AI Redraws Marketing's Model at Mastercard

Balaji Sampath:

Hello everyone, and today we are joined by a legend, Raja Rajamannar, Senior Fellow from Mastercard. Raja spent over a decade as the chief marketing and communication officer at Mastercard, building one of the world's most venerable and valuable brands. His approach to multi-sensory and AI-driven marketing is taught at Harvard and Yale, where he is an executive fellow. Raja's book Quantum Marketing is a Wall Street Journal bestseller. He has been named among Forbes’ most influential CMOs, business insider's most innovative CMOs. He is a member of both the Marketing Hall of Fame and the Forbes CMO Hall of Fame. Raja, it's really a pleasure having you in our discussion today.

Raja Rajamannar:

Thank you very much for having me, much appreciated.

Balaji Sampath:

Thank you. So Raja, today is the first day at Cannes. There is a lot of conversation about the evolving role of the CMO as AI shapes our function. How are you seeing this particular role evolve over the last 18 months?

Raja Rajamannar:

So I think marketing as a function over the last eighteen months is still floundering quite a bit. There is a lot of… euphemistically I can say there is a lot of discovery that is happening.

Balaji Sampath:

Okay.

Raja Rajamannar:

But I think people are drifting quite a bit. They're trying to figure out, they’re trying to catch up. You know, AI is evolving at such an incredible pace that it's really hard to get your head around it and then figure out the applications of that, then get your systems up and running for it, get your talent and your partners like agencies up the curve to be able to use and deploy them very effectively. It's a huge journey, but it's happening at such a breakneck speed that I think marketers are struggling. Number one. Number two, I see a little bit of a deja vu here. In late 1990s when digital marketing came about in a big way. Marketers were actually struggling to understand what is digital.

Balaji Sampath:

That’s right.

Raja Rajamannar:

And what does this segment of one mean? How do you bring it to life? And how do you measure? And what is precision marketing? How do you really do ROI in a very accurate fashion? Those things were really areas which marketers were struggling with. And suddenly a new breed of people came out of Silicon Valley. They called themselves performance marketers and they literally hijacked. Good thing is eventually marketing is sort of still one function, but it is a sharp dichotomy. There is the classical marketers and there are the performance marketers. Now it is at an exponential scale what is happening as we see. Today, for example, who is going to define the future paradigm of discoverability of a brand in the AI environment is not marketers, it's actually technology platforms. And they change their stance fairly frequently. They’re very dynamic is again a euphemistic way of putting things together. But the reality is that they are figuring it out, they are evolving, they are seeing new opportunities. So for example, we used to do a lot of marketing to be discovered as a brand through a whole bunch of paid and organic channels. And then when we looked at AI driven, LLM driven results in the GEO or AEO, our brand was not featuring in the top ten. We said, what's wrong? When we started diving in, we found, and it was very interesting, firstly, where do you even look and how do you even begin to understand? Then some companies started coming from the woodwork saying, hey, we will tell you, we'll help you find out what are the relative weightages of where you show up and what kind of mentions you get that will give you the visibility. And shockingly at that time, 40% of the entire weightage was being given to visibility on Reddit.

Balaji Sampath:

on Reddit?

Raja Rajamannar:

Now Reddit was not even a thing for us to really be because we thought that space which is full of you know technology nerds and people who are really a little bit on the fringes kind of a thing. But they were deciding forty percent weightage, right, for your discoverability. We said we need to really rethink. But by the time that's done, the algorithm is evolving. So the agenda is now being driven by folks outside of marketing. If we don't understand it and if we don't quickly come up the curve, we'll be once again left behind very badly. At this time, it's gonna be bad.

Balaji Sampath:

No, actually that's quite telling that 40% of the weightage of discoverability is determined by the platform providers. In fact, Raja, one of the things that that we see in this industry is what we call as the deployment gap. The pace at which AI is evolving and the pace at which enterprise functions are adopting AI, there’s a huge gap.

Raja Rajamannar:

Oh yeah. Right?

Balaji Sampath:

Now, given this gap, where do you see marketeers spending most of their effort today? Are they spending in the right areas or are they… should they do something different?

