How AI Changes Advertising | 3XM Technologies' Ron Randolph-Wall
- [Ryan] Welcome everybody to another episode of the AI For All Podcast. I'm Ryan Chacon. With me is my co-host, Neil Sahota, AI Advisor to the UN and founder of AI for Good. Neil, how's it going? - [Neil] Yeah, I'm doing awesome, Ryan.
I'm looking forward to another amazing episode because of a guest that's well versed in the world of Hollywood and marketing. And so fascinating conversation about AI's role in our content consuming business. - [Ryan] Very excited about this conversation. Our guest today is Ron Randolph-Wall, CEO and founder of 3XM Technologies Incorporated.
They are a company that has a mission to create more effective loyalty programs by creating new platforms, inventing new technologies to accomplish their objectives. Ron, very happy to have you here on the podcast today. - [Ron] Happy to be here.
Hello, everybody. - [Ryan] So Neil set us, teed this one up for us, but I guess I'd love to hear more about your background experience and kind of what brought you to where you are now. - [Ron] I'm English, as you might have gathered from my accent. I've been living in the U.S. for 65 years, and I started out in marketing and advertising.
And in those days, and actually still very much today as well, people usually buy the number of eyeballs that they can gather and put out a message and hope that somebody there will resonate with the message in the sense of they'll engage with the ad, and they will go out and buy the product. Sadly, in, when I first started out in advertising in 1950 something, there was no way to know who actually read your ad because the newspaper owners or the magazine owners would not turn over their subscription lists to the advertiser. And there was no way to know whether actually people read the ad and actually went out and bought the product. And I got a bit tired of that because I felt that what happened was that the advertiser, the biggest advertiser would be the one who would get the most share of attention. Didn't necessarily mean he was most successful. So, I got into what I call the promotion business, whereby what we would do is we would offer people an incentive to purchase the product, and because they claim the incentive, we would then be able to capture their name and address.
And then we could actually have a dialogue with them that actually was parallel to what they were doing in marketing. But of course technology was really, there was almost no technology or there was very little technology at the time. Technology at that time was movable type.
And so I invented a couple of other loyalty programs and instead of actually creating an infrastructure whereby the brand and the. consumer were wedded together, what we did was, and we came up with this as an idea, and it was the world's first co brand credit card. So what we actually did was, we went to the banks and said, we'd like to have a credit card, we'd like to put the name of the corporation on there, and we want you to message the consumer every month with their bills and put in their other promotional literature. But, they came to us and said it's a very nice idea, but you can't do that because it's against Visa rules. And so we went to Visa, and we petitioned them for three years, and finally got them to change the rules, so that we could actually issue a card, and we did that for General Motors, which was the world's first co brand credit card. We went on and did that for the NFL and the NBA, and for about 50 other companies around the world.
What you really need to do is you need to understand who the person is that you're marketing to. And I'm a marketer. So at the end, I'm always trying to figure out what are the tools out there that we could use in order to be able to understand people because once you understand them, you know how to talk to them, you know how to actually exit those people who are not valuable customers to you, and you know how to message them in a way that you know you're getting an incentive.
And so when I met Neil about four or five years ago, and he was talking about AI and how it was being, not even how it was being used, but where it could be used and how somebody could let their imagination run wild. And I said, oh, this is a great idea, and I spoke with him. I was actually in the movie business at the time.
I created a movie ticket that could be put inside a box of cereal or toothpaste and a brand could give that away as an incentive. We went on to distribute 1.8 billion movie tickets in 16 countries around the world. And, but once again, here we are, we are serving the studios and the brand, but they didn't know who was buying the product, and they didn't know who was going to the movies.
