- 5 months ago
What happens to advertising and marketing in an age where AI makes purchase decisions for consumers? Will AI platforms like ChatGPT and Perplexity replace Google and Meta as the biggest ad surfaces?
In this thought-provoking podcast, Sir Martin Sorrell, Executive Chairman at S4 Capital and one of the world’s most respected voices in advertising, shares his perspective on the future of creativity, data, and AI in marketing with Deepsekhar Choudhury, Associate Editor, Outlook Business.
Key discussion points include:
- The shift from creativity to data and what takes centre stage in the AI era.
- If humans outsource purchase decisions to AI, what does that mean for brands and advertisers?
- The impact of AI-driven search platforms on Google, Meta, and the digital ad duopoly.
- Can AI-generated ads really kill Google and Meta ad space?
On India:
- Has India exceeded or missed expectations over the decades?
- Why India struggles to create global consumer brands — and can that change?
- India’s image on the world stage: Big Tech CEOs, rapid growth, and geopolitics.
Don’t miss this deep dive into the intersection of AI, advertising, and India’s evolving role in the global economy.
In this thought-provoking podcast, Sir Martin Sorrell, Executive Chairman at S4 Capital and one of the world’s most respected voices in advertising, shares his perspective on the future of creativity, data, and AI in marketing with Deepsekhar Choudhury, Associate Editor, Outlook Business.
Key discussion points include:
- The shift from creativity to data and what takes centre stage in the AI era.
- If humans outsource purchase decisions to AI, what does that mean for brands and advertisers?
- The impact of AI-driven search platforms on Google, Meta, and the digital ad duopoly.
- Can AI-generated ads really kill Google and Meta ad space?
On India:
- Has India exceeded or missed expectations over the decades?
- Why India struggles to create global consumer brands — and can that change?
- India’s image on the world stage: Big Tech CEOs, rapid growth, and geopolitics.
Don’t miss this deep dive into the intersection of AI, advertising, and India’s evolving role in the global economy.
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TechTranscript
00:00AI threatens to upend the traditional advertising model.
00:04We are running an agentic test that is made purely with AI.
00:09We're running that that will cost about $500,000 and take two or three weeks.
00:14And at the same time, the client is going to run a commercial in a traditional way,
00:18taking four months in exotic locations, cost about $2.5 million.
00:23Google is $250 billion out of the trillion of the digital market.
00:26We're seeing the Mag7 spending about a half a trillion dollars a year on CapEx.
00:33What it will do is intensify the position of the major tech company, in my view.
00:38Never count Musk out.
00:39On Chinese social media, the meme is Trump is making China great again.
00:45TikTok may be coming here in the near future.
00:47Is there something you know that...
00:48No, it's not something I know. It's something I would guess.
00:50We have three major political big issues.
00:52President Trump said we sold all of these things.
00:55Layer on top of that tariffs.
00:57The world is going to grow more slowly.
00:59Inflation is more stubborn.
01:00Stats yesterday in the UK on 3.8% inflation.
01:04America is still over three.
01:06In that slow growth world, you have to be more efficient.
01:09Modi's leadership helping in the air.
01:11He understands branding.
01:12He understands how to market.
01:14I would argue that the UK lacks it.
01:16I'm not happy about India buying Russian oil.
01:18India is growing so rapidly.
01:19I think the biggest issue, the infrastructure, that is putting huge strain on the economy.
01:24A lot of what happens in Asia and happens around the world is determined here.
01:29Developing relationships with America is not an easy thing to do.
01:33Hello and welcome to the Escape Velocity podcast by Outlook Business, where we talk to the
01:50movers, shakers, thinkers and doers of the tech and startup ecosystem.
01:55Today we have with us Sir Martin Sorrell, a doer of the marketing and advertising industry.
02:01I know a doer, it's the first time anybody's called me a doer, but we have to figure out
02:05some way of dealing with your glasses so they don't fold up.
02:10Sir, so I think the first question would be, what brings you to India again and again?
02:16You just told me that you came here in the 80s first.
02:21What brings you to India again and again?
02:22Well, first, I'm interested always in what's happening in India.
02:27India as the, what, fifth largest economy in the world?
02:30Yes.
02:31Probably soon to be the fourth largest and most populous country in the world.
02:39Needs more infrastructure as we were talking about.
02:44I mean, that growth, that six or seven percent growth in GDP puts greater and greater strains
02:50on infrastructure in all sorts of ways.
02:53But, you know, India is a, one of the most important economies in the world.
02:57It's led by probably one of the most powerful and influential leaders in the world.
03:05Modi has really established brand India in a totally different way over the last few years
03:14and certainly put India very much on the map.
03:20So a lot of what happens in Asia and happens around the world is determined here.