Raja Rajamannar:

See, I will divide the AI journey into three blocks. Right? So the first thing is the learning and understanding what is even there and make sense out of it and understand the dynamics behind it. That's one full block. As I said, marketers are struggling with that. The second block is do you have your organizational readiness for it within marketing, not just as an enterprise, right? In enterprise, I think there are some companies where other functions are ahead of the game. In some companies, marketing is ahead of the game. But that’s there is a gap between one function and another function. But at the end of the day, unless your organization in totality is ready for it, you are struggling a little bit. And third, because you cannot do everything yourself because you don't understand all aspects of AI, you need partnerships. And that is the third bucket. Who are the right partners for you? So in this scenario, what I see from a deployability, as you mentioned, we are farthest as an industry across number one and number two.

Balaji Sampath:

Okay.

Raja Rajamannar:

Okay, and number one trying to understand and make sense out of it and get the drivers behind. And number two is in terms of enterprise readiness, particularly for the point of marketing. Because unless you have proprietary data that is well organized, even if you have the best of the tools, they are only relying on data that is available. So garbage in, it’s garbage out obviously. And so I think marketers are quickly gravitating therefore to partners. So there are companies which are actually helping marketers to come up the curve and say, hey, we'll hold your hand.

Balaji Sampath:

You know, pretty much I was looking at your campaign just before we came in.

Raja Rajamannar:

Yeah.

Balaji Sampath:

Like your Sherpa

Raja Rajamannar:

Yeah.

Balaji Sampath:

campaign to we'll help you in AI guidance kind of a thing. That's exactly what companies and marketers are looking for. And so I would compliment you on your campaign. It’s absolutely spot on in terms of opportunity and how you're communicating.

Raja Rajamannar:

But having said that, you need a credible, trustworthy, dependable partner who is also incredibly agile. Now, you have got small companies which are coming out of the woodworks and they say we understand it and they’re very dynamic, they show everything, but you don’t know if this company will exist one month down the line or six months down the line. So continuity is a big issue. We don't know whether these guys are putting in some little worms into your system that will suck the data out and then take away. Credibility and trust again comes there. And so I think that's where marketers have to be very careful because I see so many marketers partner with so many companies which you don't know how stable, how credible and how competent they are. Because marketers themselves don't understand AI enough, many times they may not even not know what questions to ask or when the answers are provided to make sense out of those answers. So this is how chaotic the whole situation is and that simply sums it up.

Balaji Sampath:

No, that's fabulous. So one is all about learning, second is all about enterprise readiness, which are really big issues for the companies. Which now brings Raja to a topic that is on many people's mind. It's all about unlocking AI value. And if one needs to unlock AI value in marketing and you also brought about the partnership stuff… while we have external partners, it's also about the partnership that marketing needs as a function needs to have with other enterprise functions. How do you see that changing? For example, the CMO CIO relationship, the CMO CFO working relationship and so on. Any guidance for marketeers here?

Raja Rajamannar:

Yeah, so from specifically from the point of AI, what I would say is you cannot navigate all by yourself. Because now you are treading into waters which are very new and you have to be very careful that there are no swirls out there which will pull you down, right? So your partnership with your CTO or CIO is critical. Like for example, in my role when I was still serving till the beginning of this year as a CMO at Mastercard, we had a person who was a CTO fully residing within marketing? We had a CFO fully residing within marketing. We had a chief risk officer who was fully residing in marketing. So all these people were reporting into me and also dual reporting into their respective functional heads. So we literally created an ecosystem of marketing. We called it the business of marketing.

Balaji Sampath:

Oh wow.

Raja Rajamannar:

So this whole business unit then has got everything that you need. So the CTO, for example, this lady, she understands she's sitting in the room with us in every single meeting and she understands what's going on. She goes back with that to the rest of the IT organization and say, hey, you know what? This is what marketing is looking. So she is a go-between literally, who translates our requirement, understands our desires and aspirations and our constraints and gets the solutions from the IT world. It becomes so damn effective and it's been a very, very productive partnership. Same thing on the risk management side. People don't talk about risk when they talk of AI. Just imagine something, one small mistake going and it becomes public. It can backfire in such a bad way and you can have mud on your face.

Balaji Sampath:

Absolutely.

