Agencies have their say on Goldman Sachs’s ‘AI is all hype’ claim

We posed the question: Is all the talk of AI being a huge opportunity for marketing agencies all hype, or are agency leaders right to gamble on the tech delivering genuine commercial benefits, revenues and profits in the future?

Gareth Davies, CEO, Leagas Delaney: “The rise of AI will usher in a technological revolution that will fundamentally change the way that we live our lives and perform our work. Want proof? Park the overwhelming narrative and just follow the money. The biggest bets from the most serious companies are all being placed on AI. It stands to reason then that all creative agencies should be giving due consideration to how they will change – and be changed – by the technology. However, a lesson from recent history and the rise of digital tells us that this won’t be the case. Many agencies back then got left behind by underestimating the impact of digital. Regrettably, there will be parallels with AI. Then, as now, those who understand the significance of the shift won’t be ‘gambling’ on their futures; they’ll be protecting their right to have one.”

Jessica Vo, executive vice-president of global marketing orchestration, Rapp: “AI-powered agencies hold a lot of promise, but AI isn’t a magic bullet. Success depends on how well it’s integrated and used by skilled professionals. Because of how quickly AI is evolving in the advertising space, people are yet to understand the best way to commercialize and charge for AI adoption. A mentor of mine always said, ‘Don’t ever ask a client to charge for a service they don’t have a budget line for.’ AI is so new that I doubt procurement knows how to negotiate rates that include AI-powered deliverables and services. To an extent, the hype is justified – AI can streamline operations, offer insights, unlock creative potential and allow us to create more personalized content. And if leaders invest wisely and foster a collaborative environment between AI and human expertise, they can see significant revenue and profit growth. The gamble could pay off, but it’s not without risks.”

Jeremiah Knight, chief operating officer, Saatchi & Saatchi: “The thing about AI is that it’s not solely a media targeting and efficiencies tool or a tool for creative expression or a speed-to-strategic-insights tool or a tool that simplifies certain types of production. It’s everything everywhere, all at once. The best agencies – the ones that are indispensable allies with their clients – understand that creating better margins in the short term through AI efficiencies is a surefire way to be disintermediated in the long term. And, they are actively experimenting to find the right combination of AI and human ingenuity that delivers brilliance for their clients and good returns. Is it already happening? Absolutely yes. Does it mean that agencies will continue doing everything they’re doing today? Almost certainly not. Clients should reasonably expect value to be passed along to them if a ‘bot can do it better. But, the great agencies will continue to prove their value through originality, superpowered by AI.”

Meghan Labot, chief growth officer, FutureBrand North America: “Agency leaders are absolutely wise to gamble on new technology and invest in how AI can play a central role in agency operations. This is an imperative, for sure, but it is not a differentiator and certainly not a guarantee of commercial benefits. AI, and all of the technology that preceded it, is a necessary part of progress and will certainly have an impact on how we do business in the future. The greater gamble is the risk that comes with not investing and being left behind.”

Brian Yamada, chief innovation officer, VML: “I am clearly an AI optimist, but I don’t think AI is going away for our clients and as agencies. If you look backward, I doubt companies thought that their first big website build created an immediate ROI, but that became their digital front door. Companies need to be strategic and invest more in AI solutions that build in your IP and differentiate. And as we move into the operationalization phase of this AI era, small will be the new big. Smaller, narrow models will solve specific use cases and save time and money.”

Stephen Ledger-Lomas, chief production officer, BBH London: “Is there a phrase for genAI consumption exhaustion? Artificial indigestion? We may all have felt that we’ve read everything and yet understand little about the real implications of the coming revolution. But one thing that’s clear – it’s not just hype. BBH is part of the Publicis network, which is investing heavily in our own protected AI tools and pioneering partnerships. And we’re in constant dialogue with our clients, examining use cases for all forms of AI across their marketing needs – and actively testing. We’re cautiously optimistic about significant leaps in efficiency across the likes of still asset creation for digital, brand guidelines monitoring and personalization. But they all require a huge amount of human grey matter to produce, prompt, moderate and QC. The AI hype hasn’t yet translated into a fully realized solution, but hopefully, in the not-too-distant future, we’ll get to a place where we can pivot even more time and resources into the thinking and creation of original big ideas. I agree with this recent refrain from Nils Leonard: ‘Stop wanging on about AI and make some good work.’ You’re not going to win Christmas with AI just yet.”

