Markets, War and the Growth Problem

Speaker 0 · 0:02

Hello. Welcome to the Media Unfiltered podcast. I'm here, as always, with Ian Whittaker. And today, we're gonna be talking about the impact of the war that's happening in The Middle East And looking at the impact on the global economy and specifically what's gonna happen to the media and advertising industry, I remain very much in on holiday. As you know, I'm in Maui. There is a tremendous storm going on outside, so I hope we remain connected.

Speaker 1 · 0:30

How are you doing? You're in England, aren't you, Ian? Yeah. I know. I'm really sorry about that too, Justin. I mean, the bad weather over there. I am. I mean, bad weather for us is pretty much as usual. So, I mean, I guess I can totally imagine what it's like over there at the moment. But, it's great you've actually sort of you know, you're on your holiday, and, and you're doing this. That shows commitment.

Speaker 0 · 0:51

It does show commitment. There is a massive wind advisory, and we could lose power. So let's crack on just to see if we can actually see this through. So the impact, I mean, obviously, there's there's oil prices. Is it hitting consumers? What's happening in the, financial markets from let's start with financial markets, then we'll move into media and advertising here.

Speaker 1 · 1:14

Yeah. I think yeah. An important thing to to say here, I mean, we're it's around two weeks that we sort of have the war now. And, you know, things are a lot of this will really depend on several factors. I mean, this is few. We're still very much in the early days by the sound things we don't know sort of how long things will last, sort of we don't know sort of what will be the endgame here as well. And that I think that's quite important for sort of how the financial markets are viewing things. Generally, the financial markets, they hate uncertainty, and you can see this in what's been happening over the past couple of weeks. You have things, for example, what's been you know, surprisingly, things like the price of gold, for example, have also been quite volatile, as well. But if you if you look at the markets, there has been sort of notable swings. Really, sort of it depends on on what seems to be the latest actions of the latest actions of what goes on in the goes on in The Gulf. So I think the markets are likely to remain subdued until there's further clarity what exactly is the end game here. And at the moment, we don't really have that. We've obviously got issues with oil. You know, oil sort of went up to a $120 per barrel, then it came back down again to under 100, and then it's been sort of moving upwards and downwards depending on what the Iranians do in terms of attacks on ships in the Persian Gulf. So I think, you know, where we're looking at the moment does not I think it's too early to get the direct economic impact of of the war into the economy. If it does last longer, obviously, higher entry prices feed into higher inflation, potentially also as well dampen consumer sentiment and impact in terms of global GDP. There are some measures that governments can do to counter that. For example, what you're seeing would move to open up the oil strategic reserves and keep, yeah, sort of of some oil supply coming through. But I think the crucial thing would be what happens over the next week or so. Because if there are signs that this is gonna be a more prolonged conflict, that we're talking something like months and so on, then I think what you'll start to see is both the markets and companies themselves react to this. If it's something that over the next couple of days, we see some sort of of sort of arrangement coming through and some sort of finalization to the conflict, then the markets will be very much relieved, and we should expect to see a rally. I would say sort of of on there that I think very much if you look at what's happening in terms of US actions, I think for the administration, what they have in mind is they have the midterms in November. Excuse me. And, you know, the midterm elections are gonna be very important to the administration. Yeah. And I think everything is really been what we're seeing at the moment is really being driven by that electoral prolonging into the summer and into the early autumn because we'll have a direct impact in terms of our electoral prospects here in November. So from my standpoint, I think this is something that they will want back up pretty quickly. They want once they some sort of victory sort of of with there. But my feeling is it's not something that should be, you know, this is not really something that should be a long dated war.

Speaker 0 · 4:42

Looking at it from a strategic perspective, it's it's it looks like a complete mess. It doesn't look like there's any clear direction. So when you talk about uncertainty, it doesn't look like we're getting a real, certain sort of strategic outlook from the from the US government on what they're going to do with this war. Secondly, you've got, mortgage rates rising in The US, and you've got inflation rising too. 4.5% is what they're looking at at the moment. So you won't get a drop in interest rates. That's got to have an impact, hasn't it, on consumers and their ability to spend themselves out of this out of this problem?

