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One More Nail In The Coffin Of Ad Agencies

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By John Winsor

In a major shift for the creative industry, Microsoft recently launched an ad for its Surface line that was almost entirely created by artificial intelligence. Using tools like Hailuo and Kling, the design team generated every scene except for a few human close-ups, such as hands typing. The ad ran for three months without anyone noticing it was AI-made, proving Shelley Palmer’s insight: “If you cannot tell the difference, there effectively is no difference.”

This milestone highlights a critical transformation in how brands create content. As Palmer smartly frames it, creative work now falls into two categories: “required” content, practical, executional work increasingly handled by AI, and “inspired” content deeply human storytelling still beyond AI’s full reach. Microsoft’s Surface ad achieved a 90% reduction in time and cost while maintaining broadcast-quality standards. For brands and agencies alike, this signals an urgent need to rethink how creativity is produced, valued, and rewarded.

When I led strategy at Crispin Porter + Bogusky, one of the most decorated creative agencies in history, we focused intensely on unpredictable human creativity. Later, at Victors & Spoils, we pioneered open talent models, demonstrating that creativity could survive and thrive in new structures. In my book Open Talent, I argue that embracing open networks and AI-driven collaboration doesn’t diminish creativity; it liberates it, amplifying human potential by automating required content.

The implications are clear: AI can now efficiently handle the “required” creative work, freeing human teams to focus on the “inspired” work that moves hearts and builds brands. However, the economic efficiencies AI brings are already compelling brands to recalibrate their balance between human creativity and machine-driven execution.

Brands now have the opportunity to fundamentally rethink their creative strategies. First, it’s no longer necessary or financially wise to pay for agency overhead. Freelancers, empowered by AI tools and connected through emerging platforms like Hence Creative, can deliver exceptional results with greater agility and at a fraction of the cost. The bloated agency model is giving way to streamlined, open networks that prioritize speed, innovation, and return on creative investment.

Second, companies must recognize the opportunity to automate and streamline their required content. AI can rapidly generate high-quality, functional creative assets, enabling brands to reduce costs and reallocate resources toward more strategic and emotionally resonant initiatives. This shift is not about replacing creativity; it’s about reclaiming the time and space for deeper innovation.

At the same time, AI’s ability to handle routine creative tasks allows human teams to focus on what matters most: inspired storytelling. Freed from production-heavy demands, creative professionals can push boundaries, explore cultural narratives, and forge the emotional connections that truly engage audiences. In this new era, the brands that thrive will be the ones that understand creativity as more than content; they’ll see it as a profound emotional dialogue with consumers.

Finally, brands must adopt an open talent mindset. AI reaches its greatest potential when paired with diverse human insights. By tapping into a global pool of freelance and independent talent, brands can access broader perspectives, richer ideas, and faster innovation. AI isn’t a competitor in this model; it’s a collaborator, amplifying the capabilities of a dynamic, distributed creative workforce.

Ultimately, the adoption of AI-generated content might spell the end of traditional ad agencies that cling to outdated structures. Those unwilling to evolve will find themselves struggling to survive. But those who embrace AI as a tool for enhancing human creativity, blending technology with diverse, open networks of talent, will lead the next wave of storytelling innovation.

The future of creativity won’t be built behind the walls of traditional agencies. It will emerge from open ecosystems, where humans and machines collaborate, liberated from legacy systems, and ready to meet a new era of brand building.

Feature Image Credit: Brands&People

By John Winsor

Follow me on Twitter or LinkedIn. Check out my website or some of my other work.

Sourced from Forbes

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Ad agencies warn of retail media’s “diminishing returns”

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By Rachel Wolff

The insight: Some ad agencies are pushing their clients to be more strategic with their retail media spending due to concerns about the ballooning number of retail media networks (RMNs), high CPMs, and the lack of standardization, per Digiday.

The note of caution comes as retailers push for a greater share of marketing budgets—particularly dollars set aside for national media campaigns—in an attempt to entrench themselves firmly in the advertising landscape.

Growing pains: The biggest concern among agencies is the question of whether spending more with a RMN results in higher sales and increased brand awareness. One anonymous executive told Digiday that “continuing to invest in sponsored products does not always translate to incremental sales,” adding that “there’s a point of diminishing returns.”

  • Smaller retailers in particular face an uphill battle to win over brands, unless they can offer up access to unique, differentiated audiences that justify the cost of advertising.
  • Two in three advertisers don’t plan to invest in new RMNs over the next few years, per data from the Association of National Advertisers.

Lack of standardization is also holding back investment—which is why players like Kroger and Albertsons, as well as trade groups like the Interactive Advertising Bureau, are pushing for industrywide standards that would make it easier for brands to measure the impact of their spending.

Yes but: Despite their doubts, advertisers continue ploughing money into retail media.