Raja Rajamannar:

So risk is very clear and that’s just one aspect of risk. Though that risk, somebody has to really understand every single thing that you’re doing. What risk am I taking? If something goes wrong, if this risk materializes, what is going to be the likely consequence? What will be a mitigating plan or a mitigation plan for that risk if it materializes, the contingency plan? You need to think through all this. As a regular CMO, you may not be thinking that. You would not be thinking actually, right? So you have a person who is thinking nothing but that, risk all day long. The last point is with the CFO and with the HR person, both of them are also in my organization. The CFO understands what we need, identifies what investment is required, helps us craft the proposals for investments, and navigates it through the finance system. Very helpful, plus also helps measure ROI. Likewise, the HR person, what kind of talent is required? What kind of talent do we have? What is the gap? Where do we get this talent from to fill the gap? Is it internal retraining or is it external hiring? And how… or it is neither of these two, but you're outsourcing certain things. Like for example, in order to understand certain areas, we actually had one of the leading industry experts to come and talk about AI on a monthly basis to all marketing staff around the world. So he was doing a global webcast and there was such a phenomenal response from the team because right now then they feel A, I am being educated, I am being empowered, my possibilities are being widened, and then that person says, Okay, here are the links, now go and study these links. And by the way, let me tell you, such and such a company is doing like this, such and such a company is doing something else like this. And this person has such a broad industry expertise, when he came and he taught all this to our people, it's a step change.

Balaji Sampath:

Actually, Raja, what you just outlined right now, it looks to me like a blueprint for the modern CMOs to think about how they should structure their own organization in these evolving times. You talked about risk as an area which requires a lot of focus. When companies go on their AI journey within, and especially from a marketing standpoint, there's a strategy and a vision of what you want to accomplish. And oftentimes we see that there’s a huge gap between that vision and the execution itself. Leaving the areas like enterprise readiness and so on that we talked about, are there other things that are actually delaying the execution of your AI initiatives?

Raja Rajamannar:

I think, you know, I would say that certainly in my company, Mastercard, where I still work though I'm not the CMO there anymore, I'm the senior fellow. We actually anticipated a lot of issues that would come up and preparing ourselves so that the fear of the unknown doesn't slow us down. That's the first thing. Because you don't know what you're getting into. So we created a neat little playbook. So we said firstly let's understand everything that is there to be potentially deployed in the world of marketing. Automation, productivity enhancement. These are things which are easier, tangible, quantifiable and easy to test and pilot. So we started doing that in small, small bits and pieces, gain a little bit of confidence that you're doing well or fix if there is any problem and then move to the next stage. That worked very well on the productivity side. And productivity plus also AI and automation hand in hand is what is resulting in that huge productivity gains. Like for example, when we run some campaigns, the productivity has gone up 4X to 8X using AI in combination with automation, right? So it's just phenomenal. So productivity people get it, they gravitate towards it. Then comes the other finer areas. How do we have brainstorm with AI? How do you do creative output with AI? How do I leverage AI platforms to help my clients? So because Mastercard is not a direct-to-consumer company. So we have got banks and merchants on both sides. We connect both of them, right? So when we go, for example, I'll give you a tangible example. So when we go to say a client of ours like say Citibank, Citibank is launching a new card for youth. How do they go about it? After the value proposition is all done, they then want everything to be manifested in a card design that reflects a value prop. It should look cool, it should represent the values and everything, right? So they brief their agency, say then, hey agency, give me some card designs for this audience. This is what I'm trying to evoke as a feeling and emotion in my prospects’ minds or in my consumers’ hearts. Agency goes away after one week or ten days or two weeks they come back with some designs. Now these guys they go through, they say I like this and this and not the other eight, reject. Now, can you make modifications? Go back. Comes back after two weeks. And then eventually one thing is they finalize it. This is it. Then they send it to Mastercard for approval. Because we had to approve the card designs as per the contract. Mastercard, nope, we cannot approve because this is not brand compliant with Mastercard guidelines. Because the card design is very you have to be precise because of the technology involved behind how cards work at the point of sale and at the ATMs and so on. So what we said is this is such a crazy thing. Can we do something? So we created an AI card design studio within Mastercard.

Balaji Sampath:

Wow.

Raja Rajamannar:

Now you are the product manager from Citibank. You can access that and you give the brief, saying that I want looking for the exactly what you would have given the agency. This spits out twenty designs for you that are brand compliant. You choose one or two and you say, I want this change, I want that change. This does those changes, gives it to you, it's all done. In a matter of half an hour, your current design exercise is over.

