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After experiencing a rapid post-pandemic recovery, agencies’ earnings have returned to pre-pandemic levels. However, AI investments have skyrocketed, reaching $92 billion in 2022 and $50 to $60 billion year-to-date in 2023. The future growth of agencies relies on their ability to adapt their economic model and fully embrace the potential of AI in their processes, capabilities, and structure. In 2024, agencies will need to transform their services-based model into a solutions-based one, combining creativity and technology products. This shift will impact all agency types, including creative, media, PR, digital, and in-house agencies, as they integrate people with technology.

Bespoke Brand Algorithms

In the future, brands will purchase the algorithms developed by their agencies. These algorithms will be created by training AI-powered marketing engines with various first- and third-party audience signals, historical media performance data, and creative content. Forrester refers to these customized algorithms as “brand language models.” They are brand-specific applications of AI technology that utilize base models like Meta’s Llama or OpenAI’s GPT. These models incorporate insights from audience signals and incorporate a company’s branding elements such as fonts, colors, tone of voice, and intellectual property. Brand language models act as engines that generate personalized marketing content based on human creative ideas with machine precision and speed.

Increased Agency Reviews

As concerns about AI mismanagement grow, agencies and marketers will face an increase in reviews. Until AI legislation is enacted in the US and EU, agencies and marketers will need to self-govern their AI marketing practices. This self-regulation raises concerns among business leaders, with 61% of AI decision-makers worried about privacy and data protection issues that may violate laws like the GDPR. Additionally, 57% are concerned about the potential errors resulting from the misuse of AI-generated outputs. To mitigate reputational fallout from mismanaged AI marketing executions, marketers will seek safe AI implementation, leading to more accounts being up for review in 2024.

Disappearance of Digital Agencies

As generative AI technology shapes more personalized and conversational experiences, marketing as a whole will become predominantly “digital marketing.” This shift eliminates the need for specialized “digital” agencies, as all agencies will adapt and offer new AI services to deliver brand experiences. This transformation leaves pure-play digital agencies facing the challenge of digital sameness and commoditization. In the words of the supervillain Syndrome from “The Incredibles,” “When everyone is super, then no one will be.”

Balance Automation With Augmentation

While traditional notions of artificial intelligence focus on automation and potential employee displacement, the influence of generative AI leans more towards employee skill set augmentation. Technologies like robotic process automation, deep learning, computer vision, and intelligent automation have the potential to automate 25% of agency roles. However, genAI offers opportunities for more agency roles to benefit from the integration of AI, with only 7.5% of agency roles expected to be automated by the end of the decade. The key is to find a balance between cost efficiency and the increased volume and impact of human creativity, complemented by AI.

B2C Marketers: Leap Now, Not Later

The AI era for agencies is already in full swing, with experimentation progressing towards implementation. It’s crucial for marketers to embrace generative AI and leverage its speed, intelligence, scale, and creativity. In 2024, marketing executives, agency leaders, procurement professionals, and technology providers will work together to commercialize the adoption of AI by agencies and the resulting transformation it enables.

For more insights, please visit the Predictions 2024 hub and download the guide.

This blog was written by VP, Principal Analyst Jay Pattisall and it originally appeared on Snapsonic.

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