Will agencies survive AI?
95% of what marketers use agencies, strategists, and creative professionals for today will easily, nearly instantly and at almost no cost be handled by the AI — and the AI will likely be able to test the creative against real or synthetic customer focus groups for predicting results and optimizing. Again, all free, instant, and nearly perfect. Images, videos, campaign ideas? No problem.
?—Sam Altman, CEO of OpenAI (source)
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First principles: AI automates knowledge work
If you’ve used ChatGPT, Gemini, Perplexity, or any of the modern AI tools, you know how powerful they can be in automating rote knowledge tasks. “Write me an introductory paragraph”, “create an image that shows dogs thinking about math,” or how about “how many global employees do publicis, wpp, and dentsu have?”. Here’s the answer Perplexity gave to that last one:
That’s a lot of headcount. You don’t have to believe in AGI or that an AI could be the next David Ogilvy to understand that many, many of those jobs are replaceable with AI.
Examples of tasks that AI is already or (will be) able to complete better than humans:
Like I said before, that’s a lot of headcount.
Second order effects: Some roles disappear entirely
AI is a lever that will enable fewer humans to do tasks for clients with more efficiency and effectiveness. But some tasks will also be automated out of existence. We’ve already seeing the big platforms move in this direction, with PMax replacing most of the activities humans used to do within Google Ads and the Google Display Network.
While I’ve been wrong before about the prevalence of “in housing” among marketers, one has to imagine that when a task that is normally owned by an agency becomes 99% automated by technology, it will make sense to contract and operate that technology directly rather than pay for overhead to manage it.
Candidates for tasks that are subject to complete automation are those that are data rich and repetitive, such as media optimization and attribution.
Side quest: What about agency data?
One side quest in this conversation is whether the agencies have enough proprietary data to defend themselves and gain an advantage in the age of AI. We know that the big holding companies are investing in AI, with Publicis’ CoreAI ($325 million over three years), and WPP’s iQ ($317 million annual investment) being two examples, while Dentsu and Omnicom like putting out lots of rando press releases. But these numbers pale compared to the investments of the big tech giants.
Investment dollars aside, who is in a better position to automate media buying and optimization that the companies that have all the data on how this has worked for the past fifty years? I asked Josh Chasin about this on the pod and he was skeptical, saying “does knowing the ratings for All in the Family twenty years ago have any value today?” Good questions.
Third order effects: Orchestration, creative, and strategy
It seems like a solid bet that agencies will be much smaller than they are today, and that some of their lower value-add activities will be eliminated, automated, or in-housed. What’s left?
We’re a long way from AI that can create the next “Coke is it” or Apple’s 1984 ad. Strategy and creative will remain the domain of humans, for some time. This is probably the 5% that even Sam Altman thinks will continue.
Orchestration is always important. Technology requires resourcing to be useful, and while AI solves many problems, it creates new ones. There will always be a role for smart people who can solve problems using technology, and this is where the need for global agencies will shift.
Another possibility, that Eric Franchi raises on this week’s pod, is that you may see extremely small groups of talented people use technology to create much more leveraged agencies. Could a three-person firm handle media and creative for a $100 million new product roll-out?
Will the cockroaches survive this time? Let me know what you think.
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Startup Advisor at StartOut
7 个月It's unquestionable some rote work will be automated by AI; the extent of that and the timeline is debatable. To me the bigger question is to what degree the buying decision might be replaced by AI. Today humans make 100% of the buying decisions and marketing influences those decisions. Product placement on the store shelf, Google ranking, brand recognition, etc. and myriad other factors influence what and how we buy. With AI, will we one day enter a prompt, "What is the best toothpaste with mint flavoring and whitening?" and take the answer as gospel? Will marketing influence the AI answer and if so to what degree? Will a focus to ensure the desired AI result lead to a form of SEO on steroids?
Advisor and NED
7 个月This may well be a true prediction. It is only a good thing, though, if you believe the saying ‘there is nothing new under the sun’.
Media optimization is rarely done well by humans, so how do we expect AI to be any better? Marketing is a cloud science, not a clock science. Until we acknowledge that and change how we buy and measure media, rejecting fake precision and favoring quality over quantity, and feed all of that into our systems, I'll take humans over AI (at least on certain tasks, far more than 5% of agency work) any day of the week. More on marketing as a cloud science: https://www.dhirubhai.net/posts/erezlevin_payattentiontoattention-qualitymatters-activity-7139977878934319105-yvsZ
Head of Global Network Transport Services - Kuiper
7 个月I built CoPilot at Xaxis in 2016 for "AI Powered" campaign optimization. We called it CoPilot for a reason. We saw AI as a tool to leverage in combination with smart people who understood the broader campaign. While I do think LLMs and other recent advancements will provide even more tooling, I'm still convinced "Human in the Loop" will be needed to drive real value. When the steam engine was replaced, everyone complained about all the jobs lost. While I can understand it was a rough patch for those who were shoveling coal into steam engines, in the long run people found ways to leverage technology with higher leverage of human input to resulting outputs. Also, don't let Sam tell you AI's free, unless he plans to give you all that CPU, Storage and Compute for free. AI development has very real costs, and deployment, maintenance, and running on all those expensive GPU's and CPU's and burning up terabytes of ram, is not going to be free.
Helping Companies Build AdTech | Martech | GameTech | AI Systems
7 个月I wrote this on the plane yesterday and lost the draft. I'd be remiss if I didn't rewrite it to share a few thoughts. TLDR: I agree with Sam Altman 65% ish but humans will be in the loop still for a while at least. 1) Behavioral change is slow by organizations due to people and processes. Technological change is accelerating at an exponential rate. Change will happen slow at first then all of the sudden following power curves when the systems get to a point of efficacy that humans are no longer needed. 2) I ran the numbers on when AI models will be cheaper than the cheapest labor. We are still about 5 years or more away from AI being cheaper than humans. So until Marginal Revenue=Marginal Cost humans will stay where they are for now. 3) Only the biggest agencies have enough data to effectively train the models. Smaller agencies don't have the scale required. Additionally with regulation not going away getting clean data for feeding AI models to train will get more challenging. Overall, menial and repetitive human task will be automated away. Companies making investments here will realize gains down the line. Quality data inputs will remain a top priority for continue efficacy and efficiency.