Technology has continually transformed the marcomm industry, and it shows no signs of slowing down. Martin Sorrell, executive chairman at S4 Capital, recently shared his thoughts on the future of agencies in an interview at Spikes Asia 2024. The audience was a mix of agency professionals, brands, and platforms, all eager to understand where the industry is headed.
Sorrell acknowledged the blurred lines between creative, media, PR, and publishers, and the excitement and fear surrounding the impact of new AI technologies. He wasted no time delving into the opportunities and challenges that lie ahead for agency groups in this evolving landscape.
In a clever analogy, Sorrell quipped, "Turkeys don't vote for Christmas," emphasizing that significant changes are on the horizon. He predicted attrition in areas like media planning and buying, where algorithms will replace the need for traditional media planners and buyers. The days of relying solely on a 25-year-old media planner will soon be over.
Furthermore, Sorrell highlighted that platforms like Google's Performance Max and Meta's Advantage+ will provide clients with direct access to results, diminishing the advantage agencies once had in maintaining close client relationships. Agencies will have to redefine their roles as validators, ensuring that platforms and algorithms implement strategies effectively.
Sorrell emphasized the importance of merging creativity and marketing with deep technological capabilities. He outlined five areas where AI will impact advertising and media:
- Visualisation and copywriting: AI-powered technologies like Sora or Lightricks can convert text or voice into video within hours, revolutionizing the creative process.
- Hyper-personalization: Data-driven content creation, as demonstrated by Netflix, will enable agencies to build content factories at a much larger scale, benefiting both agencies and clients.
- Media planning and buying: Traditional media planners and buyers will be replaced by algorithms, revolutionizing this aspect of the industry.
- Agency and client efficiency: Linear marketing plans that used to cost millions will now be more cost-effective, thanks to streamlined client-agency processes.
- Knowledge transfer: AI will revolutionize information sharing within companies, leading to flatter organizational models and enhanced team collaboration and agility.
According to Sorrell, agencies will need to prioritize scale to ensure revenue growth. However, the larger agencies will also need to undergo drastic changes. Billing based on output rather than time spent will incentivize efficiency and discourage unnecessary headcounts.
Transparency is another key area that Sorrell believes needs attention, particularly in media planning and buying. The recent arrests of GroupM media trading executives in China shed light on issues regarding media discounts that agencies derive their profit from. It's an issue that extends beyond China, as some clients struggle to fully understand their TV spend in markets like Japan.
As Sorrell acknowledged, Asia is a crucial region for future growth. By 2050, China, India, and Indonesia are projected to be three of the world's top five economies. However, Sorrell also advises caution in choosing geographic regions to expand into, emphasizing the importance of market understanding.
In contemplating Sorrell's insights, it's clear that the marcomms industry is on the cusp of significant transformation. Agencies will need to adapt and embrace technology while maintaining their core creative and marketing expertise. As an educator and consultant myself, I find these discussions to be both thought-provoking and inspiring. It's essential for professionals in the industry to stay informed, challenge existing norms, and navigate these changes to thrive in an AI-driven world.
