Advertising industry executives take on AI apocalypse

Is the advertising industry staring at the moment when you say, “Let me eat a cake”?

Thousands of media and tech executives are leaving France for the annual Cannes Lions Festival (June 16-20). There, they do Schmouse and Ship Aperol Splitz at the party, commising perhaps between panels at Meta or Spotfiy Beach, or one of dozens of Yatz docked into the harbor. The town's story is framed by a veteran media executive as the “inexplicable chaos and confusion” that AI is beginning to release as it cuts thousands of jobs under the name automation and integration.

A few days before the Cannes Lions kickoff, it's already felt at the top of the industry. WPPCEO Mark Reed announced his intention to leave at the end of the year, reassuring staff that “AI is now transforming marketing,” and that “face the future, equip with confidence and acquire opportunities ahead.”

Omnicom and IPG are heading for a $13 billion mega margar. This assumes the creation of advertising giants that “accelerate innovation and poised to take advantage of the critical opportunities created by new technologies created in this age of exponential change.”

According to veterans at advertising agencies, the exponential change is based on several things. The practice of buying and selling, once hashed in smoke-filled rooms and flashy events, is already increasingly automated, and AI only turbo bills that potential AI agents are deployed, imposing that potential AI agents create a complete media plan.

Creatively, AI dramatically changes the creation of the ads themselves. For example, Meta wants to have AI Tech in the market to enable brands to create, target and deploy ads by the end of next year. The industry is developing tools that allow brands to upload images of their products.

The end result is a business that could be fundamentally small. “I'm worried that in a few years, big advertising agencies will be a shadow of what's today,” admits the former CEO of top Madison Avenue company. “There's nothing consistent with human creativity and experience, but much of what an institution does, from research to creative, can be replicated fairly well through AI.”

Not everyone agrees that the end is near. It also includes Meta's CMO, Alex Schultz. “AI believes that agents and advertisers will be able to concentrate their valuable time and resources on critical creativity. And we are looking at agencies that are already using AI to match this vision,” Schultz wrote on LinkedIn last month. “Advertisers, including Meta's marketing team, also rely on agencies to make decisions across channels and platforms. We believe that they will ultimately be automated in marketing, but the role that agents play will be more important through their ability to plan, execute and measure across the platform.”

Still, the AI ​​revolution is coming. Last year, Coca-Cola released ads created using generator AI tools. In June, Kalshi from the forecast market advertised during the NBA Finals (at least on YouTube TV streams), created entirely using Google's new video generation model, Veo 3. Thomas Iljic, the product lead of Google Labs, who is responsible for Veo 3, Hollywood Reporter When it comes to using technology in advertising, “it seems very promising, but I think it's still very early in terms of measuring the size of the market.”

Advertising businesses will first bear the brunt of disruption, but a massive warrant for media businesses will have to tackle the outcome and what comes next. Everyone in Hollywood recognizes the threats generative AI poses to production, but there is less focus on process disruption. Meta and Google dominate digital ads, and with Amazon added, the three companies believe that more than 60% of all advertising dollars (excluding China) (Magna and Analyst believe that AI could further entrench the tech giant.

“The key risks seen with small platforms are the further retention of large platforms and the inability to compete. [first person] Data, Goldman Sachs' Eric Sheridan wrote May 7th.

Streaming services are one of these small platforms, offering digital advertising to consumers. Tech Giants “has a very different cost model that allowed AI to make revenues in Tech areas where traditional media would slow down innovation,” says Kate Scott-Dawkins of WPP Media.

But traditional media is trying it out.

Large media companies have already been reorganized to enable more automated advertising purchases and transactions with a data-heavy approach, targeting and guarantees. The spray market, which was played in phone tag games, now automatically occurs with custom software.

As the Digital Giants roll out more AI-driven advertising options, streamers and publishers have no choice but to follow.

Of course, some streamers are already thinking about the looming confusion. Before this year, both Netflix and Amazon announced their AI-powered ad formats. It uses technology to fuse existing ads with content that viewers are watching. Tiktok announced its own AI ad format at Cannes Lions this week. Others follow.

However, the Entertainment Titan has an ace. These deals rarely dissipate immediately as human touch is likely to remain for major advertising deals, including top brands, and live sports remains the most valuable content on the planet. One ad sales executive creates larger tailored bundles for clients whose companies use sports as their hubs, as spokes that can support other content such as news and entertainment, and tailor them to automatic ad purchases on the outer rim, and more in-demand entertainment dishes.

But the not-so-distant future brings great uncertainty about the content consumers are watching, where to watch, how ads are sold and consumed, and other big picture questions that seemed science fiction.

Author-led platforms such as YouTube, Instagram and Tiktok can disrupt content consumption and content creation, and AI can further fragment that world.

“I think what people are probably not ready for is what happens with an explosion of machine-generated content or AI-generated content, and how well these platforms make it thriving,” says Scott Dawkins. “How much do they try to hold it down and maintain the authentic, human-driven story that they historically had with their users?”

For example, YouTube CEO Neal Mohan made the Cannes stage on Wednesday, announcing the VEO 3 will be added to the shorts later this summer, making it easier and faster to use Google AI tools. “The possibilities for AI are endless,” Mohan said. “Many things can change with generations. Entertainment itself has changed more dramatically in history than any other era in the last 20 years. Creators have led this revolution.”

As for its value, one top tech executive says that while AI content on user-generated platforms is inevitable, human creativity can be augmented by AI tools, it is likely that people are interacting with most people. The future of advertising is likely similar.

“Consumers already expect advertising to be relevant, engaging and seamless experience. These expectations will only accelerate in the age of AI,” WPP Media CEO Brian Lesser said in connection with the company's launch on May 28th.

Or, as Apple VP Tor Myhren declared this week at the Cannes Lions event, “The good news is that AI won't kill ads. The bad news is that AI won't save ads.

Therefore, even if humans retain similarities in creative control, it could be a technology that buys and sells advertisements in itself by replacing AI.

JP Morgan analyst David Karnowski reported on June 9th, Minority Report– A world where advertising is personalized through virtual reality, digital and physical media. Consumers may start outsource their purchasing decisions to AI agents (already seen in the clothing industry using Stitch Fix). ”

But even in that world outlined by JP Morgan, where science fiction becomes a reality, there is a silver lining for old-fashioned advertising.

“In this scenario, media buyers emphasized that AI buyers can understand consumer goals, budgets and habits, and use that information to make decisions on your behalf and communicate with AI sellers. However, advertising plays an important role in providing information that encourages consumers to highlight and update the AI ​​aid's goals/directions.

You don't need to call that 1-800 number or access that website. Just tell the AI ​​agent about the Super Bowl ads created by AI and the rest is done.

The story was featured in the June 18th issue of the Hollywood Reporter Magazine. Click here to subscribe.