Barney Worfolk-Smith, chief growth officer, Daivid: “Goldman Sachs’s report is wide-ranging and falls down in that there is an assumption that the benefits of AI come from efficiency rather than value creation. Sure, there are only so many efficiencies agencies can make through the use of AI, but the smart ones will look for the creation of new value through their investments. How can I make my creative more likely to be effective? How can I become part of the creator economy ecosystem? And more questions none of us are even thinking of yet. Hype is never helpful as it obscures the reality underneath. That reality for agencies is they need to invest in AI and apply some smarts to it to create new value, or they’ll be in bother.”

Malcolm Poynton, global chief creative officer, Cheil Worldwide: “In the past year, we’ve seen holding companies vie for headlines over whose AI investment is bigger than whose. But what will a 300m (pick your currency according to Holding Co origin) investment in AI deliver? At this stage, the answer looks a lot more like ‘chat’ rather than a ChatGPT-kind-of-AI-model. If you’re a holding company, the answer is more serious - survival. With the top 40 US advertisers each spending over $1Bn on advertising annually, securing those media contracts is vital; something that requires increasingly sophisticated consumer data for media modeling, targeting and buying, along with the data to build and operate loyalty platforms. In that sense, the AI hype makes a lot more sense than any talk of generative AI threatening to take over creative duties. The reality for traditional Holding companies is they either double down or face extinction. We’ll have to wait to see if $300m can build enough scale to compete with gorillas like Accenture and Co.”

Jef Loeb, director, writer & creative director, Brainchild Creative: “Due respect to the bulging brains at GS, but they haven’t just lost the plot, they’ve missed it. The play here, at least for the majors, isn’t about increasing efficiencies, ergo agency revenues; it’s about setting up a giant honey trap for clients. “Give us your proprietary data and well train our proprietary LLM on it and ne’er the twain shall part.” This will be true, as far as it goes, when you consider what it will take to shift a full stack of fully loaded tech from Behemoth A to Behemoth B. As to the other part, and based on the evidence to date, I’d argue that robotic creativity is presently and will remain a maybe. If it ever gets beyond the hype at all.”

Kate Ross, co-founder, Eight&Four: “AI is a modern, mad, gold rush on social network steroids. It’s a combination of people wanting to be part of history, the feverish social echo chamber we now live in and fomo about the bags of money being thrown about. People point to past technical revolutions – the internet, the mobile phone – but each of these replaced cumbersome existing solutions relatively cheaply. But GenAI hasn’t created any seismic opportunities yet, and we’ve spent a literal trillion. I’m not anti-AI, but I don’t want people to get sucked into the hype. It’s great for specific things – post-production augmentation of shoot output, TOV governance on long-form content, some data maintenance tasks… But for a lot of stuff, it’s going to be an expensive distraction. It is absolutely critical to be nuanced in your approach. GenAI is a very big hammer – choose your nails wisely.”

James Calvert, head of generative AI, M&C Saatchi: “Agencies are pouring $1.5bn yearly into AI, a minuscule drop compared with total AI investment. Can they get a return on this in the next five years? Quite possibly. By automating production tasks, agencies could boost margins by 5-10%, freeing up creative minds to craft better ideas and grow brands. But look at the broader tech industry, already $1 trillion deep into AI investment. The future is less clear. Technology evolves unpredictably. Just as Sir Tim Berners-Lee, inventor of the World Wide Web, couldn’t foresee his creation would eventually enable us to order groceries for one-hour delivery on a smartphone, creators of today’s AI technologies might not fully grasp how the future impact of AI might astonish us. AI will unveil unexpected possibilities. As the saying goes, we tend to overestimate short-term change and underestimate long-term impact. Agencies should keep exploring AI and perhaps embrace its potential to surprise.”

