AI has made ‘doing’ cheaper but knowledge more valuable

The Media Lab co-founder Antony Young has been doing a lot of reading about how AI is changing the agency world. He shares what he’s found – the good news and the bad.

Earlier this month, Evan Hubinger, a researcher at Anthropic, shared a sobering prediction: a greater than 10% chance that artificial intelligence could kill all humans within the next decade. That rather trumps the “end of advertising” headlines our industry trots out every time the next big thing arrives.

When I sat down to write about how AI is reshaping the agency business, I was hoping for something more optimistic, and closer to home. I found some. But first, the bad news.

It’s coming for our jobs

However you spin it, jobs are going to be lost. The Guardian reported that last year, more than 14% of UK advertising agency jobs were cut, with AI responsible for many of the entry-level and administrative roles disappearing. This month, Omnicom announced plans to shed another 15,000 jobs in pursuit of a $1.5 billion “gross synergy target.” WPP has eliminated 11,000 roles globally under CEO Cindy Rose’s restructuring plan, and its shares jumped by about a quarter in August.

The market is rewarding holding companies that flatten their structures and flatter their margins. None of that bodes well for the next generation of planners, creatives and account managers.

But the AI shift is about more than headcount. It’s a structural reset in how marketing services are priced, delivered and measured. As WPP founder Sir Martin Sorrell said recently, “The [AI] shift goes to the heart of the agency business. For decades, the industry’s economic foundation was built around people, hours, teams and retainers. AI challenges that directly because it compresses production time, automates parts of media planning and creates a different basis for valuing work.”

So how is New Zealand adland responding?

From backlash to pragmatism

When Bremworth released NZ’s first AI-generated TV ad two years ago, the industry reaction was frosty. One commentator lamented on the Campaign Brief story: “What a shame. There could have been a powerful commentary and idea in combining a natural fabric like wool and the use of synthetic (not real) visuals made with AI.”

Since then, costs have kept falling and quality has kept climbing. The industry has become far more pragmatic and far more skilled in its use.

The hybrid agency

Calibre + Candor head of creative Sarah Beck says her agency has fully embraced the new tech, running a hybrid of AI and human work. Much of the push comes from clients who simply don’t have the budget to shoot and produce ads any other way.

“I feel very proud of the work we produce. We have the ability to fulfil our imagination,” she says.

But she’s candid about the catch. Clients often expect anything involving AI to be automatically cheaper. It does save on traditional shoot costs, from locations to talent, but doing it well is still time-intensive. “It takes a specific skill set, a lot of refinement and, importantly, time to get to something you’re genuinely happy to put in front of a client.”

Calibre + Candor’s head of media Vanessa Williams sums it up: “Ultimately, we want to be optimistic about where AI is taking our industry. AI should be used to augment, not replace, our thinking and output.”

The department of one

AI is a great leveller. You no longer need a strategy department, a production studio or a data science team to compete. The scale, resources and expertise that big agencies have always sold are now within reach of almost anyone.

Chris Boyd, who runs Kindred Creative, sees the big agencies’ creative cuts fuelling a wave of small shops like his. AI lets him offer strategy, concept and production as a one-person operation, delivering fully AI-produced social and TV ads that he writes, casts, produces, edits, grades and mixes himself. With clients bringing more marketing in-house and moving away from full-service retainers, he believes there’s still a place for creative, but he’s wary of what’s flooding the market: “There’s a lot more generic AI stuff with no idea in it.”

Gen Z: most at risk, best equipped

Gen Z staff are arguably the most exposed to AI. They’re also the most adept at adapting to it.

At The Media Lab, we’re rebuilding every core function in the agency with AI agents. From planning and insights to reporting, analysis and implementation. The goal isn’t just to be more productive, but be able to divert that time into the areas that add the most value. Our largely Gen Z team are embracing it.

Years ago, working at a global agency network, I was charged with rolling out global planning systems. They stalled because people resisted change. I’m not seeing that with this generation, rather they are treating AI as the natural way to work.

I recently met Jasper O’Loughlin, who founded Minimise last year in his third year at the University of Otago to help marketing, digital and media agencies transition their businesses through AI. He has zero agency experience, yet he’s advising agencies on which functions to augment and which to automate. That tells you something about where fresh thinking on this is coming from.

The end of the billable hour

AI is rapidly eroding the time-and-materials model agencies have always charged on. According to a study released this month by the World Federation of Advertisers, labour-based agency compensation has fallen to just 17% of arrangements, down from 54% fifteen years ago. When the hours shrink, billing for hours stops making sense.

Agencies will have to get more resourceful about how they charge and that comes down to the value they bring.

So where’s the value?

Clients know some of the answers to their marketing questions are just a prompt away.

Ask ChatGPT for five ad headlines for a summer sale aimed at busy parents. It’ll do a competent job. Ask Google’s Veo for a social video promoting a restaurant to Auckland diners. It’ll look pretty good. Ask Claude for a media plan to raise awareness for a not for profit. It’ll come back with some genuinely solid options.

As one client put it to me: “I can get strategy from AI. What I need is your advice on whether it’s the right strategy, and your ability to execute it for me.”

That’s what clients will pay for: judgement built over years of developing and running campaigns. Someone they trust to tell them when they’re wrong.

Which raises an uncomfortable question for our industry. That judgement has traditionally been built in exactly the junior roles AI is now absorbing. If nobody spends their first three years pulling reports, building plans and sitting in on client meetings, where does the next generation of senior judgement come from? Agencies that cut the bottom rung without redesigning how people learn will face a talent problem in five years that no model can solve.

Doing got cheaper, but knowing what’s worth doing didn’t.

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