Episode 94 Transcript

Brent Trimble: Welcome to the Professional Services Pursuit, a podcast featuring expert advice and insights on the professional services industry. I'm Brent, and today we have an amazing guest who will share knowledge about running a very creative agency. Patricia Rothenberg is the global chief operating officer and general counsel at the agency 72andSunny. Along with all the Super Bowl commercials that just came out here in the US a month or two back, they are also leading the way in innovation and business operations. Patricia, welcome. Thanks so much for doing this. We're excited to dive in.

Patricia Rothenberg: It's great to be here, Brent.

Brent Trimble: There are two things I want to ask about before we dive into the heart of our conversation. One is to tell us a little bit about the name, the moniker, and the brand name of 72andSunny. We can surmise, but it would be great for our guests to hear about it.

Patricia Rothenberg: It's a great history. The founders wanted to ground the identity of this place, not in their individual identities, but instead to come up with something that would be a statement of optimism. For them, optimism is very much an action verb. It defines the way we approach our work, each other, and our clients. It serves as a foundational principle for everything we do, and it is evident in the outcomes we achieve for our clients.

Brent Trimble: I love it. It is very optimistic, particularly for those of us in less warm climates. We think of California during a tough winter, which we've just experienced on the East Coast. We envision the pleasant, optimistic 72andSunny, which is brilliant. As I mentioned in the intro, the agency does a considerable amount of creative work. While all agencies are creative, the focus here is on consumer engagement, emotive spots, and campaigns that evoke responses. If you're willing and able to share, what did you have in the lineup for this year's Super Bowl?

Patricia Rothenberg: The NFL is one of our longstanding clients, and we had the privilege to create two spots for the Super Bowl this year, both of which were successful. Both spots made the top five in USA Today’s ad meter for the third year in a row, which we are very proud of. The two spots were "Somebody" and "Flag 50," both of which landed on ad meter's top 10. In fact, "Flag 50" was ranked number one by Fox Sports. These spots have had a great impact, and I think audiences are really enjoying them. In many ways, they are an articulation of both our longstanding partnership with the NFL and our teams' efforts to create work that inspires as well as entertains.

Brent Trimble: That's outstanding. I remember those spots, and I'd encourage our listeners to see that creativity in ads that elicit smiles, delight, and even provoke thought. It's a phenomenon unique to the U.S., especially during the Super Bowl. Watching the game and experiencing those surprise and delight moments with the commercials is truly unique. Congratulations on that.

Patricia Rothenberg: Thank you.

Brent Trimble: When you and I were on a webinar together a few months back, the subject of the moment, particularly in agency and consulting operations, was all about AI in many different contexts. I want to get your take on a few points, because you brought up something in the webinar that I thought would be wonderful to hear in a longer answer around this concept of taste and creativity. Of course, we work with a lot of agency partners. We work with consultancies with an agency creative arm. We work with management consultants and innovation specialists that have a CX arm in all shades and manner of those.

AI is providing pressure as well as maybe some kind of existential crisis with some types of shops, and then with others, it’s a real channel for revenue because they're helping clients drive strategy and AI strategic roadmaps for them. Let's focus first before we get into maybe nuts and bolts and costs and whether you are getting pressure from client procurement and that type of thing. Let's talk about maybe that notion of taste and true creativity. We talked about this a bit, and this notion, of course, we see it still in its kind of nascent forms. Everyone's going to AI image generators and seeing that it's almost as good as Y. You had some real insight there. As the chief operating officer, of course, it's going to be in your equation of charting the future growth of the agency. Let's start with that creativity and your take on that as someone who's at the helm of one of the arguably most creative shops in the world at present.