Nick Watts, chief AI officer, Hook: “We’re an agency with creativity at our core – who saw enough value in AI to appoint a chief AI officer, but even we don’t believe the agency of the future will be powered by AI. It will be powered by people, just as it is today, and I don’t think that’ll fundamentally change even as more of those people work AI into their functionalities. We’ve collaborated with several of our brand partners on the use of AI tools in our creative production workflows, and we’ve agreed to continue exploration, but so far, only one has agreed to introduce AI-generated images into campaign production – and that’s because they are an AI company. However, we know our clients have AI on the brain. In fact, RFIs are coming through where they’re asking us, “How will you pass along cost efficiencies gained through AI use,” and the reality is that we’re, candidly, not seeing any cost efficiencies – not yet – and so we can’t pass those on.”

Hannah Baker, chief marketing officer, Brave Bison & SocialChain: “Like it or not, AI is the future of our industry. It’s a strategic bet that agency leaders would be wise to take or risk being left behind. At Brave Bison, we’re all about capitalizing on the complexities of the modern marketing landscape, so we see AI as a huge opportunity to democratize strategy for clients who are under pressure to do more with less. In today’s fragmented digital landscape, brands need to know their audiences better than ever. But developing an effective strategy is proving increasingly costly - not just in terms of financial budgets, but also in time and resources. By building AI into our strategic process, we can turn a client’s unstructured or limited data into insight faster than we’ve ever been able to before - bypassing time-consuming and costly market research and recommending channels across the customer journey. Agencies must position AI-driven strategies to clients as tools that enhance value rather than shortcuts.”

Anis Zantout, VP of Innovation and Head of Proximity, Impact BBDO: “The arrival of AI in marketing is a double-edged sword. AI tools and solutions bring unprecedented efficiencies and possibilities, but their general availability also levels the playing field. The Goldman Sachs report’s skepticism about ROI for non-tech businesses underscores a critical issue: how can any agency charge a premium or maintain better margins when everyone has access to the same AI capabilities? The key lies in how these tools are applied. Agencies can set themselves apart by their unique approach to integrating AI into their operations, strategies and creative processes. The real value moves from the technologies themselves to the expertise and creative application of those tools. At Omnicom, we call this ‘elegance at scale.’ The challenge is bringing creativity back to AI as brands demand more customized content at scale.”

Matt Rebeiro, executive strategy director, Iris: “If it isn’t already, AI will soon become a table stake for agencies. Thus, agencies will increasingly be AI-powered by necessity, with any benefits being short-lived unless genuine innovation occurs. In the short run, deploying AI faster than the competition can yield pitch wins, revenues, and profits. However, given the commoditized nature of AI and its rapid industry deployment, these advantages will be short-lived as competitors catch up. At that point, AI becomes just another cost of doing business. This likely results in a slightly reduced headcount due to automation, providing a short-term boost to profitability that is soon erased as clients’ procurement departments push for cost reductions(!). The only way to break this cycle is for agencies to innovate around AI, creating materially new products or services with a defendable moat that delivers effectiveness rather than just efficiency.”

Max Lederer, chief innovation officer, Jung von Matt: “For us, AI represents an exciting technology that adds significant value to our communication production processes. It augments human capabilities rather than replacing them. AI drives efficiency, streamlines processes, and opens new avenues for innovation, but its true power is unlocked through professional services and talented individuals. However, creativity and emotional connections are inherently human traits. We’ve seen solid returns from our AI products, reinforcing our belief in its potential. Our strategy involves thoughtful integration of AI, experimenting, and maximizing benefits while staying adaptable. The future agency is undoubtedly powered by AI. To thrive, agencies must learn to use AI effectively, integrating new possibilities to keep pace with evolving demands and competition. AI is not a fleeting trend but a permanent fixture in our future.”

Katy Hindley, innovation director, Posterscope: “Future ROI on AI investment is tricky to determine in absolute terms, but as an agency, you’ve got to be in it to win it. Considering the amount of data generated globally is expected to double every two years, investment in scalable systems and advanced analytic tools and technologies that can handle large datasets efficiently is essential. How agencies analyze and use this data will determine their future competitive advantage, whether that be retaining and attracting new clients, improved decision-making and strategic development, operating efficiencies, productivity gains, risk reduction, innovation and new services. The key will be tracking the right metrics to determine whether AI investment has been worth it in the end.”

