April 14, 2020

The following is republished with the permission of the Association of National Advertisers. Find this and similar articles on ANA Newsstand.

By Karen J. Bannan

If Forrester's recent "Predictions 2020: Agencies" report is correct, this is the year that agencies will "upgrade or fade," either delivering "more synchronized, impactful campaigns and experiences" or finding themselves falling by the wayside. The marketing research firm has a pretty good idea about the impetus causing such dramatic change: artificial intelligence and machine learning, which will transform 80 percent of agency jobs by 2030. And such a transformation will no doubt have a significant impact on client-agency relations. But how?

"This transition is arguably already underway," says Jay Pattisall, principal analyst at Forrester, lead author of the report. "The impact of automation is transforming agencies and jobs, some of which will thrive, some will transform, and some will go away completely."

The changes will completely upend the client-agency relationship, transforming everything from deliverables and metrics to projects and interactions. In some cases, the transition will automate the client contact role and impact how projects are charged and billed, Pattisall says.

Sounds daunting? It shouldn't, because automation and the changes it ushers in can be a boon to those agencies willing to take some chances. "AI is not the agency job destroyer the industry perceives it to be," Pattisall adds. "Traditional agencies will need to adjust their skills and outputs [but] this is an opportunity for those agencies willing to transform."

Lowest Hanging Fruit

Against such a backdrop, agencies have embraced AI and machine learning across the board, and this is altering the client-agency relationship. The easiest and most visible example is the widespread adoption of audience activation and planning platforms. These tools — both third-party and white-labeled options — are taking multiple data sources and giving agencies a better, identity-based view and understanding of an audience.

Although this provides both marketers and agencies with more effective targeting, it also commoditizes what was once a core value. What was previously a largely manual task is now automated via software and data feeds, creating parity between agencies. The upside is that what could once take weeks or months is now completed in days or even hours, no matter the size and scope of the agency.

While clients will rush to embrace an agency with the best pricing strategy, industry observers disagree, saying it's precisely for this reason that agencies and clients will form stronger (not weaker) bonds and build more loyalty and long-term value.

"Technology will force us to build deeper connections with clients," says Monique Brosseau, president of GroupM Quebec. "Yes, we all have data and intelligence and a wealth of information, but that actually helps us become deep and true strategic partners with our clients."

Eliminating manual labor gives agency executives the time and ability to work more on creative, too, she says. "It allows us to have more conversations around brands and consumers," Brosseau adds.

Chip Walker, head of strategy at Strawberry Frog, agrees, saying that the best agencies will take automation and AI as an opportunity to be more productive with clients and get campaigns done faster and more efficiently. "AI is helpful because it can give us insight to spark new ideas and allows the uncovering of insights regarding how a consumer lives and how someone interacts with a brand," Walker says.

Forrester's Pattisall says that another positive outcome is that agencies can finally give clients — and, by extension, consumers — exactly what they've been asking for all along. "Clients want more simplified, streamlined engagement with their agency partners," he says. "Until now there was a mindset at ad and creative agencies that was slightly resistant to that. That's got to change."
 
One Part Perspiration, Two Parts Creativity

Some agencies say the proof is simply looking at the quality of ads that are being produced as well as the level of personalization that AI enables. Mike Margolin, chief digital officer at ad agency RPA, points to his agency's digital work with Honda.

"While we don't currently use AI to inform personalization, the complexity of what we're doing in this area make it a prime target for AI-augmentation in the future," Margolin says. "For example, we use past site analytics to build decision trees that inform what message is served to audiences through digital advertising based on what they did on the website.

"In the future," he continues, "AI will enable that decisioning to be informed by many more real-time factors, like what kinds of actions similar people are taking on the site right now, or what's the best path for a certain shopper to take on the site to result in a sale."