Patricia Rothenberg: I think we all see the potential value in leveraging AI and its capabilities. What I stay focused on, at least for us and for me in particular, is that like any tool, it is an assistant. It is, in its best form, a facilitator to human creative expression. It is not a replacement for it. At the end of the day, what really matters, what resonates with audiences, are creative expressions that are truly touched by human intuition. This means understanding how far to take something, knowing what will resonate with people because it hits a very human tone. If we focus on simply repeating what everyone has seen before, it becomes a race to the bottom, creating too much sameness. Even when AI tries to zig versus zag, it often comes off as stale or weird. We all see it, and there have been recent examples that haven't achieved great acceptance or enjoyment. They are not inspiring.

However, it is a creative act. In the right hands, with truly creative people leveraging not just the tool but their experience and talent, AI can help create something that resonates with audiences. Otherwise, it ends up being very flat. It is a matter of taste. Ben Affleck mentioned in a podcast or conference last year that AI is like a craftsman; it can learn and imitate, but it doesn't originate. It is not truly artistic. AI is a tool, a mathematical equation happening in the background. It is important to focus on marrying human intelligence and creativity with the capabilities of artificial intelligence. While AI is learning a lot, it requires human input to create something memorable and meaningful. We all remember some of those AI-generated spots from last year where the hands looked weird or the facial expressions didn't feel alive.

From a creative agency perspective, it is vital for agencies to stay focused and vigilant on maintaining the differentiation that only comes through human input and creativity. AI tools can help find efficiencies and fast-track the ideation process. What excites me is seeing some of our creatives playing with these tools, pushing to get what's in their heads onto the page. It often doesn't come out right the first time, and it takes many iterations and combinations of tools. Creative development is a human-driven act, and centering this process in human input will always be an essential ingredient in producing truly creative outputs.

Brent Trimble: Most of our listenership understands that there's probably not a future where you simply take a brief, enter it into a large language model, maybe connect it to an image or cinema generator, and suddenly a beautiful spot comes out. That, to me, seems a bit contrived, but it can be part of a toolset, maybe in prototyping, maybe in different facets of the process. When you look at, for example, the NFL spots, the notion of cinematography, angle, emotion, and a real director governing the process still endures. There is demand to have pieces that truly delight the consumer and evoke a significant response.

It is wonderful to hear about the differentiation and the notion of the sea of sameness, and the race to the bottom. Fundamentally, AI models learn from different data sets. If they are influenced by more AI-generated ads, distillation will inevitably occur.

Patricia Rothenberg: Exactly.

Brent Trimble: On the business side, I have been on many panels and have talked to various partners and clients. We are in the software industry, so we want to understand how best to deploy AI for our clients, our roadmaps, and so forth, and have some really interesting insights around productivity. Interacting with clients, procurements, and budgets that need to go further and further, we first started hearing consistently about the application of AI in the business around 2018 and 2019. It really started to ramp up in 2020. Are you getting pricing pressure or productivity questions or that healthy tension between agency and client about budget and how to extend it to make it go further? Does AI come up in those discussions, or is that something still unfolding for you?

Patricia Rothenberg: It's definitely a growing trend, but I don't know if there's clarity about where the trend is or the outcomes of the trend. There is curiosity and interest in exploring its application and potential translation into some cost efficiencies. However, there is not clarity about what that means. There is a lot of capability, especially when it comes to post-production or production where it could really help fast track and provide some savings. These tools require a lot of work, especially if your campaign has many layers to it and complexity. The more complexity there is, the more you need to iterate and combine tools. You still work very closely with your creative teams and production partners to bring the thing to life.

If your campaign has many layers to it and complexity, the more complex it is, the more you will need to iterate and have a combination of tools. You are still working very closely with your creative teams and production partners to bring the project to life. Now, do you need as many sets or can you replicate certain aspects of a scene? Yes. That's where some of that can come into play. It is still a time-consuming endeavor depending on the complexity of your spot.

When we talk about the race to the bottom, maybe at some point, you just plug in the brief and something is generated. The alignment of what's generated to what the goal of the brief was is very much dependent on the nature or the quality required of that particular asset. If you think about the spectrum of what's created as a TV spot versus a quick social post or campaign, all of that is important in identifying whether you will be able to leverage AI from a production standpoint.

