Advertising agencies have invested millions of dollars into their own AI-powered platforms to handle all kinds of tasks, from creative testing to audience targeting and campaign planning.
An outsider to Ad Land might be forgiven for assuming all these AI tools are, essentially, the same as one another. (It probably doesn’t help that so many rely on self-referential naming conventions, like Omnicom’s Omni, Horizon Media’s HorizonOS, or Havas’ AVA.)
But according to Valeria Balaro, the CMO of technology consultant firm Star, these AI tools – which Star helps many of its advertising clients to develop – are important. In fact, brands are beginning to select the agencies they work with on the basis of those AI capabilities. Save, of course, for the brands developing their own in-house AI tools instead.
Last year, Star teamed up with Forrester Research to survey other chief marketing officers and senior marketing leaders about their approach to technology. AdExchanger spoke with Balaro about the results of this research, as well as the new expectations that CMOs have for themselves and their agencies of record.
AdExchanger: Do you find that on the whole, CMOs are expected to know more about the technical sides of the business, within their own organizations than they used to be?
VALERIA BALARO: 100%. Before, the CMO could be someone creative, or someone who can run really good campaigns. That is no longer enough.
On each CMO’s mandate right now is revenue. Ten years ago, that was not the case, but things have been moving in this direction for some time. If you are not able to show what is happening at each stage of the buying process, then it basically doesn’t exist.
You need to understand what each part of your martech stack is enabling you to do, and why exactly you need it, because you need to defend it.
The AI side of things requires CMOs to be much more technical as well. You need to be an architect of the technical system that’s going to enable you to do the work that you need to do.
So, it’s like a perfect storm for CMOs, where you are more accountable than ever for the results, and having to deal with completely new tools and infrastructures.
What is the general state of the union between brand CMOs and agencies?
That relationship is still strong, but I think there is much more expectation from the CMO side that their agencies are going to be more than just creative partners. They want the agency to be able to say, “Look, if you invest a million dollars here, this is what is going to enable you to do.” An agency has to be fluent in those kinds of conversations.
CMOs are appreciative of the fact that the agencies are trying to change, and that they’re creating these platforms to be more technology enabled. At the same time, the research showed that CMOS are seeing agency outcomes as interchangeable. There isn’t one agency that’s gotten it completely right.
There’s been a lot of talk from agencies about converging their budgets and breaking down silos, particularly with regard to CTV and linear TV. Are you noticing similar trends?
Yeah, absolutely. The landscape is just so fragmented. In the past you had one main agency, but now you can have three, four, ten other little vendors that you are working with. It requires a lot of your mind space to manage all of these relationships and make sure you’re getting the best out of them. So if you are able to consolidate, you are going to try and do that.
With AI right now, there’s all of these companies that are popping up that are essentially wrappers on top of an LLM. But at some point, they are going to converge and be acquired, or merge, or just go out of business.
Piggybacking off of that, what do you think the typical agency-brand relationship looks like in the future?
This is a little bit of a controversial opinion, perhaps! I think that the agencies are not going to be around in the way we know them today.
We’re going to see more low-value, basic support being pushed down into automation. Then the truly big creative things – the original thinking, the unique creative campaigns – will be elevated. And I think it will become more valuable than it is at the moment, even, that human creativity.
The gap is going to widen between the really outstanding, iconic creative that an agency can do, versus what is just bread and butter. That can all be absorbed by agents, and just become part of the agentification of your workforce.
This interview has been condensed and lightly edited.
