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Why are some companies more productive than others? It turns out, online advertising is among the top factors!

The National Bureau of Economic Research, an independent and nonpartisan research organisation, conducted a large-scale experiment on Meta Advertising last year. It involved 200,000 advertisers in the US running 700,000 campaigns.

Companies proficient in social ads tend to achieve a better return on ad spend and generate more revenue.

This leads to increased productivity for the business, which is typically measured as the revenue output divided by the number of hours worked or capital invested.

The experiment showed that:

• Overall, advertising significantly increased revenues.
  On average, each dollar spent on advertising generated $3.31 in revenue.
• Ad spending resulted in a 25% increase in the number of purchases, a 13% increase in the number of unique customers/purchasers, and a 73% increase in conversion events.
• Advertisers with more experience and those who frequently updated their campaigns achieved significantly higher returns.
• Historical ad spending was used as a proxy for experience. Advertisers with above-median historical ad spend generated over $3 for each dollar spent, compared to $1.50 for those below the median.
• Sophisticated advertisers achieved higher returns.
  They're defined as those using advanced data collection tools like Meta's Pixel and Conversions API.
• Experienced AND sophisticated advertisers are more likely to continue advertising, which in turn generates more revenue.
  Unsurprisingly, inexperienced advertisers tend to give up sooner, missing the opportunity to increase revenue over the medium to long term.

The better you are at online advertising, the more revenue you generate. This, in turn, allows for more advertising, which leads to even more revenue. It's a virtuous cycle! 🚀

Personally, I would add that companies can boost this virtuous cycle by investing in in-house resources as opposed to external agencies. I believe that in-house teams are more motivated to understand the context, learn from mistakes and improve their campaigns over time. But I’m happy to hear different opinions on this!

The study finally provides empirical evidence that experience, skills, and continuous learning in digital advertising do yield better returns!

ChatGPT-4o is very cool, but what do we need it for exactly?

Watching the latest OpenAI demos on ChatGPT-4o reminded me of an insightful essay by Benedict Evans.

He compares modern AI to the advent of personal computers in the 80s.

Computers were invented several years before but were not accessible to everyday people. This was not only due to the high cost, but also because it was unclear what everyday use they were designed for.

This changed when Dan Bricklin observed a professor using chalk to create a spreadsheet on a blackboard and realised that a software could accomplish the same task.

He developed VisiCalc, the predecessor of Excel, for the Apple II. When he demonstrated it to accountants, it blew their minds!

Although the Apple II was very expensive, $12k in today’s money, this specific use case was so strong that every accountant bought one. It could effectively save weeks of manual work.

ChatGPT, especially GPT-4o, can do a lot of things, almost anything really. But what can we use it for in practice?

The truth is that, apart from some experiments, we only use Ai for specific tasks. For instance, I used it to proofread the text of this post, create images for my blog, and analyse spreadsheets.

But contrary to what many demos suggest, I don't use AI for everyday tasks, like organising a vacation.

Benedict Evans suggests that we’ll embrace Ai as we embraced personal computers only when specialised apps will be built to solve specific problems. Like VisiCalc did for accountants.

Even today, laptops are nothing without the specialised apps that we run on them.

I would argue that OpenAi and others are already going in that direction, similar to Apple with proprietary apps like Safari for browsing or Garage Band for music. When you purchase a Mac, it already has native apps that can perform many of the tasks you would typically use a personal computer for.

Custom GPTs are the equivalent to native apps on a Mac. Indeed, I only started using ChatGPT regularly after custom GPTs were introduced.

Search is another strong everyday use case.

GPT-4o seems to be very good at it, but others like Perplexity are also gaining momentum.

The question is…

will OpenAI, or an equivalent, dominate the Ai app market, or will we see a rise of many small and large developers delivering their own solutions to specific problems, as happened with personal computers?

OpenAI is building a Preferred Publisher Program. It is a big deal!

Why?

It's now evident that OpenAi wants ChatGPT to become as integral to our daily lives as Google or Instagram.