Speaker 1 · 5:20

Well, if we just actually focused on the war itself, because I think there's some other economic data out there, which is which is quite interesting. It has been overlooked with the whole thing with what's going on in Iran. That's absolutely true in terms of if interest rates remain elevated divorce as well. Yeah. The the the sort of mortgage mortgage rates and so forth also sort of made an elevated. That will have an impact on the consumer. I mean, bear in mind there are a couple of things here. If you take The US, you tend to get a greater penetration of thirty year mortgages, for example. So, yeah, a lot of people are on mortgages that are already fixed for a long amount of time. So the amount of impact that you get from elevated mortgage rates isn't as much as, for example, you see in a market like The UK, where people tend to have one to maybe five year mortgages coming through. But all but interest rates are obviously important because they feed through things such as credit card rates, what happens with car loans, which, you know, is a big factor in The US market as well. So yeah. Yeah. If we don't see if we see interest rates remaining high, we see inflation coming through and the Federal Reserve decides to actually jack up interest rates in response to elevated inflation. And, absolutely, this is gonna have an impact on the consumer. Having said that, I go back to the previous point. Yeah. The thing to bear in mind with this is that the actions of the administration will be driven very much by the electoral cycle in 2026. So you could argue that we have a endpoint here in in November in terms of the midterms. There is no way that the administration will want to go into the the midterms with a a story of elevated inflation, higher interest rates, and a consumer US consumer that is feeling weak. That is the recipe for electoral disaster in November, and it essentially guarantees that Trump's final two years would pretty much be yeah, would be a lame duck presidency. And so I think with this, what you will see is that sort of as we get out sort of out of spring moving more into summer, particularly, it was moved more sort of into early autumn. You will see more measures that will come through and that will look to boost the economy. And so I think with this war, as I say, sort of in terms of timing of this war, where things go go on, I don't think the administration and look, these may be sort of events that beyond their control. But certainly where things stand at the moment, doesn't look I mean, you would think the administration does not want this conflict to go on for a long amount of time because that damages its electoral prospect. And so if I was sitting here and looking at things, my feeling would be is this is, say, is a conflict they would probably want wrapped up. Mhmm. You know? So that of by, you know, early summer at the latest. But, of course, we don't know sort of what will happen. So from that start the standpoint to summarize, again, I think it's too early to say Mhmm. In terms of what's gonna be the impact on the consumer. The critical point here will be how long this thing goes on. Because the longer it goes on, the more you'll get the consumer being concerned, the more you will get effects coming into The US economy. Yeah. That's really the key point to look at.

Speaker 0 · 8:36

Yes. Alright. So Ian predicts, by can, we should be over with this with this nonsense. Let's hope that's the case. They have actually reduced or really they have softened sanctions for Russia, which is absolutely upsetting news in order to bolster the, the the oil price, or reduce the oil price, and, that didn't work. But it's it's it's pretty upsetting to hear them doing that sort of thing. Anyway, let's look at the media and advertising market. Any impacts that you're seeing from this war last couple of weeks on this market?