  • We expect it to account for $1 in every $4 spent on advertising by 2028.
  • This year alone, retail media ad spending will grow 26% to $54.85 billion.
  • While the lion’s share of that money will go to Amazon—with Walmart as a distant second—retailers that can offer brands the ability to reach new or incremental audiences, access their first-party data, and deliver strong return on ad spend have a better chance of standing out in a crowded field.

Go further: Read our report on The Retail Media Opportunity, or check out our US Retail Media Ad Spending Benchmarks: Q3 2024.

Factors That Would Drive US Agency/Marketing Decision-Makers to Increase Their Future Investment in Retail Media, July 2024 (% of respondents)

Sourced from EMARKETER

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Ad spends migrate online, but are brands digital-ready?

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By Chitra Narayanan 

Digital is becoming dominant media, but are companies and their ad agencies transforming fast enough to make a splash

ll the projections — from India and worldwide — say the same thing. That digital will drive the advertising rebound in 2021. According to GroupM’s estimates, ad revenue for digital media companies (notably Facebook and Google) will surge 14.1 per cent in 2021.

Zenith Media forecasts that digital media will command 58 per cent of total global ad spend by 2023. At nearly $360 billion, that’s no small change.

In India, ad network Dentsu’s projections point to digital media surpassing TV by 2025. It is already at the number two spot, having crossed print in 2020.

The question is whether brands have a clear digital marketing strategy yet. Where exactly will they be parking their digital advertising monies? Also, as veteran marketer Lloyd Mathias asks: “Where are the superstar digital advertising creators?” TV commercials have had their Piyush Pandeys, Balkis, and Prasoon Joshis, but we have not yet seen their digital equivalents. Mathias grouses that advertisers and brands have not fully leveraged the vast potential of digital, and only have a “post facto” strategy.

Questions abound. But first let’s explore where the digital ad spends are likely to go in 2021. Given the accelerated adoption of e-commerce, retailer media (search ads on retail platforms) is obviously going to grow. Social commerce, influencer marketing, OTT platforms are all going to see increased play. The focus will be on performance marketing, experts say.

According to Ashish Bhasin, CEO Asia-Pacific and Chairman India, Dentsu, with e-commerce becoming a part of the Indian consumer behaviour, it will be a big thrust area for brands on digital. “There will be an element of short-termism,” says Bhasin, “as in the initial months of 2021, people will look for result-oriented advertising on digital.”

As he explains, “Liquidity is the grease that keeps the economy going and we are short of the grease. So the thrust of advertising in the initial parts of the year will be performance-oriented.”

Everyone realises the benefit of brand building, but this will probably come in the third quarter of the calendar year, feels Bhasin. So far the big spenders on digital have been BFSI (banking, financial services and insurance), e-commerce, auto categories, but Bhasin feels that as digital’s reach widens, it will become very attractive for FMCG (fast-moving consumer goods).

“By 2025, digital will become the largest medium in India. At the moment TV reaches about 750 million Indians. Digital reaches about 450 million people. In the next three years there will be more than 300 million new users of the Internet. Once the reach of TV and Internet start converging, it becomes interesting for categories like FMCG, which typically want mass numbers,” explains Bhasin. Especially, as he points out, with the next hundred million users coming from Tier 3 and 4 towns and rural areas.

The Formula 1 model

It’s the short-termism Bhasin talks about that fires up Naresh Gupta, COO of Gurugram-based independent agency Bang in the Middle.

We need to break the mindset of digital as a broadcast media, says Gupta. According to him, very few brands have bothered to create their own platforms on digital and instead left it to Facebook, Amazon and Flipkart to capitalise.

It’s not very difficult to build a community on digital and own it, argues Gupta. Giving the offline example of Formula One, a property co-created by auto companies that has raised the profile of auto brands, he asks why we have not seen similar communities or platforms on digital. “Why have camera brands not created a photo community on digital,” he queries. Like Mathias, who feels advertisers have not learnt to explore the vast potential of digital, he feels brands are missing the digital opportunity.

Get the digital natives

Advertisers are still repurposing traditional media offering into digital, says Mathias. Whereas the digital medium is vastly different.

So how can they harness this opportunity? “Getting digital natives should be the core of the strategy. If they get people who live their lives on digital, it will be more natural,” says Mathias. “Don’t retrofit creatives built for television and print. It won’t be seamless. That is the critical part,” he says.

Growing DIY

Long-time digital evangelist Shubho Sengupta feels that this whole talk around social, AI-driven content marketing and so on are self-indulgent statements that have nothing to do with reality. The reality is that digital has evolved from brand building to generating leads to now using digital technology for every activity a brand does.

He cites the example of the owner of a small lubricant company who has created an interesting app that tells him how much he has sold. His challenge is in getting people to download the app at a POS (point of sale) level.

The other thing, Sengupta says, is that a lot of companies are deploying in-house capabilities for digital marketing. “I get at least one or two calls every week for help with handling social media. The more the ROI (return on investment), the more the clients get involved and want to do it themselves,” he says.