03:26And Indian entrepreneurs are a pretty fearsome bunch, not only domestically, but increasingly
03:34internationally, you can see in the UK, Sunil Mittal, I mean, Mukesh Ambani, obviously, Mahindra.
03:42I mean, all these entrepreneurs, Adani, these entrepreneurs have not only impacted India,
03:49but increasingly impacting the rest of the world.
03:52So India is an important economy for S4 and for monks, important too.
03:58Obviously, in my previous existences at WPP and Sarches in advertising, India was an important
04:05economy as well.
04:07In a way, that was sort of happenstance because when you and I were prepping for this, you
04:13know, we were talking about when I first came here and Sarches had businesses here, particularly
04:18when we bought businesses outside the UK.
04:20But when we built WPP, JWT had massive business here on the back of Unilever, as did Ogilvy.
04:30And in 87, we bought JWT.
04:33In 89, Ogilvy, the two here were the dominant, still to some extent, are the dominant agencies.
04:41You've got to remember that the media business was part of JWT and part of Ogilvy and part
04:47of Gray and part of Wayanar, part of Wunderman.
04:51And that was split off and, of course, made into Group M. And Group M is still the biggest
04:56media force here in India.
04:58So India is really important economy, important politically, important, obviously, from a population
05:06point of view.
05:08And therefore, you know, a regular visit here is important.
05:11It's an interesting question you raise because not many leaders of the major global agencies
05:19come here as often as probably they should, given the weight and the significance of the
05:27number of people they employ.
05:29So we'd like to understand a bit about your perspective on what's happening with AI and advertising
05:38and marketing industry at large.
05:40Well, AI threatens to upend the traditional advertising model.
05:47You know, I just came from Korea, from Seoul, and we made a number of presentations, as we
05:54will hear in Delhi and in Mumbai and in Bangalore, around AI and its impact.
06:01But if you look at it in a very simple form, it's affecting our business in five ways, which
06:07I can run through as quickly as I possibly can.
06:10But the first and probably most impactful is in visualization and copywriting.
06:15So if you simply put, to produce a piece of advertising for television or for the web, historically, you
06:25would have a very expensive shoot in some far-off land.
06:29You know, you're doing a car commercial, a car launch commercial.
06:32It might cost you $2.5 million and might take three or four months to produce and do the
06:39post-production.
06:41With AI, you can literally do it in weeks, and it can cost a fraction of that.
06:47In one particular example in a minute, we are running a test, an agentic test, so a commercial
06:55that is made purely with AI, agentically.
07:01We're running that.
07:02That will cost about $500,000 and take two or three weeks.
07:07And at the same time, the client is going to run a commercial in a traditional way, taking
07:13four months in an exotic location.
07:16In this case, in Eastern Europe, it will cost about $2.5 million.
07:19So we were talking to clients recently whose film production budgets are as much as $100,
07:28$150, $200 million a year globally, and that can literally be reduced to a fraction of that
07:34cost.
07:35And in a world which is probably going to grow slower, where inflation is more stubborn than
07:42people give it credit for, and where interest rates are resultantly higher, finding growth
07:48and being efficient is critically important.
07:52So AI answers that need in visualization and copywriting.
07:55The second big area is personalization at scale, so we can personalize communication for
08:02what I call the Netflix model, using first-party data and signals from the platforms, of which
08:08there are basically six.
08:10Netflix basically is Alphabet, Meta, Amazon, Alibaba, Tencent, and ByteDance, TikTok, obviously.
08:17TikTok may be coming here to India and will be my bet in the near future.
08:24Is there something you know?
08:25Sorry?
08:26Is there something you know that you're...
08:27No, it's not something I know.
08:28It's something I would guess.
08:29I mean, I was reading in newspapers this morning that Modi is doing what I think is the right
08:36thing to do.
08:36He's developing relationships, obviously, with Americans of the best of his ability and
08:43not an easy thing to do.
08:45And at the same time, cultivating the Chinese, which, you know, if I was him, I think it's
08:56the right thing to do.
08:57Playing both ends off against the middle is what many countries...
09:01I mean, Europe, Christine Lagarde, today, again, in the media, saying that what Europe
09:08has to do because of the pressure from tariffs.
09:10I mean, this is...
09:12I mean, we're a bit diverse away from AI, but make the point.
09:16On Chinese social media, the meme is Trump is making China great again.
09:24And what, you know, if you think about the world being $106 trillion of GDP, of which
09:31U.S. is 28 and China is 18, so that's 46.
09:35There's another 60, of which India is a large part, which about, you know, $5 billion.
09:44That says for $5 trillion, which is really the basis of where China is going to go.
09:53I mean, China is going to go for BRICS, next 11, and global south.
09:58India is a very important part of it.
10:00And so you're seeing the pendulum sort of switch from one way to the other.