For us, it is a collaborative team sport that requires the brilliance of multiple people. While clients are definitely interested in exploring those things, we still need to collaborate with our clients and partner teams to really understand what's achievable.

There's also the tension point I see in some of these questionnaires that we get from clients around the security and confidentiality components of it, the ability, from a legal perspective, the copyright ownership issues, the potential risk that comes from using these especially open platforms that are trained on the internet at that moment in time. All of that is very much a tension in those conversations in the best ways, in the sense of there's curiosity, interest, potential, but also something that we together need to navigate platform by platform in discussing with the client marketing teams and the client legal teams. It's definitely a growing part of the RFP process and/or kickoff process with clients.

Brent Trimble: Absolutely. You bring up an important point, and I'm sure your background as general counsel makes you immediately recognize the potential risks. The last thing you’d want is an intern or first-year junior copywriter taking a brief and lots of client assets and uploading it into ChatGPT. It has been amazing to see how quickly the creative services industry as a whole, including consulting, has responded. We are deploying AI on behalf of clients in a way that protects IP and adheres to standards and guidelines, without releasing them.

Patricia Rothenberg: Which reminds me, Brent, that in many ways, while there may be some efficiencies that you would think lead to cost savings, there are also inefficiencies created because we are all trying to wrap our heads around navigating the use of these platforms in a responsible way that our client legal teams will be happy with. That takes time and requires people, insight, and practice. Often, it necessitates using an enterprise-level platform instead of something free or open. The complexity to navigate creates some inefficiencies as well. We are reaching a point where we still need to create the roadmap for how to do this. The platforms and tools are evolving so fast that our ability to catch up and create best practices that can be consistently applied is a challenge.

Brent Trimble: Yeah, because when you think about it at their essence, and I'm speaking kind of at the cursory level, the large language models, the Chats, the Geminis, the Claudes, the Groks, etc., they want to learn if desire is innate, I guess, so you would be doing them a favor by just giving them unfettered access to our brand standards and guidelines that would make the responses richer but at the cost of your client IP and that's a really interesting topic, probably a great topic for another podcast episode, actually.

We’ll turn to another topic that I feel like the pendulum has swung and stuck because we've had both in, talking to our consulting clients, whether it's strategy, advisory, through our agency clients of all shapes, PR, biddable media to more creative focus, this notion of pricing and selling value and moving beyond the price sheet, billable model, figure out an effort to give the client a price and then there's all kinds of things like hours, reconciliations and burn reports and retainer and all that type of thing. We’ve had folks like Tim Williams on the pod who coauthored thought leadership. He's a big proponent of this. Michael Farmer with Madison Avenue Manslaughter and then Madison Avenue Makeover. But you have put a form of this into practice. I don't want you to divulge a lot of agency secrets or anything, but just in broad strokes, our understanding is you've gone to a pricing model that's really about outputs and outcomes and not bottoms up, billable hour type of staffing profiles.

To the extent you'd be comfortable to share, how is that going? How has it changed the agency? You're again, at the operations helm. Is it something that you see as a plus? Have there been pitfalls? Are you going to continue it? But with what you're comfortable sharing for our listeners, we’d love to hear about that.

Patricia Rothenberg: It's going well. Like all change, it evolves and improves with time and practice. It's allowed us to move more quickly, which is interesting to me because we don't spend as much time on administrative tasks. These tasks, such as the reconciliation process, can be distracting from focusing our team's energies and talents on doing great work for our clients. We definitely feel the benefit of this change, and so do our clients.

It does take training our teams early on in how to navigate having a different kind of conversation, which is still very much centered on ensuring that our clients understand the value we are going to bring and what we are going to achieve for them. This provides them with a sense of comfort and understanding that they are getting value for the money. Changing the ways they have historically assessed value can be a challenging conversation to have, requiring training and a lot of practice. A large majority of our clients are now on values-based pricing models, and our teams have become more comfortable with this approach.

