in that. I think if you do that, you'll get a, maybe a decent result.

[00:12:18] Kelly: Maybe it'll even be. A better result than you were getting because the bar was set really low before, in, in another way. But that's not I've said this so many times. The thing is the opportunity cost of. You can use AI simply or poorly or cheaply, and maybe you get a good result. But if that's the case, almost certainly if you were to use it to its full potential and its full thing, you could get an amazing result.

[00:12:44] Kelly: And so you're, it's always this missing out on what could be. If you really were to think about, like, again, even if you were to get a small win using a cheap AI process, that may feel good, but I guarantee you if it was, if that was possible on a very simple, cheap way. You would get something so much better if you had someone that was iterating and challenging and thinking and training and growing and building.

[00:13:08] Kelly: That means that there's so much more on the table and you're just taking the next good thing. I shared this video in one of our team sharings and one of my favorite wording from it. Was the idea of the definition of creativity. And it came from, I think it was some like teenager and something and some exercise, but it was like creativity is you, is taking more than the first idea that you have.

[00:13:31] Kelly: and I love that idea of like, okay, like this first thing might work, but what if I push it further? What if I push it further? What if I try to break it? What if I go further? And that is what unlocks this almost unlimited potential of what can be done. But that only happens if you have someone with the experience to push and break.

[00:13:50] Kelly: The proper motivation to do so. And when I say motivation, at the end of the day, that comes in the form of compensation. When it comes to business, you have to be paying your partner in such a way that them going the extra mile, them putting in the extra effort, them going beyond just good enough to not get fired is actually rewarding to them in some meaningful way so that they can apply that and they can have the outcome.

[00:14:13] Kelly: That's why so many of our deals, even when we do have to. Compete on what is probably not the most reasonable cost, value exchange for what we're gonna bring to the table. Our whole way of trying to make up with that is to have opportunity to win on the backend. That if we do go the extra mile, and if we do add in and it works like it should, we can at least participate in the added extra economic value, the bonus systems, the unlock structures, all of that because.

[00:14:40] Kelly: If you're race to the bottom in your cost and you have no way to make up any economic value beyond that, your motivation becomes don't get fired. And why is that? The relationship that anyone wants to have with the person who's supposed to be putting blood, sweat, and tears to improve your business and make everything work, it just doesn't make any sense that you would want to set that engagement up from the very beginning.

[00:15:04] Todd: Sounds like, something that would result in a worse divorce rate than what California currently yields. I, yeah, so this is, I know these podcasts get posted on YouTube and I don't know how many people listen to these things, but if there's a marketing community listening, I would love a marketing person to comment and tell me why in the world.

[00:15:26] Todd: They think everything we should do should be cheaper today than what it was five years ago. Again, when the cost of the technology. so let's assume that AI and tech stacks are great at, they can help generate ideas quicker and maybe, and more large swaths, right? We can get more ideas now and we can test more variations, analyze more data, but none of that decides what matters to the business.

[00:15:51] Todd: Only smart, strategic humans. The operators can decide what matters and all of that. At least this is our experience. I've never seen AI be able to decide what matters most to a business. It's just the most experienced business people that are using those outcomes are able to then discern the nuances and decide what's going to matter.

[00:16:18] Todd: The most,

[00:16:19] Kelly: you know what's even funnier about what you're saying and I don't wanna go too far down this rabbit hole 'cause it, it gets really technical, but it fundamentally gets worse what you just said as far as how AI can help make these determinations when you understand how AI actually works and the fact that it is not.

[00:16:38] Kelly: we haven't reached general intelligence with ai, right? So all AI really is right now is a probability ranking of the best possible outcome within its context window based on what the input it's being given, which basically means that when you see it write out all of these long form things, every single word.

[00:16:58] Kelly: That it is choosing for the next one. It is simply going through, it's usually about 200,000 possible next words. And it's ranking all of them and taking the top one. And it goes back through the context. It's been given in the history to choose that out. It's not actually reasoning anything, it's not actually thinking anything.

[00:17:15] Kelly: It is taking,

[00:17:16] Todd: that's what I mean. It doesn't know what matters.

[00:17:18] Kelly: It's taking the input and it's creating a probability ranker out of it. and when, and the reason that I point that out is because. That is so highlighting of the importance of who it is that is giving it the context that it's giving the guardrails that's thinking about the iteration and the context that it's feeding in so that it can do that ranking and every little ranking decides what the next output possibly is, and that's where the iterative effect becomes so important, where.

