As an agency owner – how should you be thinking about AI with Paul Roetzer

Speaker 1:

It doesn’t matter what kind of agency you run, traditional, digital, media buying, web dev, PR, whatever your focus, you still need to run a profitable business. That’s why Agency Management Institute started the Build A Better Agency podcast a few years ago. We help agencies just like yours, grow and scale your business, attract and retain the best talent, make more money and keep more of what you make. [inaudible 00:00:25] has 25 plus years of experience as both an agency owner and agency consultant, please welcome your host, Drew McLellan.

Drew McLellan:

Hey, everybody, Drew McLellan here with another episode of Build A Better Agency. I am super excited to bring my guest to you today and to raise this topic, which I think has been floating around on the edges of agency consciousness for a while, but I don’t think most of us are thinking about it with the clarity, and the emphasis that we need to, and that is the whole topic around how does artificial intelligence impact our world?

So, just like in the days when, for those of you that are really long in the tooth like I am, remember that when there was a time when you worked at an agency, and there weren’t websites, or there wasn’t access to the internet. And then remember when we were just manually sending out if we had to do any mass marketing, and then the electronic way, it was by fax, or we were manually keying in email addresses and sending them out before the Mailchimp’s of the world came, Constant Contact came into play.

And then we thought, “Okay, that’s the Nirvana.” And then all of a sudden, SharpSpring and HubSpot, and all of the marketing automation software showed up. And all of us have retooled our business around all of those technologies. And all of those technologies eventually made the work that we do better and easier and more efficient, programmatic media buying. There’s all kinds of, if you look back on the history, just the recent history of how long we all have been in the business, there have been some dramatic changes that technology has brought to our business and artificial intelligence is just that, it’s another way that we can leverage new technology and new tools to serve our clients better, to help them grow their business, and to more profitably and efficiently and effectively grow our own agency.

There is no one on this planet that I think knows more about this from an agency perspective than my guest Paul Roetzer. So, Paul, many of you know Paul from… he owns a PR shop in Cleveland called PR 20/20. Lots of you have probably read his books Marketing Agency Blueprint, Marketing Performance Blueprint. One of the things that is true about Paul is, and I’ve known him for years, he’s always wondering where the puck is going next. He’s always wondering what’s going to happen next in our industry? And how can he and his agency be at the forefront of that.

So, I wasn’t at all surprised when I started talking to Paul a few years ago, and he started really leaning into artificial intelligence and how we can use machine learning and all of the tools around that, to better serve our clients. So in the last year or so, Paul has really doubled down on that not only in what he’s doing with his own agency, but he has created a whole new organization called the Marketing Artificial Intelligence Institute. The whole purpose of that organization, which is a separate organization from his agency, is to educate us and to probably provide resources, I think down the road, for agencies and brands to really capture the power, that is artificial intelligence, and use it to change and evolve our businesses, as these new opportunities present themselves.

And so, many of you, if you’re on the E-newsletter list for AMI, you have been seeing me talk about a conference, the MAICON conference, M-A-I-C-O-N. So the marketing artificial intelligence conference, which is going to be held this July, it is July 16th and 18th, that is coming out of Paul’s organization. It’s going to have a separate agency teaching agencies, the one-on-one, the beginner level of what is artificial intelligence, how is it already showing up in our business more than we recognize it or not? And what are the opportunities for us as small and mid-sized independent agencies to learn more about this and to leverage it inside our business?

If you have an interest in going to that conference, we’ll include a link in the show notes, but basically, it is, the conference is M-A-I-C-O-N. That’s the website as well is never mind, don’t worry about the URL, I will include it in the show notes, or just google MAICON, M-A-I-C-O-N, or the marketing artificial intelligence conference. July 16th and 18th, if you want to go, there’s a discount code you can use, it’s mcclellan19. So M-C-L-E-L-L-A-N 19. And you’ll get $100 off of the registration.

I will be there, I’m going to be running a panel, talking to folks about how agencies can begin to harness the power that is AI. I think a lot of us are worried about it, we’re scared about it, we’re worried it’s going to change our business that’s going to knock people out of jobs. I think that’s all what I want to talk to Paul about is what does this mean for us as agency owners? What does it mean for our agency in the future? So, without any further ado, let’s get into the conversation.

All right. So without further ado, Paul, thanks for joining us today, this is going to be a fascinating conversation.

Paul Roetzer:

It’s always fun to talk.

Drew McLellan:

It is. So, I gave everybody in the intro a little bit of your bio, but walk us through your agency, and you have taken an interesting evolution. So, you start an agency, and then you basically, when I think of you and I think about your agency, I always think of you as somebody who’s looking for, what’s the next thing? Where do we have to evolve to before everybody else gets there? I think that the books Marketing Agency Blueprint and Marketing Performance Blueprint are that where you saying, “Here’s where the puck is going, if you will,” [inaudible 00:06:38] Wayne Gretzky, “here’s where we need to go.” It feels like this most recent shift is part of that. So, walk us through… I guess what I’m asking you is how does your brain work?

