Earlier this year, WPP quickly remodeled one of its client's Super Bowl TV ads. Instead of human actors and expensive productions, which originally cost millions of dollars for weeks of work, agents used artificial intelligence tools.
The remake, part of WPP's technology experiment, was indistinguishable from many who saw both versions, according to those who saw the campaign.
The speed and quality of AI-generated versions highlighted the impact of advertising agencies' investments in technology, but also highlighted the threat to WPP's traditional creative business.
WPP CEO Mark Reid, who announced his exit this week, was one of the previous adopters of his agency's AI tools. Despite pushing to embrace AI, the group's stock price has been halved after seven years of work.
“Investors are scary. They are worried about the impact on revenue from AI,” said one person who has been close to discussing with company shareholders in recent months.
When he took over from Ir Martin Sorrel in 2018, Reed spoke about the need to invest in technology on his first investor day. He bought AI startups such as Sataria in 2021, and recently took hundreds of millions of pounds to develop internal AI tools.
Currently, over 50,000 people use WPP Open. This is AII's AI platform that allows you to turn simple text prompts into social media ads in minutes. But for agents who still bill some clients hourly, there are still investors in their own business disruption.
“AI's unit economics is DEFLESTIONARY. Investors find it difficult to see past that,” said another person familiar with the ideas of key investors.
What's more worrying for investors is the rapid deployment of AI tools by high-tech giants like Meta, Google, Tiktok and Amazon. This can replace much of the work traditionally done by advertising agencies.
Meta, which owns Facebook and Instagram, will be offering advertisers the ability to use AI tools to create whole ads and targeted campaigns next year.
Amazon Ads offers generic AI tools that allow businesses to create their own ads and allocate real-time budgets across ad slots on linear broadcast and streaming services.
For businesses that buy ads, the effectiveness is substantial. Financial Services Group Klarna says that AI has cut spending on marketing agents quarterly and allowed them to run more campaigns.
Next week's Cannes Lions will be able to see similar tools using digital avatars to turn text prompts and product images into video ads for just a small portion of the cost and time previously required by productions involving actors. These ads can use data from high-tech companies to target specific groups of consumers.
Using Meta, Google, Openai and Microsoft using autonomous “AI agents”, marketers are also provided access to AI assistants for media planning and creative development.
WPP has over 29,000 agents. This allows you to train individual brands on the needs of individual brands to work as a custom planner, creator, and strategist. Even Read has his own “CEO agent” who writes in the tone of his voice and can deal with his work. Synthetic audiences designed to mimic corporate customers are also created to test ideas.
Jonathan Miller, CEO of Integrated On Media, specializing in Digital Media Investments, said the rise of AI will “create a challenging future for creative agencies.”
Miller questioned the extent to which creative agencies were needed when AI “essentially providing everyone with access to the world's most powerful creative tools.”
The confusion caused by the AI was not the only factor in the investor's mind before Lead's decision to end the WPP.
Its stable, creative, media and PR agency wide restructuring and integration over the years was seen by investors when necessary, but some employees were unhappy.
WPP stocks fell to nearly five years' lows, close to the last seen levels in 2009. People close to the group say this is the metric that was ultimately used to determine progress by readers, and investment in AI still doesn't provide clear financial rewards.
However, Lead told the Financial Times that simplifying businesses is essential to deploying AI across businesses, adding that WPP will need to “disrupt themselves” to ensure that it will be placed in a better place than its rivals in the next AI revolution.
The arrival of the new chair – former BT boss Phillip Janssen – was a natural moment of scrutiny by a longtime CEO.
People close to Janssen's idea suggest that he doubles the AI investment made by what he reads. The new chair tells staff that “we use people who use AI more than we do than we do with them,” not AI that is a threat.
However, a WPP employee confirmed that Janssen also has “his own ambitions” about where he will bring the company next, and how to deploy and price AI technology to create a sustainable business model.
In a note to staff this week, AI said “has a greater impact on society, business and WPP than the internet,” adding that “my biggest focus over the past two years is ensuring WPP will succeed in this age of AI.”
Analysts agree that over the next few years it will be important to decide which agencies will win the AI Arms race.
David Hero, Harris' vice-chair and chief investment officer of WPP's top 10 shareholder, said in the short term, the company needs to improve its media business, which has lagged behind its rivals such as Publicis. However, in the long term, it was necessary to “shoot how AI investments could be commercialized.”
He said shareholders are priced for uncertainty about the impact of AI, and it is not clear to what extent opportunities from AI will balance the risk of disruption.
Advertising executives say human creativity is always necessary to get through the common types of ads that are often generated by AI. They also believe that the technology will enhance creative work and help plan and test ideas.
“There's certainly a big threat directed at traditional advertising agencies that focus on creative output, but the real question is how well those businesses adapt or don't.”
