The march of the machines and the replacement of the human race has (probably) been greatly exaggerated.
We won’t see the creation of a digital god (unlikely) but artificial intelligence (AI) will take a lot of jobs out of the workplace (near certain) as we know it.
Hold on to your seat (job), major disruption is ahead.
However, AI of the generative kind -- that can create text, images, video -- will mean new jobs will emerge, according to market analysts.
We don’t know the exact nature of the roles yet but we know that creative and analytical skills, as frequently displayed by those wearing the advertising uniform of a black t-shirt, are valued.
That’s according to the pointy heads, those whose role is to suck in data and spit out considered viewpoints, sometimes known as analysis.
Accenture estimates that 40% of all working hours could be impacted by AI, ranging from 9% to 63% of a standard day’s work.
Gartner forecasts 30% of outbound marketing messages from large organisations will be synthetically generated by 2025.
And the future for advertising agencies is smaller, but more capable, according to Forrester. The global consultancy predicts that nearly one-third of ad agency jobs will be at risk of automation by 2030, with 7.5% of ad agency jobs already lost.
The target for overhead savings is obvious when you consider that about 30% of the cost of sales in media is labour.
Cut that and more profit is created? Maybe. But the equation isn’t that simple. If your clients know you can produce a campaign cheaper, won’t they demand a fee cut?
The World Economic Forum’s Future of Jobs Report 2023 (recording the perspectives of 803 companies collectively employing more than 11.3 million) found that expectations of the displacement of physical and manual work by machines has actually decreased.
However, AI is expected to be adopted by nearly 75% of surveyed companies. Half the organisations expect it to create job growth and 25% see job losses.
The majority of the fastest growing roles are technology-related. AI and Machine Learning Specialists top the list of fast-growing jobs.
Martin Sorrell, the founder of pure-play digital advertising group S4 Capital, describes AI as a superpower, the core of a new industrial revolution.
“The unique, transformational shift to artificial intelligence (AI) and artificial generative intelligence (AGI) will only accelerate the pace of digital change,” Sir Martin says.
“Our mantra or strap line has now been modified to ‘faster, better, cheaper and more’ to reflect our enhanced ability to accelerate copywriting and visualisation, to automate media planning and buying, to use AI/AGI as a super tool in our operations, to provide hyper personalisation at greater scale and provide data to all our almost 9,000 Monks in 57 offices in 32 countries.”
While he embraces this change, others have a few worries ahead of them, including competitive pressures and clients doing more of their own advertising work assisted by AI.
A study by investment bank Goldman Sachs says the rapid acceleration in task automation will drive labour cost savings and raise productivity, putting millions of jobs at risk.
“The good news is that worker displacement from automation has historically been offset by creation of new jobs, and the emergence of new occupations,” write analysts in a note to clients.
The evolution of work is a constant in recent history. The arrival of the internet heralded new jobs including digital marketers (and their agencies), website designers and software builders
More than two-thirds of all the jobs that people are doing now did not exist in 1940, according to economist David Autor.
These include aeroplane designers, textile chemists, computer application engineers, controllers, remotely piloted vehicles, certified medical technicians, wind turbine technicians and paediatric vascular surgeons.
Whatever the eventual impact of staff levels, the global advertising groups are obliged to increase investment in AI because of their increasing reliance on business related to data and technology.
The agencies need to keep pace because everyone else is investing.
Investment bank UBS, in a study bringing in its analysts from across sectors, says AI is expected to intensify competitive pressures.
This is certainly the case in advertising, which has the major global groups in an arms race trying to stay ahead of the nose-bleeding inducing curve of AI advantage.
And the spoils are there. AI will touch more than half of all ad revenue in 2024 and will inform more than two-thirds of advertising by 2028, according to estimates by media agency GroupM, part of WPP, the world’s biggest advertising group
“AI tools are now being widely adopted across agencies, adtech and media owners (well beyond the largest tech platforms where they have been in use for the past decade or so), helped by the intuitive interfaces and simple text-based input of tools like Chat GPT,” says GroupM in its latest global advertising forecasts.
Google has rolled out Performance Max and Meta Advantage+ to apply AI to budget allocation and optimisation across their platforms.
Some agencies have their own cross-channel allocation models as well as custom chatbots to interrogate and optimise media budgets.
In parallel with advertising agencies, big brands are investing in AI, not just to handle inventory control but to create their own campaigns.