Paul Roetzer:

Oh, man. We don’t have time for that.

Drew McLellan:

[inaudible 00:06:51] a lot of agency owners, in that you are constantly looking to reinvent yourself.

Paul Roetzer:

Yeah. So I think it’s a blessing and a curse. The tagline in our logo is look beyond and I feel like, subconsciously, I’ve always lived that. So, in 2000… Well, I launched the agency, it was standardized services, preset pricing, it was how do we change the dynamic of the pricing model in the agency world, make it more transparent, make it more outcome-based? So that was the original, outward-looking how do we move the industry forward? Then in 2007, we were the first HubSpot partner. And it became, “Wow, marketing automation, we can bundle our services around this thing. And this is going to be big.” And if Brian Halligan and Dharmesh Shah are successful at disrupting SEO and PR and all the industries they wanted to not necessarily take down, but definitely improve, there’s this massive opportunity.

So we went all in and we built the first inbound marketing agency, and I wrote a blog post called Dawn of the Inbound Marketing Agency in September of 2008. And that became the internal rallying cry at HubSpot to build this ecosystem. Then 2011, I wrote the agency blueprint. And then, unfortunately, for me, or fortunately, I guess, IBM Watson went on jeopardy in 2011. And that set me down the path of what is this? How does this artificial intelligence technology work? And how is it going to transform what we do? And I just went on a period of discovery, of reading everything I could about AI and trying to put the pieces together. And while the world was pouring billions of dollars into marketing automation tools in 2012, to 2014 to 2015, I was looking at those tools and saying, “But they’re preschool level. You just have to do all the work.”

And so for seven years now, I believed that we were going to arrive at a day where Intelligent Automation would actually change what we fundamentally did as an agency. And so I hope, I’ve now after all these years, gotten to the point where I can stop and sees what’s actually here instead of… because I think AI is the thing he was all leading to is like we saw it coming and now it’s here. And now we can really build on this instead of me now like, “Okay, what comes after AI?” It’s like, “I’m good for the next 10 years. Let’s just do it, yeah.”

Drew McLellan:

So recently, you published a blog post called Dawn of the Intelligently Automated Agency.

Paul Roetzer:

Yeah.

Drew McLellan:

We’ll include a link in the show notes for everybody to check this out. But give us a 30,000 foot level of what you were trying to do with that blog post, and what we as agency owners should take away from it.

Paul Roetzer:

Yeah, and it’s obviously a bit of a, I just mentioned in the Dawn of the Inbound Marketing Agency, it’s a bit of an ode back to 2008. So 11 years later… So for the last two years, I’ve been doing talks around the world on artificial intelligence. And I’ve said, “I believe that at least 80% of what we do as an agency will be intelligently automated to some degree in the next three to five years.” And here we are two years into that period. What I meant was, there’s all these repetitive data-driven tasks we do every day. If you’re in content marketing, it’s figuring out what to write about, when to publish it, what channels to push it through a social, how much paid media to spend on things.

There’s all these things we do. If you’re in social, it’s what to share, when, what hashtags to use, what images to use, when to publish, when to republish. I’ve just looked at all these things and said, “A machine can do all that better.” I know it can. And there’s technologies built to do each of those things better at scale than humans. And so we finally just got to the point where it’s like, we need to start doing this. And so that’s what the intelligent automate agency was about. It’s like, our path to get to this point and our first steps to actually build a suite of services around it.

Drew McLellan:

So I think, for a lot of agencies, this is scary stuff. It feels like they’re going to be extinct soon. And that wasn’t the sense that I got from what you wrote or all the conversations you and I have had around this. So frame that up in terms of what does this mean for the average agency?

Paul Roetzer:

Yeah, my belief, there’s certainly dystopian views of what artificial intelligence will do to marketing, to the industry, to the agency world. I tend to find the net positive outcome side that it’s going to take a lot of the things we don’t like doing anyway, and automate them. So, for example, there are very few agency owners, marketers, people with journalism backgrounds, who like analyzing data and building pivot tables and trying to extract insights from that data, or digging into Google Analytics, like, “Why is the blog post traffic down?” And trying to actually find those answers, it’s just not what you enjoy doing.

So imagine a machine much like a Google assistant in your life. It’s just surfacing things for you. So as the agency owner, as the marketer, it’s coming up with some insights and saying, “Here’s what I found. Is this interesting to you?” And now, instead of building the pivot tables, I’m just looking at some insights from them and trying to figure out what to do next.

So our belief is that it’s actually going to make us better, it’s going to make us enjoy our jobs more because it’ll take some of the mundane, repetitive things out of it. And it’ll enable us to be more creative, more strategic, more empathetic, more human, which is really, what would make us all happier anyway? So, it’s like looking through the rose-colored glasses, I suppose, of what I think is going to happen. I’m not pretending like there’s no downside to all this. But I think the long game is it’s going to make us better agencies.

