The Rise of AI in Advertising

The Rise of AI in Advertising written by John Jantsch read more at Duct Tape Marketing

Marketing Podcast with Mike Rhodes

Mike Rhodes, a guest on the Duct Tape Marketing PodcastIn this episode of the Duct Tape Marketing Podcast, I interview Mike Rhodes. With over two decades in the digital marketing industry, he established his award-winning Melbourne-based digital agency WebSavvy back in 2006, to help small businesses grow. They are a Google Premier Partner and one of only a handful of Australian agencies to be part of Google’s International Growth Program. Mike also runs AgencySavvy, training hundreds of agency owners how to ‘do’ Google Ads better and scale their agencies.

He co-authored The Ultimate Guide to Google Ads, now in its sixth edition, which is the world’s best-selling book on Google Ads, with over 130,000 copies sold.

Key Takeaway:

Digital marketing is going through a constant evolution, where the implementation of new tools is a must today to keep up with the necessities of the market. AI plays a big role in advertising, particularly in messaging and content creation. AI tools can produce numerous ads and ideas to create first drafts of content for different platforms and also to recollect data.

Mike also emphasizes that analyzing the budget for online advertising depends on a business’s marketing efficiency ratio, business goals, and margins. Additionally, measuring the lifetime value of new customers is vital to determine the ROI of online advertising, and investing in CRO as an ad spend, could make significant improvements in performance.

Questions I ask Mike Rhodes:

  • [02:17] In the last couple of years, what are the biggest changes in digital marketing?
  • [04:45] What do you see in the near-term future of using AI in advertising?
  • [09:03] Where does programmatic advertising or geofencing fit today?
  • [10:37] Does geofencing have a place for certain businesses?
  • [11:56] Where do you fall on the need for kinda long-term advertising and short-term advertising?
  • [17:28] How do you help people analyze what they should be spending on online advertising?
  • [20:15] How do you tie conversion rate optimization to your ad spend?
  • [21:49] Regarding GA4, What’s your advice to business owners? How did they take it after using GA3 for so long?

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John Jantsch (00:00): This episode of the Duct Tape Marketing Podcast was brought to you by the MarTech Podcast, hosted by my friend Ben Shapiro, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals with episodes you can listen to in under 30 minutes. The MarTech Podcast share stories from world-class marketers who use technology to generate growth and achieve business and career success. And you can listen to it all on your lunch break. Recent, an episode featured Max Novak, the founder of Nova Cast, where he talked all about how podcast booking campaigns create value For listeners and for brands. You know, I’m a huge fan of being guests on podcasts, so listen, check out the MarTech podcast wherever you get your podcast.

(00:57): Hello and welcome to another episode of the Duct Tape Marketing Podcast. This is John Jantsch and my guest today is Mike Rhodes. With over two decades in the digital marketing industry, he established his award-winning Melbourne-based digital agency, WebSavvy back in 2006, with the purpose of helping small businesses grow. The agency is a Google Premier partner and only one of a handful of Australian agencies to be part of Google’s international growth program. Mike also co-authored The Ultimate Guide to Google Ads. Now in its sixth edition. Google keeps changing things, gotta keep updating the book, the world’s best-selling book on Google ads with over 130,000 copies sold to date. So Mike, welcome to the show.

Mike Rhodes (01:47): John. Absolute pleasure to be here. Thank you for having me.

John Jantsch (01:50): So, so Google’s really essentially kept you in business, haven’t they? Just by making changes. They’ve kept us all in business, haven’t they? Like every time they changed something we, you know, we’ve become more important to the world out there, don’t we?

Mike Rhodes (02:01): I hitched my wagon to the right ride way back when. Yeah. I didn’t choose Yahoo and Overture. So

John Jantsch (02:07): I was gonna say that the ultimate guide to Overcharges would not have sold as many kids. Oh, quite as

Mike Rhodes (02:12): Good. That one. Yeah.

John Jantsch (02:14): So this is a really big question.

Mike Rhodes (02:17): Okay,

John Jantsch (02:17): Maybe I’ll say, maybe I’ll boil it down to like the last two years, rather than saying, you know, the 20 some years you’ve been doing this, what, what in the last couple years have you seen are the biggest changes? Let’s just throw it out. Digital marketing. You can go anywhere you want with that.