[00:17:44] Kelly: You can do the same exercise in ai and the probability ranking it chooses on one day might be totally different than it would do the next day or the next week or the next area in there. And so you're getting the best of what was available in that window of whenever someone used a system and you're hoping for the best, like now you're going off of that.

[00:18:07] Kelly: And so. But again, someone that's gonna stress test it, look at it at different angles, put it in inputs, make sure it's foundational. That's where you start to dig in and explore and stress test. That, that, have I looked at another angle? Have I reviewed it in that way? But why? Why would somebody do that and spend the time to do that?

[00:18:23] Kelly: If all it's gonna do is eat into their profit margin and their razor thin margins and their areas with no ability to reap any rewards other than just, I'm gonna put it in the system. I'm gonna give you whatever it put out that day, and we're gonna hope that it does just enough. To make sure that you keep working with me for the next month or year or however long it is.

[00:18:44] Todd: Well, you keep saying you, so who's the, you in your description? Is that, so like in our business, is that you, the senior co-founding strategy person of this company that's got 25 years of marketing experience. Who's the you? Is it a ju nothing against junior people? Is it, do you want, is it the junior person that's interpreting that or is it, or do you want it to be.

[00:19:10] Todd: Somebody who's got 10, 20 years of business experience, who's thinking about the interpretation of, the, again, what the AI spit out, which is maybe it's generated some ideas. Like you said, it's written some words, it's provided some variations. Maybe it's analyzed some data, right? But it, again, it's not capable of deciding what matters.

[00:19:31] Todd: It doesn't have that context. As much as you could pipe in your brain's worth of information into an agent, it still is not gonna be, like you said, generally intelligent to decide what matters. So who's the who in your mind? in a typical agency, and I guess in our case, let's use a media agency, but you could use any kind of meat agency.

[00:19:55] Todd: Who do you think the who is that's doing that?

[00:19:58] Kelly: So in our company, and the way that I think it should be is it is a structured team. So yes, it should start with a strategic owner. In that case, it's generally gonna be myself. although we do have others there.

[00:20:11] Todd: And how many years of experience do you have?

[00:20:12] Todd: I'm sorry, I just want to tally this up. how long have you been doing this for?

[00:20:15] Kelly: 2021.

[00:20:16] Todd: And you've done this for the biggest brands in the world, right? Data across your career. Okay. Absolutely. So I just wanna, I wanna validate here what we're talking about. So here's somebody who's got this massive amount of experience, who can decide what matters?

[00:20:30] Todd: who else is on the team?

[00:20:31] Kelly: I think it needs to be an account manager. Someone who is being compensated and motivated to deeply understand and own a relationship within a client who's all things traffic control, who's organized, who has access to, what are the reports, what's all the information that.

[00:20:48] Kelly: Knowledge base that gets created around a client and is that singular point of contact, because that's really important to have that day-to-day organizer and then it's gonna be made up of senior specialists in their specific execution field. Data scientists and analysts who understand the nuances of data architecture and structure and metrics and trigger firing and everything that is collecting the data and where it's accurate, where there's gaps, where there's proxy fill-ins to make sure that picture's right.

[00:21:19] Kelly: It's gonna be your channel manager, your people who know. Meta and TikTok and all of the social platforms deeply inside out the best practices. What's the latest and greatest? What's going in there? Your search specialists, your Google, your Bing, all of your things that go into search and YouTube and everything and know everything.

[00:21:34] Kelly: Latest and greatest are working with the teams are stress testing the environment and your programmatic specialists that are gonna understand everything else, your CTV, your streaming, your all your capabilities, your data providers, your every c, every piece of knowledge that they do or do not have.

[00:21:49] Kelly: Dictates what they're able to accomplish. And so from the top strategy, from my vision and the account management's digestion of. What the client's needs and goals are. That creates the blueprint and the North Star that everyone kind of tallies up to and understands what we're trying to accomplish and what the overall picture is.

[00:22:07] Kelly: And then everyone has the expertise to know I'm responsible for a certain portion of the money that is meant to accomplish this clear overall goal. And I need to understand all of the levers that go into what makes my platform work. When I'm spending dollars on meta, what is meta's best practices?