Drew McLellan:

Well, as I listen to your talk, I think about for many agencies, the things that they have a hard time articulating to a client, why they’re so labor-intensive, and why they cost so much? Every client wants reporting frigging every day, but they don’t want to pay for it. Agencies are trying to figure out how do I staff for this? How do I have somebody who is articulate and a good writer, but also understands the numbers do this? And how often do I do it? I know it’s going to be a loss later in most cases because if I actually charge a client $150 an hour, which is the average agency hourly rate these days, to do this, they’re going to have a cow because they don’t understand all the work that goes behind it.

So, as I listened to you, and as I read some of the things you’ve been writing, I guess the optimistic version of me is like, “Well, you know what, maybe this is a way for us to actually get paid for our intelligence, but not the manual labor, it took us to get smart.”

Paul Roetzer:

Yeah, there’s a great book called Prediction Machines, that’s written by three economists. And they look at the future of work. And they say that… because machine learning, which is the primary type of artificial intelligence is all about making predictions. That’s really what it does, it makes predictions on future outcomes based on historical data, and then it keeps learning, that’s the name. So it’s literally machine learning. It’s like Google Maps recommending a better path, it’s learning ways to…

So they say that the two jobs that will exist is telling the machine what to predict and then using human judgment of what to do with those predictions. That’s what we’re trying to get to. It’s like, I don’t want to spend all my time trying to figure these things out. And like you’re saying, we bundle strategy and performance, like the performance reporting into our service packages. So when someone’s on a monthly recurring revenue model, and they’re paying $8,000 a month, or $13,000 or whatever it is, we give the performance reporting away, which is crazy, because in our opinion, it’s probably the most valuable thing, but they don’t value it. The reports don’t.

So, we have actually, for years, bundled it into our pricing model to just do that. And then our strategy, we need to talk about it because they don’t want to pay for that. So, for us, it’s always been about well, how do we do those things more efficiently, and create greater value? And that’s what we did with our automated performance reports, which is one of the things we recently introduced. So we trained a model to take 12 core questions you would want to know from Google Analytics every month. The machine answers those 12 questions. And so on the first business [inaudible 00:15:04]

Drew McLellan:

Give us an example of how that would work. So on the first business day of the month.

Paul Roetzer:

Yeah, we go into the software that we’ve taught to write that report, and it literally just pulls data in through the API from Google Analytics. And it writes human-sounding narrative to say, “Was traffic up or down? How is that compared to last month, last year, same month? Was the blog post traffic up or down? Were people more engaged? What were the top blog posts? Our goal conversion.”

So the standard 12 things that as a marketing leader I would want to know, it just write some and literally on the first day of the month, because what we used to do is you would have people who aren’t analytics by trade, usually our staff is journalism, communications majors. So we have to first teach them how to look at analytics, then teach them how to extract insights from it, then they would spend 6 to 8 to 10 hours building a deck with all these charts and screenshots and trying to come up with insights, we just automated that whole process.

So something that used to take 6 to 10 hours, literally takes 6 to 10 seconds now, per client. And then we have a senior strategist that looks at that and says, “Are there any anomalies? Is there any insights we can extract from this? Is there any value we can add that otherwise, the client was paying six hours for potentially?” Now they don’t have to. We charge $150 a month or something for the basic report.

Drew McLellan:

Right.

Paul Roetzer:

$150.

Drew McLellan:

Right. So, where does the line stop? And so, you gave the [inaudible 00:16:38] example, it gathers all this data, but it’s not predicting, or it’s not recommending what to do based on the data or does it?

Paul Roetzer:

Not in this case. So all this is doing is writing a narrative of what happened. It’s not saying necessarily why? We do have some of it that actually does answer the why question, but it doesn’t drill down really far. And it doesn’t tell you what to do as a result of it. That’s still where the human piece comes in. However, if you have access to Google Analytics, you can see Google’s attempt to do that part for you.

So if you go into the insights in your app, and just click on insights, is that little circular thing at the top that usually has a little bubble you looked at ever, it’ll make recommendations to you. It’ll surface things and then when it does, it says, “Was this helpful? Yes or no?” That’s machine learning. You’re actually telling the machine, “Show me more things like this or don’t.” And it learns, and it evolves what it shows you.

So we’re moving in that direction. But you and I’ve talked before about this Intelligent Automation, if you think of autonomous vehicles, and you go from one to five as the standard rating, five being a fully autonomous, there’s no steering wheel, it just goes. We’re trying to get to a two. We’re just trying to take all manual, and do some machine-assisted stuff that maybe uses a little bit of AI, but it really is irrelevant. It’s elegantly automating a process that otherwise was really inefficient. And that’s what we focus on.