But to achieve this, historical training data is not enough. It requires real-time data to ensure that responses are 100% accurate and useful in daily use contexts.

Where to get real time information?

OpenAI is initiating negotiations with top publishers and media companies to incorporate their content into ChatGPT. For instance, it recently secured a deal with the Financial Times.

In return for content, OpenAI will pay them either a fixed amount or a variable one depending on usage. More interestingly, it will also offer premium placements within the ChatGPT environment.

Placements will take the form of links or citations, with their prominence and look varying based on the agreement, I guess.

This is as if Google paid publishers to display their results!

While publishers did attempt to profit from Google, the model proved unsuccessful. Instead, the SEO industry was born!

I believe that also OpenAI will eventually stop paying for content. Instead, it will develop a system similar to SEO where the best publishers will gain more visibility on ChatGPT. Of course, this will work only when and if ChatGPT will finally be part of our daily lives like Google is.

This is exactly what OpenAi is aiming for.

It is especially clear if we look at the latest developments of GPT-4o, which acts as an everyday personal assistant. They even released a desktop app for Mac (not available for older models with Intel chips, like mine 😕 )

Ads are going to be the next step.

After securing partnerships with publishers, it will target advertisers. People will soon pay to be on ChatGPT!

OpenAI is growing up, from a tech darling to a real big tech!

After many rumours, now it’s official: Google paid Apple $20 billion in 2022 to be the default search engine on Safari.

It represented 12% of Google’s search ads revenue! 😱

Instead of an anti-competitive agreement, it's a revenue-sharing deal.

Apple has used Google as its default search engine since 2002, initially for free. They simply wanted the best quality for their users.

However, with the rising popularity of Safari, Google could significantly boost its ad business. Therefore, it was only fair that Google shared some of its revenue with Apple, similar to how it does with YouTubers, or how Spotify does with artists.

Microsoft attempted multiple times to lure Apple away from its partnership with Google by offering up to 90% of its search ad revenue. It wasn’t enough!

As even Satya Nadella stated, being a browser's default search engine is "game changing". This is due to the URL bar that also functions as a search bar.

In practice, the default search engine has become the gateway to the internet as a whole. We typically don't bother to type out full URLs, but instead just input the website name and click on the first result.

I speculate that most people don't even realise they're using Google when they input queries in the search bar, confusing Google with the internet itself.

Not a bad position to be in! and totally worth 12% of revenue.

Much discussion surrounds the idea that new AI-based search engines are threatening Google's market share. However, a fundamental difference exists in how people use them, suggesting there is room for both.

While Google transitioned from a traditional search engine to the "gateway of the internet," AI search is a specialised tool for research and answering questions. These two can easily coexist as they serve different purposes.

Until Ai search transitions to a traditional search engine 🤣.

Perplexity plans to sell ads on its Ai search platform. This is a big deal!

In a conversation with AdWeek, Chief Business Officer Dmitry Shevelenko stated that the company plans to introduce sponsored suggested questions by the end of this year.

Rather than appearing in the initial answer, ads will likely surface when users seek additional information. It reminds me of Quora Ads.

Perplexity could potentially compete with Google and other traditional search engines for a portion of the highly lucrative search ads market.

Bing Copilot is already showing ads while Google Search Generative Experience is still testing them. See screenshots.

But the ads I spotted on Bing Copilot looked quite lame, resembling contextual display ads more than search ads.

Conversely, the sponsored suggested questions on Perplexity might give advertisers more control over the specific phrases or keywords associated with their ads.

For now, neither Microsoft nor Google offer advertisers specific tools to manage and monitor Gen-Ai ads. Instead, they include them in their popular automated solutions such as Performance Max and Multimedia Ads.

So I'm curious to see what kind of ad platform Perplexity will develop!

I’ve used Perplexity as my main search engine for several months now and I couldn’t be happier. But I don’t think it will replace Google any time soon.
In fact, it serves a different purpose.

