Minnie Wang
Jun 10, 2024

BlueFocus CEO: Half of digital marketing work and positions will be replaced by AI

In an exclusive interview, Pan Fei, CEO of the largest Chinese marketing agency group, is unapologetic about using AI to replace human outsourcing, leading creative output, and eventually replacing human employees.

Pan Fei
Pan Fei

In April, one year after embracing AI, Chinese marketing agency group BlueFocus released its annual report. Revenue in 2023 reached 52.61 billion RMB (US$7.26 billion), an increase of over 43% from the previous year, marking the first domestic marketing company with revenue exceeding 50 billion RMB.  

In a public letter to its investors, CEO Pan Fei said BlueFocus has experienced fundamental changes in business models, process improvements, organisational structure, and talent development by adopting what it calls the ‘AI² strategy’ since 2023. The new ‘human + AI’ working mode has achieved 100% full coverage, with 36% of employees spending more than three hours per day on AI. In the future, the company hopes that more than 50% of staff can reach an average of five hours or more per day of ‘AI time’.

In an exclusive interview with Campaign, Pan shared his insights on the current and future applications of gen AI within BlueFocus Group. He also discussed the potential for Chinese brands to expand globally in an era filled with uncertainties.

As more and more Chinese brands go global, BlueFocus aims to stand out as the ‘global cross-border marketing-first brand’ in China. However, its CEO maintains a prudent approach towards global expansion, stating that the company’s core priorities are building new capabilities with gen AI, as well as opening up the second growth curve of its overseas business.

“We are very clear that if these two problems are not solved, the scale advantages we have accumulated in the past will lose their meaning,” he said.

With 18 years of experience in brand management, digital marketing and public relations consulting, Pan embarked on his journey with BlueFocus in 2007. He initially served as the general manager of BlueDigital Shanghai. His leadership and strategic vision propelled him through the ranks, leading to his appointments as the senior vice president of BlueDigital, the CEO of BlueMedia, and, eventually, the CEO of the agency group.

With a diverse portfolio spanning automotive, FMCG, gaming, ecommerce, internet, 3C, finance, pharmaceutical, and luxury sectors, Pan has collaborated with brands such as Jaguar, Ferrari China, Shanghai Volkswagen, Mercedes Benz China, Pepsi China, P&G, Nike, JD.com, Tencent, Huawei, CMBC, Bank of China, China Merchants Bank, and Deutsche Bank. He is at the forefront of BlueFocus’ digital transformation, spearheading the strategic planning and execution of AI initiatives, overseeing the mergers and acquisitions of Domob and Madhouse, and establishing BlueFocus’s overseas business and intelligent marketing business.

Campaign's edited interview with Pan follows below: 

Blue Focus surprised the market with rapid growth in 2023. Can you elaborate on the key factors that you believe contributed to this business growth?

BlueFocus's growth structure is composed of '1 + 1 + X'.

The first significant growth is from our overseas business. Initially, the companies venturing abroad were mostly internet-based, but now many high-tech and automotive brands consider overseas expansion as one of their most important strategies.

There are two main reasons for this shift. China's capabilities in mobile internet and intelligent manufacturing have experienced an overflow. This overflow is not in excess but the result of China's higher-than-global-average construction and manufacturing levels in mobile internet applications.

Another reason is the emergence of globally leading companies such as Tencent, ByteDance, and TikTok during the internet era. I believe this overflow of internet capabilities and manufacturing has made the trend of going overseas and the saturation of the Chinese market more apparent, leading to a stronger momentum for brands going abroad. We can clearly feel this trend, so BlueFocus' overseas marketing business has grown the most.

The second block is our domestic intelligent advertising segment. The market now demands higher integration of 'brand, effect, and sales' in advertising placement, with better ROI performance. These three aspects combined have brought good feedback in various aspects of our advertising placements, resulting in significant growth.

The third block to mention is AI, which can be considered an X-factor growth point. It is a new capability that cannot yet be scaled. After practical application, we can now fully empower AI in various daily business tasks. I expect AI to have extraordinary growth every year.

How can AI effectively reduce costs and drive growth for your business? Has AI truly replaced human outsourcing at Blue Focus, as claimed last year?

Last year's news about 'stopping outsourcing' sparked a lot of discussion outside. If we were to choose again, we would still make this decision. First, it represents our determination to go ‘All in AI’. Secondly, when AI can complete basic creative work, we will definitely choose AI first.

In fact, we are not 100% opposed to outsourcing; when an external company is stronger than us in a specific capability, we are still open to cooperation. The core message we want to convey is that all processes related to AI are given the green light, while traditional methods still have conventional conditions to constrain them.