Mike Rhodes (02:30): Oh boy. Okay. So on the Google side at least they are continuing this sort of march towards the ultimate black box. I think the way Google would love it is give us your credit card and maybe a feed out of your accounting system on the other side, and we’ll just do everything in the middle and we’ll figure it

John Jantsch (02:49): All out. Yeah, you just stand over there and never leave. Right.

Mike Rhodes (02:52): Little humans out the way, please. We’ve got this, we’ll just spend your money for you. Which kind of sounds ridiculous, but we’re kind of heading in that direction almost a couple of years ago that was sort of another big change in this direction. Google launched this thing called Performance Max, which is the latest in this sort of black box. If you’re cynical, you might call it Inventory Max. It’s a way of Google selling a lot of inventory your ad will appear on. Yeah, basically all over Google. Seven different channels and Facebook have since come out with their sort of version of this and marketers are a little bit upset. But you know, we just, we crack on. We don’t really miss control. We, none of us want to go back to fiddling around with bids three days a week. But we do miss the ability to have insights.

(03:38): And so the more and more we head down this road towards the platform being a black box, I see two huge changes for marketers. My mental model is creative platform data and as the importance of platform in the middle starts to shrink, the importance of creative and data. Yeah. Rise massively. Businesses really only care about creative a lot of the time. We as marketers understand that data is incredibly important because we are marketing first to the machine. Because if we can’t convince the machine to show our ad, you know, the human never gets to see it. So yeah, data is so, so important and that obviously has led into this sort of AI world War now, which I’m sure we’ll talk about as well.

John Jantsch (04:21): Well, nobody else is talking about it, so we might as well, right. . .

Mike Rhodes (04:25): Yeah, that I haven’t seen anything about it on LinkedIn recently.

John Jantsch (04:27): Yeah. Yeah. I caught you right J as you were getting ready, taking a drink there you about spit it out, . All right, so let’s dive right into, you mentioned creative. You know, that’s certainly an area where AI is changing advertising. I, you know, I know from a testing standpoint it’s pretty easy to spin up 200 ads now or 200 headlines now using ai. There’s actually even some tools, especially as we go to the next generation of AI that’ll produce videos and produce, you know, images or full, you know, on ad creative. So what do you see as kind of the near term future of using AI and advertising?

Mike Rhodes (05:00): That’s crazy, isn’t it? I remember standing on stage in San Diego about five, six years ago. I was explaining how AI works cause I got into it really early, kind of ran away screaming thinking, businesses aren’t really ready for this. Everyone needs to focus on automation. And I remember saying bidding. Well that’s just a mass game. So computers have won that targeting. Yeah, yeah. The moment it’s 50 50, but machines will win messaging. Ah, that’s the bit you should focus on. You should go and be a persuasive copywriter then you’ll be safe. I was completely wrong, g PT has obviously changed that massively. And it, we’ve gotta remember it’s only been four or five months. Yeah. When we were playing with G P T back when it was version two and then version three about three years ago. But this just a new interface just grabbed everybody’s attention.

(05:44): A hundred billion users in two months. And here we are now, text the video, as you say, is not that far away. Text, the image is blown everybody’s minds. And it’s less than a year since Darley came out. Where are we go? Yes. Yeah. We will be sitting here in a year or two saying, Hey machine, I need six videos for YouTube, three for TikTok. Oh, go on, give me one for something else as well. No, not like that. A bit more like this shorter, bigger. It quite phenomenal where we’re at. It’s, it’s right to say, but it does change everything.

John Jantsch (06:20): Well and you know, there’s still people there saying, oh yeah, but they can’t write headlines as good as a really good copywriter. But what my contention is, a lot of times I’ll throw six headlines out there. I’m like, that is the best one. Well that’s not what the market’s held me. Right. Nobody can predict.

Mike Rhodes (06:38): I think what a lot of people have done is that they try and make it a either or thing and it shouldn be Yes. Yes. And the way we use it for images makes it much clearer. And then you take that approach to text. Yes, priming is important. Yes, the prompt is important. And yes, people are gonna call themselves prompt engineers, but it’s playing with the machine, the back and forth, the iteration that really, if you go and find a time lapse video on YouTube of a really good artist playing with something like Mid Journey and what they come up with over the course of half an hour, it’s not about the perfect prompt gets you this incredible thing. It’s that interplays machines are gonna augment us. They already do. I mean, I have no idea what’s on my calendar unless I look at Google Calendar. I can’t read the thing without these anymore.

