Will GenAI Help or Hurt Ad Agencies?

Will GenAI Help or Hurt Ad Agencies?

As Generative AI continues to accelerate, some agencies will be better positioned than others to reap the benefits. Our Europe Media & Entertainment analyst, Laura Metayer, explains.


----- Transcript -----


Welcome to Thoughts on the Market. I’m Laura Metayer, from the Morgan Stanley Europe Media & Entertainment team. Along with my colleagues bringing you a variety of perspectives, today I’ll discuss what the future may hold for advertising agencies amid fast-paced Generative AI developments.

It’s Wednesday, July 31, at 2 PM in London.

Right now we’re still in the early stages of GenAI’s impact on ad agency offerings; although the debate around technology removing the need for ad agencies is not new.

Soon after the release of ChatGPT in early 2023, my colleagues in North America started mapping out the potential impact of GenAI on the ad agencies. They concluded that GenAI should represent an opportunity for the ad agencies, at least near-term. First, Gen AI would lead to productivity improvements from automatable tasks in creative, media, digital transformation consulting and central functions like HR and Finance. Second, GenAI would boost client demand for advice from agencies to help navigate the coming evolution in digital advertising.

Fast-forward to now and the impact of GenAI on the ad agencies has become an active investor debate, with concerns centering around the Creative business. Many eyes are on the Gen AI-powered text to image/video tools, which could disrupt the ad agencies' Creative & Production business. We this has weighed on agency stock prices recently.

Essentially, the bear case has been – and is – that technology would devalue agencies’ offerings and agency clients may rely more on tech platforms and in-house services. That bear case – twenty years into online advertising – has not played out. We think that in these early days of AI’s impact on marketing, there may be more upside to agency equities than risk over the next 12 to 18 months.

On the one hand, the introduction of Gen AI tools may mean reduced pricing power and challenged top-line growth. At the same time, replacing creative personnel with software may increase earnings power, even with less revenue. We think it's likely that a key value-add of the ad agencies' Creative business would be campaign personalization at scale, powered by data and technology.

Looking back, technology has been commoditizing certain areas of creative and production for years, well ahead of AI; and yet creativity and creative services remain core value propositions by agencies to brands. Overall, there is as much – if not more – opportunity than risk for ad agencies over time.

So let me leave you with two key takeaways:

First, we see the larger ad agencies as better positioned to remain relevant to customers in the GenAI era. However, we would caution that their large scale may also lower their ability to adapt quickly to evolving customer requirements when it comes to GenAI.

Second, we expect GenAI to drive more consolidation in the industry. We think it’s likely that some of the large ad agencies take market share from other large ad agencies.

As these trends play out over time, we’ll continue to keep you updated.

Thanks for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.

Jaksot(1511)

Mike Wilson: Markets Cheer Clarity on Vaccine, Election

Mike Wilson: Markets Cheer Clarity on Vaccine, Election

Upbeat news on a coronavirus vaccine and a win for President-elect Biden drive stocks significantly higher. How should investors trade a potentially earlier re-opening?

9 Marras 20203min

Special Episode: Markets Parse Election Results, Jobs Report

Special Episode: Markets Parse Election Results, Jobs Report

All eyes are on the U.S. Presidential race as markets also weigh climbing coronavirus cases in the U.S., fiscal stimulus uncertainty and October’s jobs report.

6 Marras 20208min

Michael Zezas: Breaking - Why Post-Election Day Just Got Trickier

Michael Zezas: Breaking - Why Post-Election Day Just Got Trickier

Amidst the uncertainty, three topics should be front of mind for investors: implications of a divided government, the path to fiscal stimulus and tax changes.

5 Marras 20202min

Mike Wilson: Is the Worst of the Correction Over?

Mike Wilson: Is the Worst of the Correction Over?

Although some volatility may lie ahead, the end of the U.S. election cycle and progress on a potential coronavirus vaccine may bring some optimism to markets.

2 Marras 20203min

Andrew Sheets: A Transformational Sweep?

Andrew Sheets: A Transformational Sweep?

A look at the 2008 and 2016 U.S. elections suggests that a sweep by either Democrats or Republicans could push stocks and bond yields higher in 2021.

30 Loka 20202min

Michael Zezas: Election Night Strategy for Investors

Michael Zezas: Election Night Strategy for Investors

For investors, election night could hinge on moments when markets conclude who has won, not necessarily on when media networks call a winner.

28 Loka 20202min

Mike Wilson: 3 Sticking Points for U.S. Equities

Mike Wilson: 3 Sticking Points for U.S. Equities

U.S. equity markets have been stuck range bound due to three key concerns, but investors could use that uncertainty to their advantage.

26 Loka 20203min

U.S. Election 2020: Divided Government Scenarios

U.S. Election 2020: Divided Government Scenarios

In part two of our special election episode, we look at the policies that could potentially come out of divided party control among the White House, Senate and House, and how they might impact markets.

23 Loka 20207min

Suosittua kategoriassa Liike-elämä ja talous

sijotuskasti
mimmit-sijoittaa
psykopodiaa-podcast
rss-rahapodi
lakicast
rss-rahamania
herrasmieshakkerit
rss-neuvottelija-sami-miettinen
ostan-asuntoja-podcast
pomojen-suusta
rss-lahtijat
oppimisen-psykologia
syo-nuku-saasta
rss-myyntipodi
rss-startup-ministerio
rss-bisnesta-bebeja
rss-myynti-ei-ole-kirosana
rss-inderes-femme
rss-yritys-ja-erehdys
rss-rahataito-podcast