Tech companies working on automation AI tools pose threat to ad agencies – WSJ

Tech and media companies like Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Meta (NASDAQ:META), Amazon (NASDAQ:AMZN), and Comcast (NASDAQ:CMCSA) that are developing new tools to help advertisers automate creative work on their platforms pose a threat to the giant agency holding companies that have for decades dominated that work, according to a Wall Street Journal report from Thursday, citing industry analysts.

Michael Nathanson, an analyst at equity research firm MoffettNathanson, told WSJ that the largest ad holding companies will have to downsize in response to a technology that is speeding the commoditization of their services. “You don’t need a 1,000-person team anymore. You need three or four great people with a vision,” he said.

Jessica Serrano, chief marketing officer at Dig, a chain of farm-to-table-themed restaurants, told WSJ that full creative automation will allow brand-side marketing teams to handle campaigns on their own while looking to their agency partners primarily for strategic guidance.

Serrano said technology like Meta’s proposed products will appeal most to startups and smaller companies. “If I had an e-commerce business with one to three employees, I’d be pretty excited about a tool like this,” she said.

AI is more likely to displace agencies that focus on so-called performance marketing, since the tools are better equipped to drive consumers to a specific action, like clicking on a link or downloading an app, than to conceive campaigns that define a brand, Serrano added.

“If agencies are not quickly evolving to this, they’ll get left behind,” she said.

However, Chris Beresford-Hill, chief creative officer at BBDO, which is a part of Omnicom (NYSE:OMC), said agencies might not be easily replaced, as large advertisers that place heavy emphasis on brand perception are less likely to entrust their campaigns to algorithms.

“One thing I do know from working with the big brands, which are certainly the bread and butter for agencies like mine, is that they want consistency and brand stewardship,” Beresford-Hill told WSJ. “AI may be able to create a visual or even create a video, but the idea of developing a unique concept seems far-fetched.”

Source: WSJ