Drew McLellan:

So, I’m thinking that a lot of the listeners as soon as you said, “And then we taught it to gather all of the data and write this stuff,” they just went, “What do you mean you taught? You taught who or what?” And then I want to get into how you moved into the institute and all of that in a second. But what does that mean? Who What did you teach how to do that?

Paul Roetzer:

In essence, what we did is back in 2015, we started a skunkworks project internally called Project copy scale. And I basically said, “Can we scale content creation through machines?” Because I had sat in on a panel at South by Southwest where the Associated Press told the story of how they were using machines to write earnings reports. So I basically said, “What is that technology? How does it work?”

So we went and found what’s called natural language generation technology. In essence, it’s just software like a HubSpot, you tell it what to do, you create a branching logic, just like you’re building an email workflow, like they downloaded this, do these things, except in natural language generation, you’re saying traffic was up 10% so it skyrocketed. Goals were below 5% of goal, they plummeted. You’re teaching it how to write and then you’re creating a human-written template that has all these variables. Basically just pulls data from a spreadsheet.

So if you can write a story, and envision branching logic, you can actually teach a machine. If you have the right software, you can teach it how to write it. It’s almost like you write one press release or one report and you turn that into a template to then write 1,000 of them.

Drew McLellan:

So, what drove you to this experimentation which now sounds like it’s a core part of how you’re delivering some of your services, to actually creating the Institute, the Marketing Artificial Intelligence Institute? What drove you to do that?

Paul Roetzer:

Being just crazy enough, I suppose. I always said, there’s a quote, and I can’t remember who to attribute it to. It might have been from the book Will and Vision, which I read very early in my career. And it was, basically, a lot of people have ideas have visions, but the entrepreneurs are the ones who actually have the will, the fortitude to see an idea through and are willing to take the risk to do it. I’ve always just been comfortable on the edge. I’ve been comfortable with risk, and I actually get bored without it.

So, first, inherently, I’m by nature a risk-taker. So when we looked at the AI, I spent 2015 considering actually building an AI software company. We were going to raise probably would end up being, had to have been north of $100 million. Because we were going to try and build an intelligence engine that would automate strategy. It’s like the holy grail of where this might all lead to. So we considered that. And then I walked away from it in December of 2015. But I couldn’t kick the obsession with AI and where it was going.

So I was doing talks at the time, I did a talk for the military, like the five arms of the military and AI and recruiting into the military. I went deep on research, I was like, “Oh, my gosh, it’s happening. All those things I thought in 2011 are coming true.” And so I said, “We got to do something.” And so we did what we know, which is tell a story.

So we started a content hub underneath, PR 20/20 is a DBA of PR 20/20. And it was just, “Let’s just start writing. And let’s start researching and interviewing the people actually building us, let’s figure out what’s actually possible, let’s make AI makes sense to us, the marketers, the communications pros, and in exchange or in return, it’ll start making sense to other people. And if enough people are interested, we’ll turn it into something else. We’ll actually turn it into a business.”

Drew McLellan:

And so for you, this is really a side hustle off the agency, which may at some point in time, dwarf the agency.

Paul Roetzer:

Yes. So it became… So fast forward from November of 2016, we launched it from nothing. I just created a site and launched it. By December of 2018, it had become 200 plus hours of agency time a month, we were putting into this thing. There was me and one or two other people. So building the newsletter, building the blog, or publishing two to three times a week. I’m doing 30 plus talks a year on it. So we were putting a lot of time into it. And it was becoming a drain on agency profits. And it was becoming very hard to distinguish between, “Wait, are we having a good quarter? Are we not?” If you extract out all the resources going into this thing.

And so I decided literally the Thursday before Christmas, I was like, “It’s own entity,” and I split it off over the Christmas break into a sole member LLC, and funded it myself. And I turned around and hired the agency to then continue doing what it was doing, but now delineate the line between the two.

Drew McLellan:

So, I know you’ve got the conference coming up in July, which we want to talk about. But how else do you envision… do you envision the institute being the creator? So for example, you’ve talked about the fact that you guys have created artificial intelligence tools to do reporting, and you’ve talked about how AP and some of the big news outlets are using it for earnings reports, sporting stories, election stories, things like that.

Are you thinking that the institute is going to be a place where agencies could come and say, “I want to subscribe to that software because I don’t want to build the reporting. I don’t want to figure out this natural language, blah, blah, blah, I want to be able to subscribe to it like I do HubSpot, and be able to deliver this for clients.” Will it become that, do you think?

Paul Roetzer:

Yeah. So the way I’m looking at it right now, and part of the challenge was becoming as you said, the institute may dwarf the agency within the next 12 to 18 months in terms of size. It already market value is probably worth more than the agency would be. If we were to go raise a round of funding, I could raise far more for the institute than I could for the agency that way.

Drew McLellan:

Sure.

Paul Roetzer:

So, when we split it off, part of it was to say, “Okay, PR 20/20 remains the consulting and services firm it is because it was getting really confusing as is it also an education hub? Is it also an event business? And that was getting messy for that-

Drew McLellan:

[crosstalk 00:24:23] software [inaudible 00:24:24].