Balaji Sampath:

Wow.

Raja Rajamannar:

Now it is productivity savings on your side, it is productivity saving side on Mastercard side too, because now I don't need people who are brand police. The AI is actually doing the work in a beautiful way. Same thing we do for music, creating what do you call background score for our videos, for our advertisements. Now, we have given it away to AI because AI, we trained it on all our brand guidelines for the sonic brand and what our melody should be and what interpretation it’ll figure out the genre that you want, the geography that you are in, the audience that you’re doing, and it will give you a what do you call an option, the entire background score for your video. That’s game changing. So these are actually now we are getting into the creative fields, not just productivity. Productivity enhances, but creativity is fantastic. I'll give you one last example. We call it the RFP factory. All the clients, they were sort of floating RFPs from time to time. Because Mastercard has more than 60,000 financial services companies who are our clients and millions more merchants, we keep getting RFPs and daily there are lots of RFPs we are working on. In the past, the salespeople would get the RFP, they would work on it, get to draft zero as they call it, which is answering all the questions, filling with the latest data and all that. Then they go to product, construct the product construct, they go to finance, get the pricing right, and finally they come to marketing and say, hey, make this look pretty. So we said, no, this is not how it will work. It'll be the other way around. We first give you insights, then you go and pitch to your client and so on. So to cut the whole thing short, we started something called the RFP factory. The RFP factory is where we train the AI agent on every single RFP that we ever participated in and responded, which ones we won, which ones we lost, and why we think. Everything is there in a repository. Now, when any bank is now sending an RFP, the salesperson gives it to marketing. Marketing produces draft zero in less than four minutes. And then we have a human oversight. That's where the man mission has to come in. The human oversight actually is paid. So by the end of day one, the salesperson gets draft zero, which he was spending otherwise seven weeks on an average. And then they work from there on. And once they finish the whole thing, it comes back to us. And of course, we'll do it the prettying up at that stage. And so this RFP factory is doing such a phenomenal amount of job, it's gone into very commercial space now. And it comes with very creative constructs for your entire value proposition. It's really brilliant.

Balaji Sampath:

That is great. In fact, Raja what you talked about also is a classic case of accelerating time to market as well. It's not just about productivity but it's also about going to market faster. Now as we are looking at this and this particular space in the next year or eighteen months, are there areas, Raja, where we are not spending as much time as marketing that we should be investing our time and taking it to the desired outcomes that we all seek to achieve?

Raja Rajamannar:

I would say that as marketers, we should be really focused on three areas right now on AI. First is enabling the learning of AI and AI capabilities and applications across your marketing organization completely. That would be the biggest above because if don't even know what it is and what it can do and what the pitfalls are you can fall into traps and you can blow up on a landmine. So this is number one. Number two is in terms of experimenting experimenting with it. Small pilots. I would say that a marketer should set aside at least three to five percent of their budget for experimentation. Take a small pilot in a small geography where even if things blow up, you learn something from it, but the company is not going to be brought down. If you do that, you're in good shape. So the piloting is the second thing, small pilots etc. The third thing is, take a careful look at your marketing organization. On the one hand, a lot of people are scared for losing their jobs. On the other hand, people are there that are continuing to do what they are continuing to do, but they're not evolving. Your talent is going to be super critical. In a world where AI will democratize competition and the entire output is going to look like a sea of sameness, the distinction of any company will come from its creative talent, innovative talent, smart talent all around. I think that’s what marketers have to really focus on the next eighteen months and I think eighteen months is a very generous time frame because eighteen months we’ll already be in a different world which I call the fifth paradigm of marketing. No, actually what really it means is that in the world of sea of sameness, it is still the people who make the difference.

Balaji Sampath:

Totally. Right? It’s people who make the difference. Right. And I think you have given such a lot of things to ponder on and thank you so much for your time, Raja.

Raja Rajamannar:

No, thank you very much for having me.

Balaji Sampath:

Great learning from you and I'm sure the audience will benefit a lot.

Raja Rajamannar:

Thank you very much.

Balaji Sampath:

Really appreciate appreciate it. Thanks.

Raja Rajamannar:

Thanks.