Speaker 1 · 9:07

Well, again, I think it's too early to say for the direct, impact to the war. You know, again, for this very moment, a a few weeks into this. And I think for many advertisers, they, like us, will not have an sort of an idea of how this will end. I think you've obviously got sort of a number of scenarios that this could play out. Yeah. On the one hand, you've got companies which could say, okay. Maybe we pause advertising, in the meantime. Yeah. We they could say, we continue advertising, but we move advertising to more shorter term. So performance based models, you know, rather than necessarily land, large brand building. I think, yeah, for a lot of companies at the moment, as I say, they're very much in wait and see mode to what happens. And it doesn't really sound like from what we're hearing at the results. And also as well, for many companies, particularly US companies, they would have delivered their results by now. They're going round speaking at the investment banking conferences. So we are starting to get a bit more color on some of the commentary that's coming out there. It doesn't really feel as though when it comes to the war per se that many companies are saying, this is gonna be a disaster and therefore, we've got a a polarizing stand. I think companies will be wary of saying that in public anyway. I think at the moment, we're really gonna, you know, we're gonna see companies sort of waiting the scene. Although what you may get is that you may get a change in some of the tactics to sort of advertise them so that they do they do spend on sort of in the short term. I think the other thing also as well to bear in mind with this is, again, it it's, you know, it's a plus so far from The US, this down point. And it's, you know, it is it's quite a bit of the topic, and and hopefully it stays the same. There hasn't really been certainly for The US, you know, for The US, there hasn't really been a large sort of amount of loss of life in terms of US service personnel. So the Right. Okay. We're probably looking, I think, as Saint Stan, we're probably looking at 14 kiln at the moment, which is terrible in terms of those casualties. But, obviously, in terms of how wars go is a very low number. And so, you know, I think, actually, one of the things that quite frankly we do wanna look out for is is if cash between remains rates remain very low, I think advertisers sort of well, they won't feel under the pressure to pull advertising. It's obviously very difficult to advertise in an environment where there was a major military conflict going on overseas, and there's also as well a lot of of casualties happening. Consumers yeah. The the message in jar with consumers, we haven't got that situation at the moment with with what's going on. So overall, I think what we're sort of what we're likely to see is the war will concentrate to the overall macro uncertainty that you've got going on in the world. I think specifically when it comes to the war itself, it's probably too early to say that there are consequences coming through for for advertising. I would say that firms do have to be conscious of not letting short term issues derail them from their longer term plans. I think what's perhaps more interesting with what's going on in the macro side of things is that there are other things that could have a more direct impact on the on the advertising market. And those would be signs that in terms of US consumers that they pretty much are they they pretty much now have reached the limit of what they're willing to accept in terms of price increases at least for large cohort of The US population. And then also as well the news that we've got coming out of China where the Chinese government has come out with their GDP projections for 2026 talking about four and a half percent growth, which is the lowest forecast for something like thirty five years. And that potentially does have major ramifications for corporations both in terms of their advertising spend generally, but what it also means as well for Chinese companies advertising in the West.

Speaker 0 · 13:21

We we often see global media spend figures excluding China because it's an anomaly in the marketplace. But that that GDP figure seemed to sort of quietly slip into the sort of financial world, and it's almost been overshadowed by the by the, by the war. But do you think that is something we've missed in the marketplace and we should be paying a little bit more attention to? That might have a major impact because as you as you rightly say, there's a lot of Chinese brands that are spending an awful lot of money in Western markets as they're growing in electric cars and and other areas. Could this have a major impact, do you think, on the global media, and advertising market?

Speaker 1 · 14:05

Yeah. And I think, you know, again, the two things that I put too, we so that we can talk about this in a minute in terms of The US and TUM of what's happening. But if you first deal with with China and what's happening there, Absolutely. And I think, really, what you've got is that you've got you've got several factors to consider. First of all, bear in mind that for many, US based global advertisers, China is a very important market for them. Now you have seen over the yeah. Particularly in in categories like luxury goods, for example. Now over the past few years, you have seen a quiet pivot, away from reliance on China to drive growth to focusing more back on North American and Western European markets. But again, yeah, these are things that, yeah, they take time in order to do. And, you know, particularly as the favor sectors like luxury goods, but it would be across the board. I mean, for companies like P and G, the the the CPG companies and so forth. How China does is gonna be critical to the overall profitability. And so a weakening Chinese consumer and this is not something which is new, bear in mind. I mean, this has been going on for several years. What that does is drag down the general growth and the general profits of many companies. Now the issue in China that you've got is that it is a sector where a lot of wealth, household wealth, is tied up in the properties, segment. So Mhmm. You're looking at probably over 60% of Chinese wealth. So the household wealth is tied up in property. And to take a yeah. An example in terms of The US, the figure would probably be under 40 Even in a high property ownership market like The UK, which, yeah, it is moderate in terms of stock ownership, it will probably be just over 50%. The Chinese property market over the past several years has been, yeah, absolutely hammered because a number of the property companies are you know, they've gone bankrupt. There's also as well just an oversupply of, of housing. And so it feels as though when it comes to the Chinese consumer, even though the government has been trying to boost consumption over the past couple of years, that hasn't really worked. And you've also got a cultural issue here as well. Chinese households tend to like to save rather than necessarily spend. So you've got for Western advertisers, you've got the issue that quite frankly, China, you know, being an important market, isn't going as much as the as they hoped. And that, you know, the growth in China obviously has a ripple effect in other markets nearby as well. The other thing we'd also say as well though is that because Chinese sort of a, because the domestic market isn't that great, what tends to happen as well is that Chinese companies have been exporting. And if you look in terms of exports, first two months of 2026, Chinese exports have been up by 22% year on year. You know, if you compare when that was in 2025, that was 5.5% growth. So, you know, what you've got here is that you've got is is a classic for the tragedy. Companies that have a weakening domestic market, you know, what they do, they actually try and export overseas. And this is why we're seeing so many Chinese companies, electric goods companies, you know, but also as well other sectors looking to move into Western markets. Now, yeah, on the one hand, those companies will need to advertise, and you can see that on the likes of the figures of Meta and sort of Google search as well, and also as well Amazon in terms of their advertising. You know, there is a substantial chunk of their advertising base that comes from Chinese companies. And Mhmm. You know, you that's been part of the reason why the advertising growth of these companies has actually been so strong. So you've got that element which is it certainly is helping advertising growth. I think that but it tends to be few towards the online space. And And, again, this is why I think we've got the part of the reason why we've got the online companies. Performance so strongly in their advertising revenues, sort of when it comes to their their q '4 numbers. It doesn't necessarily help other sectors. You know, these companies are not necessarily just simply because of that background, for example. You know, the Chinese ad market tends to see more online, not particularly heavy spenders of traditional media. But then it was as well, the other implication of this, of course, is that Chinese exports were, you know, booming. At some point, the risk is that provokes reaction from particularly the OrCam markets who who say our own industries have been threatened. And so from a medium term perspective, you know, the risk depends that you get more trade conflicts coming through. That's obviously not gonna be good for for GDP growth, not gonna be good for companies, and that again could feed into depressed advertising spending. But but I certainly agree in terms of what's been happening in China and those sort of GDP growth numbers there. It it's really been a story that's been missed by the market simply because, as you said, so many other things that have been going on. But while everyone's focused on Iran, you know, and in the short term, I think that's obviously more important sort of issue. I think for the medium term, it's really this whole thing with China that that's gonna be more critical.

