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How the AI era will accelerate agencies from services to solutions
By our News Team | 2023
The next wave of growth hinges on agencies’ ability to shift their economic model to capture the full potential of artificial intelligence.
After meteoric post-pandemic performance, agencies’ earnings have returned to pre-pandemic single-digit levels. At the same time, AI investments skyrocketed to US$92-billion during 2022 and $50-$60-billion year-to-date in 2023.
This is according to research company Forrester, which says the next wave of growth hinges on agencies’ ability to shift their economic model in order to capture the full potential of artificial intelligence within their processes, capabilities and structure.
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In a blog post on the company’s website, Jay Pattisall, Vice President and Principal Analyst at Forrester, says that, in 2024, agencies face recasting their services-based model into a solutions-based one comprised of creativity and technology products.
All agency types – creative, media, PR, digital, and in-house – will feel the impact of pairing people with technology. As a result, Forrester predicts that, in 2024:
Bespoke brand algorithms will power agency offerings
In the future, brands will buy the algorithms that their agencies build by training AI-powered marketing engines with multiple first- and third-party audience signals, historical media performance, and creative content – personalised for each client.
Forrester calls these bespoke brand algorithms ‘brand language models’. They are brand-specific applications of AI technology that use base models like Meta’s Llama or OpenAI’s GPT that leverage insights from audience signals and layer in a company’s branding, fonts, colours, tone of voice, and IP.
Brand language models are the engines that create brand-specific, personalised marketing based upon human creative ideas combined with machine precision and speed.
Agency reviews will increase as fear of AI mismanagement grows
Agencies and marketers will be left to self-govern AI marketing practices until the US and EU enact AI legislation, expected by 2026.
This will make business leaders nervous. Sixty-one percent of AI decision-makers are concerned about privacy and data protection that might violate laws such as the GDPR, while 57% are concerned about the misuse of genAI’s outputs leading to errors.
As a result, 2024 will see more accounts up for review as marketers look for safe AI implementation to control the reputational fallout from mismanaged AI marketing executions.
Digital agencies will disappear from the industry landscape
As generative AI shapes more conversational and personalised experiences, this will effectively recast all marketing as ‘digital marketing’. This means that there will be little need for specialised ‘digital’ agencies. This leaves pure-play digital agencies with the reality of digital sameness and commoditisation.
You can read the full blog post here.
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