And so once again, we were thwarted, but when I spoke to Neil, I could see that we could actually get to be able to not only understand who went to the movies, but what movies they saw, what they thought about the movies, and how we could remarket to them and tell them about new movies coming up, but not in the way that you see Hollywood do this, which is usually the picture of the star and their name, and it usually drives by you at 40 miles an hour on a bus. And there's no way that you could know how many eyeballs saw that ad, and whether they actually bought a movie ticket or not. And so what we've been doing for the last couple of years is blending together not only the psychological and emotional data of the moviegoer, but also connecting it as well with their local box office as well, and the theater, so we can actually see who reads our messages, how deep they go into the message that we've sent them, and actually whether they purchase or not. So, it's the Holy Grail, and I've just been waiting 50 years to get the technology to catch up with my imagination. - [Neil] Ron, you've had a lot of success that you shared with everybody. You're talking about the movie business here.
You're talking about a different way of essentially marketing these movies. Why hasn't this happened yet? Is it, do they feel like nothing's broken here, or they just, it's good enough? What's the deal? - [Ron] That is a great question. And actually let me expand the way in which I talk about what we're doing. First of all, Plato or Socrates said know yourself. And if you are an advertiser, if you don't know your customer, or a marketer, you have no idea what you're doing.
You're just spending the money, and you're hoping that somebody is going to see this and respond to you, but you have no idea whether, in fact, there's a relationship between how much you spent and actually what you earned from that message. This idea that we've been talking about can actually be applied to any industry, as long as you know who the customer is, or you give the customer an incentive to talk to you, so that you get to know them, you could apply this, whether this be in providing psychological advice to people who have gone online and are asking a therapist to tell them how to get out of a bad marriage or how to be in a better relationship. And so we're looking and exploring all of those ways, but let's go back to your question and that is that how is it this has not been done before, even though this technology has been out there for quite a while? The real problem is, and I'm going to be a little bit uncharitable here, and I always quote this statistic, the number of seats that are sold in a movie theater, and I'm sorry, I'm sticking with the movie industry, but it happens to be a very good way to describe what the problem is. The number of people who go to a movie theater relative to the number of seats that are available for sale is about 12%, which means that 88% of the seats in a movie theater go unsold. Now here you have people in Hollywood or people in an advertising agency in New York or on Sunset Strip or wherever, and they come up with these very clever ads of why you should buy their product. But generally speaking, if you have never been in the sales business, and when I call, talk about sales, I mean behind the counter, actually talking to a customer, okay.
You have no idea about what people think and how they go about making decisions. And what we do is we look at people, we see how they move their eyes, whether they move forward, whether they ask you interesting questions. But today, all of that stuff can be digitized and all of that can be put together in a formula, so that you can actually understand these people. But, I doubt whether there's anybody from a studio who's been inside a movie theater on the third week when their movie is playing and there's only four people in the auditorium, okay. So, it's really a, it's a dark stain I think on marketing, about knowing how to engage and get with their customer.
And then of course we have the other side of it, which is the people are scared, okay. They're scared to try something new. I ran a company, we had 40 employees, we were operating in 16 countries around the world, and we actually had a meeting once a week, and it was called the anarchist meeting, and the object was to blow up what we're doing and do it differently. And you think about the way companies operate, and you see that there's nobody there who is either really responsible for the money. If you're in marketing, you're there to spend the money.
You're there to figure out how to spend the money, but you're not necessarily connected to the finance department to see exactly how many movie tickets were sold or how many products moved off the shelf. And so there needs to be a real alignment, that now we have all of these tools available to us, but you still need people who understand the sales process, and they're willing to blow it up to figure out how to get more engaged with customers as well. And that's part of my mission in life.
I'm getting on in years, so I'm not quite sure how many other people I'm going to be able to convince. But what we're doing with this company, 3XM Technologies, is in fact to bring in the idea of knowing who the people are, knowing how to speak to them, rewarding them for the purchase, rewarding them for reading our emails, and rewarding them for actually going out there and becoming more engaged with us. So, it's very exciting. - [Neil] You touched upon something that's a challenge for a lot of businesses, and that's essentially metrics. We've been using a lot of metrics for so long and take it for granted that they may need a refresh or may need new metrics.