[00:22:26] Kelly: What's the data that has to be fed into, what's the architecture and the input that has to be set up? What is the creative needs that are going into, what are the metrics that I'm gonna feed it? What are the limitations, the priorities, the nuances of the business? And how? How do I set that up in a way that it creates a data feedback loop that not only lets me make decisions, but powers an AI engine to properly look at both the narrow context of meta.

[00:22:50] Kelly: Amongst the broader picture of the entire marketing investments and all of the factors and variables that go into that. And that is a massive ecosystem. It is not simply buy more Facebook ads and it'll work better. You have to factor in your data, targeting your outcomes, your user journeys, your nurture cycles, your competitive landscape, your pricing structures, your, I mean, if you're going in retail, you gotta look at distribution centers and sales channels and promo calendars, and it's this massive universe of variables that somebody.

[00:23:19] Kelly: With enough experience to understand how to map and think about all that, can properly guide a system to think about factor, tap into and structure it. And on top of all of that, you also have to have people that can organize all of the moving parts so that there's not one missing piece. It takes down the whole house of cards.

[00:23:42] Kelly: You can't go and say, how do I do my what? How should I do my media mix and my budget allocations? And then forget that you're missing a bunch of conversion data in a feedback loop that's gonna guide it down the wrong road and not see the full picture. Or there's some cookie consent thing where you're missing a huge percentage of the picture.

[00:23:59] Kelly: And so every decision it's telling you to do is on 60% of the picture, and you're missing 40%. Or I, phone calls is a major thing and I'm not tracking and factoring that in, or there's sales disruption or there's all these things that if you don't have someone thinking about this business and understanding the full picture, you're just saying, I have money.

[00:24:18] Kelly: I need more CU customers. AI go tell me what I should do. Maybe it guesses and gets it right, or maybe it misses a whole lot of great that could have been figured out in that process.

[00:24:30] Todd: So what I heard you say. What somebody told me in that conference, I should stand up and say, because I would get a standing ovation, was it takes a lot of really smart, experienced people, to decide what matters with experienced judgment, based on experience, using a lot of humans to.

[00:24:59] Todd: Foster creativity and collaboration and discussion and dialogue around the idea that AI frameworks and optimization process and all that stuff helps ultimately execute. But I heard you talk all about the people, and this is what I cannot. I, and I genuinely hope that if anybody's listening to this and they're not in the agency side and they're on the marketing side, that somebody can answer and riddle me this, maybe I'll post this on LinkedIn.

[00:25:30] Todd: How does anyone expect to pay less today for that level of human strategy and growth sort of experience on top of. Oh, by the way, as an agency, let me just riddle off. We have to subscribe to enterprise versions of Claude Notebook, LM Chat, GPT, slack, media specific, technology, AI powered technology, including just name dropping here, a platform we're about to test, from.

[00:26:10] Todd: the head, the lead members of Tesla's AI marketing team who spun off on their own we're footing the bill for this tech stack. tens and tens and tens of thousands of dollars. Plus the senior people that have been in our agency for years and years and years who have seen increases in their compensation every year by a lot.

[00:26:39] Todd: Yet we're supposed to sell that same service for less than what we sold it for a year ago, five years ago, 10 years ago. Why? I don't understand what marketing belief exists out there, that all of what you just described, knowing that the cost of the world. The cost of technology, the cost of salaries, the cost of living, the cost of everything has gone up, but we're supposed to sell all this for cheaper.

[00:27:13] Kelly: Well, I can tell you why I think it happens is, and for better or for worse, this is just kind of how I feel about this is the problem is it's because everyone promises. World because that's what you have to do. And no one ever won a client being like, yeah, we're gonna be mediocre, we're gonna cut corners.

[00:27:30] Kelly: Right? So everyone,

[00:27:30] Todd: so we just lost, right? We just lost a big pitch. Came in number two again, where everybody, what's the saying about being just like it being second at the dance or last at the dance? I don't remember what it was, but, and the price and the reason was given that it was an economic decision, which means we were.

[00:27:49] Todd: We came in number two because we were deemed to be too expensive. Sorry to cut you off, but this has happened right a week ago and once again, we lose, even though we've lowered our prices. While all of our costs of doing what we do best has gone up substan by double digit percentages, we continue to erode what little margins we have and we still can't win.