Paul Roetzer:

Yes.

Drew McLellan:

Yeah.

Paul Roetzer:

So I’m looking right now at the Institute is largely an event business first and foremost, but it’s a media property. And so with that comes the growth of the blog and all the opportunities that arise from that. We’ve looked at a number of things for software. One is having a venture arm that actually invest in build software, that we would then probably license and sell either through the Institute or separate entity. The other could be online education and training for agencies and marketers, really, anybody, and that would be the most likely.

So the event is in July. And after that would likely be the first step into online education. We get a ton of large enterprises coming into the institute who want help understanding and piloting AI, those actually get passed to PR 20/20. So PR 20/20 is morphing in a way to start doing not only intelligent automating the services we usually provide, but to be able to provide consulting to organizations of how do you actually think about and apply AI?

Drew McLellan:

So, I mentioned the conference in the intro, and I gave everybody the discount code to register. But talk for a minute about… I have to think a lot of people are listening going, “Holy crap, this is way over my head. I haven’t thought about very much of this or I know. I feel it in the future. But I don’t know.”  What are they going to learn? What are they going to be better at, if they go to the conference? If they’re an agency owner, they’re a 10 person agency in the Midwest, what makes this conference of value to them? And what are they going to walk away with? And, is it going to be over their head? Are they going to understand what’s being talked about?

Paul Roetzer:

So I would say, first of all, the persona we’re targeting is manager level on above marketers, agency people. It is our job is to make AI approachable and actionable. So it is for non-technical audiences. Every single session, there’s 40 plus sessions, is built for beginner level. So we see this first year as chapter one of the story where you’re curious about AI. It’s just that sounds really important, or you’ve read enough to know it’s really important. You just need to go somewhere where you can understand it.

So we want people to develop a very clear understanding of it. The first talk is literally, “This is AI.” It’s Karen Hao from MIT tech review, who’s going to walk through a flowchart of being able to tell whether or not something is AI or not. And so, I always look at it and say, “You’re using it in your life hundreds of times every day, and you don’t care, from Netflix to Google Maps to Spotify to Amazon, Alexa.” Every single of those things wouldn’t be possible without AI.

That’s what’s going to happen in the marketing world, in the agency world. Everything you use is going to get smarter because of AI. And you can sit back and wait. And just be like, “Wow, that got a little easier, that got more convenient.” Or you can go out ahead of your peers, and be proactive, finding smarter solutions now. But the competitive advantage you’ll get from AI is unlike anything before, with fewer, you’ll go back to when websites first came out, or when the internet first came on, this will dwarf it.

Sundar Pichai, I always quote him, the CEO of Google says, “AI is the most profound thing humanity has ever worked on. It’s more profound than electricity or fire.” That’s what we’re talking about. Trillions of dollars in annual impact on businesses, and 99% of marketers and agencies have no idea what it is, but it’s not sci-fi, it’s not future, it’s like there are hundreds of use cases right now that can make your agency better.

Drew McLellan:

And is it accessible to that 10 person agency in the Midwest, somebody who they don’t have millions of dollars or millions of hours to invest in figuring this out. But they are doing plenty of repetitive tasks, whether it’s writing press releases, whether it’s creating content, whether it is doing the reporting that we’ve talked about. Is it accessible for them?

Paul Roetzer:

Yeah. It’s not only accessible, it’s essential. If you’re selling SEO services, and you don’t know the impact of voice search, if you’re still selling clients on the 10 blue links on a landing page, you’re going to be out of business in the very near future because that’s not the future of search. If you don’t understand what power search and the one result I get when I ask Alexa for something, not the 10, Where does that one result come from? And how does it understand my question? How does it generate a response? That’s all AI. None of it happens without it.

If you do email marketing for clients, I can tell you the tool that will write the email subject lines better than you right now. I can tell you what images do you think.. Everything you do, some other agency is going to-

Drew McLellan:

What is the tool, by the way, that writes emails?

Paul Roetzer:

Phrasee, it’s P-H-R-A-S-E-E. They’re [inaudible 00:29:09] London.

Drew McLellan:

Okay.

Paul Roetzer:

But it’s largely for bigger enterprises, it needs like 100,000 emails to learn from. But those tools are all out there. And there are going to be agencies that figure out that the traditional inefficient methods aren’t the best methods anymore, and they’re going to build smarter, more efficient solutions. It’s going to be an interesting period.

Drew McLellan:

So Phrasee is a great example. You just said you got to have 100,000 emails. So, is this going to scale down to the small agency?

Paul Roetzer:

Yeah, and it depends on the use case. So the best advice I can give people is you look at the tasks, we’re not talking about entire career paths going away. But if you look at an individual professional and say, “They spend 10 hours a month doing landing page A/B testing, 10 hours a month figuring how to allocate 10,000 media spend for a client, 10 hours a month writing press releases, 10 hours a month doing perform.” I could look at it and say, “Every one of those, we can do [inaudible 00:30:05] right now.