Pete Trainor, global AI strategy lead, MSQ: “As with all good technology gains over the last 30 years of data and digitization, the secret is not in codifying people, but partially codifying the tasks that people do; we’re not digitizing behavior, we’re behaving in a digital world. AI is not a gamble if agencies and clients can first establish the key linear processes that AI and RPA (robotic process automation) can ethically – and credibly – replace and use AI to augment people within those processes rather than replace them. Those are the agencies that will see the biggest productivity gains, with ROI coming back in time saved and output doubled. AI is not about selling the dream of fully automated creativity; it’s about mapping out where productivity can be found and creative talent amplified. At MSQ, volume creative jobs like dynamic content optimization (DCO) are now being taken care of by rules-based algorithms, and concept creation is augmenting brilliant people. AI cannot codify talent.”

Julie Michael, CEO, Team One: “AI is a ‘capacity creator.’ By handling tasks like audience targeting, predictive analytics, ad placement/bidding and creative concepting, it allows agencies (and marketers) to move away from more rote tasks to work on the differentiators. For luxury and premium brands, that means creating more personalized, sustainable, and sublime experiences. AI unlocks this by connecting data with affluent customers’ needs and facilitating more meaningful interactions. The real challenge is creatively and strategically implementing AI to enhance influence and connection. Agencies who can crack that, will continue to hold enormous value for their clients.”

Elliott Millard, chief strategy & planning officer, Wavemaker: “The GS piece is based on a flawed hypothesis – you might as well say that because we all buy the same TV or use the same audience analysis tools, that we would all have to have the same plans. The reality, as with so many things, is that this is not an either/or answer but a ‘yes, and’ answer. AI can speed up the processes and manual work that exists within agencies and free up people to be able to apply themselves creatively to client problems. Our power remains in our people and the way that they think and that means that even with exactly the same tools and tech and systems, the thinking from each agency will be totally different. It’s our application of AI (or any other tool) that adds value to clients rather than the tool itself. And it’s the application of the tech that will deliver commercial benefits, revenue and profits.”

Jason Foo, CEO, BBD Perfect Storm: “AI will mean everything changes and nothing changes. I am old enough to remember the introduction of email on PCs and then on mobile. We became ‘always on’ and there was a new and incredible sense of speed, efficiency and dynamism. Those who adopted it could move faster than everyone else. You had an ‘edge.’ But, very quickly, it became the norm. Now, everyone runs faster and is always on, and because it’s universally used, there is no competitive advantage to using it - merely a competitive disadvantage to not using it. AI and this era of automation will achieve something similar. Everyone will get efficiency gains, but that doesn’t drive differentiation. Differentiation will still need to come from genuine human creativity, which I believe we are still some way from AI ever replicating. Creativity arises from lived experience, understanding cultural context and the connection of lateral thoughts. This is where the difference and, ultimately, the advantage will lie.”

Nick Gallimore, group managing director, The Ingenuity Group: “We’ve seen this enthusiasm for AI several times before, and what always follows is an ‘AI winter’; a dearth of investment as organizations realize they won’t get a great ROI. The implication that businesses will all implement the same tech substantiates the AI winter theory because everyone (and therefore no one) gets the return. However, I don’t think everyone will invest in AI. Besides, what’s different this time is that the tech stands up to scrutiny – but organizations may still struggle to monetize it properly. Our industry solves a distinctly human problem, so we need to fully understand how the material that has been created or curated by AI will be received or understood. It’s, therefore, difficult to predict how effective AI output is going to be in agency land. History tells us that after the ‘hype curve’ comes the crash, so I think agencies ultimately need to be clear on the use case, just like they would with any other investment. Investment for investment’s sake remains risky.”

Katie Hankinson, MD US, Yonder: “AI is a tool and like any tool or technology, it’s a lever – it can act as a force multiplier. The measure of success is what will make the work better – that is the thing for which consultancies and agencies can command a premium. The same brush in two different artists’ hands will result in entirely different pieces of work –and the same can be said of consultancies and agencies using AI. It’s not the access to the tool, in this case, but how one wields it. So, will AI power the agency of the future? No. I’d say that it’s imagination – creativity – that will continue to be the differentiating and driving force. Consider that not everything has to be built in-house, as building your own tech can be a high-risk game. Plus, strategic partnerships, consulting technical experts and testing existing solutions are a good way to learn, and that’s even more so the case during a period of adopting and experimentation.”