[00:28:14] Kelly: Yeah. and the irony of that situation is it was an incredibly complex and sophisticated need, and we were already below really where we should have been. And really the, on the only true upside would've been if we had unlocked the bonus pools that we had put together. And so for anyone to undercut where we were at, it's just completely and utterly and practically not going to happen.

[00:28:37] Kelly: But it, and that's what I'm saying is. Everyone's willing to race to the bottom and make these claims. And I just, I personally think that the decisions on who to hire are being done on the shiny object syndrome and the want to believe in tools and technology. And I think it's why so many people have gotten burned in the past.

[00:28:57] Kelly: and usually our best clients come from people who have had enough experiences of the big shiny, great sounding pitch and then it not coming through and being real. And at the end of the day, I think people need to finally get to the point where what they are hiring is the engagement and the experience that they want to get from the team that they're gonna work with.

[00:29:21] Kelly: And not the fastest, biggest promise to get to the unrealistic outcome that I want, and I just don't know. And again, I think it's harder as the CMO experience gets shorter and the need to show the win needs to be faster. I think you just have to keep going with the, or people choose.

[00:29:41] Todd: Why is that a belief?

[00:29:42] Todd: That's only a belief because people believe technology somehow has enabled that to happen.

[00:29:47] Kelly: I think. I think it's just hard to break through. Right? Because again, while we're sitting here saying like, we have these senior people and we don't have turnover and we have all these things and obviously that's our story.

[00:29:56] Kelly: that's true. We have it on our understanding of the reality of what happens because we see behind so many curtains and we're able to understand this. But if you take yourself out of that and you look, every other person pitching is saying that same thing, no one's saying, yeah, we get turnover every couple of months, or You're gonna be a small fish in our big pond, or you're gonna get the sea team.

[00:30:17] Kelly: Or, I don't even have the people that are gonna work on your business yet. After you award me the contract, I'm gonna go hire the cheapest, fastest that I possibly can. Like no one's saying that we know that's the reality, but it's not being said. And so. I don't know. How do you break through and understand?

[00:30:34] Kelly: I mean, people, particularly salespeople, are very compelling and very believable and very charming on certain things, and I don't know, it's hard. It's

[00:30:43] Todd: why I said I want any marketing person, and I'll have to maybe post this on LinkedIn. I want one CMO to come to me and tell me why they should pay less for senior tenured talent and expensive technology.

[00:30:59] Todd: I want them to justify why they should pay less for that today than they did yesterday. there's no world, there's no reality, there's no anything I buy in this world today that I get to say I want it for cheaper than it costs yesterday, and I want more from it. I want it to be better than it was yesterday, and I wanna pay less.

[00:31:20] Todd: That doesn't work in any other industry that I'm aware of. and it doesn't work in any other purchasing cycle, but that's what we're expected to deliver on

[00:31:30] Kelly: it. It's funny too, because even in the best case scenario where it works and you're like, okay, I bought the platform, it was cheaper and I got the pop, I got the win.

[00:31:39] Kelly: Even in the best case scenario, if that works, you're still setting yourself up for long term. Failure because eventually that sort of dead cap bounce is gonna run out, right? Like you're gonna reach a ceiling with that, you're gonna lose institutional knowledge and expertise or motivation to go above and beyond or to break out.

[00:31:58] Kelly: Like again, I just don't understand the concept of wanting to motivate a partner who you're relying for a pretty critical part of your business and growth. To do the bare minimum or to cut corners or to find the cheapest route, like I don't understand why that is ever supposed to lead to the longest term best outcome.

[00:32:18] Kelly: Like I would want the partner who is lockstep with me and wins when I win and benefits and has every reason to give me their best and their priority and their top and everything. But if I'm just gonna cut margins and procurement and go to the bottom line. You're just going to paint everyone into a corner.

[00:32:37] Kelly: I heard about this other RFP process not that long ago where they were literally requiring like guarantee CPMs in the process. And I'm like, that, that actually just doesn't even make any sense because you're just handcuffing someone to make the right decisions for your business based on whatever.

[00:32:56] Kelly: Is real in that moment. We all operate in auctions. what it costs. We don't have discounts to give, we don't have things. All we do is we go to the auction and we look at what's available, and we bid until we have a cost benefit analysis of what the right amount is. And if you're putting a ceiling on that, are you really gonna miss out on the next best likely thing to lead to a customer or a client?

[00:33:17] Kelly: Because you didn't want to go one penny higher than what your ceiling was like. I just don't get the thinking.