10:06And if you're between, you know, if you're between China and the U.S., you will seek,
10:12I think, to try and cultivate both.
10:15But anyway, as an aside, so the second area is personalization at scale, using that Netflix
10:20model on steroids, using first-party data, using the signals from the platforms.
10:27And that is being developed at a huge scale.
10:29My ability is to reach you.
10:31I know what your media habits are.
10:33I know what you like or what you don't like.
10:35And I develop a huge number of assets at scale using AI.
10:40AI has enabled that at an even greater scale.
10:43That's the second area.
10:44The third area is in the area of media planning and buying.
10:46A lot of what we do in our industry, there are 250,000 people employed just in media planning
10:53and buying, is manual or semi-manual or semi-automatic.
10:59The investment industry, you know, our industry is a trillion-dollar industry.
11:03Advertising is a trillion dollars, 700 billion digital, 300 billion traditional.
11:08The investment industry is a multiple of that.
11:11I mean, Blackstone, Blackrock would probably manage $13 trillion, I think it is, so much,
11:17much bigger.
11:17But they do everything algorithmically.
11:20They don't allocate investments between equities and bonds and real estate and private equity
11:26and crypto and whatever other than using automated means.
11:31We should be doing that in our industry too.
11:33So that will reduce the demand for people, but the outputs from the algorithms will be
11:39so sophisticated that humans will still be needed to try and figure out what is right.
11:44That's the third area.
11:46The fourth area is general efficiency.
11:48So for outside broadcasting, for example, actually we're exploring it in India at the moment
11:54with a number of interested parties.
11:57We can reduce the cost of outside broadcasting by something like 80% to 90% in a joint partnership
12:05with NVIDIA, AWS, and Adobe.
12:08So really interesting ways you can, you know, an IPL cricket match, you know, historically
12:14you would buy a truck for about $10 million.
12:17You advertise it over five years, $2 million a year.
12:20We can reduce that cost by about 80% or 90% using AI and cloud and remote broadcasting.
12:28So that's a fourth area of general efficiency, client and agency.
12:31And the fifth area, which I think is really probably the most interesting, I think from
12:37an organizational point of view, is what we call democratization of knowledge.
12:42So what AI enables you to do is to enfranchise everybody in the corporation with knowledge.
12:48I mean, depending on levels, but you give them open access to everybody, they would be aware
12:53of pretty much everything going on in the organization.
12:57Silos and verticals in companies are controlled by people controlling information.
13:03Information is power.
13:05What AI does is break that down.
13:08So Jensen Wang, for example, NVIDIA apparently has 51 direct reports, which you're asking the
13:13chairman of BCG, as we will be asking him at the Economic Times conference next day or so
13:19here in Delhi, you know, what's the ideal organization span?
13:24They would say 12 or 13 people.
13:25You're going to handle more.
13:27Jensen Wang handles 51.
13:28How does he do that?
13:29Less one-on-ones, apparently.
13:31But he set some objectives, four or five objectives a year, monitors their KPIs.
13:37And the reason you're unable to do that is AI spreads knowledge and information across
13:42the phone.
13:42So it compresses organization spans, makes, I think, companies much more efficient.
13:48And there's a sort of a, in my experience, the deeper you go inside an organization, the
13:54more you find people wanting to share information to get a job done.
13:59It's only as you go up to the mucky mucks at the top of a company, they like to control it
14:05and maintain their power base.
14:07Um, and the, the anathema, you know, if you said to me, you know, write a book on your
14:12industry or your experiences, I think that the most telling thing inside client and agency
14:19is politics with a small P. Um, the ability of people inside companies to subvert corporate
14:27purpose is amazing.
14:28The ingenuity with which people go about trying to make sure things don't happen is unbelievable.
14:35Um, so I think AI actually is, um, a really interesting tool to deal with that.
14:42So those are the ways we see it.
14:44And the, the net answer to your question, the simple answer to your question is that AI is
14:48upending the industry in a very, very fundamental way.
14:51So there is a fear or, you know, there's a thought process that, uh, you know, a lot of our advertising
14:59today has already shifted to digital and it's the, it's Google meta.
15:04Uh, it is Google meta, a lot of advertising is done on, let's say Amazon and a lot of this
15:13is programmatic and targets users, uh, you know, with our data.
15:19Uh, now with agentic AI coming where I can instruct an AI agent to agent or to buy certain
15:29thing for me, to buy a holiday for me or a jacket for me.
15:33So maybe I'm not looking at the ads anymore.
15:36So then who are you actually creating the ads for, for humans or AI agents?
15:41So is that something you, well, the answer is you'll be doing it for both.
15:44Um, but yeah, the point you're raising, I think it's an underline it.
15:47Firstly, market structure, it's a trillion dollar industry.