Speaker 0 · 19:24

You know, to be honest, I think, ever since the start of this administration, it's been it's been chaotic, and there's been uncertainty around. Started obviously with the tariffs. Now we've had a a variety of war or international disruptions. And, I think budgets are fluid, and they'll be fluid probably forever now. Just assume that there's gonna be some sort of craziness around the corner. And I think I think brands are probably set up for this now. They're set up for all these possible outcomes, and they just they just don't plan like they used to with the longer term strategy. And they're they're looking at ways of making their budgets, as, like I said, fluid as possible so they can shift money around, either not spend or spend in other areas. And I think this just adds to it, doesn't it? It's you've just gone through it. It's a crazy amount of uncertainty. There's so many things happening. It's it's actually hard for us to figure out what to talk about, isn't it, in a given week? Yeah. I mean, it it's quite funny. I mean, bear in mind with advertising. Probably the the single biggest factor we've never had I mean, you know, the single biggest driver

Speaker 1 · 20:28

and dependency of advertising spend is corporate profitability. Yeah. We could talk about GDP growth. We could talk about consumer sentiment. But at the end of the day, it is advertisers who, you know, corporations who spend on advertising. And so it is their profits, how they're doing in profits that drive advertising spend. Yeah. It's a topic that sort of we did this before. I've talked a lot about in terms of speaking language with the CFO and marketing as intangible CapEx. At the end of the day, yeah, it's how those companies are are doing, sort of in how they think about profitability that will drive things. Because they're feeling profits come under pressure. The temptation will be to cut back on Martin's spend because it's, you know, it's the easiest lever to pull for a company if they need to maintain

Speaker 0 · 21:17

their owners. So I think for many companies But it becomes a cycle. Right? It becomes a cycle. When you start doing that, then you enter into a period of low growth, with no way out. And if you follow Michael Farmer and doctor Augustine Fu, they have just Michael Farmer's been going on about this for a very long time. I feel as though not not many people or enough people pay attention. He tracks the top 60 advertisers in The US. They typically are big global companies. It's figured out over the last fifteen years, the top 30 haven't grown. They've grown less than inflation in fifteen years. Why is that? But they've been either cutting back on spend or spending in areas that provide them with little to no growth, which is in digital environments. And doctor Augustine Fu has actually shown this. He's actually done it's kind of a bit of a mishmash, but he's he's shown the brands that have invested into sort of mass reach versus those who have focused a lot on narrow digital environments. There there's some fluctuations there in the data in the sense that if you're in a category that's growing, you're doing okay anyway regardless of spend. But there's a there's a clear correlation that for those companies who have invested in mass reach targeting light buyers have actually bucked the trend and grown. And what's really interesting actually, these top 60 advertisers, top three or four are who have who have grown spectacularly in this sort of performance driven world. Go on. It's

Speaker 1 · 22:48

Google.