So, what you do is you find individual use cases that you can build quick win pilot projects. So ours was press releases performance reports. Those are just two logical places. So, find ways you can move the needle forward. Now, in our case with analytics, we’re talking about a massive improvement and we’re a small agency, we’re under 20 people. But we look at it and it’s like, “Okay, we were spending hundreds of hours a month doing performance reporting that we can probably now do in under 10 hours a month.”

So, again, small budgets, small agency, we found one thing, and maybe that’s all you need is like one or two things. You have to become an AI-first agency. But again, as the market gets educated, clients are going to demand it. They’ll be like, “Hey, I heard you can automate press releases. You’re charging me $900 a press release? Why?” And then I don’t even know how to respond to that.

Drew McLellan:

Right. So, in your case, you guys created two tools, you created the press release tool and the reporting tool. Do you believe that either in the near future or the longer-term future, there will be software services for all of that that is affordable for the small agency? Or do they have to go out and build all of this themselves?

Paul Roetzer:

You don’t want to build any of it. And we didn’t build it from… Well, the performance reporting, we largely built from scratch and then layered it on top of a SaaS product. The only things you ever want to build are the things that are absolutely core to your business. So, Christopher Penn, I think you and I both know Chris.

Drew McLellan:

Yeah.

Paul Roetzer:

So he has a book called AI for Marketing. Second edition, it just came out a few months ago, it’s a really good read. He talks about it as if it’s core to your business. If you’re a retailer, and it’s the in-store experience you’re trying to build AI into, that’s fine, it’s core to your business that you got to do it. If it’s selecting keywords and doing bid management, you don’t build that as a retailer.

Drew McLellan:

Right.

Paul Roetzer:

And so as an agency, it’s the same thing. I’m not going to just try and build a natural language generation engine from scratch, we have no ability to do that. And 10 other people have already built the thing. So it’s more knowing what your use cases are, and then going and finding solutions. Now, the challenge is some of them, there’s one that there’s automated media buying, way better than humans would. But when we first met them years ago, it was $10,000 a month, was your minimum [inaudible 00:32:26] but now I think it’s $30,000.

So some of the better tools are moving upstream because there’s so much demand for the smarter tech. But there’s tools like Yext, for example, was a really approachable price point. And if you manage multiple locations for SEO for a client, and you’re not using a tool like Yext to do the Knowledge Graph management of hours and locations and promotions and menus and all that stuff, that’s how Alexa finds its answers. It looks for a knowledge graph of organized websites that are structured for it to find what it’s looking for, what the consumer is looking for. So that’s like 100 bucks a month like you started. So it’s knowing what to look for and where to start.

Drew McLellan:

So if I attend the conference, which in full disclosure, I’m not only going to attend, but I’m moderating a panel there. But if I attend the conference as an agency owner, is part of what I’m going to get is resources of where to start and who to talk to, and what tools are accessible to an agency my size?

Paul Roetzer:

Yeah, that’s exactly it. So there’s about 65 or so presenters. And it’s going to be from major companies like Facebook, and Amazon, and IBM, and HubSpot, and MIT, and Publicist, and major players. And there’s also a ton of technologies. The guiding premise for anyone from a tech company that’s presenting is the outcome can’t be, “You have to buy our solution to do this.” But for example, we have [inaudible 00:33:53] from CRAN presenting on strategies to build a competitive or how to build a competitive intelligence strategy.

So you could, as an agency, easily bundle services around competitive intelligence using a tool that is powered by AI. And so that’s the kind of thing you can come and learn like, “Well, what is that?” What can we even offer?” Sentiment analysis of social media, things like that. I look at it and say, “I want to be able to walk away as an agent saying there’s five tools I’m going to go vet that I might be able to build services on top of like we did with HubSpot back in 2007, 2008.

There’s this whole new realm of smarter solutions that are using AI, you don’t have to build anything yourself. Just go find the better solutions and be smart about how to package your services with them. And there might be premiums, profit margins you’ve never fathomed because again, everything’s done so efficiently. But to the client, the value is immense because they probably couldn’t even get it elsewhere.

Drew McLellan:

Right. Well, and I think that’s the trick is like you were saying earlier, a client goes, “Why are you charging me $900 to write a press release?” I’m sure many agencies went, “Well, crap. Now I’m going to charge $1 for it because I just press a button.” So I think part of the interesting discussion around AI for agencies is, and this gets back to a discussion we’ve all been having for a long time, and I’ve been harping on this forever, how do we price based on value not based on the hours it took to deliver?

