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Welcome to another week of AI and Ecommerce. This week we look at how AI will disrupt the advertising agency niche and how that will impact the entire ecosystem. Check out the latest podcast we also did on the topic.

We hope you enjoy it!

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Advertising Agencies Will Face Disruption

AI is set to both power up and massively disrupt the advertising agency industry. Publicis, a leading advertising agency, initiated the year with a personalized video message for its 100,000 employees, crafted with the help of AI. This initiative symbolizes the dawn of hyper-personalized advertising, showcasing how AI can produce targeted ads quickly and affordably on a large scale. Major agencies like WPP and Publicis are investing heavily in AI to stay ahead, echoing sentiments that AI's impact on advertising is as profound as the invention of the internet.

AI's integration into advertising is transforming traditional methods, enabling brands to engage with consumers more directly and personally. For instance, in India, a campaign featuring Bollywood icon Shah Rukh Khan was customized for thousands of local stores, highlighting the scalable personalization AI offers.

However, this shift raises concerns about the future role of advertising agencies. The rise of direct AI engagement by brands for creative tasks signals a significant shift in the advertising landscape, which is already contending with the digital dominance of tech giants like Google and Meta. These platforms are capturing a growing share of advertising revenues, further pressuring traditional media and advertising agencies to adapt or risk obsolescence.

What does this mean for ecommerce sellers?

The rise of AI will certainly have an impact on how the entire advertising ecosystem is functioning. Big tech like Google and Meta will take over much more of the advertising agency pie when it comes to digital marketing assets. Clients will expect an enhanced ad cycle with less time billed on ideation or production because of AI. Most smaller agencies will probably fold up as the time-based fee structures will disappear and project- or outcome-based fees will proliferate. New AI-first agencies which focus on automation will surface and become primary challengers to the big dogs.

Ecommerce sellers will probably find some of their advertising budget shifting internally to teams managing AI-first creative tools to produce the bulk of their digital content. That said, the more AI-generated content comes out, the more consumers will be looking for authentic content from brands. For that, ad agencies will still very much be in the driving seat.

Here is the latest episode of the New Frontier podcast in which I and Max interviewed Harry Guild, Strategy Director at BBH and we discussed all of this.

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• If you were stressing about AI, you are not alone. Also, you are not too late to AI.

• Meta has been efficiently getting rid of their advertising reps and guess what, advertisers are not happy.

• X makes Vertical Video Feed ads available to all advertisers.

• Meta will label AI-generated content from all the big dawgs.

• Microsoft has upped its game with Copilot and a new AI image functionality.

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