According to Ahrefs, the top five Google searches in the U.S. consist of single-word website names, such as "youtube", "amazon", and "facebook". It's clear that users are just looking to visit these sites, not to find information about the companies behind them. This behaviour will hardly be altered by Gen Ai.

Instead, Ai search engines such as Perplexity and You.com target users who are conducting in-depth research on specific topics or need quick answers to particular questions.

For instance, if you search for "how to take a screenshot on a Mac" on Google, you'll have to sift through numerous SEO-filled pages before finding a clear answer. However, if you do the same on Perplexity, you'll get the solution immediately.

To me, this latter scenario seems more favourable for ads, where advertisers can clearly address users' questions and needs.

TikTok and Universal Music Group have finally found an agreement over music royalties and UMG songs are back on the social platform.

The Background

Back in January, TikTok muted every song affiliated with Universal’s artists and authors, after falling out over royalty payments.

The Effects

It seems TikTok’s popularity and usage was not very affected by the move. However, it was bad publicity.

Especially after the news of the social app possibly being banned in the US, last thing TikTok needed was more bad publicity.

On the other side, UMG’s artists were very much impacted by their songs being muted on TikTok.

In fact, the Chinese app is currently the most popular music discovery and promotion engine on the net.

Because of this, there were exceptions.

Taylor Swift was still allowed to play on TikTok, to promote her latest album.

Not very nice to all other UMG’s artists ☹️

The Reality

Many artists started to ask for exceptions, like the one Swift got.

Quickly, it was clear the whole situation was a lose lose.

The two companies went back into negotiations and UMG songs were promptly brought back to TikTok.

Bottom Line

If you’re Taylor Swift nothing can stop you.

The music industry relies on social media more than ever, and on TikTok’s viral algorithm in particular.

Not great news for music enthusiasts for sure.

Happy 1st of May my European fellows!

Speaking of labour, much has been said recently about the difference in work culture between Europe and the US.

Nicolai Tangen, boss of Norway’s titanic oil fund, recently told the Financial Times that Americans just work harder.

It is a factual statement. The average American works 1,811 hours per year, compared to approximately 1,500 hours across Northern Europe.

The Americans also make more money. Salaries are higher and workers are more productive.

As an economy develops and productivity increases, people can either maintain the same work hours and become wealthier, or work fewer hours for the same income.

The US clearly chose the former option, while Europe chose the latter.

But what is actually better?

Various indicators such as life expectancy, sustainability, health, and happiness suggest that Europe, particularly Northern Europe, is an ideal model to emulate.

I would add that it’s easy to choose to work shorter hours when you sit on a $1.6tn public fund, like it’s the case of Norway. The other Nordics share a similar situation with very small population and few huge profitable companies, like Novo Nordisk in Denmark.

Switzerland is also in a similar position, with many Swiss (maybe the majority?) choosing to work part-time, because why not.

But for all other Europeans the story is different.

You might be enticed by the Italian "Dolce Vita," lured by the promise of a great life with relatively small money. Spoiler alert, “La Dolce Vita” is not cheap and you’ll end up in broken dreams and misery.

The reality is, in today’s economy, the developed world must continue to work hard, not for improving its quality of life, but simply to maintain it.

However, the American model is also not the best example.

On average, Americans live to 77.5, while Spaniards to 83, despite being poorer. According to the Financial Times, only 30% of Americans are truly engaged with their work and willing to put in extra hours. 20% are just miserable, and the remaining 50% merely show up. Therefore, only a fraction of Americans work harder and earn more than the average European. In contrast, we all tend to work and earn roughly the same.

Which model would you prefer?

Familiar with FOMO? Meet FOPO, the Fear of People's Opinion.

A PGA professional, a local teaching pro, and an amateur compete on a golf course in front of an audience and cameras.

As expected, the PGA professional performs well.

The amateur golfer thrives on the excitement for the unusual challenge.

However, the teaching pro unexpectedly underperforms due to anxiety.

Why?