15:50It was last year.
15:51This is 700 billion is digital growing at 10, 15, 20%.
15:56You look at the Q, Q2 numbers for alphabet, meta, Amazon were growing at 10, 15, 20%.
16:03And then the traditional, the 300 billion, you know, a Disney, a Fox, a Discovery Warner,
16:10a Paramount, uh, the new Paramount, the Skydale's Paramount now, uh, flat or down live sport
16:19being the key, the differentiator.
16:21If you have live sport, you manage to decline only by 0 to 5% or 10%.
16:27If you don't have live sport, it's 10 or 15%.
16:29So you've got two, you've got two different industries.
16:32I think analysts actually should look at them as being in two different industries and you're
16:36right about domination.
16:37I mean, Google is 250 billion out of the trillion, so 25%, but out of the 700, because it's purely
16:44digital, it's one third of the business, basically.
16:48Meta is 150 billion, 15% share of the total.
16:53Amazon is 60 and TikTok's 40 outside China.
16:57So those four platforms are half the market, 500 billion, five sevenths or 70% of the digital
17:04market.
17:04So you're, you're right.
17:05I mean, you throw in Alibaba, Tencent and ByteDance or TikTok in the equivalent in China,
17:11mainland China.
17:12Those are the six platforms dominate.
17:14You go down to Microsoft, probably around 19 billion, Apple around 11 billion of ad revenues,
17:20uh, snap about five, five and a half.
17:23Pinterest, four, Twitter was five, now as X, probably about two, two, two and a half.
17:30So very much, you're right, heavy concentration.
17:35Now on the agent to agent, I can every year, I sit down with somebody at Amazon who I think
17:40is one of the deepest thinkers, uh, in the business.
17:44And, and we were discussing exactly the point you raised, that we'll be in five years agent
17:48to agent.
17:50And of course, Google depends as does Meta and others on, on search.
17:56Um, and the question is whether search will continue to be the dominant force or will we,
18:01you know, if I, I need a pair of shoes, you know, I, I, I ask my agent, I prompt my agent
18:08to find me a pair of brown shoes, et cetera, and the agent will go to maybe an Amazon agent
18:14or whatever it happens to be.
18:15But the point that you're raising is really interesting because in, in that world, what
18:21you have to do is to make sure that all the information around your brand or your product
18:27or your service or whatever happens to be is out there.
18:31So when the agents crawl or troll the web, the net, whatever, it's there.
18:39So what, what you're saying is the premium will be on disseminating information.
18:45I remember I had a conversation with the CMO of Samsung a few months ago in Seoul when I
18:51was last in Seoul about three months ago.
18:53And, uh, he made the point, you know, that, that, that, that disseminating all the information,
19:00the premium now is on dissemination of information.
19:04It's actually, you know, in, um, if you think about it, um, when you're producing your quarterly,
19:10um, results, uh, the more positive references you put in, the more you use the word profit,
19:20the better it is, the more you use the word loss, the worse it is.
19:24So, so because a lot of what's happening now is happening algorithmically or mechanically
19:31or using bots or, uh, using, uh, using mechanical means.
19:37And in that world, you know, you have to think about it, you know, what are these machines doing?
19:43They're crawling and trawling and picking up all the information, all the data.
19:48So the more data you have out there, disseminating a message or whatever it happens to be, the
19:54more important it is.
19:55So I think you're right.
19:56I think the nature, what, what, interesting with just with Google actually in Korea, uh,
20:02the last couple of days and their view, and I think they're right, obviously, uh, is that
20:11the demand for search has actually increased as a result of what we've seen with chat GPT
20:18and other alternatives to, to Google's own Gemini.
20:22Whether that's the case in the longer term is another, another case, another story, because
20:30it may be over time that people become more, um, more attuned to using Gemini, chat GPT,
20:40perplexity, whatever it happens to be.
20:43Uh, and they will shop in a different way.
20:45And the advertising model to the heart of your question has to be different.
20:51It will have to be a model that is very different to the model that we've had already.
20:54So, you know, we were going to upend the upenders, if you like, in, in terms of that.
21:00And that may, to be frank, might've been one of the reasons why Alphabet was slower to introduce
21:07AI, um, and Gemini.
21:12Because if you go back in time, you know, who was the first there?
21:15Google was the first there in 2014 with DeepMight.
21:18Yeah.
21:19Right.
21:19So they weren't the ones to write the paper.
21:21Absolutely.
21:22So why was it?
21:23So they were worried about hallucination.
21:26They were worried about the existential threat, you know, Jeffrey Hinton or whatever.
21:30He was, you know, resigned from DeepMight, went, I think, a professor at the University
21:34of Toronto.
21:36So they were worried about that.
