Future of Marketing Briefing: Agency operating systems face a differentiation problem

Mark Penn, speaking during Stagwell’s latest earnings call, argued there’s “real and significant demand” among clients for these systems.

But the underpinning thesis took a knock last week, following a Gartner research note that projected half of the agency-made AI platforms would go kaput by 2029.

Analyst Jay Wilson argued that agency sector consolidation (essentially, more mergers like the Omnicom-IPG deal) could sunset some players outright, while platforms like The Machine and Blu will become less attractive to the business organizations behind big advertisers as they invest in their own, bespoke AI set-ups.

“Those platforms are largely going to be built by or purchased through the hyperscalers of the world, the Googles and the Metas,” said Wilson. “CMOs will tap into those [AI] platforms, but that essentially disintermediates the agency platforms.”

Agencies pursued the operating system path partly because they hoped it would padlock clients to them for longer periods of time. In basic terms, a CMO might be less likely to go to review if changing agencies also meant changing AI systems. “Agencies are hoping that these AI platforms will improve their stickiness,” explained Wilson. To preserve room for maneuver, he advises marketers to stay frosty.

Wilson’s note highlights a differentiation problem that was already beginning to loom.

As clients find themselves less and less dazzled by the white heat of technology, they’re asking searching questions in reviews about how competing agencies plan to account for AI token economics in their pricing. When CMOs consider pitch decks that discuss using Nano Banana in video asset production, or agentic systems for media buying, they’ll be comparing it to what their in-house teams can do with the likes of Google Pomelli or Manus.

“That wrapper, that copilot, is almost certainly going to get commoditized by a hyperscaler,” said Ted Iobst, president of agency group Stellar.

For some marketing services groups, purchasing power will set them apart from the pack.

Speaking at Omnicom’s recent strategy day, CEO John Wren argued the holding company’s sheer size and ability to negotiate access with AI developers meant its Omni platform had unrivalled strength in depth. “We have all those tools, and we have them at such a scale that it is going to be very difficult for many competitors to catch up at this point,” he told investors and analysts.

The execs behind Brandtech’s Pencil, meanwhile, emphasize transparency. They’re open about the way its tech rests on the shoulders of Anthropic and OpenAI’s models – but they’re also open about how they’ve trained models and developed applications unique to Pencil, and how their pricing structure accounts for token economics.

“We’re trying to find an economic solution that works for the client and us as the tech vendor,” said Will Hanschell, CEO and co-founder of Pencil.

Clients don’t have to leave the behind-the-scenes work to Brandtech entirely, and can port over token agreements they’ve negotiated themselves into Pencil’s system, he added.

WPP’s chief technology officer Stephan Pretorius said the group’s scale – leveraged in enterprise agreements for tool and ongoing token deals – wasn’t just a means of lowering costs for clients, but a way of futureproofing their AI usage.

“Because we’re buying at WPP’s scale, across all our agencies and clients globally, we negotiate pricing that individual agencies or brands simply couldn’t access,” he told Digiday in an email. ”We pass those economics on to clients. They get enterprise-grade AI pricing without needing enterprise-scale infrastructure. And because WPP Open is provider-agnostic, we’re not locked into any single partner.”

“Our partnerships and platform architecture mean clients get better AI economics and better outcomes than they could achieve alone. It’s a force multiplier for growth,” he concluded.

Marketers embrace principal media-buying, but checks and balances lag

Marketers are increasingly aware of principal-media buying practices within their agencies, but governance in the form of contracts or formal oversight is still lacking. That’s according to the ANA’s latest report on the topic, a survey of 119 marketers and brand media execs in the U.S.

Well over half of respondents (58% ) said their agencies use principal media; 37% said their use had increased in the last year, and 76% say that reduced costs were the primary benefit they saw from the practice — all of which suggests marketers are coming to terms with it as a way of doing business. But just 57% have guidelines for its usage and only 63% have language in their agency contracts that addresses it.

“The perception is that it will provide you a cost value and cost efficiencies,” said Jason Trubowitz, svp, media and measurement leadership Initiative lead at ANA. “The question comes down to: does it really?”

Numbers to know

5%: The surcharge added to Austrian and Turkish brands’ Meta spend after the platform giant decided to pass on the costs of those countries’ respective digital service tax policies on to customers.

$10.5bn: The amount of ad spend WARC projects will be splurged by brands around the FIFA World Cup.

0.91%: The click-through-rate (CTR) recorded by one client involved in the early ChatGPT ads pilot, according to Adthena.

39.2%: The proportion of the U.S. population expected to use generative AI this year, per eMarketer.

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BrewDog’s new owner seeks female drinkers to revive brewer

When Scottish beermaker Brewdog collapsed earlier this year, it put the capstone on a long-running narrative arc — and on a way of marketing. The brand’s new owner wants to find a new audience and a fresh positioning.

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