[Keynote] Canadian Music Week Digital Media Summit

please welcome Gary Vayner chock good afternoon um so there's a lot of places I think I can go with this talk I'm going to ask a quick question or two just to contextualize uh the audience in this way can decide where to go with it I also is that mic have you guys been doing Q& A with that mic is that in play okay good so then I I'll also want to do some uh Q& A to bring where my thesis is maybe down to a little bit more of real life or specific to the context of what you guys do for a living um how many people in this room have no idea who I am or don't know that much about me please raise your hand all right that [ __ ] hurts tough start it's a chilly welcome Toronto um all right I kind of thought that would be the case uh I apologize to other 30 40% I'll give a little backstory of who I am because I think it will help really structure where I want to go with this talk before I do that I'll make a statement that I think really matters um no matter what you do in this room um at the end of the day the reason I care about social media is because it sells [ __ ] and I think that's an important thing for everybody to understand I'm not a techie I'm not that romantic about technology I didn't own a computer until I was 19 years old um I'm not super worried about the gadgets or the technology actually I'm super not interested in it at all what I'm interested in is human behavior and specifically because I'm an entrepreneur and a Salesman I care about what it does and how it does to end to a goal within Commerce right I think about how it's impacting Parenthood and you know and dictatorship and all the other cool things but specifically where I have a depth of knowledge is how it makes you buy things you know my enti I like to tell people that I suck at 99% of things in business that I'm actually not that good at a lot of things but the reason I do think that I will buy the New York Jets which is a professional football team in America that will cost me billions of dollars is because I have one move that has brought me enormous value in my career and that is I bet on the things that I think all of you are going to do before you think you're going to do it how many people in this room 7 years ago said to themselves or to somebody else the following thing and remember lying is the devil how many people said this thing to themselves or to somebody else five six seven years ago I'm not getting a Facebook account that's for kids I will never be on Facebook raise your hand don't lie don't get lazy on me of those 40 people how many of you are on Facebook or have a Facebook account that right there what you just saw is basically all I do I know if this crowd was a little bit older and there's some scattering of it I'm old too uh you know 15 20 years ago people said they would never get a cell phone there was a I mean people adamantly were like I'm not getting a cell phone this pager is [ __ ] good enough right like that's how people rolled like that's what people believed and on and on I argued with my Forward Thinking friends two years ago the ones that pioneered the povs around Facebook and Twitter I'll never forget this at South by Southwest two years ago in a whole T room with 20 30 gals and guys that are supposed to be so futuristic and we had an argument where I and one other guy were on one side and the other 18 were on another side on their adoption and behavior around Snapchat why they thought it was stupid and that they would never use it all 18 of those forward thinkers now snap me pictures of their boogers or whatever the [ __ ] they're doing right I mean this is something I constantly think about and this is something that will never change as a matter of fact it's super interesting for me to be here today because under the context of this room it's even more interesting to me let me explain I was born in communist Russia I grew up in America the liquor business I did grow my family business from a three to a $60 million business the reason I am no longer 100% in the wine business is completely predicated on law laws American laws around alcohol are only second worst to you guys right you know it's a it's a really broken system and a lot of protectionism through laws breaking down opening then closing back up you know when I think about the radio industry in the US versus Canada and like the Spotify and the r radios and things of that nature I'm always fascinated completely fascinated by the notion of people making businesses decisions hiding behind rules legalities or governments because they're just a matter of time and to me that is a fascinating variable what I think about and I'll get back to that a little bit because I think that's specific and I think we'll save that for Q& A let me make this statement I know I still haven't given you my bio let me make this statement 99% of the people in this room and 99% of the organizations represented in this room do not mark it in the year that we actually live in all of my time is spent all of my upside in my career has been predicated on that one move that I told you about which is doing the things I believe you're going to do before you do it's not because I'm Nostradamus it's because I pay attention and I get my hands dirty in the reality of the current Marketplace I spend all my time in two places the clouds and the dirt nothing in between I theoretically Strate Rize and then I actually execute within those channels the day Vine came out last year the app Vine familiar with Vine raise your hands I'm just trying to context here great when vine came out last year I'm running a 300 person social media agency I am who I am and out of all the employees all 300 nobody spent more time playing with vine on the first two weeks that it came out and I get home at 11:00 p. m. from 1100 p. m. to 2 o'clock in the morning for three and a half weeks I played on Vine every day because the thing that really pisses me off and I'm about to get some Smiles in the crowd usually from the younger set the thing that really pisses me off is when people have points of view on products that they don't even [ __ ] use right I was and that to me is the most interesting thing back to Marketing in the year we live in let me paint you a picture I was in a boardroom the other day with a client billion dooll company markets to 12 to 19y Old females mainly and a little bit of 12 to 19y old male and I basically set out the new year's plan where most of the money both creative and distribution above the line below the line is completely forced into the environments of Instagram Snapchat and Vine and I give all the data compelling reasons I mean anybody in this room that even has a pulse to what's going on understands exactly why all the money should be spent there creatively and distribution wise but knowing that I'm dealing with a Fortune 500 company and an executive team that doesn't necessarily know all those nuances not lucky enough to have kids in that age just yet got to know your audience I give them all the data all the rationale to why at the end of that meeting gent looks at my face and he says Gary this is great he goes I get it but you know what I don't think we're going to go with this because very honestly I just don't get Instagram so I look at his face and I said that's great dick that's his name I go that's great dick that you don't get Instagram but 200 million of your customers do and so I stand here in 2014 and I ask myself why in the world are people marketing like it's 2009 2007 2004 2001 1999 and the answers are clear some people just don't see it I respect that but the answers are much more complicated than that aren't they they're because there's political reasons not to do it or my favorite they don't understand the ROI of it yet meanwhile we've accepted the ROI of traditional mediums on ludicrous horseshit with all due respect Allah everybody here who's ever run a print ad in their career has predicated on eight times distribution of the print magazine or newspaper because John might leave Sports Illustrated on the train and Ricky might come along and pick it up and go to page 147 we've accepted this we've accepted outdoor media Billboards I've spent plenty of money on them in my career because some dude stood on top of a building one day 20 years ago with a clicker clicked it a bunch of times and we mathematically predicated that out into the volume growth of population over the last two to three decades we've accepted neelon ratings which I don't know for Canada but in the US 5,000 boxes representing 300 million people's television viewing habits so we've accepted in marketing and advertising what anybody with any hardcore math discipline is going to look back on in the future now that we live in a digital environment as the Dark Ages because the companies I'm an investor in Uber and Birchbox and all these other companies that have done well or the retail company that I run or the retailers that I'm involved with who have direct response business where you spend money and you see what it brings back they're all pouring their money into Facebook unpublished posts right now meanwhile while everybody else is reading ad age and saying Facebook organic reaches down I'm not going to run any more Facebook we are living in really interesting times and most people aren't executing on so many different variables they can't show the ROI look I get it you want to show the ROI of your Instagram campaign and you've got somebody disciplined above you that doesn't know how to quantify it and you walk in and say hey we did really well this month we got 1,700 Hearts that's a tough thing to sell through I respect that at the same token there is a fundamental reason why big companies go out of business because they don't market and execute in the world we live in it's why they don't they wait four to seven years for people to create a reporting mechanism to justify what's going on in reality while everybody else in innovates and executes and takes their business Blockbuster didn't have the data to tell them why to buy Netflix for $40 million eight years ago that put them out of business and so we go on and on look this is the same thing over and over I built that wine retail business from $3 to $60 million because in 1996 when I launched wine library. com which was one of the first Ecommerce wine businesses first of all that was ridiculous and early most people in 1996 told me they weren't going to put their credit card into a computer and for the people in here a little bit older than their 20s remember really debating that first time they ever did put a credit card into a computer because the one thing we're grossly underestimating in this room including me who fancies himself in knowing [ __ ] is that the Internet is just begun how many people in this room remember the world pre- internet you actually remember living your life and there was no internet raise your hands raise it high yep most of you most of the people in this room remember the world pre the internet forget about [ __ ] Snapchat or Vine or Facebook or YouTube or all the things we spend all our time on talking about which all didn't exist just 10 years ago the internet itself is basically 20 years old and I know there's some nerd in the background like oh actually 1959 I know [ __ ] nerd but I mean when normal people went on normal people have been using the internet for about two decades we're just starting and everybody in here is grossly and I mean heavily underestimating the culture shifts we're living through these are massive culture shifts and so the behavior of our consumers in marketing and how they decide to buy and most of all in the way we communicate with each other is massively changing massively and our actions and the way we advertise and execute and actually live our lives on the consumer side you're marketing and trying to make [ __ ] happen very differently than the way you're acting as a consumer on the other side of it because you have vested interest in the success of the marketing over here and you don't over here we are now using technology to get away from marketing at all costs how many people here now besides watching live sports and award shows watch most television on their time you know PBR to Netflix