We no longer do individual-based timesheets, which was a big cultural shift. We did it in iterations and made sure to parallel path so we understood it would have the operational rigor needed for both ourselves and our clients. This was part of the evolution. We are much tighter as an operational machine than we were historically. There are many different components to this, but it helps from a tracking perspective and understanding the health of each project for our clients to have a values-based model. Otherwise, it felt like a race to the bottom that was not mutually beneficial.

You can do it, and we still have a couple of legacy clients that do it. However, it feels like we are getting better outcomes both operationally and in the work we produce for our clients.

Brent Trimble: That's fantastic. You have achieved this transformation without a great deal of fanfare and ink in the industry press. You have quietly adopted and transformed the model. It has been successful, and you have migrated many clients in that direction. Of course, there are some legacy holdovers, but that is encouraging. The value being placed on the outcome, the creativity, and the results is a great signal to the market, which has always been in a state of dynamism.

Patricia Rothenberg: What I also think was interesting and probably an unintended consequence was that when you start to focus on the value from an internal standpoint, it allowed us to really pay more attention to what we do. In other words, rather than the who and the how long, it redirected all of that energy to the what are the value propositions. What are the things that we do that actually get us to better creative outputs?

Even unlocking and understanding all the different components of what we do from a strategy perspective was a critical aspect that allowed us to then push further into strategy and develop it as a product itself. In many ways, unraveling the traditional model allowed us to gain better insights into our own products. This allowed us to come to the conversations with clients understanding their business problems and objectives and being able to really align our offering to those because it wasn't about just the staff hours and the staff plan. It is now about what you really need us to do. Here's a growth audience product that we have. This is what it will do for you. I think this allowed us to have a better, more productive conversation with our clients.

Brent Trimble: One of the important things, too, is that I always think about operations in a consulting or agency context. Good operations and progressive, forward-thinking operations build the condition for success for the agency. Ultimately that's for the client. To be in the talent services business, it's all about when you can have that bulwark of solid, sound operations, good data, and understanding where your backstop is as a shop. That's just a boon for clients because then you're more in the client business, not necessarily always in the admin operations business.

That's really good to hear. I think, dovetail, because we'd love to hear—all right, we've talked a little bit about value, and I think that's a big part of the agency, so I probably should use the moniker a little bit. But the notion here, you're an operations lead. As I know that you're a client of Kantata, you're using a central system. In this case, it's ours to really help govern operations. With that, you're synthesizing lots of data inputs about the shop, inputs about resources, and the flow of business. So maybe give us some insight, a day in the life, a week, how you see and use the data and insights about your firm to really govern and steer the firm, because I think it's rare for us to have someone in your role as a guest, but it's very rich to get that. We talk about the operations role, but hearing it firsthand would be really great. I'd love to hear your take on that.

Patricia Rothenberg: One observation I had coming into this role was the combination of how much time I would spend harnessing and capturing data. Most of the time, this was retroactive. We were always looking back instead of having clarity on the key data inputs and the landscape of how we were doing in real time. It was important to be able to project into the future.

It started with figuring out how to gain clarity and harness what was happening in a way that would allow us to unearth some of that data in real time. Kantata has been one of those tools that helped us design a more operationally excellent workflow. By moving to that centralized hub of information, we were able to focus on creating more detailed casting forecasts at the project and department levels. It became easier to facilitate inter-office resource sharing when it made sense.

The tool gave us the ability to assess scoping, allowing us to see the sold versus actual allocation. We could monitor the health of a project in real time and project into the future based on different adjustments, whether the client needed to rebrief or a launch was going to be pulled forward. We could see how these changes affected our resources and the health of the project. The tool provided richer data and insights into our profitability by client, project, and department. This fundamentally allowed us to make informed choices about how to service our clients and navigate our conversations with them in a more data-driven way.

