Ozempic for the Ad Goliaths
By Toby Barlow
The physicist Niels Bohr famously said “Prediction is very difficult, especially if it’s about the future.” And the guy won a Nobel prize in physics, so I’m not going to contradict him. But here is a prediction about technology’s impact on advertising: if your business model is based on billing your global client for 4,000 full time employees, A.I. is going to seriously threaten your profit engine.
Once, agencies billed as a percentage of the media buy. Then they started billing based on FTE’s. Ever since, we’ve seen a swelling of staff serving big accounts. Which makes sense, since more people meant more billings. But AI threatens to make a lot of those people unnecessary.
On the other hand, if you’re an agency of 40, AI is something else entirely. It’s an opportunity to show large clients that you can provide greater service than they would otherwise expect from a small shop.
We’ve had versions of AI working across production for a few years now, expanding our capabilities, and delivering value to our clients. We’ve also used it for first drafts for copywriting (ChatGPT often writes like a sophomore who didn’t do the reading) and for a range of other tools. All of its applications still need human oversight. They probably will forever. But not 4,000 humans.
With AI’s help, larger clients will find smaller agencies come with all sorts of benefits. They’ll save due to fewer FTEs, allowing them to shift that money from fees to working media dollars. They’ll also get more accountability from their agencies as smaller size allows for improved transparency into who are the actual value-creators.
Fifty years ago, agencies had to be big to have a sizable impact. But the commoditization of creative tools has been continuously challenging that model. When I started out in this business, the reason there were so many drunk art directors was that once they sent their type off to the typesetters there wasn’t much to be done but wait, and drink.
Apple and Adobe and a host of other tools changed all that, and probably saved a few marriages along the way. Today, with the exception of a few charming holdouts, we didn’t need typesetters anymore.
But we still needed ideas.
We still needed people to imagine Gekkos driving sports cars, Big Macs being delivered in Burger Kings, and Old Spice showing us “The Man Your Man Could Smell Like.” We still needed some ambitious, imaginative soul who saw a blackout in a stadium as the perfect time for an Oreo social post.
We still needed the kind of thinking that only people could deliver. Really bright people.
It stands to reason that 50% of the people you meet are of below average intelligence. Big global agencies pack their accounts with every end of that spectrum and AI is going to challenge a big chunk of the bottom half. But small agencies can’t afford to fill their ranks with average, let alone less than average. So the AI engines will expand our capabilities without threatening our core.
Finally, one of my mottos is “Beware of big decisions.” Holding companies and large agencies are already investing heavily in their quest to create “proprietary” engines. We’ll see. My guess is that AI will be just another commodity, accessible to anyone with an internet connection. In the meantime, to pay for these robots, we’ll see the holding companies shed a lot of people. The staff who survive are going to be the ones who always survive: the politically savvy and the well positioned. This is not the same as the excellent, the brilliant, or even the irreplaceable. The giants will be slimmer, but they probably won’t be smarter.
All these changes are going to come. None of it should be a surprise. The big slow animals are going to be more vulnerable than the quick-witted, lean and agile ones. This has been the case for centuries. And honestly, it can’t happen soon enough. Because clients deserve better.