While AI enables retargeting that can be as granular as the trim level and color of a vehicle, it's the agency's ability to harvest insights that's making such microtargeting and micromessaging possible, says Pete Imwalle, chief operating officer at RPA. "You still need the right people to figure out where [the ads] should be," he says. It stands to reason that one of the biggest concerns when it comes to AI relates to creativity: Does automation and technology stifle new ideas and strategies? Does it cause tension between agencies and clients? The answer depends on whom one asks.

Strawberry Frog's Walker, for instance, says he's seen negative effects for agencies that rely on technology when it comes to creativity. "If you're just pairing offer A to picture B, at some point the practice just runs out of steam," he says. "You need a human to come in and come up with new ideas." This is why it's crucial, he adds, for agencies to keep the basics in mind even as the use of AI and machine learning continues to evolve.

Forrester's Pattisall says AI and machine learning speeds up the creative process, but agencies must remember that the human element is integral — now and forever. For example, there are already AI-assisted platforms writing copy, but what they write is questionable, he says. "[AI] is not about replacing but enhancing what a creative does," Pattisall says. "There's always a risk of relying too heavily on technology or becoming overly reliant on technology to the exclusion of good ideas." To help illustrate the point he cites various mobile apps created for airline companies. "When they all do the same thing and all look alike [as they do], how do you tell the brands from each other?" he says. "That's where creativity and branding is needed and must continue."

Ryan Linder, Global CMO at MDC Partners, agrees. "Think of AI as an iPhone update and the human talent in our industry as the actual iPhone. If you don't have an iPhone, what's the point of the update?" Linder says. "The update gives you new tools and features and can make your phone perform faster and more efficiently, but the phone is still the fundamental piece of equipment needed for the update to matter and be impactful. Without the phone, the update is meaningless."

Another agency veteran stresses that agencies should be cognizant of what AI is best used for, but not forget the secret sauce that humans can provide, in terms of the creative. "The elements of the creative flow that are process oriented and rely on data for decision making and workflow that underpins the client-agency relationship are the ones that technology can best assist in," says Richard Benyon, CEO and co-founder of Decideware.

Agencies must also realize that if they don't provide that differentiation clients will simply continue taking their work to in-house agencies, something that's already underway and increasing in frequency.

In 2018, the ANA reported that 78 percent of its members had an in-house agency, up from 58 percent five years prior. Pattisall says that half of in-house agencies indicate they are underresourced, so even if brands attempt to go it on their own, agencies that have a strong AI and machine learning practice coupled with traditional agency capabilities have a good chance of winning them back. Adds RPA's Imwalle: "If you bring a team in-house, it's hard to stay on the cutting edge," he asserts.

GroupM is wooing its clients by using data and AI to expand its offerings and distinguish the agency from competitors. Based on AI, the agency is able to develop a more robust content marketing strategy on behalf of clients. "We're not just here to buy media," Brosseau says. "We can support our clients and add value."
 
AUTOMATING AGENCIES?

Marketing Recruitment in the Age of AI

When it comes to hiring, AI and machine learning adds to the challenge among agencies to recruit new blood. While technology makes online analytics easier, hiring people to collect data and turn it into marketing gold remains both complex and costly. In addition, agencies may find themselves with fewer employees due to various efficiencies created by automation.

"We see AI reshaping the construct of the creative team since you need to find people who have the adeptness to work with insights," says Jay Pattisall, principal analyst at Forrester. "This could translate into training. It could translate into replacing some creatives. The future may also include less headcount, but the people who remain are critically and highly skilled."

Agency executives say that the speed of change sparked by AI and machine learning is making hiring and education more important than ever. "The biggest [agency] challenge today is keeping up with the pace of change," says Monique Brosseau, president of GroupM Quebec. "Every day there's something new — platforms, technology — and finding talent to respond to those needs is key."

Richard Benyon, CEO and co-founder of Decideware, adds: "It is vital that technology should never replace communication. It should provide important insights, but not get in the way of the irreplaceable magic that happens when teams collaborate and innovate."

— K.J.B.

 

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