21:37But the third reason might've been worried about disintermediation of search, which I think
21:44is, in the longer term, a big question mark.
21:47So if the disintermediation happens, then you think, because in the last 10, 15 years, the
21:52two, three platforms, which have ruled the roost, then maybe we'll have new platforms?
21:58Well, yeah.
21:59Well, no, I don't think you'll have new platforms.
22:01I think those platforms will adjust.
22:03I think the capital needs, and there's a big question about, you know, when you have a DeepSeq
22:08or a Manus in China, you know, which are producing the same results or even better results, even
22:16cheaper.
22:16It may be that the capital-intensive model, I mean, we're seeing the MAG-7 or MAGA-7, as
22:23we now call it, under Trump 2.0, spending about half a trillion dollars a year on CapEx and
22:33data centers around AI.
22:35That might be the right model.
22:37It might not be the right model, but what it will do is intensify the position of the
22:44major tech companies, in my view.
22:46Now, you never count Musk out.
22:50You know, they will always say, but, you know, basically, Altman and Sam and Oman AI is an
22:54extension of Microsoft, at least to a major part.
22:58So, the big players are going to be the six that I already mentioned, Alphabet, Meta, Amazon,
23:05Alibaba, Tencent, ByteDance, plus NVIDIA, obviously, plus Musk, throw him into the mix, plus Apple,
23:17plus Microsoft, plus probably Adobe, Oracle, and Salesforce.
23:22Those, to my mind, are going to be the big players.
23:25Adobe, Oracle, and Salesforce are coming up against the software problem of high-pressure
23:35salesmanship, broad spectrum of software which clients have to take in their entirety.
23:44So, you're getting, you know, for example, Adobe Firefly is coming under pressure from Canva.
23:49Canva, Australian, originally aimed at small and medium size.
23:54The enterprise is now starting to push up into enterprise and obviously attack Adobe and
24:01Adobe Firefly.
24:02So, you're getting pressure from that end.
24:05You've also got, you know, the platforms like Runway and Minimax and Luma, who we're quite,
24:11all three, we're quite close to.
24:13One, Chinese.
24:14Two, Western.
24:15Which are the video platforms that are being used to create AI films, et cetera.
24:23So, there is some heavy competition in there.
24:26But I think fundamentally, those big companies I mentioned, the six big platforms, plus the
24:32software companies, and Apple, and Microsoft, and NVIDIA, are the ones that are going to continue
24:37to be the big players, unless the regulator decides in some way, shape or form, to break
24:43them up.
24:44And I think that's a really interesting question.
24:47In the case of China, when Jack Ma stepped out of line and was slapped on the wrist, I think
24:55now back in the fold again.
24:57But when he was slapped on the wrist, I think President Xi or people who worked for him indicated
25:04they were going to break Alibaba up into six, seven, or eight parts.
25:07That has not happened.
25:10So, it doesn't appear to happen.
25:11Why is that?
25:12And I think the Chinese government understands that big tech is important from the point of
25:18view of sort of big safety, security, that having big tech companies, you see it in the
25:26war in Ukraine, you see it in the war in the Middle East, you see it in the drones and
25:34drone technology, bot and bot technology, are really important from a defense point of
25:40view, offense point of view.
25:41So, having big tech is really important from my point of view too.
25:44So, I have two connected questions.
25:46Yeah.
25:47One, you know, there was the, in the first modern era of advertising, it was all these,
25:53you know, genius creative people who are kind of the hero.
25:59And then there was data and platforms in the last 20 years.
26:03One question is, what do you think in the AI age, in the next 20 years, will be the hero
26:10in advertising?
26:11Oh, yeah, but you're always, you're presenting.
26:13As a connecting, and I'll connect a question.
26:15Yeah.
26:16If you're a 25 year old today, then what should you kind of focus on if you're in marketing
26:21and advertising?
26:21Well, the answer is both.
26:22The answer is both.
26:23You see, I mean, you sound a bit like those rose-tinted, spectral romantics who go back
26:30to Mad Men and Don Droper.
26:33The fact is, it's both.
26:34Yeah.
26:34So, I could argue that the human creative element is going to be even more important.
26:41I mean, if everybody's bombarding, and this is the James Quincy point, CEO Coca-Cola, when
26:47he said, you know, if everybody's bombarding you with personalized messages, what's the
26:52difference?
26:53And the answer is, you have to make the difference.
26:56So, the creative dimension, the strategic dimension, the creative dimension is still super
27:03important.
27:03Let's say we could, let's say, let's be romantic, still the most important part of it.
27:10Having said that, data doesn't destroy it.
27:13Data informs it.
27:15Technology doesn't destroy it or replace it.
27:20It enhances it.
