No country for Mad Men
THERE was a time when this marketing quip – 'Half the money I spend on advertising is wasted; the trouble is I don't know which half' – was good for a titter. Now, such a flippant statement must make even the most sanguine adman twitch nervously instead.
The twitching would have intensified last month on the news that Meta aims to fully automate the generation of ads on its platforms with artificial intelligence (AI) by the end of 2026. All a prospective advertiser will need is a product image and a budget, and Meta will take it from there, generating copy, visuals and video that will be buttressed by the company's targeting and measurement abilities.
TikTok, too, is making further incursions into Mad Men territory with tools that enable marketers to turn text or images into video ads on the platform. These features will join its existing arsenal of digital avatars and voice-overs that it already offers through its video-editing service for advertisers.
The writing is on the wall for the ad industry, it seems, and it's being wrought by a large-language model. Upstream and downstream, the ranks of creatives, media planners and analytics people risk being hollowed out by this AI onslaught.
Invariably, when Silicon Valley overturns an incumbent's apple cart, its bedraggled pitch is that the pie will ultimately get bigger, and there will be enough demand to go around. But somehow, it is Big Tech that often ends up with the largest slice.
This has been illustrated across various kinds of upended apple carts. Alphabet, Meta and Amazon collectively account for more than half the global digital advertising expenditure. In the US, YouTube and Netflix, respectively, have the largest and second-largest share of all TV viewership. In e-commerce, Amazon was taking a cut of more than half of sellers' revenue by 2023, said a study by e-commerce intelligence firm Marketplace Pulse.
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In advertising, the ice has started rattling ominously in major players' whisky glasses. Year to date, the share prices of the world's largest ad firms have fallen by between 7 and 40 per cent, a proxy for how unevenly the industry is absorbing the shock of evolving viewing habits and tech disruption.
The AI scythe being wielded by Meta and its peers will produce similarly uneven outcomes. For now, ad firms servicing the largest corporate accounts remain relatively safe, because established brands continue to spend on full-suite services.
But it is unclear how long such a moat will hold. No Fortune 500 firm is immune to AI's siren call of cheaper production and fatter margins. And while purists reflexively recoil from the prospect of 'AI slop' being churned out by Big Tech's ad machine, I rather suspect that people do not have a problem with AI per se, but simply with AI being deployed poorly.
Make the quality gap between man-made and machine-generated content small enough, stuff whatever crevice remains with cost savings and a wad of novelty, and eventually, we will drink the new flavour of Kool-Aid being marketed through an AI-generated Instagram ad.
Today, the concept of not knowing which half of advertising is wasted grows more anachronistic by the month. Instead, a far more pressing question is which half of the ad industry will survive this generative AI blitz.
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