Should ad agencies be worried? Not yet. But they clearly need to put a lot more creative energy into taming the beast called digital.

Feature Image Credit: Hit makers: Digital advertising still awaits the kind of superstar creatives that rocked print and TV   –  ISTOCK.COM

By Chitra Narayanan 

Sourced from The Hindu Business Line

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The Future Of Ad Agencies Might Not Be Advertising At All

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By Jeff Beer

To call R/GA an ad agency is a bit misleading. Sure, it’s created award-winning ad work for brands like Nike, Beats and Samsung, but over the years the company has also branched out to include a venture practice, business consultancy, design and more. In an industry that’s quickly and constantly changing thanks to technological innovation and consumer behavior, R/GA chairman and CEO Bob Greenberg sees self-disruption as a key business operating principle, one that has served the company well in the past and will ensure its survival in the future.

Speaking at the  Fast Company Innovation Festival, Greenberg outlined how this strategy has always been a part of the company. Founded in 1977 as a computer-assisted filmmaking company, R/GA has evolved beyond motion graphics and a digital studio, into an interactive agency, and now a consulting and ventures practice, all while creating award-winning work for brands around the world.

[Photo: Jeff Beer]

“Disrupting the agency business is something we feel pretty confident in. We’re helping clients grow, and we do it through connected communication and connected design, but we always have to explain that we’re very interested in storytelling,” said Greenberg. “It shouldn’t be because we’re talking about digital things, that we’re not interested in storytelling. I think we’re very evenly balanced throughout our agency capabilities around the world with systematic designers and storytellers.”The company works well outside the traditional ad agency purview—it has an ongoing tech venture program partnership with the L.A. Dodgers, for instance–while still pushing boundaries in marketing work with projects like a Twitter series for Converse starring Miley Cyrus and Game of Thrones‘ Maisie Williams. For Greenberg, the key is to never view the company as a finished product.

“At best, we like to think of ourselves as an 80% company because we feel that if you’re 100% you’d be like the advertising business,” he said. “That’s what makes the advertising business fall into the deconstruction situation that’s been happening now for a couple of years. There’s nothing new, particularly, in outbound advertising, marketing communications that needs to be developed. It’s been 50 or 60 years, and they’ve done a wonderful job, but we’re looking for things that we’re 40% into or 50% into. We’re very far from our 80%, and we like to say we’re always a work in progress.”

Feature Image Credit: Jeff Beer

By Jeff Beer

Jeff Beer is a staff editor at Fast Company, covering advertising, marketing, and brand creativity. He lives in Toronto. More

Sourced from FastCompany

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Instagram Closes Gap with YouTube Among Advertisers as Twitter Continues to Fall

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By MediaStreet Staff Writers

Instagram continues its surge in generating advertiser interest while Facebook remains the dominant social platform. This is according to a first quarter survey of advertising agencies conducted by Strata.

The survey also found a continued multi-quarter decline in YouTube’s lead over Instagram, bringing the two within one point of each other in advertiser interest. 54% of agencies report plans to use YouTube against 53% for Instagram. Facebook remains entrenched in first place as 95% of agencies are interested in the platform. Twitter, which historically held third place in agency interest until the second quarter of 2016, continues its slide with interest from 37% of agencies, finding itself just 10% above fifth-placed LinkedIn.

The interest in these social platforms is reflected in agency spending, as well. 93% percent of agencies are currently spending money on Facebook, with 53% planning to spend on YouTube, and 49% planning on Instagram. The current spend lagging behind agency interest could indicate increased spend in the coming quarters.

More than half of agencies now plan to spend more than 5% of their overall advertising budgets on social media, with 22% allocating between 11-25% of their budgets on social, compared to 18% in 4Q16. The increase in budget for paid social coincides with the proliferation of live streaming tools, such as Facebook Live and Snapchat Live as 42% of agencies report that clients were interested in these innovations for their campaigns.

“Though Facebook has remained the dominant player in the social media space, the gradual shifts in focus to other platforms has been interesting to watch. There’s always been a premium on live, so it’s not surprising that agencies have an interest in exploring Facebook Live, Snapchat’s Spectacles, and Instagram’s Stories,” said Judd Rubin, senior vice president at Strata.

When agencies were asked which form of media they prioritised the most, 24% reported that digital video was their primary focus. Although that leaves digital video in second, behind local TV and cable at 36%, the interest in digital video has seen a 351% increase over the past year.

The rise in interest in digital video may be surprising in light of the fact that agencies appear split on the effectiveness of digital video. Twenty-five percent feel that it can be as effective as traditional TV, but 33% feel it isn’t, and 42% are unsure. When asked more broadly about perceived ROI from digital video, over 50% felt fairly confident that they were getting good value for their money. Forty-one percent noted they were unsure, and only 9% of agencies felt they were not getting a strong ROI.

 

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