Speaker 0 · 22:49

Yeah. Meta. Amazon. You know, I'm I'm not saying their growth is at the expense of all these companies, but it doesn't look good. So we're in a we're in a for a lot of these companies, we're we're talking big companies as well. We're talking P and G, Nestle, Unilever. You know, these these companies are massive, and they haven't grown out of these ruts. So what do they do? Like you said, they limit spend, and they can carry on. So it'll be interesting to see how they come out of that and whether they change their approach. Well, one thing we would say here look. I think

Speaker 1 · 23:21

I think initially something I've raised before. If you go back to the inflation price of 2022, 2023, and I think, you you know, in terms of of those two topics of research, I'd like to go into a bit more. I'd like to look myself into a bit more detail about what they've sort of what they forecast, what they focused on, and so forth. But it it but it sounds, you know, it sounds entirely credible. But, again, if you go back to 2022, 2023 when inflation really peaked, many companies managed to push up their price increases faster than, you know, a lot more than than than they expected to. A lot of them were saying when we put through these sorts of price increases, we're gonna see a a big hit in terms of volume. That didn't happen. And so they're able to put through, you know, very significant price increases to consumers, which had a very noticeable impact in terms of of corporate margins and also corporate profitability as well. And when you listen to CEOs, CFOs in the call, what they pointed out to was the overwhelming factor that they said helped support those price increases was the strength of their brands. Now Mhmm. The analogy I always use, and it's quite sort of fitting given the given what we're talking about this week, is that brand's value spending is really like defense spending. It's one of those things that you don't realize how important it is until it's called into action. And, you know, just as we've seen in in many countries, they took a short sort of short sighted sort of view of saying, we can afford to cut our defense spending because, you know, we don't need it. I think a lot of companies also as well took that same sort of short sighted view when it came to actually the the the sort of brand build as well And thinking what they really need to focus on was the new was just performance, performance spending. And I think, you know, those companies, as you say, those companies that that did that, this is now really come back to bite them. Because the problem is if you look at a more macro level, what we're in now is that we're in an environment where the days of zero to 1% inflation that we thought about before, those days have gone. Yeah. We're now constantly in higher inflationary environment. The cost for many companies in terms of of sort of the the input costs that are coming through are likely permanently elevated. And for companies, quite frankly, you know, they have a choice to pass this onto the consumer, or do we actually absorb it ourselves and take the hit in terms of margin? Now the problem sort of it in terms of if you try to drive yourself by revenue growth is, I go back to the point before. You know, China's flowing down, so that was one route that many companies look to to boost corporate profitability. That doesn't look as though it's gonna be a reliable driver as it was in the future. You know? So the other thing is you focus on on consumers, then you try you can try and take, you know, share to drive up your volume. But realistically, what you have to rely on is price. Over the past several years, you know, that worked. You know, consumers 2022, 2023, to some degree, 2024 and 2025, they were willing to accept those price increases coming through, and that helped maintain corporate profitability. The problem is now is that we're seeing signs that the consumer has said enough is enough. And you're seeing this funny enough, you're seeing some of this in in the political actions that being taken. For example, yeah, if you look at what the administration has been has been doing, yeah, it's been talking about, well, never mind talking. It's directly intervened in the pharmaceuticals market by launching the website, sort of proclaiming that people can buy cheaper, drugs. Also as well making comments to, you know, veiled threats to companies saying don't raise your prices sort of too much. But you're seeing it particularly in the actions of consumers, particularly from low to mid link amounts, I was saying we're not paying for these goods anymore. And what was interesting sort of, you know, going back a few weeks, you know, Pepsi, for example, cut the price of some of their goods by up to 15% because they've said, you know what? Consumers are no longer willing to pay the prices that we were charging, so we've gotta roll things back. McDonald's has had this issue for a number of months as well. And you can see in the results of the CPG companies, Procter and Gamble's numbers weren't particularly great. General Mills sort of issued sort of a profit warning as well. You can see that there are signs that, you know, The US consumer and also small consumers, you know, elsewhere, you know, are starting to say with these price price increases, enough is enough. And that creates a dilemma for many companies because if volume's not going up because the emerging markets, likes of China, are not the driver that it they were. And if they can't take significant share from anyone else And now that the lever they had in terms of price increases isn't working as effectively as it was, what do they do to actually boost revenue growth and boost earnings? And this is gonna be a question for them because, you know, the markets are if you look at where market expectations are for earnings growth over the next two years, you know, on average, there'll be high single digit, low double digit earnings growth. Now a lot of that will be driven by the online companies, as you said, the Meta, the Googles, and so forth. So but a lot still needs to come from traditional companies. And so for many of these companies now, what they're facing is a situation where they're like, the consumers said, as I said, enough is enough. In that sort of environment, my view is that what you need to do is you need to invest in brand. It obviously won't cure all your problems. But again, to go back to 2022, 2023, if consumers feel as though a brand is if they feel affinity to a brand, if they feel as though the product is worth paying for, you can at least persuade some consumers to pay more for your goods. But the worst thing I think companies can do in this environment is actually say, we're gonna ship more sand to shorter term performance based marketing. Because where the consumer sits at the moment, that that may be a tactic that looks good in the short term, but I think, you know, it's really gonna come back to buy companies sort of on a medium term stat. Well, not even a medium term. I think, you know, on a twelve to twenty four month view.