John Jantsch (07:25): Well and we’ve been, you know, we’ve been using Google Maps for how long? Well you know,

Mike Rhodes (07:29): Absolutely. And in the early days people used to drive off the end of the pier, you know, because they were blindly following map. So use it at your own risk. Don’t blindly follow it and you’ll be okay. Yeah,

John Jantsch (07:38): Yeah, yeah. And you know, one of the things, I think what you just alluded to there was design, creative design has always been an iterative, you know, process. Yeah. I mean , if you watched, you know any designer, you know, they’re doing that anyway. But now what we’re getting now is we’re just getting efficiencies and speed and we’re now able to have 200 variations.

Mike Rhodes (07:57): That’s a really good point. I read there’s a wonderful book called Creative by the President of Pixar. And we all think that a, an amazing movie like Toy Story just gets born and just comes into the world one day that goes through multiple, multiple iterations that the wonderful movie up, you know, the house with all the balloons and the dog and that entire movie was rewritten five times and then brought into The Genius is a Pixar and absolutely played and taken apart and put back together. It’s always been that iterative process. And if you treat the AI like a pretty good intern who can come up with an unlimited number of ideas and a great first draft. Right? I used it yesterday to write a sales page, the video script for the sales page, five different hooks for ads, then to write the ad, then to ask the questions for the application process on the back of the sales page. It was phenomenal. Four and a half thousand words took me an hour and I now have everything I need for the whole marketing plan. It’s just, yeah. Crazy. But it’s here.

John Jantsch (09:00): So let’s do a couple more terms out there before we talk more about ai. Where does programmatic advertising, geofencing, you know, some of those kind of, I don’t, are they niche areas or subsets of advertising where, you know, where do those fit today? Or maybe just briefly even describe kind of your relationship with the both of those.

Mike Rhodes (09:17): It’s funny, we have people sort of mention programmatic to us quite often. Oh should we be doing programmatic? And we also tell, well you are good is programmatic, Facebook is programmatic. It’s just, there’s sort of a corner of the advertising world where a group of people have decided, well we can charge a lot for CPMs if we kind of obfuscate some things and we make this seem much harder than it is. Google display network is programmatic. And yes, there’s some differences, but ultimately a machine is making all of these decisions. So I think that as long as the business gets the data that they need back to inform them and to have the insights and there is enough transparency where they can do that, then it doesn’t really matter what medium that business uses. I mean as long as they’re using something that’s right for them, for their particular need. If you are highly visual product and a female audience, then Pinterest might be worth a crack. If you know you need to say something through video, then might be, maybe it’s reals, maybe it’s YouTube shorts, there’s an unlimited amount, you’ve gotta test a lot of stuff. You go where your audience is. The problem now is that your audience is everywhere. They’re on 20 different channels and most businesses can’t do 20 different channels. So you pick one, you master one, and then you move to a second.

John Jantsch (10:33): Yeah, you won well instead of five poorly.

Mike Rhodes (10:36): Yes. Yes.

John Jantsch (10:37): So, so I mentioned another uh, kind of trendy term geofencing, you know, does that have a place for certain businesses? Is it too creepy? I think

Mike Rhodes (10:47): We all know the stats at this point. Google know more about us than our spouse does. So it knows where you are, where you normally are, what device you’re on, what the weather is. They’ve tested. If the phase of the moon had an impact, it didn’t, but they tested it. So what else might they have tested? So I think of geofencing as just where is your audience rather than, we don’t do that sort of crazy stuff of like only show an ad when they walk past the door of my store and then show them this ad and then to do that. I don’t know how effective that is. And in the world we’re going into where more of that data is hidden because of privacy reasons. Mm-hmm. , I think maybe it’s had, if it’s day in the sun and we’ll have to find new and more creative ways. And I’m sure we all will.