Heinz asked AI for a tomato sauce commercial. While this was more for fun than to drive sales, the result is entertaining and enticing:
And Coca-Cola used Stable Diffusion, a text-to-image AI generating photo-realistic images, in this commercial:
Ai isn’t something new, it's just surfaced in the communication channels of the business world, lodging top of mind via Openai’s chatbots.
A study by investment bank UBS of almost 500 earnings calls, where companies explain their latest results, since January this year found 3,500 references to generative AI and/or ChatGPT.
“Generative AI is set to automate or augment the roles of many knowledge workers,” write UBS analysts in a note to clients.
“Employee costs are high as a proportion of sales and – in the US at least – over three quarters of the workforce in the Software & Services and Media sectors work in roles most prone to be impacted.”
For advertising agencies, there are three opportunities, according to UBS, for using AI:
Refreshing and integrating data to provide better audience insights and optimisation; Cost reductions in creative services, around video, language (copyright) and imagery; Reskilling staff around higher value/revenue workflows.
A threat is that generative AI could create cost deflation in creative (copyright and production) leading to revenue headwinds.
However, agencies believe lower costs will accelerate the shift to greater personalisation of advertising campaigns which will foster greater volume growth of business.
And if an ad agency can, when using AI technology, create a commercial for less, will clients demand a discount?
Arthur Sadoun, CEO of Publicis Groupe, faced this question when he was briefing analysts on the March quarter results.
“I'm definitely not saying that AI will lead to lower revenue,” he told the briefing.
“What I'm saying is that we might get paid less for a single ad one day. We are far from that, but it will add to the volume of ads that we have to produce because of personalisation at scale.
“And this is where we still have a lot of work to do, to change the perception of what we do for our clients. And why what we do, not only make us unique, but we believe creates, the opportunity to be the only one that can truly outperform the market, is we have shifted from a communication partner to a transformation partner.”
Brands are already deep into AI. LinkedIn’s The B2B Marketing Benchmark’ study of 150 local marketing and finance leaders shows AI has caught on to a greater extent in Australia than in most other markets, with more than half (51%) currently using generative AI compared with the rest of the globe (45%).
And in advertising agencies Ai has been around for a while. In June 2017, Publicis launched AI-powered platform Marcel, which brings together data from 80,000 people and more than 1,200 entities, spanning 200 specialties and thousands of clients.
Marcel has reportedly already created tangible benefits around staff procurement to better serve clients and provide better internal opportunities (lowering churn). AI is also powering data insights inside Publicis’s data platform Epsilon.
WPP’s GroupM has been using AI at Xaxis to better target media, optimise campaigns and create audiences
“We use it to target media, to optimise campaigns, to create audiences, and in the production part of the business,” says WPP CEO Mark Read.
“Hogarth uses AI extensively to create, to produce work, for all of the channels that consumers need. I think what's changed over the last six months is the application of AI, through generative AI into the creative process of the production of language, video, imagery through AI and that's really allowed us the opportunity to use it much more creatively in the company.”
Read says technology at WPP’s businesses has so far tended to create more jobs than it has destroyed.
GroupM, in its mid year ad spend forecasts, says the industry is at an inflection point where the drivers of advertising growth are maturing, the pandemic upheaval is receding and the previously relentless rise of digital advertising has slowed.
This is why GroupM is forecasting underlying mid-single-digit advertising growth over the next five years.
In Australia, the 2023 forecast is for a flat market, just 0.2% growth, dragged down from the outlook six months ago of 3.4% growth.
However, the impact of AI could change that.
“There are myriad ways in which content and image generation and modification could disrupt the value exchange between audiences and consumers and the media owners, whose businesses are subsidised by advertising, vying for their time and attention,” says GroupM in its latest global media spend forecast and trends report.
That could be a positive or a negative.
An explosion of quality content and AI-enabled startups could lead to faster growth.
Or a flood of low quality content could start a race to the bottom and the erosion of audience trust in advertising.
But there is a lot of fun to be had with AI. Look at this commercial created by DDB for Funlab:
And the threat to the world from AI? Small, according to today’s thinkers.
“To compare this technology with the truly existential threats we face today such as climate change, war, pandemics, is simply absurd,” says RMIT’s Professor Matt Duckham, Director, Information in Society Enabling Impact Platform.
He says the technology is causing big changes and disruptions in many industries and sectors of society.
“Many of those disruptions will be negative, but hopefully many more will be positive,” he says. “None will be apocalyptic though.”
The GroupM forecast:
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