Speaker 0 · 29:44

This discussion drives me crazy because there's so much hard evidence and actual figures that you can put out there. There's examples like Adidas and Nike. Like, look what happened to Nike when they Yeah. When they shifted their strategy. It was a double edged type strategy. They went a digital strategy as well, then they then they moved into more of a performance world. Adidas did the same thing. The amount of money they have lost, not just in share value, but in income, is colossal. And there's another there's another price point that we can actually put on those businesses is the cost to get that brand up to where it was where it was before. So you you liken it to like an airplane. The cost of it take all the amount of fuel it takes to take off. And then once it sits at altitude is where it's most efficient. It it take costs a lot of money and takes a lot of time to get it back to where it was, And I think you can put money on that. And now with price elasticity that you've seen in these high inflationary times, you can put a profitable figure on what is what what it is to have a very strong brand. Just the sheer number of examples out there should be enough for these companies to realize that moving your money into performance and too much into it. You know, I'm still I'm working with some brands that performance to brand is, like, eighty twenty. And we're talking, like, Alcos, cars, and others. And you're like, are you crazy? Like, that ratio is completely out of whack, and and it and it just doesn't work. I've got an example from Kia in in Australia that I heard about. They they have got they are the number two car brand in, in Australia in terms of performance. What that has has allowed them to do is to launch cars at different price points as well, like a more of a luxury car. And and consumers are willing to buy it because it has such strong brand equity in that market. And and that's the difference, your ability to be able to do a lot more things to leverage against your brand if you have a strong brand in whatever various markets. The funny thing is we are in this, and maybe that's why we got such a bias in it that that we're we're looking at going it so blindingly obvious. I sometimes can't understand why for brands, they don't get it. But maybe it's because I'm I'm too in it, and I believe this too much, and it's more of a tunnel vision for me. No. I don't think that's correct. I mean, I mean, I