BlueFocus generates thousands of pieces of content daily using AI for our core businesses such as integrated digital marketing, overseas marketing, and intelligent advertising. These works are used in 68% of client projects. Gen AI is reconstructing our production efficiency, visibly improving BlueFocus's overall business production efficiency by about 50%. Gen AI is helping BlueFocus create revenue and foster new business models: highly AI-empowered cross-border ecommerce product design, generative influencers, generative advertising, and more are opening up new imaginative spaces for us.

In the past year, we created nearly 300 real AI marketing cases, with AI-driven revenue reaching about 108 million RMB (US$ 14.9 million). In 2024, this figure is expected to grow by 5-10 billion RMB (US$690 million to 1.38 billion), achieving roughly tenfold growth. We are building our own industry model based on large models and striving to become our AI digital infrastructure as soon as possible.

To what extent does Gen AI influence your business decisions, particularly with regards to layoffs? 

Gen AI is reconstructing our organisation and culture. Organisationally, from recruitment to promotions to incentives, AI has been embedded in all aspects of our assessment. In the long run, a 'human + model' will replace the current 'human + APP' mode. Now, the super APP mode of the mobile internet paradigm will likely evolve into the 'human + model' paradigm.

I prefer to understand this model as 'industry model' or 'vertical model'. In the future, 50% of digital marketing work and positions will disappear, replaced by gen AI, digital employees, and internal super assistants. Only the remaining 50% who outperform machines, with stronger creativity and imagination than machines, may walk more firmly and competitively.

To facilitate the shift to AI native mode, what measures can be taken to support employees in transitioning from an 'All In AI' approach to an 'AI-First' mindset through training?

From the perspective of employee training, we focus on internal development, enhancing existing businesses and AI's core capabilities. We have formulated specific AI training and talent development strategies for different employee groups:

For all employees:
We have established an AI-specific knowledge base and periodically launch AI application sharing to equip all employees with basic AI knowledge and application capabilities, understanding AI's impact on business, to ensure employees can access the latest AI knowledge anytime, anywhere.

For AI enthusiasts:
For employees with a strong interest in AI, we offer exclusive AI small courses, providing in-depth learning and practical opportunities through small-class practical projects focused on specific application scenarios, exploring the latest AI technologies and trends, improving AI skills, and cultivating intermediate AI talent.

For AI pioneers:
For employees who excel in the AI field, especially those with AI native thinking, we organise the 'Million AI Seeker' event to find and identify top AI talent through different works and tasks. We provide them with cutting-edge AI technology training, organise AI Talk sharing sessions, promote AI innovation projects, and give substantial rewards to teams and individuals who achieve outstanding results in AI projects.

For high-potential talents:
We will fully support employees with high comprehensive quality and potential, selecting and cultivating young, high-potential talents with AI thinking, professional capabilities, leadership, and cultural recognition. Through customised training and development plans, providing rich and cutting-edge AI resources empowerment and overseas AI study opportunities. We aim to cultivate management talents who can drive business models and organisational structures.

The latest ESG report from BlueFocus indicates a decrease in the number of R&D staff. What are the company's strategies for increasing investment in R&D and AI-generated content (AIGC) in the near future?

Although BlueFocus has accumulated good practical experience on the AI path, the tremendous changes brought by gen AI are just beginning. Facing an increasingly competitive market environment, we need to continue steadfast exploration and practice, creating more AI marketing cases, collaborating with the world's best AI technology companies, and integrating every core business line with AI to create a truly AI-native model.  

Last year's financial report disclosed nearly one billion RMB (US$1.38 billion) in investment; and this year's R&D investment will grow by about 30%-50%. During this process, we will invest a large amount of funds in AI infrastructure and strengthen investment in talent.

Could you please share some work from BlueFocus with the support of AIGC?

Previously, we were invited by CCTV to co-create the video 'AI Dream Qingming' using AI-native production methods, restoring the Qingming season with ancient poetry using AI. Through intelligent search, we can quickly integrate various related information and import it into the knowledge base for dialogical creative work. Then, by linking multiple intelligent agents such as brainstorming, script creation, and prompt optimisation, we can quickly make keyframe plans, and finally, through image-to-video editing, produce the final video.

AI Dream Qingming

For example, we created the world's first AI-generated interactive ad starring users for CATL (Contemporary Amperex Technology Co. Limited). Users only need to choose their gender, face shape, travel start and end points, and upload a photo, and within about three minutes, they can 'travel 800 miles' and get a personalised driving blockbuster generated by AI starring themselves. Through simple face-swapping technology and multi-scene intelligent editing, it not only provided a new advertising experience but also directly made users feel the performance of CATL batteries - charging for 10 minutes and travelling 800 miles. Among the users who participated in the interaction, the retention rate of those who finally followed and retained information reached 90%, improving the efficiency of traditional page advertising from browsing to retention nearly tenfold. This showed us the great potential of AI in the advertising field.