on demand what how many people in this room watch most television on their time raise it I want you to everybody to look around we're talking about 80% of this room how many people in this room have spent 2014 fast forwarding every single ad when given the opportunity please raise your hand Oh weird all of you Meanwhile my clients at Boehner media the biggest clients in the world in Canada and every country meanwhile they are fast forwarding every user is fast forwarding meanwhile they're spending tens of billions of dollars producing and distributing commercials trying to reach you to tell you your story and you're not seeing it even if you're lucky enough that somebody dropped the remote control off their bed and the [ __ ] commercial got to you even if that happens even if there's the luck of that happening all of you in this room the second that thing goes to a commercial and they're telling you a story that you don't want and you're not there for you're pulling for your laptop your iPad or your phone and you're texting about what you just saw catching up on email the thing that we're all battling for whether you're EA or stumble upon a radio station whatever B2B you've got a platform PR writer I don't care what you do the one thing that binds every person in this room every single one regardless of career is we're all battling for attention the commodity that everybody in here wants the one thing that you all want every one of you want in your career is attention get my attention then tell me why I'm so awesome why I should buy ads from you why I think you're good why you bring me value in what you're trying to tell me and the supply of attention has not grown as a matter of fact it's decreasing because the volume of stuff being thrown at us has exponentially exploded over the last 10 to 20 years and now we have a battle we have a supply and demand issue and so people think that they can do the same old thing they did 10 years ago to break through Direct Mail outdoor radio look how many people in here now when they drive listen to the music that's on their phone how many people do that I'm just curious that's about 25% of this room that's about 25% more than 5 years ago right and these Trends happen and they change and things happen and so I don't think traditional media is dead I don't think a commercial's Billboard's dead I don't think a radio ads dead direct mail I don't think they're dead I just don't think they're worth the price they were five years ago it's as simple as that and that's business right outdoor media do me one favor when you leave this keynote you're driving home tonight please look at three people when you're driving I promise you two of the three people driving are looking at their cell phone right people so you think they're looking at Billboards my friends people aren't looking at Billboards they're not even looking at the [ __ ] road anymore who here can't wait to go to their laptop or tablet and click a banner ad who's fired up 0. 1% click-through ratio when in our lives has 0. 1% of anything been deemed a good thing these are the reports back at media buying agencies that everybody's high-fiving that like oh not bad 01 I'm sting like what the [ __ ] are you talking about that is ludicrous now let me paint you a picture of what I mean by Marketing in the year you actually live in 1997 I launched wine libraries email service how many people here have done email marketing at some point in their career been close to the email marketing awesome a good amount you ready for this one you're going to love this one in 1997 400,000 person email newsletter I had 89. 9% open rates yeah [ __ ] that we could never achieve now you know you're a hero at 30s something hero right 89% open rates like 63% click through I me like stuff that you couldn't even begin to make up right now you know why in 1997 there was a different world and I'm going to make a statement that I believe in more than anything more than I believe that the sun will actually come up tomorrow I know that marketers ruin everything and I'm a proud marketer I am that I can't wait to ruin Snapchat I do you know why yeah I'm serious you know why I stayed up for 3 Days 3 weeks excuse me on Vine to figure out how to ruin it that's the truth now the nice thing is ruining it these days is making native ads and it's getting a little bit better as we continue to hack at this culture but that's what it is marketers hadn't ruined it yet Groupon and living social hadn't come along yet and emailed you [ __ ] you didn't want every day 16 times a day marketers ruined email marketers by that purpose are ruining social media looked a lot different in 2006 and 7 than it does right now it's what we do it's how it rolls so when I had 100,000 followers on Twitter compared to the million that I have now I got dramatically higher click-throughs and engagement on the stuff that I tweeted out because the supply and demand curve was in a good place we just ruin things

it's what we do banner ads want to talk about banner ads in 1996 when I ran my first banner ads we had 24% clickthrough 2. 4 out of very 10 people that went to a website clicked the banner ad CU they're like o what's this [ __ ] thing right like that's what it was and when I and when Google AdWords came along I bought the word wine for 10 cents and owned it for 9 and a half months before anybody bid me up and now it's a $14 word right and then when Banner retargeting cookie ads came along I cookied the [ __ ] out of all of you when people thought you ate that [ __ ] right I knew what it was I used it and it worked better it converted more we weren't used to being followed around people even sent emails like wow you guys are buying a lot of ads everywhere because we didn't even know that was the behavior yet and so over and over it's a very simple game Innovation comes along there's opportunity first move Advantage there's a value proposition it gets more