He was used to being “the expert”. Now his identity is threatened by the obvious superior skills of the PGA pro and the amateur's unexpectedly good performance.

He fears judgment from the audience and the other players, causing him to enter survival mode, limiting his potential.

Survival mode is when we focus our energy on surviving instead of thriving.

In the workplace, we enter survival mode when we just do what we’re told without contributing with new ideas or speaking up proactively.

Junior employees, like the amateur, have little to lose and are excited to share their opinion. Executives, like the PGA pro, already know how to handle pressure and office politics.

On the other hand, senior employees starting to climb the ladder can struggle, just like the teaching pro.

Good managers combat FOPO, by creating a shield around their senior employees and by fostering a purpose-driven culture.

Purpose-based teams, unlike performance-based ones, go beyond mere metrics and strict tasks.

Employees driven by a clear purpose aren't afraid to speak up or try new ideas because they aren't intimidated by the occasional performance dips.

They overcome survival mode and start thriving.

They are more engaged and proactive, ultimately delivering more value.

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Read more: Free Your People from the Need for Social Approval

TikTok might be banned in the US soon, why?‍‍

The background

The US is concerned that the Chinese government might access American users' data for intelligence purposes.

TikTok had already worked on a billion-dollar project to isolate American data, but it wasn’t enough to satisfy US regulators.

What’s happening

The US House of Representatives recently passed a bill to ban the app unless it's sold to a non-Chinese entity.

However, before it becomes law, it must be approved by the Senate and President Joe Biden. If that happens, TikTok will have 6 months to divest.

My take

The primary concern of the US regarding TikTok isn't about data privacy. In fact, there's no evidence that the Chinese government has used the app's data for intelligence or military purposes.

Plus, the vast majority of smartphones are either iPhones or run Android, both developed by American companies. It shouldn’t be too difficult to prevent TikTok from gathering certain types of data.

The main concern is the algorithm.

TikTok can influence what people see on its platform.

With its vast reach in America (170m users), it can steer public opinion on crucial geopolitical issues, such as the conflict in Palestine.

Worse still, it can foster extremism.

It's a proven fact that social media and their echo chambers contribute to the development of more extreme ideas.

Extremism is the enemy of democracy, the foundation of western society. Which in turn is the “enemy” of totalitarian societies like China’s.

Not by chance Trump has recently come out against the ban, despite his earlier opposition to the app while he was president.

What's your take?

The Gstaad Guy is a masterpiece of influencer marketing and branding.

Here’s why:

With "only" around 800k followers on Instagram and TikTok, the Gstaad Guy has developed two distinct online personas.

First, there's Constance, a 30-something bastion of old money, living between high-society London and the luxurious ski-resort town of Gstaad in Switzerland. To quote him, “if you know how to pronounce Gstaad, you know”.

Then, there's Constance's American cousin, Colton, a Gen Z new-money obsessed with street fashion and matcha, splitting his time between LA and New York.

Both are parodies of real characters you might encounter in the private members clubs of Marylebone or at NYC fashion shows.

Although the Gstaad Guy has kept his true identity a secret, Constance and Colton have become influencers in their own right.

Constance has launched his own rosé wine brand, Palais Constance, which is served in upscale clubs and restaurants. He is officially dressed by Loro Piana and Audemars Piguet and has sunglasses collaborations with the Swedish brand CHIMI. Meanwhile, Colton has established himself as a Gen Z street-fashion icon.

People even text Constance for tips on where to eat in London, as if he were a real person.

The Gstaad Guy achieved the impossible task of representing, and likely becoming, the very individuals he mocks. Forbes reports that the rich love him and make up a significant portion of his relatively small following.

Thanks to his double life, the Gstaad Guy can appeal to different audiences and expand the range of brands for potential collaborations.

While Constance and Colton look antithetical, the brilliance lies in the fact that they actually represent two sides of the same coin. The contrast between old money and new, tradition and hype, encapsulates the essence of modern luxury.

The Gstaad Guy has understood this perfectly!