John Jantsch (11:31): This is a, I wouldn’t say it’s a hot topic, it is a debated topic amongst a lot of, I think folks like yourself. You know, is there a place for what people might refer to as brand advertising or you know, long sale cycle trust building type of advertising as opposed to, you know, how do I get today’s dollars? How do you ba I mean are you on the side of you need both? Are you on the side of one is hard to really, you know, justify or where do you fall on the need for kinda long-term advertising and short-term advertising if we want call it that way,

Mike Rhodes (12:03): We’re gonna need a bigger boat. We, I was on stage last week at conference with my head of strategy. Trevor Henselwood, a great guy and he talked about this exactly, I mean had two quotes both from the same guy, Aash kk, who for many years was Google’s digital evangelist. Sure. And the quote was something along the lines of, it’s impossible to think of a business that has only done performance marketing for 25 years and been a huge success. And then the next slide was, it’s impossible to think of a company that’s only done brand marketing for 25 years and been a huge success. I think most businesses need to do both. However, if you are a relatively small business, let’s say sub 20 mil, then you are gonna spend the majority of your budget on performance. And you absolutely should be spending something on awareness.

(12:52): Yes, it’s gonna be harder to measure. Yes. You can’t really draw the line from, oh we did that and then that happened, but we know we shouldn’t be doing that anyway. But clients love to do that because they want to see that return on investment. And if I’m tipping 10 grand a month into this machine, I love seeing that I get 70 or 95 or 113 out the other side. What do you mean I need to tip in another five and not tell how well it did? That seems risky. And so clients sort of often will push back on that certainly. But once you reach the point where you know, you need to grow a brand where you have aspirations of market share and share of wallet and those sorts of terms get thrown around a boardroom, then you’re probably gonna start increasing the share of your spend on, on that sort of harder to measure top of funnel if the funnel even exists anymore

John Jantsch (13:41): As a small business. Let me throw you anecdotally, what we see is when we stop running, what I would call brand ads, our performance ads don’t perform as well.

Mike Rhodes (13:54): Correct. , we’ve seen this a lot over the past year and a half since iOS 14, a lot of businesses couldn’t see the same results from their Facebook ads because of all of the tracking changes. And so they started pulling back on Facebook spend starting with top of funnel spend. And yet, yeah, you know, weeks, months later performance starts to drop. The audience just isn’t. Trevor actually had a wonderful piece in his talk about you can even use something like Performance Max this bike box of a thing to just go for new people just very cheaply, tiny portion of your budget. Please control it well, but just let it go out there and find completely new people. Cause you can’t convert people that have never heard of you. But it’s a really good

John Jantsch (14:34): Point. Yeah. And what we, I mean we focus on, certainly because of the market I’m in is just all of that’s just teaching. You know, all of that’s just like, wow, this guy’s got good ideas. You know, there’s no, I’m not trying to sell anything just trying to have new people go, oh, that that’s somebody I wanna pay attention to. And when, like I say, when we stop doing that, you know, we stop having great as good a results from some of our other programs,

Mike Rhodes (14:56): Which, which makes complete sense. That’s where word of mouth starts, right? You’re being useful and valuable to people. Like Seth Golden said, advertising is the tax you pay for being unremarkable. And if you’re just focused on bonus shit and holding under everything else, then that’s a very short term mindset. And it might work in the short term, but it’s not it,

John Jantsch (15:14): It unfortunately does for a lot of people in the short term . Yeah.

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(17:17): So let’s talk budget. When somebody comes to you, how do you help them analyze? I know this is a really tough question cuz it’s a big, it depends, but how do you help people analyze what they should be spending on online advertising?

Mike Rhodes (17:28): So with all of the changes in tracking that have happened and you know harder to tie those dots together, like we talked about before, we tend to look at sort of marketing efficiency ratio and the business goals. You know, what are you trying to do? Where are you trying to get to? We are very good at optimizing. So we’ll start by looking at what is already there. Now if somebody comes to us, they’ve never run any ads before, then it’s gonna be a different conversation. But if they’re already spending 50 grand a month on Google ads, then we’ll look at that, you know, issues and opportunities within that, tweak that and prove that. And then we can start, once the data is right, then we can start to forecast and predict better. Overall we see clients, there’s a huge range. We’ve got clients with that sort of marketing efficiency ratio, business roas, however you’d like to term it, anywhere from 2% to 33%.