Paul Roetzer:

[crosstalk 00:35:17]. And when we look at the automatic presses to stay on that for an example, we’re as transparent in pricing as anybody in the industry, we’re not putting a price to it, per se, because we’re going to look at it and say, “Well, how many do you send a year?” “Well, we send 1,000 press releases a year.” “And how much are you spending on that?” “We spend about $500,000 in press releases.” And then we’ll go through and analyze and say, “Okay, five of the seven types of releases, we can create templates for and intelligently automate.” But you can then use those for the next 10 years. So the value of this solution is massive.

So it’s going to be 50,000 to build all the templates, do all this stuff. And then if you want us to write the releases, we’ll charge you 100 bucks [inaudible 00:36:02], whatever it is, and they’re still going to come out ahead in year one. And then by year five, the lifetime value of that solution is immense. So that’s how we look at it, it is a value-based model of, we’re not going to just start undercutting the industry and selling things cheaper. The reality is, if that’s even possible, then you need to be questioning the value of what you’re doing.

If you’re charging something that you know isn’t worth that, but the only model you know is billable hours so you just have to because it took five hours or seven hours, that’s your problem and that’s a bigger problem than Intelligent Automation rolling into the industry.

Drew McLellan:

Well, it is a problem where eventually you’re going to be pushed out of the market.

Paul Roetzer:

Yeah.

Drew McLellan:

Yeah. I want to talk a little bit about how you think what agencies are going to look like in the future based on all this. But first, let’s take a quick break. I wanted to take just a quick second and remind you about one of the core offerings of agency Management Institute. And that is our peer networks. So we offer them both for agency owners, and also what we call key executives. So if you’re attraction follower, these would be for your integrators. These are your right-hand people who help you run the business day in and day out.

So, from the owners perspective, imagine a Vistage group or an EO group, only everyone around the table owns an agency. These folks become your board of advisors, they become trusted friends that you learn a lot about their business, and they learn a lot about yours. So not only do you learn from us, the facilitators, but you’re constantly learning from your peer group as well. The same thing happens in the key executive groups, we bring them together, and we help them learn how to help you bring your vision to life as an agency owner.

If you want to check out either of these peer groups, you can go over to the AMI website, and look under the network’s tab. There you will find information on both our live and our virtual agency owner peer groups, and also our key executive group. Check it out. And if you’re interested, let us know, we’re happy to have a conversation. Okay, let’s get back to the episode.

All right, we are back. We are in the heady space of artificial intelligence and how it’s going to change our world. I hope you’re finding this as fascinating as I am. Because I’m sure for some of you, this is frightening. But I’m guessing for most of you, it’s exciting. It’s interesting to reinvent what you have done for a long time in a way that actually gives you the opportunity to scale and grow in ways that you couldn’t imagine.

And for many of you, who are struggling to find human bodies to do anything inside your agency, maybe you’re starting to see that this may be a relief point for you there too. So, before the break, I asked Paul to ponder how agencies are going to look different as this all plays out. So, Paul, I’m sure you’ve thought about it from your own agency’s perspective, and also I know, because of the way you think you’re thinking about it from the industry’s perspective. So what will an agency look like 10 years from now, do you think?

Paul Roetzer:

Man, I have no idea, honestly, because I always say-

Drew McLellan:

[crosstalk 00:39:09]first of all.

Paul Roetzer:

I always say anything three to five years from now is crazy to try and project. Actually, Steve Jobs, Apple released the iPhone in 2007. If you would have asked him in 2017 what would the iPhone have done to the world? No way he could have predicted everything that came after that.

Drew McLellan:

Right.

Paul Roetzer:

And so I think we’re in months to short term years able to predict and I would say, the next 12 months, there’s just a lot of learning. This is not a fast adoption curve. Even if you, let’s say you hear this and you say, “I have to go to the marketing AI conference. I’m going to figure this stuff out.” You will get everything you need to start, but then you’re going to have to go back and educate your team on what this is. It’s not sideline, it’s not absurd. It’s actually very tangible. And I get it now. Here’s the few pilot projects I took away and I want to go talk to these three vendors.

Well, now you’re three, six months out. Maybe by 2020, you’re starting to launch a pilot project. That’s where we’re at. The vast majority of large enterprises haven’t launched a pilot project yet. So, agencies, I think we have a one to three-year window, where there’s going to be this gradual transition. But the agencies that get the head start now and figure this stuff out, it’ll dwarf the advantage they had of being a first mover with marketing automation tools. It’s just like the compounding value of understanding this stuff and moving early is so dramatically greater than anything we’ve seen before.

Drew McLellan:

Do you envision that agencies will be a guide to and through AI to their clients beyond the marketing arm, but if an agency really has their arm wrapped around this, and they have mastered, let’s call the basic level of AI, and they’re using some of these tools, either they’ve created them, or they’ve partnered with existing SaaS products to do some of these things, do you envision that this is a way for agencies to get tighter with the C-suite, having more strategic conversations, or our company is going to have a whole department that deals with AI eventually?