Like, I actually see this in healthcare a lot that all the population metrics like BMI, body mass index, are essentially outdated. They're not that accurate. We have better ways now, use like body volume.
Sounds like it's the same thing when it comes to marketing. I remember once you were talking about Top Gun: Maverick, Ron, and over half a billion I think domestic, and you're like do the math, crunch the numbers, you strip out all the people who went to the movies multiple times, that kind of stuff, and the average ticket price, really boiled down to about 20 million people in the US saw the movie out of the possible audience of a hundred million people that probably would have really enjoyed the movie. So, a billion dollars sounds great, Ron.
It's, you only captured 20% of the market. - [Ron] Well, of course, you're not going to always sell everybody everything, right? So, one has to figure out what is your likely potential income. But I was walking to, I was at the Paramount studio lot.
I bumped into a guy, and I said to him what do you do here? He says I'm in advertising. I says, what do you do in advertising? He says, I figure out the budgets. So, I said you've got a new Mission: Impossible movie coming out. How much are you going to spend? Oh, sorry. Top Gun: Maverick. I said, how much are you going to spend? He said I'm going to spend 148 million dollars in marketing.
I said, how do you arrive at that number? He said, we had a movie that came out six years earlier, we spent 148 million dollars, and we were happy with the sales. When I talk to people in companies, it's very rare that they sit down, and they actually do the numbers. And that is how much are you spending? How much is all of your fixed costs? How does the CFO sit down in the marketing department other than say you've got 300 million to spend this year in marketing. They're not asking how many eyeballs, how many people that you encouraged that were new. How do you go out there and find those people? There are all of those sort of questions that generally don't get answered.
And of course, one hopes that actually with technology, not only will you know how to talk to people, but you'll also be able to see attribution as well, which is whether the ad worked, whether people opened it up, whether they read it, whether they responded to it and then also being able to do analytics on who they are, whether they were an existing customer, whether they're a new customer. There are all of those things that are out there and lots of this stuff, even though people have gone to, have got their MBAs, they're not doing that stuff. - [Ryan] A lot of discussions we have on this podcast are around the advancements in AI and the advancements in just data management, data collection that companies are now having access to, and I think a big question we always ask is how companies can make sure that they're getting the best data possible because having that data allows them to utilize these new technologies to better understand their audience, better understand their target customers, their existing customers, and make better decisions to do their jobs well, whether it's in the marketing space or other roles within an organization, but one of the biggest things I'm excited for as a marketer myself is just having tools that can better analyze data in a more, more quickly for us to better understand who our audience is, better understand how campaigns are being run, and how to make tweaks and changes to get things to be more effective more quickly. - [Ron] The big thing since the 1960s has been loyalty, okay. I, as I told you, I've done about 50 odd loyalty programs around the world.
The General Motors credit card, that and the NFL and the NBA are still going after 35 years, okay? Same program that I designed, created, and built. The problem is that most brands subsidize their existing user. So, you go, and you stay, you go and use your credit card. It's very nice that you get 3 percent off. But at the end of the day, that's 3 percent that actually the bank earned, and they're giving you because they want you to keep you using their card. But then of course, Costco does it, and Citibank does it, and Chase does it, and they're all doing the same, and they're rushing themselves to give away their profits until who knows who's going to win the argument in the end.
And also the problem is that it's not necessarily incremental profit. Now, you might say, I go and I collect airline points, and now I'm going to go and take my wife on a vacation. You would have taken your wife on a vacation anyway, and you would have paid for the ticket, and the trouble is that so many advertisers go out there, and they, most of their ads are directed to their existing customer to say thank you for doing business with me.
You made a smart choice in choosing my brand. But then you're giving away profits. I get coupons from my supermarket. They have no idea whether I would have bought the product anyway. I got a nice fat check from Costco for buying at Costco. I'm going to just go out and use it and buy the things that I would have normally bought anyway.
