Long Read - Advertising agencies race to build AI superpowers

Chris Pash
By Chris Pash | 23 May 2023
Credit: TK via Unsplash.jpg

The global advertising groups are adopting AI (artificial intelligence) faster than many analysts predicted.

It’s a form of arms race to be on top of the heap in what’s been described as a new industrial revolution.

For those who work for agencies the stakes are high. Will creatives, and back office workers who keep the wheels of the industry turning, have their jobs enhanced or diminished or, worse, scrapped?

The global groups have taken care with how they describe their use of AI and any impact on staff levels but there will be change

And that may be here now. SEEK recently listed a role for a Freelance ChatGPT Prompt Editor  in the form of a “detail-oriented” copywriter.

“We are NOT looking for someone who wants to write copy from scratch. Those days are gone,” writes Ultimate Edge Communications, describing itself as a full-service marketing communications consultancy. "We need someone who embraces the new AI paradigm and can exploit all its power while minimising its deficiencies and shortcomings.”

A study by investment bank Goldman Sachs says the rapid acceleration in task automation will drive labour cost savings and raise productivity, leading to millions of jobs at risk.

“The good news is that worker displacement from automation has historically been offset by creation of new jobs, and the emergence of new occupations,” write Goldman Sachs analysts in a note to clients.

Whatever the eventual impact of staff levels, the advertising holding companies are almost obliged to increase investment in AI because of their increasing reliance on business related to data and technology.

And competitively, Google and others are now improving on AI to help clients create and deliver digital ads without help from an agency.

In the name of keeping overheads under control, no company can ignore technology making the factory floor more efficient (read: faster creation of advertising content).

And if an ad agency can, when using AI technology, create a commercial for less, will clients demand a discount?

Arthur Sadoun, CEO of Publicis Groupe, faced this question when he was briefing analysts on the March quarter results.

“I'm definitely not saying that AI will lead to lower revenue,” he told the briefing.

“What I'm saying is that we might get paid less for a single ad one day. We are far from that, but it will add to the volume of ads that we have to produce because of personalisation at scale.

“And this is where we still have a lot of work to do, to change the perception of what we do for our clients. And why what we do, not only make us unique, but we believe creates, the opportunity to be the only one that can truly outperform the market, is we have shifted from a communication partner to a transformation partner.

“Where we make our money and our margin, because this is valued services, is in our ability to accompany our clients in the transformation.”

Sir Martin Sorrell, the founder of pure-play digital advertising group S4 Capital, believes the industry, and the wider economy, are about to experience a new industrial revolution.

Winners and losers?

Sir Martin says AI will have a major impact on productivity and the patterns of employment.

“We believe it will make our disruptive model even more inevitable for clients and are determined to establish the leadership position and leverage it,” he says.

“We are immediately seeing positive impact in four areas - use of AI as a superpower or super tool to improve our people's effectiveness; speeding up the creation of advertising content through faster copywriting and visualisation; hyper personalisation at scale providing more empathetic advertising assets; and improved media planning and buying, particularly in digital improving targeting and optimisation and catering to client concerns around TV frequency capping and reach.

“The net effects of these developments will improve the effectiveness and efficiency of what we do - faster, better, more efficient, more and NOW!"

WPP, Sir Martin’s old company, has been using AI for a number of years, mainly in GroupM and through Xaxis.

“We use it to target media, to optimise campaigns, to create audiences, and in the production part of the business,” says WPP CEO Mark Read.

“Hogarth uses AI extensively to create, to produce work, for all of the channels that consumers need. I think what's changed over the last six months is the application of AI, through generative AI into the creative process of the production of language, video, imagery through AI and that's really allowed us the opportunity to use it much more creatively in the company.”

However, Read doesn’t think AI is going to make people suddenly more creative or shorten that process.

“I think the amount of work we get paid … for that ideation, the strategy, for account management, all of those things are substantially I think going to be unchanged.

“If anything, it might be increased by the application of AI because it's going to demand greater volume of assets.

“On the production process, there is a question around volume versus price. We need a greater volume of creative assets to be produced, a much greater volume by the way as the number of channels explode and the formats explode.

