Is your ad agency ready for AI? Sam Altman predicts AI will take away 95% of ad agency work. This disruption is a rare opportunity for those willing to adapt.
Altman Says AI Will Handle 95% of Ad Agency Work
According to a recent report by Paul Roetzer and Mike Kaput at the Marketing Artificial Intelligence Institute, OpenAI’s CEO Sam Altman predicts that “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.” If anyone knows the future of AI, it’s Sam Altman.
Altman’s prognostication is sending shockwaves through the advertising industry. There are hundreds of thousands of jobs at risk.
Chasin Says Without AI, Agencies Cannot Compete
In a segment of Marketecture Podcast Episode 83 which turned me on to this story, Josh Chasin says, “what’s going to happen is I think that AI is going to immediately have an impact on labor costs.” After all, automation like AI is typically a deflationary force.
Chasin continues, “And the agencies that don’t embrace AI are going to find that they’ve got a competitive problem because they are offering the same services as their competitors, but they’re spending too much to do it.”
AI Will Eliminate Toil, Not Jobs
I agree with Chasin. However, I disagree with Altman’s claim of “95%.” It’s way high. It reveals his lack of knowledge of the work at ad agencies (he can’t know everything, right?). That said, I agree that lots of agency work can be automated by AI.
What kind of work will AI automate? AI will automate the toil. AI will free ad agency workers from drudgery.
AI will eliminate work, but it won’t take away jobs. It will transform jobs in profound ways. By eliminating the toil, it will distill the jobs down to the essence of the value they bring.
AI Will Come Slowly, Then All at Once
Chasin further observes that ad agencies are “reticent to move in this direction because they think that their asset is people. Everybody thinks their asset is people. But once their competitors start competing for business in a more efficient fashion with way fewer labor costs, that’s going to accelerate the adoption of AI across the industry.”
AI will come at you like Sir Lancelot’s charge in Monty Python and the Holy Grail. If you’re not preparing for AI now, you’ll suddenly get rolled when your competitor flips the switch on their AI automation.
Are You Ready for AI? Probably Not
The biggest agency holding companies are not yet ready for AI.
According to Ari Paparo in the Marketecture podcast, “the investment levels are not what you’d expect for very large companies that are about to get wickedly disrupted.” According to Paparo’s research:
- Publicis is spending $325 million over 3 years on a program called Core AI.
- WPP is spending $317 million in 2024 on a system called IQ.
While these investments seem big, they are not huge relative to the scale of these businesses. If my math is correct, this works out to about $1,000 per employee at Publicis and about $3,000 per employee at WPP this year.
Meanwhile, companies like Open AI are spending billions of dollars on research and development.
Will AI Spawn a New Breed of Agency?
Eric Franchi ponders, “Given how fast these tools are coming online and the capabilities and some of the things that that that we’re seeing with startups, I just wonder if it’s going to be a new breed of agency that is people light and technology adept. My friends out in Silicon Valley, they’re obsessed with this idea of billion dollar one to five person companies.”
To which Chasin responded, “I kind of wonder if the first one might be an agency.”
AI Disruption Brings Opportunity and Threat
Since most ad agencies are unprepared for AI, the old guard is ripe for disruption.
For challenger agencies, this is a big opportunity. Some might say it’s a once in a lifetime opportunity to quickly gain market share.
For incumbents, it’s time to shred the old playbook. Old systems and processes will no longer be a competitive advantage. In fact, the inertia of the old ways will likely be a disadvantage.
Let’s explore the barriers to AI.
Lack of Good, Clean Data
You can’t have AI without IA (information architecture).
One of the primary reasons ad agencies aren’t ready for AI is their data infrastructure is not fit for purpose. In many cases, agencies lack any real data infrastructure.
Ad agencies have historically relied on disparate systems and manual processes, with data siloed in different departments.
This won’t work for AI, which relies on comprehensive, well-organized datasets.
Data Incarcerated in Excel Spreadsheets
Many ad agencies, especially smaller ones, still rely heavily on Excel spreadsheets for media planning and media buying data.
While Excel is a powerful tool for one-off projects, it fails as a good source of data for AI and it doesn’t integrate well with AI (yet). When “data” is incarcerated in spreadsheets, it’s effectively useless to AI because it’s not structured, normalized, and aggregated in the way that AI prefers it.
While it’s conceivable that an AI can make sense of a pile of spreadsheets, this is a recipe for disaster. The use of unstructured data dramatically increases the risk of LLM hallucinations. It’s a step backwards from state-of-the-art Retrieval Augmented Generation (RAG) methodologies that mitigate the risk of these hallucinations.
Facing the AI Skills Gap
The transition to AI will require you to not only upgrade your technology but also your people.
Most (all?) agencies face a skills gap when it comes to AI. This will be a challenge for staff who are experts in traditional advertising but unfamiliar with data science, machine learning, and AI technologies.
The Path to Thrive in the AI Age
For a glimpse of the future, listen to Paul Roetzer in The AI Show Episode 87 where he reacts to Altman’s “The Quote.” In the near future, AI will not take your job. However, if you’re not using AI, your competitor who is using AI will take your job. You’ll need AI to remain competitive.
It’s clear now is the time to make moves to adopt AI. Here are starting points:
🦋 Embrace AI-friendly Systems: If you’ve not already, now is the time to modernize your operating systems. Many would argue it’s already past the time to move away from manual processes and toward technologies that enable and integrate with AI. It’s never too late to get started.
🎓 Accelerate AI Literacy: Building or acquiring expertise in data science and AI is crucial. Agencies like Publicis are spending more than $50 million this year on upskilling their talent.
🛠️ Prioritize Data Strategy: If you’ve not already, now is the time to develop a comprehensive data strategy that includes data collection, data management, and AI availability.
⚗️ Experiment and Innovate: There are lots of consultants claiming to be experts. The truth is everyone is trying to figure this out right now. The best way to learn AI is to get your hands dirty. Build a chatbot. Build a vector database. Build a recommender. Build an AI agent. None of these are overly difficult (I know because I’ve done all of these). Although it will be frustrating, you’ll learn a lot in the process. This will put you ahead of almost everyone else.
🌱 Start Small: Don’t try to boil the ocean. It’s a good idea to start with small pilot projects to demonstrate the potential of AI. This will deliver immediate value and build confidence to make larger investments.
Bionic is Here to Help You with Your AI Transformation
Your journey to AI adoption will not be quick nor easy. Please know that Bionic is here to help you.
Here at Bionic, our Guiding Belief is “We believe in a future where human creativity is unleashed by automating the mundane tasks that consume most of our time and energy. Bionic will enable you to achieve super-human results through advanced workflow automation.”
We believe this so strongly, it’s in our name: Bionic literally means enhancing human powers with technology.
Good News If You’re Already on Bionic
If you’re already using Bionic for Agencies, good news… you’re already ahead of most agencies in AI adoption.
For starters, you already have an AI-friendly database. While you’ve been using Bionic to automate your workflow, the system has been quietly building you a clean database that you can use for your AI initiatives (among other things).
You may not realize this, but you’ve already been using AI for years. When you add lines to your media plan, you’ve been using an AI-powered media recommender.
More recently, you got a new “Data for AI Analysis” export that enables you to use AI to analyze media plan performance.
Stay tuned… there’s much more to come!
It’s Not Too Late to Get Started
If you’re not yet on Bionic, it’s not too late to get started. As soon as you log into Bionic, you’ll make a major step forward in your AI transformation. Get started today.