expensive Facebook dark posts if you're an app developer that's really understands what's going on how many people here are familiar with the term Facebook dark posts raise your hand all right so let me really get into it Facebook unpublished posts is the proper terminology dark post is the slang term Facebook right this second you have the ability to Target every single person on Facebook you don't need a single one of them be a fan you have the ability to make a picture a video an infographic whatever you want and then Target the living [ __ ] out of it to data levels that we've never seen before downright to like MasterCard Behavior you want to sell some soap pretty cool to like Target somebody who actually bought soap in the last 30 days want to buy soap that wasn't your brand soap in the last 30 days you can Target the 300,000 people in the last 30 days that bought a soap that's not your soap and you get to put something in front of them targeting at a level we've never seen before the conversion rates that I've seen on Facebook unpublished posts in the last 3 months are the single best digital Asset Marketing thing I've seen since Google AdWords in 1999 2000 yet the hyperbole of organic reach drop going down has all the marketing Rags talking about why it's bad and why debating people if they should double down or triple down or get completely out this is the common story over and over again and so what I implore everybody understand is this it's very simple you know I know you know I'll talk about Walmart I know it's more of us Centric play Walmart's out of business the biggest retailer in America is out of business it's just a matter of time now right they didn't do the right strategy to the world we're about to live in over the last decade Amazon did and the game's over it's over they have the end Whoever has the End customer wins Amazon has the data has the customers they're building 13 warehouses in the US right now to do same day delivery within the same day of your delivery and it's over because we're lazy we value time that's what we care about when I invested in Uber people are like nobody's going to pay for that I'm like they may not pay for a premium Black Car service but people are going to buy time because you value money your health and time that's what Uber sells time that's what Amazon's going to sell with same day delivery time that's where we live in and so we're living through massive culture shifts one that I think people are grossly underestimating one that people get very comfortable in oh we thought all these things were going to happen then they don't and then they really go out of business the reason Borders bookstore went out of business in the US was because Amazon came along in '95 got all the hype the 2000 internet bubble came Amazon lost 91% of its value in the stock market not in actually how they were doing with customers in the stock market and borders decided they were going to take advantage of this opportunity and they let Amazon do their distribution online they didn't build their own capabilities and Amazon paid them there's literally border Executives I know that said they'd laughed in the boardroom when they made the deal that Amazon was going to do all the work for them and they were getting paid meanwhile Amazon was just collecting customer data and in 36 months borders was basically out of business the key thing is this everybody wants to know what the ROI is right now and just because there isn't an Roi at this exact second doesn't mean that it's not valuable to do the lack and I come from retail family business where it wasn't about how many Impressions you got or how many awards you won in [ __ ] can it was about if we didn't sell [ __ ] P Noir we weren't going to eat right so it was results driven and the only thing I ever talked about and thought about and the only way I story told that I marketed was about lifetime value and percentage of wallet spent something that I have heard zero of since I've come to corporate and agency America and that to me is the opportunity who here actually cares about their customer who here wants to have a customer forever execute and it starts with having a great product but it also means how to property storytellin the world we actually live in contextually to the platform the amount of people in this room that believe they have a story to tell they make a video or have something to say and then use social media as distribution is by a high percentage most people here look at Facebook and Twitter as distribution channels I'm going to do something over here I'm going to take the link and I'm going to post it on Facebook and tter and drive people they treat social like email marketing what they completely lack and where all the upside is and what I basically wrote about in the book is storytelling contextually within it so the results happen within it no reason to send a mouse somewhere else people I mean people really get an emotional romantic point of view of driving people out of social to their website so their website can do their thing when at the end of the day as long I mean would you care if you sold somebody in your house or at the park doesn't really matter as long as you sold them and so there's just a lack of strategy in my opinion one by the way one man's point of view that spends all his time thinking about why in the world are my friends raising a million dollar starting a company and then heavily hurting companies that have $500 million in market cap why are we living in that world right now a world where companies within 36 months are able to massively disrupt the incumbent that has so much more money and so much more Legacy so much more brand equity and so much more infrastructure and it's happening because the internet itself has eliminated the costs of infrastructure to go to the consumer and storytelling in an efficient way and in a quick way and meanwhile what I spend all my time in not trying to allow my customers to spend money on dumb [ __ ] because that's what they do all day long we're spending money on dumb [ __ ] and we're not storytelling to where the consumer is and this is happening at scale the fastest growing demo for 40 to 60 year olds right now is the fastest growing demo on Instagram Instagram's fastest growing demo is a 40 to 6-year-old the people that are taking the most selfies in the world growth curve in the last 6 months are 43. 