Sometimes our client needed something that overburdened us, but our ability to absorb that, facilitated by the operational infrastructure we built, gave us clarity.

Brent Trimble: Yeah. I think fundamentally in the agency business and management consulting to a degree, there's that reflex to serve and then overserve and exceed client expectations. The challenge, of course, is if you're taking investments on every client, every project or engagement. The notion is, well, we'll just make it up in volume. The math doesn't always work, so you have to strategically do that with both eyes open and make those puts and takes. Every client is overly invested into it; it’s inherent in the business. You can't necessarily make everything a true investment venture. That's really good insight.

Hearing you articulate it in such a precise fashion is going to be a boon, a benefit to many of our listeners, the notion of value pricing and coupling that with solid operations. As we think about wrapping here, what's a parting thought you'd leave for other agency leaders in your shoes, operations lead or those with ambitions to improve operations and maybe even consider moving to a value type of pricing model? What bit of advice would you leave for them?

Patricia Rothenberg: I think I have this within our company a very, I probably use it too often, but this model of crawl, walk, run and really remembering that changing behaviors requires some patience, clear roadmaps, and making sure that at the end of the day, everyone understands it's an art and science. Just because you have all the data doesn't mean that you know exactly what to do. It takes the people to understand the context in which you can be informed by that data, but it is not dispositive of an action. It still takes some judgment and collaboration to really get to a better result. I think that's the truth of it. It's not an overnight kind of thing. It does take time, and you have to make sure that you're taking everyone necessary on the journey with you.

The second part I would say is I think it's interesting, this combination, this confluence of events, the AI component, this desire for efficiency, and if you're still in a historical model, I wonder what that does. At the end of the day, you're adding cost to your business operations whether you like it or not because you have to have enterprise level tools. You might have multiple, lots of tools and licensing depending on your scale, etc. Storage costs, all that kind of stuff starts to add up. When you're thinking about adding cost to your business through these AI tools, it takes time and investment to operationalize them in a client compliant manner like we just discussed. That can be expensive, yet we're still getting more pressure to find those efficiencies for clients. Guess what? If we can achieve some of that, it's going to be recaptured by our clients first. That’s going to be that tension point, that expectation that it leads to lower fees. When you're in a traditional FTE based model, that's probably going to present more challenges because the hours based model is just vulnerable to margin erosion. It gets harder and harder to operate. You're adding resources, adding cost, etc., and yes, maybe you also are able to achieve some efficiencies, but there's also that identification of what that's going to look like from a client perspective in terms of is it going to be in alignment with client’s expectations in terms of reduction of revenue? It's always a balancing act.

Brent Trimble: The hidden cost of that expanding tool stack and how willing and able you are to absorb that when the billable hour model is always more or less under some form of scrutiny. That's a really good point. Patricia, this has been fantastic. I really appreciate the time. We know how busy you are creating wonderful top-tier market-making spots and executions for your clients, so we really appreciate that. I think our listeners will as well. Thank you for joining and spending the time with us today.

Patricia Rothenberg: This has been fun. It's always good to explore and chat through some of the different things that we're all facing because no one has the answers.

Brent Trimble: That's a good point. If you have any surly pre-teen or teenager, next time there's a family road trip with the Rothenbergs in the back seat, you can throw this on. Our producers do an excellent job, and you speak very eloquently and extemporaneously, so it'll be great. You can say, "Here you go, let's throw on the pod," and maybe see some eye rolls. I do that with my kids sometimes.

Patricia Rothenberg: Most certainly there will be. There would be eye rolling for sure.

Brent Trimble: For our listeners, thanks for tuning in. As always, if you have any follow-up questions for myself or Patricia, our guest, we'd love to hear them. Send us an email at podcast@kantata.com and we'd be happy to hear from you.

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