Why are agencies running away from Generative AI?

As part of the StopPress series ‘AI – Marketing disruptor or overheated hype?’ Antony Young, Co-Founder of The Media Lab, shares his thoughts on why the advertising and marketing industry should embrace the changing landscape instead of looking the other way.

The ad and marketing industry loves its bright and shiny objects. Last year it was the MetaVerse. Two thousand and twenty one was the year we fell in love with TikTok. In 2020 social justice movements and the US presidential election sparked conversations about brand safety.  

But it seems 2023’s hot big topic Generative AI isn’t getting much love from the advertising industry.

The global agency holding companies have been eager to announce acquisitions or partnerships in the AGI space.  But the actual agencies themselves are struggling to get behind this tech.  I’d go as far as say, resisting it.

This year at Cannes, the industry’s annual ad festival, Ad Age reported agency executives grumbling over AI overshadowing other more ‘important’ issues for the industry.  WPP owned Ogilvy propose a crackdown on AI-generated influencer ads by using a watermark to distinguish it from original content.  While BBDO Worldwide President and CEO Andrew Robertson in an internal memo that was leaked, warned employees to avoid using AI tools such as ChatGPT, Midjourney and DALL-E 2, unless approved by the agency’s legal team over concerns of copyright issues.  

Yet, the media companies are diving head first into AGI. Microsoft made a $ 10 billion investment in ChatGPT owner OpenAI which they say will eventually power its Bing search engine. Google have been operating it’s AI open-ended machine learning research division since 2011 and merged it with DeepMind a company it acquired. Google have made a ton of enhancements including releasing Google Bard, their ChatGPT alternative. Meta last month added AI ad creation within their ad manager system. Venture capital investments in generative AI are expected to hit $ 43 billion by the end of the year. Many of these targeting the marketing sector.  

Despite all this interest in marketing AI, why is the ad industry being apprehensive with this technology?  

At the heart of it, is the threat to undermining their creativity. Platforms that create digital ads or images is one thing, but when Coca-Cola released this ad using Stable Diffusion, a text-to-image diffusion model capable of generating photo-realistic images given any text input, it showed the potential for high quality production of TV ads.  

Another issue is the ability to reduce the time to create ads threatens to usurp the FTE charging model that agencies heavily rely upon to earn fees. If an ad generated by a machine only takes minutes to create, how can an agency justify the charges agencies apply and the covering of overheads?

Finally, jobs. The ad industry has already been hard hit this year with a soft advertising market.   According to a report by Forrester Research, some 33,000 ad agency jobs will be lost to automation by 2030.  One-third of this loss will be the direct result of generative AI. The flow on effect is potentially crippling talent entering the industry with junior employees and entry-level graduates who cut their teeth on the more implementational work.   

None of these concerns will stop marketers from pursuing more cost effective solutions. If agencies don’t come on board, then the clients will do it without them. Last month, KiwiBank announced a partnership with creative automation firm Storyteq, an early move by a prominent New Zealand advertiser.  

But in my view, AGI doesn’t replace human ingenuity.  

The best advertising comes from breaking new ground, not repeating what’s worked. Great ideas develop out of fresh insights and your gut telling you. Clients buy a communication strategy because they trust the experience of its author. And clients aren’t robots, they want to work and count on people who are passionate and committed to the cause.  

Of course, AGI can make things work faster and cheaper, and clients want that too.    

What we’re seeing in the marketing sector is just a forerunner to what we’re going to see in every industry.  Along with marketing, we are seeing customer service, software development, the banking industry, legal profession and healthcare sectors start to experience disruption from large language AI models.  

Right now, the AI platforms are clunky. But we are just at the starting line of the Generative AI phase.  After all, the first iPhone only operated on 2G, had just 8GB of storage, with no independent apps.  The intelligence and processing power of these tools will quickly escalate.    

Personally, I’m optimistic for the next stage of AGI-enabled marketing and advertising.

Some roles will go away. In the 1990s, agencies had finished artists and the despatch departments. But new roles, needs and opportunities will also emerge. Back in those heady Mad Men days who could have imagined an agency having social media managers, developers and data scientists. And in the not too distant future, who knows what other expertise will be required.  

We can’t avoid change. So we better run towards it.  

Written by a human.

Antony Young is Co-Founder of The Media Lab, Wellington’s largest independent media agency, and The Digital Café , an AI advertising agency servicing SMEs.  He ran agencies in New York and London, and was a regular writer for Advertising Age.

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