[00:33:23] Todd: That, that takes me back to when programmatic first started. We were having that conversation 10 plus years ago. I look, I don't know,I'm energized by the conference. That's why I wanted to talk about this today.

[00:33:33] Todd: I'm energized by the fact that panel was up there kind of talking about this stuff. I'm frustrated that, once again, we were the date that didn't get asked to go to the dance because of price. Not because of perceived value. I think your point's super relevant is how does any of that make sense?

[00:33:57] Todd: and my point is I can just show you on a spreadsheet, simple cost of labor and cost of tools and subscriptions that everything's gone up 50 to a hundred percent. So how could you ever expect your agency to do all the work that you're saying they should do while. Trying to get them to work for less because there's already no margins.

[00:34:19] Todd: Seems like a crash course for something that's gonna lead to, maybe some buyer's remorse. And oh, by the way, it's kind of funny how we've heard from a couple of people in our past lives who have resurfaced that didn't hire us, hired another. there's one independent agency that sort of keeps showing up in this conversation that keeps getting hired because they do pitch really well and they're big and they can claim a lot of technology and they can claim a lot of success, but it's funny how the people that hire them keep coming back to us saying, yeah, it didn't end up being what we thought it was gonna be.

[00:35:02] Todd: And I've, I don't know how long. I think like you've said before, it's gonna take some time before. Maybe AI sort of circles the wagons around that I tried and it didn't work, and enough people find enough failure in it that they realize that, again, maybe this is sort of where I'll just land this entire debate and argument is that stuff is all process and execution.

[00:35:23] Todd: It is not decision ownership. It's not judgment ownership. It doesn't replace. Again, experience, creativity, collaboration. The human, the human in the loop still has to be there so that the technology doesn't amplify bad decisions, bad strategy. it can't decide what matters. You still have to have really smart humans do all that work, and darn it, these really smart humans, they cost a lot of money and they cost more today than they've ever cost.

[00:36:00] Todd: They're worth it. But you gotta have a client, I guess, that is willing to put their neck on the line and their job on the line to pay for that versus process and framework that's cheap.

[00:36:13] Kelly: Yeah, I think my two biggest takeaways are, one of the things that I think people underestimate or just don't know about is, I hate to say that.

[00:36:25] Kelly: What we do in media, buying with data and the fragmentation of what exists. it's not that hard to make things appear or look better than they are or to hide things or to kind of bury things that don't tell the story that you want and to kind of guide a narrative in a way that you want. And again, I just knowing that I would never want to give anyone a reason to need or want to do that on my behalf.

[00:36:49] Kelly: I would want everything to be nice and transparent with aligned motivations and strong relationships and a trust factor, and a consistency with a team that I don't need to worry if someone's just trying to take credit for something or shift blame or cut corners or anything like that.

[00:37:03] Kelly: It's just, it's too easy to paper over those cracks, once, once you win the deal, once you make those grandiose promises, there's a reason why it's so easy to not fulfill on them and keep it around because you collect a lot of fees for a long time, and. it, it's a problem. and I just, I don't think enough people factor and think about that when they make the decisions that they do.

[00:37:22] Kelly: And then the other thing to your, that you said is we've had a lot of people that we've worked with and have gone on to bigger things and we get a lot of viewpoints behind the curtains on, big entities and. I think this cost cutting element is it's skewed in the overall scale of things, right?

[00:37:38] Kelly: People look at clients that are spending hundreds of millions of dollars, and so yeah, you can carve a percent here and you can shift it over there, and you can have these single digit percentages of media in there because again, you're working at such massive scales, right? 5% of a hundred million dollars is.

[00:37:56] Kelly: Exponentially different than 50% to $5 million. Right? Like it just like it. It's different when you look at those. But, so then when you go and you get this entity that works on businesses of that size. I just don't understand how no one can do the math of, there's only so many extremely talented people that go around like just like every other field.

[00:38:19] Kelly: You could call it ninety ten, eighty twenty, seventy thirty, whatever it is, some smaller percentage of the overall population of talent is extremely talented, who you really want working on your business. And if you think that smaller percentage of an overall high talent pool. In an entity that has clients that are exponentially larger than you are, you're somehow gonna keep that and it's not gonna get moved on.

[00:38:43] Todd: or maybe not larger, but maybe just the fee structure, the margin, the relationship in general is just that much better.