27:21I mean, if I have deep insight about what makes you tick, I'm more likely to trigger the emotional
27:29psychological things that I'm trying to get to in order to get you to purchase whatever
27:34it is I'm trying to sell you.
27:36I mean, everybody in our industry loves the idea of, you know, you're up until three or four in the morning, you come home late at night, you get a grab an hour's sleep, you shower, you shave, you put on your suit, a nice crisp white shirt and tie, whatever.
28:00So, you walk into a room at nine o'clock and you do a five-minute presentation and the client says, I buy it.
28:06It doesn't work like that.
28:08I wish it did, but it doesn't work like that.
28:10So, what you have to do is you have to harness the strategic, the creative, the data, and the tech platform.
28:18So, I think it actually makes it more effective, not less effective.
28:21But in a world where we're getting 600 million signals a day or whatever the figure is, that creative dimension, strategic dimension, creative dimension, harnessing the data, harnessing the technology becomes even more important.
28:39So, I would argue, so coming back to your question about the kids, you know, if you were a kid now and you were starting, the answer is you have to have all of them.
28:47You have to have the strategic, you have to have the creative, you have to have the data insight, and you have to have the technological understanding.
28:55We have 7,000 people in 33 countries, and if they have one strong virtue, I think it is they do understand the impact of technology on our industry.
29:12And they are super good at understanding what that means for clients in terms of advertising and marketing.
29:20But, you know, you've got to look at it as a continuum. It's not an either or.
29:26Everybody in our industry likes to try and pick out an either or an or. The answer is you have to do everything.
29:33Sir, now I would like to move to your thoughts on India.
29:37Yeah.
29:38You have been coming here since the 80s for almost going to be five decades.
29:42Yeah. So, how do you think has India changed? And how do you think its perception in the world has changed over the decades?
29:55Another thing is, has it leaped up to the expectations maybe of the 90s, of the…
30:01It's beyond, I think, I think beyond. I mean, I think, look, I think the world has changed.
30:06I mean, the last 30, 40 years, high growth, low inflation, low interest rates.
30:15We're now, you know, we have three major political big issues, U.S.-China relations or lack of them, Russia, Russia, I would say Russia,
30:27because it's not just about Ukraine, and Iran, the Middle East, and Iran and its proxies.
30:33I think those three problems, I mean, President Trump said in his election campaign he would sell all of these things very quickly,
30:44and, you know, he's finding it's a little bit more difficult in making, he's making great efforts,
30:49but a little bit more difficult than it was built.
30:52With those three problems, and then layer on top of that tariffs,
30:56I think the world is going to grow more slowly, irrespective of the tariffs.
31:03I mean, it would have done anyway, but tariffs make it even more difficult.
31:06More slowly, inflation is more stubborn than people think.
31:12You know, stats yesterday in the U.K., 3.8% inflation.
31:16America is still over three, and interest rates, as a result, higher than we've been used to.
31:25In that world, two things are important, I think, for our clients.
31:31Firstly, you have to pick the geographies to grow much more carefully than you did before.
31:37You know, before it was Ted Levitt, globalization, consumers consuming everything, everywhere in the same way.
31:44I'm not saying it's gone completely, but it's certainly much more muted.
31:48So you have to pick your growth areas.
31:49So North and South America, the Middle East, Asia, qualifier on China.
31:55If you're big in China, given the Taiwan risk, do you really want to be bigger?
31:58Big defined as 20% plus of your sales.
32:03So Apple, Tesla, LVMH, not a Unilever at nine, not a Rackets at six or seven, not a Pepsi at three, right?
32:12You want to be bigger.
32:13But, you know, once you get to 15%, 20%, you want to question.
32:18India comes into its own as a result, as the alternative, e.g. Apple and other supply chain alternatives.
32:26Obviously, markets like Indonesia, Vietnam, Thailand, Philippines, Singapore, Malaysia.
32:32You know, the new Asia as opposed to the old Asia, Japan and Australia and New Zealand.
32:38Africa, very volatile, but opportunities on a micro basis, not macro basis.
32:44And Europe, slow growth.
32:46France, Germany, Italy, Spain, all under the gun and UK under the gun,
32:51except maybe Germany a bit more fiscal headroom, defense spending having to increase
32:56because of Americans sort of withdrawal from NATO or less support of NATO means maybe a little bit more growth.
33:04So one thing is find your growth pattern, and therefore India comes into its own.
33:09And the second thing is in that slow growth world, you have to be more efficient.
33:14So my view is that once this tariff issue, it'll never go away because tariffs were 1% or 2%
33:22and they're now 15% or whatever they're going to be.
33:25So it is a different world.
33:27You have to be more efficient, not just in slow growth Europe, but everywhere.
33:32Okay, so AI is going to come with a whoosh after we've managed to see what the tariffs sort of turn out to be.
33:42So that's my view of the world.