Paul Roetzer:

Eventually, maybe. But again, we’re looking at a pretty long… We’ve talked to some fortune 50 brands that haven’t even come close to figuring this out yet. So I think you’re going to see some new agencies emerge that specialize in AI consulting because the only people who can do it right now are the big consulting firms, and they’re going to touch anything under 10 million. They don’t want to mess with $100,000 here, $100,000 there. Where firms like ours, that’s great. It goes all day long.

So you’re going to see some firms that just pop up out of nowhere that do this stuff, others are going to evolve like we’re trying to do, we’re going to move more probably into a lot of consulting work and like wind down a little bit of the production side. We’ll still actually do production. But I would see it actually flipping where more of our work is high-level consulting workshops, training on how to do this. That’s why we have launched a piloting AI workshop model where it’s a half-day or full-day, we just go in and teach the team, teach the C-suite, what it is, how you can do it, help them understand different use cases, and prioritize them and then go and then we can provide ongoing consulting to help them actually implement those.

Drew McLellan:

So I have to think some people are listening and saying, “What the heck is happening to this industry? I love the creativity, I love the developing brand, I love telling stories. Is all of this going to become just computer-generated gibberish?” What’s your answer to that?

Paul Roetzer:

I think the opposite. So, I think I mentioned this earlier. But the theme of the conference is more intelligent, more human. Our whole thinking is as we intelligently automate more and more of these kind of repetitive tasks. So these things that are hard for humans to scale, like tagging 1,000 images on an e-commerce site, we’re trying to figure out how to tag 1,000 blog posts. It’s just hard to scale consistently. In reality, this is not that fun. So the machine does that.

What can I now do with the time I would have spent? I may go actually spend time with my client, I may think about the next creative big idea, I might think about the next thing I can intelligently automate, that can continue to free me up to build relationships and be empathetic and do all these things. My hope is that it really does just make us better brands, better agencies because we’ll do the things we actually enjoy more of. Will it take jobs? Will it change careers? Yeah, it will. I’m not trying to pretend it won’t. But I think it’s also going to create new career paths that we can’t even imagine right now.

Drew McLellan:

So, if you were a betting man, in three years, what jobs won’t exist in an agency anymore?

Paul Roetzer:

Media buying, A/B testing, landing pages, writing social shares based off of existing blog posts, scheduling social shares, writing performance reports. Again, they’re not jobs, they’re tasks, and I can give you 200 of them.

Drew McLellan:

Yeah. So, if I’m an agency owner, and this is new thinking to me. How do I begin to think about my agency differently? So, yes, go to the conference. Yes, read all of the books and stuff we’ve been talking about. But how do I actually use all of this to grow my business? So, one of the things I heard you say was learn about some of these tools and think about like we used to about SharpSpring or HubSpot, or any of those? How do I wrap services around this tool? But can I use this for biz dev in terms of can I make this a differentiator for me in the marketplace that makes me more attractive to prospects?

Paul Roetzer:

Oh, yeah. You can niche all over again, like the same things you would have done. Because the way I always explain it is, AI is just smarter marketing technology. So the same way you’ve always thought about marketing technology, like finding the best solution, building services, you’re still going to do that, you just need to know to look for smarter tech. To do that, you have to understand AI and what it’s capable of, and what the common use cases are. Because then you can look at it and say, “I’m still using a core piece of my tech stack. But I have to write all the rules. I have to figure it out as the marketer, what are the workflows and how do they manage? And when do I turn a workflow off versus turn it on? And what CTA should I put on this?”

Those are all the things I just look at and know why I take the risks I do, why I build the things. I can’t stand inefficiency. If I look at something and think, “There is no way that should take 10 hours, that should be 10 minutes.” I can’t do the thing for 10 hours again. So the reason I built PR 20/20 in the beginning was I couldn’t stand the billable hour model and I couldn’t spend my career charging 15-hour increments for one minute of work, 15-minute increments for a one-minute work, and then having to explain it. The inefficiency in that model literally drove me crazy. We’ll have to find a better way.

I look at everything and say if there is waste or inefficiency in a process, I can not try and find a better way to do that process. Even if I’m benefiting from that efficiency, so again, if an agency has a budget of $10,000 to write 10 press releases, good for them. But if I know I can write those in one hour instead of 10 hours, I want to still write them in one hour instead of 10 hours, even if the budget [inaudible 00:46:46].

So, the problem with a lot of agencies is there’s been no incentive to become more efficient because they get paid to be inefficient. That’s how agencies were built. And so, I’ve never felt that inefficiency was an acceptable thing in business, no matter how you splice up the financial side of it.

Drew McLellan:

Well, and I think again, I think it’s about charging for value not for the manual labor, how to deliver the value, which is something I think a lot of agencies are wrapping their heads around in lots of different ways. And certainly your book and the courses that you teach and some of that articulate that. But I think a lot of Ron Baker and lots of other folks talk about value pricing, I just think a lot of agencies wrestle with how to do it.

Paul Roetzer:

They can’t move. Yeah, the whole business is structured on that financial