Over the past month, groups have settled into a scenario familiar to investors when building their fortunes: AI as margin defense, integration as operating leverage, scale as moat, and automation as productivity.
This is a neat frame and a way to show that the generation tool does not hollow out the model and that EBITA can be protected.
But investors aren’t buying it.
WPP’s new strategy was successful without an increase in stock prices. Although Publicis continued to grow in both sales and profitability, it was not enough to stop the decline in its stock price. Dentsu’s poor performance directly affected its market value. Habas remained even more stable. Omnicom’s rebound following the results was driven more by the structure of the merger and capital gains than by renewed confidence in its direction.
When you filter out all the noise, the market message becomes consistent. As currently being told, the AI story has not yet taken off. Part of it is execution. But most of the time it’s much worse. When every holdco reaches for the same vocabulary, the same AI layer, the same agent orchestration, and the same human-supervised automation, the discussion stops sounding like a strategy and starts to sound like a script.
A few soundbites from the earnings call illustrate the point.
Publicis CEO Arthur Sadoun told investors that AI is “not a headwind. For us, AI is actually a strategic driver of growth and profitability.”
His counterpart at Omnicom, John Wren, also reached into the same register, describing the group as “the world’s learning marketing and sales company, built for the next era of smart growth.”
Havas boss Yannick Bolloré said his business had evolved as an “AI-driven organization, driven by human ingenuity and where technology amplifies rather than replaces human creativity.”
Giulio Maregoli, chairman of Dentsu Americas, said the group is “embedding an AI-enabled workforce with strong data integration across planning, activation and analytics, while accelerating investments in media strategy.”
WPP CEO Cindy Rhodes, perhaps the holdcos’ bellwether, closed the loop. The group’s “new mission” is to be a trusted partner for the world’s leading brands in the age of AI, she said.
In earnings calls this week, each of the five executives argued that AI is an asset, not a threat. Investors have the right to read all five at the same time and ask which one is correct. Or whether any of them are.
business model issues
The holdco platform should deliver on its promises, but so far clients are unaware of it.
“The honeymoon around AI and agency is essentially over,” said Jay Wilson, vice president analyst at Gartner. “A year ago, agencies were selling clients on their AI platforms and claiming that this would improve cost efficiency and speed time to market. CMOs were saying, ‘Will it be cheaper?’” And agencies were saying, “Not yet.” And now we’re talking to CMOs who are reviewing and updating their agency scope, but they’re not seeing cost savings yet in terms of fees. ”
Shipping isn’t the only issue. It’s just that the business models needed to deliver on those promises don’t yet exist.
As AI automates creative production and removes humans from ad buying, the old time and material models will collapse, with no obvious replacement. When assets are generated on a large scale, the payments per asset are split up. Once outcomes are no longer tied to time, retainers begin to feel arbitrary. Subscription fees can struggle to capture the increasing value of your work over time. The industry demands focus on outcomes-based pricing, which requires access to customer data and board-level trust, which most agencies don’t have and can’t achieve.
Bruce Biegel, Senior Managing Partner, Winterberry Group, said: “When you talk to these companies, the question that always comes up is, ‘How do we price what’s going to happen next?'”
No one knows.
But no matter which model wins, creativity will be at the heart of it. Not as a production cost that should be automated, but as a judgment layer that decides whether something will work or not. What should exist? What should the brand symbolize? Does the work really move people’s hearts? These are not efficiency issues. These are valuable things, and the industry still doesn’t have an agreed way to price them.
That is exactly why the issue of pricing is a significant issue. A common belief is that creative ends up in the media budget and becomes a percentage of spend rather than a separate bill line item. If so, it would be more than just a bill adjustment. That means reordering the purpose of the agency and where its influence actually lies.
Until the industry resolves this issue, customer dissatisfaction will continue to grow, business models will remain broken, and investors will remain skeptical.
“Almost all the focus and all the noise [around AI] Paul Frampton-Carrero, CEO of independent media agency Goodway Group and former managing director of Havas Media Group UK, said: “AI can deliver faster and cheaper. But faster and cheaper doesn’t necessarily mean better. If there are fewer people in the loop, you’ll get there faster.”
reality check
A statement from someone sitting inside the system will land you differently. And that, in a quiet moment, is something Holdco’s chief probably wouldn’t dispute.
In fact, Wren has publicly stated that ultimately everyone will be using the same tools, and what matters is the talent behind them, which, if you read between the lines, is an admission that platform competition as a differentiator is over. The underlying architecture of these platforms confirms this.
WPP’s new turnaround plan is the latest acknowledgment of that reality so far, and as such is the most obvious change this entire earnings season.
For many years, WPP operated as a consortium of brands held together by a shared balance sheet. What was announced last week was an attempt to break away from that. The group is disintegrating into four operating units, with media at the center and open recasting as the connective tissue rather than a product in its own right. Most struggling companies are faking their diagnoses. To WPP’s credit, this company has an obvious name for having a balance sheet that is too complex, inconsistent, and needs fixing before anything happens.
But knowing the diagnosis and acting on it are two different things. The room to act decisively to absorb short-term pain, restructure operating models, and rebuild customer trust at the same time is exactly what is often suppressed by running a public company within a quarterly reporting cycle. And all the while, clients are drawing their own conclusions. So the script is tidy, the story remains optimistic, and the hard questions are deferred to the future and conveniently unpriced for the moment.
Ruben Schrules, CEO of Ebiquity, whose firm advises large advertisers on media and agency performance, said: “In my humble opinion, the key thing for large companies to achieve is clear differentiation and the right value proposition in the interests of their key customers. Ironically, for a company whose business is brand building and marketing, their marketing and brand positioning has not been as strong as they could have been.”