So, the brands really need to start thinking about incrementality, and they also need to be thinking about do you actually understand that there are, there is a world outside your shop and what can you do to impact your customer's life? And AI allows you to think about all of these things and not just think about them, but have the tools to go out there and create something that will allow you, and if you accept the target as being incremental relationships with these people and incremental dollars earned, you're going to succeed - [Ryan] What's required from a company standpoint to be able to utilize the technology and be effective in making these, or I guess, discoveries and understanding of what's working and what's not with not only the loyalty programs, but any of the campaigns that they're working to run. And to your point earlier, where it's people are potentially going to spend the money where you're promoting, like for instance, the Costco example, where you're going to get money back for shopping at Costco, but you're going to shop at Costco anyway. So is there a better way that companies can evaluate and the data to create a program of any kind that is, I guess, more effective and just better across the board. - [Ron] Every company is different, every audience is different, and the relationship that they have with the brand is different. And I think what people really should do is to go out there and find a really good expert and somebody who is not just trying to fill his order book with getting you as a customer and serving up some old, tired meal, but to go out there and have somebody who can explore that and who thinks on a more global basis, rather than, in fact, thinking about how do I go out there and keep my existing customer happy? Clearly that only keeps you, does keep you in business, but it doesn't provide any growth opportunity. - [Neil] So is that really the secret here with AI? That it helps the marketer become a trusted advisor and that with all these tools, you know the customer so much better, almost like a best friend.
But you can actually suggest things to the customer that they ordinarily would not buy or incentivize them and say, like a movie, and say hey, if you catch this movie on Wednesday afternoon, you're gonna get the ticket for half price or something, and you're gonna this movie for X, Y, Z reason. I've watched movies that I probably would not have if it wasn't for my better half. She loves movies.
But I found that some of them I really enjoyed. Ordinarily, I never would have seen them otherwise. So, it seems like there's that kind of lost incremental market you're talking about, Ron. - [Ron] So, yeah, you have these people in society who figure that AI is the bane of all things that are going to be bad in the future.
It's 1984 times two. You have people who read The New York Times and everything else, and I'm talking about the people who are, who've got a good job, they've gone to university, and everything else, and they only know what they've read. And then you have people in companies who are trying to figure out how to make it work. But the storybook for AI has not yet been written. There are so many different aspects of the way to see information, how to act on it, and also the tools themselves are becoming smarter also.
So, it's a wonderful time for people who are starting out in life, and they're trying to figure out where they're going to go and everything else to just dive into it head first. You're going to find out a lot of things. I think there's more stuff to come and to me today, I'm using it almost every day. I'm figuring out how to write something better, how to conceive of an idea that maybe I've got a rough shape, and I need to smooth off the edges.
I'm doing it that way. There are other people who are designing illustrations and there are other people who are making decisions about what proteins to use in cancer drugs. It's unbelievable, right? - [Neil] That's the power of data at the end of the day. Minutia and the variation is so subtle that for us as people, it's hard to pick up on, but it's tailor made for AI analysis.
- [Ryan] Ron, let me, let me ask you as we wrap up here, if people want to learn more about what you all have going on, maybe just connect in any way after this conversation, follow up, what's the best way they can do that? - [Ron] I have a website or an email address. It's ron @ 3xmtechnologies dot com, technologies is plural, dot com. I'd be happy to hear from anybody, and you will get an answer from me.
- [Ryan] This was a very exciting conversation. Your experiences and story of your background is really interesting and exciting, so I'm glad you're able to share that. Neil, anything to add before we wrap up? - [Neil] I think it's been a great conversation, and I think it's actually been inspirational that a lot of people are just struggling on how to use it, and I think Ron, you provide some great insights, and you've shown that no matter how much success and how much mileage you might have, there's still opportunity. - [Ron] Thank you very much indeed for giving me a chance to talk to people and also for your good questions. I always find this exciting. Thank you very much.
2024-03-13 21:20