[00:38:50] Kelly: Whatever it is. you're just, you put yourself in such a risky scenario to just not be the priority, not keep that, and it's why everyone gets the turnover and the switchover and the things like, I just, I don't know why anyone wants to be.

[00:39:02] Kelly: Someone's rounding error priority when it's like, of course if I, even if I'm so lucky and I get the superstar, in what world is that superstar not going to move on to the client that's 10 times bigger than I'm,

[00:39:16] Todd: I don't know. I wish marketers would just come ask us for our advice and we could just tell them who to hire and how to hire.

[00:39:23] Kelly: And certainly if, to your point, if you want to have the, a attention and priority of an agency that. Has the expertise and the drive to sit on all these seats and to know these technologies and stress test all of these things. Again, that takes time and energy. That's opportunity cost. Every client we take on is an opportunity cost of that expert talent that could be applied to either expanding our knowledge and learning other things, or going to a client who's gonna pay more for that finite time.

[00:39:52] Kelly: Like we all only have a certain amount of time and energy and our days as well, and ai. Exponentially increasing that, but that is then being applied to doing even better for client. And that's what it should be. It shouldn't be saving time and bandwidth so we can take on more clients, and now you're just watering that talent down.

[00:40:09] Kelly: It should be using that talent to improve the outcomes. And again, as a client, I'd rather not save money by being watered down on the talent. I'd rather pay the same amount or even a little bit more and get five times 10 times more than I otherwise could've gotten because of how great AI is.

[00:40:24] Todd: I agree, but guess what?

[00:40:26] Todd: We're on the service side, not the brand side. So we don't get to make that choice. We just keep getting to fight the fight.

[00:40:32] Kelly: to be fair, I have lived to be fair, I have lived this element, like I have been on the side of negotiating contracts where I could have pushed for cheaper or I've taken things where it's in the wind and I have actually lived this out and gone the other side and been like, look, I don't want.

[00:40:47] Kelly: That much of a discount. I don't want you to cut this corner. I would rather pay a reasonable fair rate that is in there so that I can get your best work and your priority on there. I have lived this side of it knowing what I know, and I have lived up to that and actually chosen to be in a better contract position with entities because I understand the trade off of that.

[00:41:09] Kelly: It's not a philosophy that's easy for me to say and not live by. Like I actually factor that into a lot of decisions that I make.

[00:41:16] Todd: Yes, I know. We treat the service providers that we hire that way, for that same logic. Too bad, that same logic doesn't exist in critical scale for the people that hire us because of whatever reasons and pressures they're under.

[00:41:36] Todd: well that's my rant, which might be very contrary to a lot of the CMO suite opinion. but I don't care because logic is logic and you can't get more by paying less. It just doesn't work. The universe doesn't work that way. If you want more, you have to pay more. so for those of you who are looking for more, come get it.

[00:41:57] Todd: for those of you who want things on the cheap. Good luck.

[00:42:01] Kelly: And look, if you're getting what you pay for it, you, you will feel it. It's a weird thing. It's a weird thing, but like you should feel it in the relationship you have. You should have this warm, fuzzy feeling that your account manager, that your strategists are thinking about your business, they're pushing you like you will feel it and experience it differently, even if it takes time to show up on the bottom line or where you want to be.

[00:42:22] Kelly: there's not always a silver bullet to get to the exact high lofty goals that every business has. You will experience it and feel confident in everything you're going through. If you just simply set yourself up for that success and it will be exponentially worth it in the long run. it's what is the saying?

[00:42:37] Kelly: Buy, buy it, right? Or buy it twice kind of thing. Like,

[00:42:42] Todd: you know what that feeling is, Kelly? It's called Bogie Day. It's the opposite of deja vu and it's a reason why our brand promises that. So, alright. Enough ranting. I'll leave it at that. We'll have to put some posts on LinkedIn and see if we can get some CMOs to listen to this and comment.

[00:42:58] Todd: 'cause I challenge any CMO to comment to me why you think you should pay less for more. and I want to have that debate. Maybe someone will even come on the show as a guest and we can have that debate and their counterpoint can be argued here. open invitation for anyone listening. Thanks. Welcome back.

[00:43:17] Todd: we got a lot to catch up on, so I will let you go and I'll talk to you in two weeks on our next show. Thanks

[00:43:24] Kelly: everyone.

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