Speaker 1 · 32:00

I mean, this is fairly well known. I mean, I I sort of do cost on how to speak the language of the CFO for marketers. But quite frankly, the other thing that increasingly, I think, as well is, you know, the CEOs, CFOs need to understand the basics of marketing. Yeah. And I I think this is, again, you know, the one of the most powerful plays by the online companies is they capture the narrative around advertising, and they persuaded you know, the the general sort of consensus has been for the past ten plus years. Oh, it's you know, advertising can almost be treated like a client. But if you send x, you will get y. When you send these sorts of tools, then it will increase optimization and efficiency. And, again, you know, to go back to what we were talking about in terms of Michael Farmer and Augustine too. And I've also made the same sort of comment as well a number of times. If you step back and actually look at the general macroeconomic picture, you step back and look at overall consumer spend, you you step back and look at corporate profitability. There are no signs whatsoever in any of those sets of numbers that actually a greater focus on optimizing advertising has led to greater company revenue growth and greater corporate profitability. In fact, the only thing over the past fifteen years where you can say, yes, advertising has had a direct impact in terms of consumers spend and also as well corporate profitability is what I mentioned before in terms of 2022, 2023. And, you know, with inflation crisis. And again, to reiterate the point that I said before, yeah, it is very clear from the the comments of companies that that sort of strength was driven by the strength of their brands. Mhmm. So this one piece of hard evidence I mean, for me, this is but I'm looking from the outside point of view. My view is all the research talking about the, you know, the impact of advertising and everything that's still not the the the sort of micro level. You you can almost put that to one side, and all you've gotta look back is you've gotta look back to what happened then. And it's you can say, that was a vast and planned experiment in just demonstrating the effectiveness of brand advertisers. Because when it needed to work and it needed to protect corporate profitability and revenue growth, it stepped up to the fore and it did it. And for me, my view is everything else there is superfluous.

Speaker 0 · 34:39

You know what? In this fifteen years, a lot of these companies haven't grown, but do you know what has grown? Is c suite remuneration has exploded. So that, for me, doesn't make a lot of sense, but that has definitely occurred. Now we, we're wrapping this up. Next week, I'm doing well, it's the week after. I'm doing a panel on premium. What is premium as a as an advertising product? Why does it matter? Does it lead to better results? So the sort of things we're talking about. We're gonna we're gonna do that next week, which is which is it's really exciting. We have some slides to share as well, on that particular podcast. Do you wanna wrap up with something? What do you view as as premium? Why do you think it's important? And it'll lead us into next week nicely.

Speaker 1 · 35:24

Yeah. I don't wanna, you know, I don't wanna preempt your your path in terms of what what it says, but my view is that premium still is critical. I think one of the the, let's call it the great, sort of, ideological debates that we've got going on in advertising at the moment, but it's one where where actually where the services in into the open is that you've got two contrasting sort of views on on the consumer. You've got sort of one which is, let's call it of the model of the broadcasters, you know, very much how advertising the advertising industry has worked sort of over the past number of decades. It says that not all content is equal. Not all audiences are equal. That there are differences in the quality of audiences, also as well in the quality of content that is shared. And it essentially, quite frankly, some audiences more valuable than others, and some content is also as well more valuable than others. That's very much a a as a third, is very much the play of the traditional media industry. On the other hand, you have what has been growing sort of it in noise over the past couple of years. The whole idea that actually sort of, there's no differential. All that really matters is that that essentially your audience, whether they're watching AI block or whether they're watching premium content, it's all the same. And that comes to fall in the argument that, you know, your share of advertising your share sorry. Your share of advertising should equal your share of audience then. Doesn't matter what that audience is watching. They could be watching white space. They could be watching music videos. They could be watching this block. It doesn't really matter what they're watching. You know, it's just the fact that they are watching something, and that's the critical factor, and the premium elements can go to one side. And that's very much sort of an agenda that has been pushed by the major tech players, and it also as well plays to the advantage because in adapts to our playbook, quite frankly, you don't need to invest in premium content. You don't need to tailor your content to individual markets. And arguably, what you could say is that you you could replace content with just AI generated slot. As long as it's getting the audiences, it doesn't really matter. So I think, for me, this is really sort of one of the big sort of debates and struggles that we're gonna see over the next couple of years. And which side actually wins with the boardroom in terms of how sort of, the c three sees it is really gonna determine not only where advertising strategy goes, but also as well the type of content that we watch and potentially, and I I could be, you know, I'll use the word interesting. That could be a very interesting scenario, depending on on which side wins. But I think this is this is gonna be critical to the debate over the next couple of years, particularly when it comes to advertising spend.

Speaker 0 · 38:13

Well, we will have that debate next week. I I have some cracking data on it, and, I look forward to doing that. Ian, it's been great. As usual, this is not

Speaker 1 · 38:22

investment advice. It is certainly not investment advice, but it is great. Just enjoy the rest of your holiday.

Speaker 0 · 38:28

Thank you, mate.