AI-generated interactive ad starring users for CATL

Additionally, BlueFocus's virtual influencer, Su Xiaomei, continuously produced creative cultural content in fields such as virtual short dramas, urban cultural tourism, and offline events with AI technology. She appeared on China Central Television's May Fourth Gala, served as Meishan City's digital spokesperson and Song culture recommender, helping Su Dongpo's culture go overseas and was listed among the top 10 in China's virtual digital human influence index report for two consecutive years. 

Campaigns starrring virtual influencer Su Xiaomei

Furthermore, BlueFocus created the VR immersive exploration cultural tourism product 'Hua Xia Tour of the Central Axis', using the latest generation of spatial computing and VR production technology, combined with LBE large space positioning capabilities, allowing users to achieve full immersion, interactive, and free exploration through VR headset devices.

How can Chinese brands harness the full potential of AIGC when expanding internationally?

Overseas, the martech tool market is more mature, with thousands of segmented tools, and many SaaS products and services are being reconstructed through gen AI. Therefore, future marketing agents can better call upon tools in different fields to help overseas brand marketing departments complete various work tasks, such as integrating data from different sources to form marketing insights based on business issues; creating new content lines empowered by human-machine collaboration and AI; or integrating tools like ecommerce customer service and logistics management to achieve more automated sales and customer experience management.

In this case, not only can big brands get help from AIGC, but it also means greater opportunities for small and medium-sized brands, truly achieving a one-person marketing department and greatly enhancing marketing productivity. BlueFocus is also building its own marketing agent and tool product matrix based on large underlying models through data insights, multimodal creative capabilities, and professional workflow integration.

BlueFocus demonstrates transparency in the representation of women in the senior management team, with a rate of 34%, as disclosed in the ESG report. Are there specific internal projects or initiatives that you would like to emphasise for the development of female talents or leaders?

The company pays great attention creating more opportunities and an equal workplace environment for women, encouraging and supporting them to bravely express themselves and show self-awareness in the professional scene.

Female employees, while pursuing career achievements, also face the challenge of balancing life and work. Therefore, we have specially set up a parental leave plan to help them coordinate the needs of work and family life, ensuring that women can fulfill their work responsibilities while taking care of their families. To further cater to the special needs of female employees, we have established a mother-and-baby room within the company, providing a comfortable breastfeeding environment and necessary support. We also hold exclusive celebration activities at appropriate times to express our recognition and appreciation for the unique contributions of female employees.

Do you work with clients in the fossil fuel industry? If so, how will BlueFocus assist these clients in aligning with the agency’s sustainability principles?

We understand that under the theme of changing times, we must promote the energy industry towards cleaner and more sustainable directions while also making the public more aware of the reality that 'energy' is ubiquitous. Under this mission, BlueFocus collaborates with Sinopec, committed to injecting new vitality into the traditional energy giant's brand, through a series of systematic brand reshaping strategies.

We firmly believe that by helping companies practice sustainable development concepts, we can not only promote changes in the energy industry but also contribute to global environmental protection. BlueFocus will continue to dedicate itself to this development mission, helping more companies achieve green transformation. We hope that through our efforts, we can lead the public to jointly support Chinese brands in demonstrating the grand vision of 'carbon peak, carbon neutrality' on the global stage, moving towards a cleaner and more sustainable future.

What do you predict will be the primary obstacle for the industry in the upcoming years, particularly for Chinese brands expanding into the global market?

Looking at the entire marketing industry, the biggest change in recent years is the increasing focus on performance-oriented outcomes. Secondly, the value of third-party companies is diminishing. The power of platforms is rising. Many roles have been exchanged. Moreover, this industry is increasingly short-term in perspective, and talent density is declining rapidly. These changes and challenges also exist in the overseas market.

In the wave of globalisation, Chinese companies encounter setbacks in overseas markets, often due to rigid application. Companies tend to apply their successful experiences in China or developed markets, or even past experiences, directly to new markets, ignoring the implicit conditions in different markets. 

For instance, the market environments in Vietnam and Singapore are vastly different, so companies need to develop different marketing strategies tailored to each country's culture and consumer habits to ensure localised product positioning and marketing strategies that meet local consumers' higher expectations for product and service quality.  

In the uncertain global environment and markets with high barriers to differentiation, we hope Chinese brands can transition from 'Made in China' to 'Created in China', eventually evolving into intelligent manufacturing in China. Although some companies are still navigating between survival and business, consciously opening up their horizons for localisation, designing products according to local conditions, and integrating into local societies to attract user attention, these methods can become the most definite turning points for going overseas in uncertain times. Therefore, we need to create differentiated labels and understand the true meaning of 'going global'.

Companies aspiring for globalisation at this stage should not stay at the stage of superficial efforts but boldly step out of their comfort zones and respond quickly to local-market user needs. The combination of scale, capability, and AI can solve the puzzle of globalisation.

Source:
Campaign Asia

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