33:45Now, in that world, India becomes even more important.
33:48The other thing is that's helping India, I mean, two big things.
33:52One is Modi's leadership.
33:55You know, he understands branding, I think.
33:58He understands how to market countries.
34:02He is a strong leader, to some controversial, to others not.
34:07But what you need is strong leadership.
34:11I would argue the UK lacks it and has lacked it since maybe Blair and Mrs. Thatcher.
34:20The US has certainly got stronger leadership in a way.
34:25But, you know, obviously Reagan was a good example in the Thatcher era as well.
34:29So one thing is got strong leadership.
34:33The second thing is the tide is with India, in my view, not just from a population point of view,
34:40although there are some projections that that might change, more so for China, interestingly, for India,
34:47but also for economically.
34:50So if you look at the E7 as opposed to the G7, actually the E7 in GDP is bigger than the G7.
34:59If you strip out US from the G7 and China from the E7, the E6 is bigger than the G6.
35:08So the point is, and it goes back to this playing both ends off against the middle,
35:12the nature of GDP, the scale, it is more fragmented.
35:17Yeah.
35:17I mean, a good case in point, when Huawei was denied access to the US and indeed the UK, what did it do?
35:25It went to the BRICS, the next 11 of the Global South.
35:28It's that 60 trillion of GDP outside the US and outside China.
35:35And the other interesting thing is the battleground in Europe.
35:40You know, India building relationships with Europe.
35:43India building relationships with Latin America, with Africa, with the Middle East.
35:50I mean, the world is shifting in my view.
35:53And if you went back 200, 200 years ago, China was the biggest economy in the world.
36:01And, you know, long came example from the porcelain industry, the China industry.
36:08Meissen China in Germany and Wedgwood in the UK in the early 19th century produced China to attack the dominance of the Chinese porcelain industry.
36:19Same price or cheaper price, same quality, and they undercut.
36:26So China's been on the wrong side of history for the last 200 years.
36:30It could be on the right side now.
36:31I think India is in a very strong position.
36:33I think the biggest issue around India is what we were discussing before we got into this, which is the infrastructure.
36:41India is growing so rapidly and the changes are so intense.
36:46And the historic infrastructure is so antiquated that it's putting huge strains on the economy from an infrastructural point of view.
36:58And over time, that really has to be dealt with.
37:02Otherwise, things are going to break or be slowed down drastically as a result.
37:09I mean, when I woke up this morning, look, what do I see on the front page of this newspaper?
37:13But a thank you to the prime minister for a new ring road.
37:18Infrastructure is, of course, an issue.
37:21I think we are growing faster than we can cope with.
37:24Yeah.
37:25Yeah, and it's putting huge strains on it.
37:27It's huge strains on, obviously, roads and rail and airports and IT, but also on people.
37:36I mean, huge strains and huge waste in terms of productivity because of these, because of the incoherence.
37:44Another thing I want to ask, because you are somebody who understands branding and marketing.
37:49India, if you see geopolitically, has always remained kind of neutral.
37:55And I think it seems as if in the last few years, that is not working very well for us.
38:04We want to be friends with everybody.
38:06Whereas people are saying you are not showing up for us.
38:10You don't show up for us when we need you the most.
38:13So, do you think, do you have any advice for India, for Modi, in terms of how do we kind of improve our brand image on that front?
38:23Well, look, am I happy that India continues to buy Russian oil, given what happened with Ukraine?
38:33Probably not, to be honest.
38:36I'm not expressing a personal view.
38:38So, on the other hand, if the world is changing, as I think it is, if I was Moly, which I'm not, but if I was, I think I'd be playing both ends off against the middle.
38:53So, taking that position, that middle of the road position, you know, it's a sort of less emotional position than Lula does.
39:01So, Lula tends to get very emotional, but I've heard him speak in Brazil, in Rio, I remember about last year, at the FII conference, where, you know, he threw away his speech, and then he went into a rant against the sort of G7 on behalf of the Global South.
39:21Misnamed, but you know what I mean by the Global South.
39:24No, listen, I think Moly is doing the right thing, that he's trying to steer, if you steer that course in between, Scylla and Charybdis, you know, the two whirlpools, you, of Greek mythology, if you steer that way, you're obviously going to get criticism from one side or the other.
39:46But from the point of view of the country, again, I come back to what Lagarde said, it was just this morning on the media, that she said, you know, Europe, because of tariffs, because of the pressure that was putting on, has to, I always remember, on Chinese EVs, before Brussels intervened and slapped a tariff on Chinese EVs,
40:10the German government, you know, what's the biggest and most important industry, autos for Germany and Mercedes and BMW, the German government said, no, we don't want to put EV tariffs on Chinese EVs.
40:25Spanish government said the same thing.