(18:19): So most businesses can’t do 33% spending one out of every $3 that comes in top line, spending that back out the door on ads. That isn’t gonna work for most. But if you’ve got the funding and if that’s your business goal, if that’s the path you are on, then you know, let’s make that work. Not many businesses are gonna do that. The majority are around about 8%. We had a client coming to us last year around 2%. They knew they probably weren’t spending enough, actually maybe it was one and a half percent and it was a conversation to get that up to two and then up to four. And this year they’re on eight because they’ve seen huge results from doing that. But it, it depends on where the business is at. Depends how skinny their margin is. It’s, yeah, there’s a, as you say right at the beginning, it depends. But I think that overall percentage of just even knowing where you are now is a small business. What, how much are you spending on ads in total as a percentage of total top line revenue? And then this whole game is about making some changes and measuring what happens next.

John Jantsch (19:21): Yeah, and I, you know, I frequently have conversation with clients that we work with that it’s not just how much is that ad bringing me today? What’s the lifetime value of that new client? You know that, you know, a lot of times when people realize that and they’re like, oh yes actually that client’s worth, you know, $50 or $5,000 or whatever, you know, over a short period of time, maybe I can invest a lot more in my

Mike Rhodes (19:43): Assets. Absolutely. What’s the buying cycle look like? How often is someone gonna buy from you? If you’re a sort of retailer and you do have repeat purchases, then something like Google Analytics four can be very useful with that. It’ll actually show you the chart of how that person goes up and what is, what are they worth to you. Maybe not lifetime. I find a lot of small businesses find it tricky to wrap their head around the term lifetime. But what’s the 90 day value of that person? What’s the one year value of the typical customer? That’s pretty easy to work out and yes, I agree it does, does open eyes when you do it that way. Yeah.

John Jantsch (20:15): So, so how do you tie conversion rate optimization to, you know, to your ad spend? Because you know, you probably have this, people come to you and they want you to run ads and you’re sending them to stuff that won’t convert. You know, is that, you know, how do you, how do you make the case for those two go hand in hand?

Mike Rhodes (20:31): They absolutely go hand in hand. I mean any kind of performance marketing, you’re gonna hit diminishing returns after a point. You, there’s very few ad accounts that we see where you could feasibly expect to get a 30% improvement in performance in a week. Right. A good CRO firm given enough time and enough room to experiment, may well hit upon an experiment that gets you that 10, 20, 30% boost. It’s probably not gonna be the first experiment they do cuz they’re usually under pressure just to get a win early on. We don’t do a lot of that in-house. We do give a lot of, I guess said advice strategy examples. We find that almost every small business, whether they have a marketing team or it’s a one person, almost every business is one person short in the marketing department. So giving them more homework and a laundry list of things to

John Jantsch (21:20): Do. Right, right, right.

Mike Rhodes (21:20): Isn’t always well received. A lot of people know that they need to work on that, but it often falls further down the list. Um, I find it staggering that the number of businesses still that might be spending 20, 50, a hundred grand a month on ads, but won’t invest by sending

John Jantsch (21:37): Them, sending them to their homepage.

Mike Rhodes (21:39): Yeah. Or I won’t invest, won’t experiment. So we work with Yeah. Number of other businesses. We don’t do a lot of that, but we send people their way and say you really need to work on your website. Yeah,

John Jantsch (21:50): I was gonna ask you about GA4 when you brought it up and I’m afraid that that might open up a can of worms, but are you, obviously we’re all going there. Google has no incentive not to turn it on . Right? They’re getting fined every day that GA3 stays on. So, you know what, what’s your advice to business owners? Not just that they have to embrace it, but I mean how did they wrap their head around it after using this other tool so long?

Mike Rhodes (22:14): Yeah, we’ve all, I’m just off this morning to do a training session with a client in person on the other side of town. Yes. Apart from the other stuff as you said, don’t leave it too long. Don’t leave it to the last minute. Yes it’s gonna happen. Yes, there are other tools out there if you want to get off the Google system, but it actually, this is gonna be heretical to say I don’t mind it now. I mean I’ve been pretty deep in it for a year and a half. It’s taken me a while. I have a course now I train people how to use it. Yeah. And it’s like everything like Google ads make how many changes since we’ve been around five massive changes to the ui. Right? Every time it happens everybody throws the pram. Sure. Toys out the pram and nah, I don’t wanna do this anymore.