3 year old females 43y old females are the highest growth curve in selfies moms are [ __ ] pulling it out and snapping the [ __ ] at of selfies at a scale that nobody thought and so we're disregarding a very important fact I want to really pound this one home for you I really want you to hear this one because way too many people are going to pull the my customer's not their card or My Demo is not there that's a favorite [ __ ] card that I want to [ __ ] burn right now let me explain to you what's going on with your [ __ ] card right your my customer's not there let's talk about that the highest conversion of consumption on Facebook right now is 46 to 63 year olds because they've gotten into the habit and they're not leaving it's why your mom still has an Yahoo email address right that kind of [ __ ] number two if you look at the behavior data the clothes she buys the way she goes out and how often her routine the way she engages on social right now the average and this is an American stat so I don't have a for can I apologize the average bless you the average 44y old female in the US's Behavior maps to the average 29-year-old American woman's behavior only 10 years ago we are living through the youthification of our society for anybody here over 35 40 that can remember their parents at some point at that age everybody in here that's capable of it think for one second right now of your parent at the age you are right now and I promise you they were much older than you their behavior was much older we're living through a massive youthification and it's because of the shift in technology how many people here have a daughter or son that's 15 to 22 years old raise your hands thank you so for the 30 of you do you remember the conversation you had to years ago when you said Hey Little Ricky I don't care how you talk to your friends but when your mother and father call you pick up the damn phone remember that one just curious how'd that work out for you let me explain to the rest of the crowd how it worked out there are grown ass men in this room in their 50s that texted LOL and OMG in the last 24 hours that's what happened Uncle Bob's like where's my emoji con right so shit's changing and it's funny to laugh and it's interesting to watch and you're seeing it anecdotally in your life you're going out you're seeing it you're tasting it and you're disregarding it in your execution in your marketing and running your businesses it's just the way it is and honestly I know there's a huge crossover in here 20 to 40% of this audience that knows it sees it but can't do anything about it because as the layers go up it gets killed somewhere along the line because there's no Roi there's no belief in it it's not safe you can't do it still doesn't stop from it being wrong and so that's it that's how I see the world I see enormous opportunity for the people that want to Market in 2014 and 15 want to respond to the behavior want to understand how many people here have done SEO or sem Marketing in their career Google came out recently saying

that Google AdWords in the last six months are down 20% in click-throughs Behavior marketers ruin everything Google was pure remember Google 99200 2001 2002 remember Google where you search something and the first result was always what you needed it's how they got there that's how they became Google Now ads everywhere and you click them at first right because they still were kind of on track now it's such a mature marketing funnel that a lot of those ads aren't as valuable to you you're not clicking them as much and now Google search sem AdWords are going down in the other direction no different than everything else no different than the social ads in the next half decade no different than everything else the opportunity the singular opportunity is to execute in the reality of the marketplace not too early I know augmented reality is coming it's coming I know smart refrigerators are pants are coming but I'm not marketing smart pants real quick because I've seen it already smart pants are you guys ready for smart pants Jesus You're Fired Up let me tell you real quick about smart pants imagine putting on your pants in the morning and your pants texting you and saying hey Lou eat a salad today fat ass smart pants smartpants connected to your phone in a world where we all pay with our phone which is basically a half decade problem at this point where most of the POS systems just have to be updated so when you're paying with your phone and your phone's connected to your smart pants and you put on your pants in the morning and you're running through the airport like I'm going to be in an hour and I haven't eaten all day so I'm hungry so I'm going to go really quickly to a Burger King or something of that nature order a Big Mac and then I go to pay and it's declined and it again reminds me to eat a [ __ ] salad that's a real reality or the smart refrigerator where you put a Bud Light into your refrigerator sixpack and you pull it out you put another Bud Light sixpack in your refrigerator you drink it over 3 days you pull out you put another one you drink it over 3 days now the refrigerator knows your drinking habits about 2 a day and when you're down to two the refrigerator reorders the Bud Light for you to be delivered at your home so who's that going to disrupt the liquor control board possibly my wine shop for sure Costco Walmart Tesco guys we are living through massive disruption that everybody's glossing over and wants to not say anything's happening because they have vested interest in it staying the way it is cuz that's what they're comfortable with or ROM think about it's how they make their money or their bonuses but none of that ever it's just how Innovation Works it's how capitalism Works none of that stops the progression and if you're closely paying attention the progression of innovation has never been at a speed of this level because the infrastructure is now coming into play this is the Second Industrial Revolution everybody sleeping on it and I highly recommend you wake the [ __ ] up thank you than