“When you can combine media and creative, we're going to be choosing millions of different types of creative assets in relation to the data signals that we get from our technology, the media.

“In all of our experience with technology to date in WPPs businesses, it tended to create more jobs than it has destroyed.

“There are also, by the way, the opportunity for us to gain market share by investing more and being more competitive and I think some of what you're seeing in terms of clients looking to streamline their partners and work with partners that have the wherewithal to invest in this indicates the opportunity for us to gain market share by better applying AI through our work.”

WPP’s use of AI goes back to 2016 in a campaign the then J Walter Thompson did for ING in Holland. And all the work WPP did last year in India for Cadbury’s Mondelez on Diwali was via AI.

Omnicom is currently running about 20 projects using AI. Five are directed at the back office and the rest to the client, or revenue, side of the business.

The agency, through its large-scale relationship with Microsoft, has established a dedicated Azure environment with secure enterprise access to the latest OpenAI GPT model.

“This unique setup is allowing us to responsibly develop new custom and version control models against various use cases within Omni as well as supporting overall automation and transformation efforts,” says CEO John Wren .

“The development includes careful consideration related to all aspects of generative AI from confidentiality to intellectual property rights, privacy, biases and ethics.”

Wren, when briefing analysts on March quarter earnings, was asked about discussion around replacing people over time and changing the creative process.

“It has a lot of potential to positively impact the business. I don’t think you will see that in 2023 because … you have to be very careful with this,” Wren said.

“And maybe one of the reasons Microsoft picked us is because we are very careful. There are a lot of ethical questions and there are a lot of privacy questions.

“In the long-term, and this is just my belief, I think our creatives – what I would call knowledge workers -- will only find their jobs enhanced by the way that we will utilise this five years from now.

“And so we are very optimistic. And we are testing it, playing with it, but we are certainly not deploying it in the way that – to the full extent of the power that it has.

“We are entering into an environment where we are going to be able to make pretty quick progress, I think in terms of what works and what doesn’t.”

At Publicis, Sadoun says AI is already a reality and is accelerating the value and the speed of everything the agency does.

“AI is at the core of the business operating system and at the service of our clients,” he says.

“When we launched Marcel in 2017 with the support of Satya Nadella and Microsoft, it was on the promise that AI will help us identify the best suited talent for any given base, proposed tailor-made learning and development programs for everyone, and make sure industry knowledge was better shared and used.

“Today, the vast majority of our people are connected to Marcel and are already using AI regularly. It is now a huge competitive advantage, not only in recruitment, but also of course, in retention.”

AI also is playing a key role to optimise media buying, powering retail media and advanced TV. For the Publicis creative business, AI optimises the production process and boosts dynamic creativity.

“There is no doubt that AI will radically change the shape of workforce entities quickly,” Sadoun says.

“So we must make sure that all of our people are capable of harvesting the machine capabilities at the service of our clients. We are committed to empower all of our people integrating AI in their daily work.”

Of course, at the moment someone has to feed an AI to make it work. Or rather enter questions and make sure it has the data to make sensible answers or create content that fits the brief.

Content owners have noticed that the AIs need this feeding and want to be paid for their input. Someone owns that content being scrapped from the web.

Robert Thomson, CEO of News Corp, has no doubt generative AI will profoundly affect the media business.

“Candidly, generative AI may pose a challenge to our intellectual property and to the future of journalism,” he told analysts during a briefing on the March quarter numbers.

“As those who have experimented with chat GPT will be aware, the answers are only as insightful and factual as the source material, and are more retrospective than contemporary.

“We see three areas in which our content will be used by generative AI creators, whose products will be enhanced by our IP for which we should be compensated.

“Firstly, our content will inevitably be used as has already been exploited to train AI engines.

“Secondly, specific examples of our content will be surfaced in response to … AI queries.

“And thirdly, and crucially, our content will certainly be aggregated and synthesised and those answers monetised by other parties.

“We expect our fair share of that monetisation.

“Generative AI cannot be degenerative AI. The digital debate over content and journalism has evolved significantly in the past few years. And we appreciate the social and commercial commitment of our partners at Google, Apple, Microsoft and meta.

“The A in AI cannot be ambiguity, nor can the AI represent ignorance; integrity would be more apt.”

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