Big ad agencies reshape as AI takes over more advertising work

In short: Big advertising agencies are scrambling to adapt as AI tools start doing parts of their work faster and cheaper.

What's going on

The Financial Times reports that the old style of advertising agency, made famous by the TV show Mad Men, is under pressure. Instead of relying mainly on large teams of creative staff, more agencies are using AI tools that can produce drafts and variations in minutes, often at a lower cost.

Executives say the pace of change has jumped. Publicis CEO Arthur Sadoun said the industry has seen more disruption in the last 12 months than in the last 12 years. Analysts also question the common agency pricing model, where clients pay for hours and activities, even as clients increasingly want to pay for results.

Big agency groups are responding with reorganizations, job cuts, and more investment in AI. WPP plans to cut £500 million a year in costs by 2028 and sell non-core businesses, while also investing further in AI. Omnicom has taken over Interpublic Group (IPG), and the combined business is cutting thousands of jobs.

The shift is also tied to broader changes in where ads show up. Streaming is taking share from traditional TV. Retailers are selling more ads on their own websites, like a supermarket charging brands for shelf space, but online. Tech platforms are taking a large share of ad spending, with Dentsu saying more than two-thirds of UK media spend now goes to tech platforms.

What to watch

Agencies are trying to become more like technology providers, but some executives warn that competing head-on with companies like OpenAI or Microsoft could be a risky, low-profit path. Another open question is how many jobs will be replaced versus reshaped, as leaders argue that human taste and judgment will still matter, even if more work is automated.

Source: Financial Times