Chris Howatson.
Despite AI adoption fears, smaller budgets across brands and job insecurity, the industry might be in its best position yet.
Speaking at sold-out AdNews L!VE Sydney, Howatson+Company founder and CEO Chris Howatson provided opportunity amidst AI doom and gloom, telling clients that it's the best time to be a brand, and agencies that its time to build strategy.
“There is this prevailing narrative that AI is here to exert demonic control up to agencies and slowly pull us apart until we wither and die. But I think that's a simplistic view of the world,” Howatson said.
“As agencies, we solve problems, and we spend a lot of time trying to understand the problem.
“In the last 12 months, brands have been investing in AI talent internally to figure out how to overcome it.
“The big shift over the last 25 years is it’s just harder to be brands. There is more competition, and as a consequence of that, clients have thinned out their organisations.
“Brand budgets are just not big as they used to be. When anything's not as big and strong, work becomes smaller, and companies become more vulnerable to redundancies.
“We are told to prioritise investment into media, because we have to maintain our share of voice, but as a consequence, Martech is going down, agencies are going down, and there is internal brand labor.”
In 2026, 37% of Australian e-commerce comes from Shein, Temu and Amazon.
The CMO tenure has dropped from four and a half years to three years today while the tenure of agency relationships has shrunk from seven to three years.
Meanwhile, 50% of budgets are being deployed to retail media, meaning less production spending.
Martech has taken up 20 to 30% of the budget, though has been on the decline over the last few years.
“For the ACA, agencies report fees and pay a percentage of fees as an honour system," Howatson said.
“We had a peak in 2023 of just over a billion dollars revenue and then a big decline of 26. So the industry is actually declining at a compound annual growth rate over those six years. There are 4.5%.
"However, The Australian Bureau of Statistics revealed creative jobs increased at a compound annual growth rate of 3.5%, larger than the economic growth rate of 2.6% over that 25 year period."
CMOS have less self-directed investment, which agencies have less influence over, reducing the scale of the agency.
Creators are now reported to deliver more future long-term effects on future demand, with it growing 13% annually, which Howatson said is that 25% of the 3.2 billion spent on social media in Australia is going to influencers.
"While you might have 13% misattribution from a television ad or AV high impact impression for a brand, there’s a 50% misattribution for influencers," he said.
"The consequence is that even though there’s incredible tools built, there are still massive chunks of inefficient budget allocation in the very real amount of budget that CMOs have that flexibility to control.
“Everyone wants creators in their campaigns, but despite the positivity that we're seeing, we're still incredibly nascent in terms of how we understand how effective that is."
Despite these circumstances, Howatson said that we are in the golden era of advertising, a time when good brands can achieve great outcome, AI can excel creativity and the value of good agency work is desired.
“We are in a period of brand renaissance, whether it's system one, meaningful difference, we have so much literature that tells us about the importance of brands,” Howatson said.
“There's never been a greater need for strategy, we're really thinking about how the customer is essential to the organisation, and that is driving fundamental internal change.
"Advertising is not in crisis, it is fully grown. We are in the golden era. We just don't know it, because you never do when you're in it.”
Howatson sees the biggest positive shift as the possibilities AI can bring to the industry.
“AI is a divine intervention,” he said.
“It is definitely going to take on a lot of tasks, but it is also creating a whole lot of jobs that didn't exist two years ago.
“And creativity is not lost. It has always required taste, whether a machine or eight junior teams punch out the basic ideas; it has always come down to somebody saying this is right for the brands.”
The requirement for continuous growth in our industry means understanding how to express value to the client.
“It's very easy for us to whinge about our situation in the world, but it all comes from intensified competition for the brands, clients we represent,” Howatson said.
“Before you even ask about how you get paid, what value are you creating?
“What is your growth proposition, not for you, but for the brands that you represent.
“We're all creative, but the proposition is how we apply creativity through the growth design process to inform our client of growth.”
Howatson believes that while having every part of the value chain is going to create incremental value, it's not the only way.
“The other way could be that you own a niche. Think about naked, glue society, they just did one part of the value chain brilliantly well and were highly successful.
“After all, we are not at the end of advertising. This is the renaissance of advertising.”
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