40:27Brussels then intervened.
40:29So, I think people are wrestling with that big issue.
40:33But again, if I'm in the middle, and I look at what's happening between US and China, which are the two dominant forces, at the minute, I'd like to be so for the near future, what do I do?
40:50I try and steer a course between.
40:51I mean, that brings into very difficult political choices like we see over Russia.
40:56I'm not happy about India buying Russian oil, which then gets refined and then distributed, because you don't know which comes from where.
41:06But if, from the interests of India, I think that might be the best position to be.
41:12And I also have a question on Europe.
41:15Yesterday, I saw this photo.
41:17You know, it was viral on Twitter.
41:18It was, the caption was, you know, Trump sitting behind his desk with schooling all the heads of state.
41:26The eight dwarfs.
41:28So, and I saw that, you know, a lot of people from Europe were talking about, you know, how Europe has kind of become a vessel.
41:37You know, that's what they were talking about.
41:40I think it's more subtle than that.
41:43And I think when the Ukraine incident happened, when, you know, Trump and Zelensky, Trump and Zelensky had a kind of in the White House.
41:59And then we saw that a lot of European heads of state kind of come into support for Zelensky.
42:04You know, do you think that now there would be a rethink, even in Europe, as to, you know, that we have to come into our own once again?
42:12Do you think is that something?
42:14No, I think what the eight dwarfs were trying to do was trying to figure out the best way of appealing to Donald Trump.
42:24Yeah.
42:24So, I think what you saw there was, you know, when Keir Starmer goes with a letter from King Charles, you know, and invites President Trump to come to the UK, you know, uniquely for a second state visit, as he will do in September.
42:42And, you know, what they're trying to do is figure out the best way to deal with a very different individual, individual style.
42:53And, you know, I think they were worried about Zelensky going there almost on his own, and he needed support.
43:02You know, the photo opportunity for President Trump behind his desk in the Oval Office in the White House was pretty good.
43:11I mean, you juxtapose that with the Alaska meeting, the bilateral, the bilat, with Putin, you know, and with the flyover of the B2s and everything.
43:26These are big photo opportunities.
43:28Now, I think what the heads of European governments were trying to do is to deal with President Trump in a way that they felt would be the most effective, whether it was the right way or not.
43:40I don't know.
43:41We have to see what comes out of these talks.
43:43So far, we don't seem to have made as much progress as we would probably all like.
43:49But, listen, you can't fault Trump.
43:52There are two counts.
43:53One is, if you don't communicate, you won't get anywhere.
43:57So you have another communication.
43:58And number two is trying to get something done.
44:01And, you know, if you have two opposing forces without, who are not talking to one another, it can be, it means you won't get anywhere and it can be quite dangerous because you can be misinterpreting one another.
44:16So it's better that people are talking than not.
44:18But, no, I just think they were trying to figure out the best way of dealing with Zelensky going there.
44:24Do you think that Europe is maybe kind of thinking about, are we done with 50 years of being tutored?
44:32You know, should we again because?
44:33Well, I think it's what goes back to what I said before.
44:36I think the world has changed.
44:38So I think we lived through 40 or 50 years, a pretty golden years, certainly relatively peaceful.
44:46And we have had conflicts, relatively peaceful since World War II.
44:52And I think we're going into a world which is much more fragmented.
44:56Therefore, clients, companies have got to look for their growth much more carefully.
45:01Therefore, big opportunity for India.
45:03And we have to become more efficient because the world is going to grow more slowly with more inflation and higher interest rates.
45:11And therefore, good opportunity for India as well because tech is the heartland of much of what can be done in India.
45:18Having said that, what AI does, you know, President Trump's right that manufacturing will go back, it will go back to the U.S.
45:28I mean, he wants it back to the U.S.
45:30It will go back to the U.S.
45:31But what's going to happen is that the bottom end of the manufacturing pyramid is going to be hollowed out by AI.
45:40And those jobs that came to India, this is a really important point, I think, those India, for example, or other outsourcing, you know, South America would be another example of it, you know, Argentina, Brazil, Colombia, Mexico.
45:54Those jobs will be hollowed out in those outsourced countries.
45:59So, you know, TCS, for example, lays off 2%.
46:03Why is that?
46:04Well, partly that's because AI is hollowing out the bottom of the manufacturing pyramid in America.
46:10So, Trump's right.
46:11Manufacturing will go back to America, but it's not going to create jobs.
46:15It's going to create more jobs for bots.
46:19There are going to be more robots doing the manufacturing.
46:22And that outsourcing, I was talking to, actually, Deputy Consul General, I think it's called, in the U.K., in India.
46:30We were discussing this very point.
46:32And there are signs already of the outsourcing industry in India being affected by the sort of insourcing of jobs for bots.
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