(22:56): We all hate change but we’re incredibly resilient. We’ve learned that for the past three years. Yeah, yeah. And you lock yourself in a dark room for a couple of days. You go through some courses, you watch some YouTubes. However it is that you learn, you get your data in there and play with it. And if you haven’t got it set up, go play with a Google demo account. It isn’t all that. I mean it’s bad, it’s a beast. It takes 47 clicks to get anything done. But once you know how to do those 47 clicks it becomes a lot less scary. And I’m at the point now where I look at Universal and go, Ooh, that’s old .

John Jantsch (23:29): . Yeah. I think there’s two things. Obviously interface changes freak everybody out cuz it’s like, where’s that button that I used to click? But also it comes at the data from a whole different view. Totally and that’s totally different. Probably the part that’s gonna take the longest for people to understand

Mike Rhodes (23:45): And the numbers don’t match up and you can drive yourself batty comparing universal with GA4. It’s, which is why we’ve been saying for a year, run them in parallel so that you understand the nuance, you understand the difference. So that when we get to July one this year and still half the websites have not moved to GA4, I think there’s gonna be a lot of panic in July. I’m going on holiday, I’m not gonna be around in July.

John Jantsch (24:09): Although I have heard that Google’s gonna auto migrate. Um, yeah they start sites if they don’t

Mike Rhodes (24:14): But it’s clunky and it doesn’t work wonderfully well. It, this is a great chance to reset and start to really value data if you take all of those universal goals and some people have got like three, four views because they ran out of room with only 20 goals per view. Mm. And they’re just gonna move all of that across. Most people in the business were not around and all those goals were set up. Almost nobody in the business understands why we actually measure all of those things anyway. Nobody realizes that half of them are broken. This is a

John Jantsch (24:44): Great pages they track don’t exist anymore. Right. Yeah.

Mike Rhodes (24:47): . Yeah. Yeah. Totally. Sit down and think what questions do we actually want to ask of the data? What do we really need to measure? Maybe we don’t need to track these 67 things maybe that isn’t really important to the business anymore. What do we really need? Let’s get this thing set up and working properly and let’s for the first time maybe for many businesses actually start to value data. I love asking businesses, where does data sit on your balance sheet? , . Cause they just don’t value it. They all know that data driven and data informed, but nobody really values data. And you can’t be an AI company without first being an analytics company. You can’t get to being an analytics company if you don’t have good data to base that analytics on. Peter Dund says by the end of this decade, you’re either an AI business or you’re out of business. Now he sells a lot of books by saying sentences like that and I don’t know if that’s true, but we will all be using AI a hell of more than we are today. But yeah, I data to do that.

John Jantsch (25:45): I think what he’s really alluding to is you just won’t be able to compete . Mm-hmm. is what it really amounts to. Right. It’s because everybody will be much more efficient, they’ll be much, you know, more informed. I mean that, that’s really gonna be the, you know, the challenge Mike, tell people where they can reach out and find more about you. Any of your work, any of your books,

Mike Rhodes (26:02): Easiest places, just to head to our Cuz down here in Australia, hey, you can find me on LinkedIn. I’m not particularly active on the socials because I’m an old person with two little kids and uh, I’ve got far better things to do than play on Twitter all day. But yeah, au. I also have another business where we train a lot of agencies how to do what we do. GA4 Google ads and all that sort of stuff. So yeah. Awesome. Whether you want training or you want some second pair of eyes over your ad account, come find me and we would love to help you.

John Jantsch (26:34): Awesome. Well I appreciate you taking a moment to stop by the Duct Tape Marketing uh, podcast. And I’m certainly hopeful we can run into each other one of these days out there on the road or on a boat or whatever it would take.

Mike Rhodes (26:44): That would be lovely. Thank you John.

John Jantsch (26:46): Hey, and one final thing before you go. You know how I talk about marketing strategy strategy before Tex? Well, sometimes it can be hard to understand where you stand in that, what needs to be done with regard to creating a marketing strategy. So we created a free tool for you. It’s called the Marketing Strategy Assessment. You can find,, dot co. Check out our free marketing assessment and learn where you are with your strategy today. That’s just marketing I’d love to chat with you about the results that you get.

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