Media Buying Briefing: How the holding companies are taking differing approaches to rolling out gen AI

By Marty Swant and Michael Bürgi • February 5, 2024 •

Ivy Liu

This Media Buying Briefing covers the latest in agency news and media buying for Digiday+ members and is distributed over email every Monday at 10 a.m. ET. More from the series →

The agency holding companies, or at least some of them, are putting down their chips to bet that generative AI will become a cornerstone of their business moving forward. But will an AI strategy be enough to help them generate a new level of relevance for their clients, in an age where platforms have strived to generate direct relationships with clients, and consultancies have muscled into holdco territory? That remains to be seen.

Some, like WPP last week and Publicis Groupe the week prior, declared their intent through financial investment commitments, while others like Omnicom have laid smaller but more widespread bets across various parts of their businesses. It remains to be seen how IPG and Dentsu will spread their stack, but some clarity should come soon as they announce their 2023 results in the coming days and weeks.

Mark Read’s AI plans for WPP

London-based WPP said its 2024 plans include spending £250 million in a cash investment on “proprietary technology to support our AI and data strategy.” WPP is also investing more in WPP Open, a platform it said has been deployed to more than 28,000 people internally and various clients.

The commitment is part of WPP’s “next phase” of its AI strategy that builds on internal developments, external partnerships and past acquisitions, including the 2021 purchase of the British AI startup Sataltia.

In an interview with Digiday, WPP CEO Mark Read said AI will “radically transform” the types of data that clients need for marketing, provide new ways of personalization and make a “big difference” with media production.

“I think we’re going to see an explosion of products and services,” Read said. “It’s hard to call out any one area. Everything is going to affect the way we create work, the way we distribute our ideas, how they’re integrated. It’s going to move away from being PII [personally identifiable information] -based cookie data into much richer and deeper and broader datasets that look into consumer behavior, e-commerce, social media data,” Read said. However, he also noted that “compared to Google, Meta, Amazon, I don’t think we’re ever going to own as much data as those companies. No holding company will.”

Read said the focus will be on organic development and investment rather than future acquisitions. “Frankly, there’s not much available to buy and what is available to buy is expensive,” he added. “We’re going to get the best return from our organic investments.”

WPP’s announcements also come less than a week after rival Publicis Groupe shared news about its own AI efforts including plans to invest €300 million in AI over the next three years and a new AI platform called CoreAI.

What are the others up to?

Meanwhile, Omnicom chose a strategy of rolling out AI-driven products on a case-by-case basis rather than declaring a dollar investment. Last summer it announced a genAI tool called Omni Assist using OpenAI’s GPT models that works through the holdco’s central operating platform Omni.

Likewise, IPG has put genAI tools from all the usual suspects to generate content, to uncover strategy and insights, and employing intelligent chatbots to automate tasks like product recommendations and the like. For example, in the third quarter, IPG’s PR agencies worked with Nvidia to add AI-enabled processes into earned media and corporate communications workflows — not unlike what Stagwell has done with its PRophet AI-driven tool.

It’s safe to expect that in all future earnings calls, all the holding companies will make sure to mention progress made by their genAI investments. We’ll find out this week from Omnicom and IPG, and on Feb. 13 from Dentsu.

By using foundation AI models fine-tuned with data and brand-related IP, the holding companies are creating what Forrester vp and senior agency analyst Jay Pattisall described as “brand AI models” that as a whole could “eventually reshape the advertising industry.”

They are not alone

However, Pattisall doesn’t think marketers that work with independent agencies beyond holding companies should be worried about missing out. Plenty of digital networks and independents — including DEPT, Media.Monks, PMG and Tinuiti — are building their own AI platforms and partnering with third-party AI providers like Adobe, Jasper, Writer AI, Microsoft and OpenAI. He also noted it won’t be possible to properly evaluate AI platforms’ capabilities until later in 2024 or 2025.

WPP and Publicis Groupe’s platforms are “an obvious reaction to the success of The Trade Desk,” said James Borow, founder of Market AI, an AI startup for marketers. The market capitalization of The Trade Desk is about the same as WPP’s and Publicis Groupe’s combined.

“You look at the relative value of the agencies that are basically their customer,” he said. “They missed out on transitioning into a technology platform and they basically ceded that to The Trade Desk. I think they’re looking around the room and saying, ‘I’m not doing that again,’ and there’s actually no reason why they can’t pull this off.”

Other marketing experts agreed that the holding companies’ AI investments could create a way to transform into media companies.

“There’s definitely this reluctance on the part of many agencies to push too hard into it, and understandably,” said Brian Wieser, an independent analyst who publishes a newsletter called Madison and Wall. “Clients say they don’t like it, but at the end of the day, clients prefer lower price. You almost want to choose if you want to be Wieden + Kennedy or do you want to be a body shop? It’s really hard to be in the middle.”

To own vs. renting the data

There are also other questions about whether companies will need to own more data to power their AI platforms. Will they need new AI-related agreements from clients, adtech firms and platforms detailing how agencies can use corporate data and consumer data?

This “revives the own versus rent argument for data,” said Pattisall. He noted Publicis, IPG and Dentsu all own their own data through acquisitions of data warehouse like, respectively, Epsilon, Acxiom and Merkle. On the other hand, he said others like WPP, Omnicom and Havas have created tech that can ingest zero-, first- and third-party data.

“The debate about which is the superior strategy is not settled,” Pattisall said. “But either way you cut it, data is foundational to any AI products and services agency develop.”

Color by numbers

Given this coming Sunday gives the world Super Bowl LVIII on CBS — and a chance for marketers to drop around $7 million per :30 in hopes to break through the ad clutter — let’s take a look at some relevant stats from around the web. — Antoinette Siu

Mood Media’s Vibenomics surveyed household shoppers on their Super Bowl preferences this year: 54% of consumers plan to shop in-store for game-day goods, and shopping lists will include: chips/crackers/pretzels (97%), packaged meat (70%) and alcoholic beverages (64%).
Super Bowl ads have gotten more expensive over time. In 2023, advertisers paid roughly the same $7 million to air a :30 during the Super Bowl LVI broadcast, per Statista. Since 2017, the average price of a 30-second TV ad during the Super Bowl was a minimum $5 million – Super Bowl ads rose 84% in cost since 2013.
Football nation: 93 out of the top 100 most-watched U.S. television broadcasts in 2023 were NFL games – up from 82 in 2022, according to Sportico.

Takeoff & landing

Publicis Groupe’s health unit was hit with a multi-state $350 million fine for its role in promoting opioids via the defunct agency Rosetta.
Independent PMG landed the rest of J. Crew Group’s media business it didn’t already have, including the flagship brand — PMG already handled its Madewell business. And speaking of fashion brands, PVH, which owns the Calvin Klein and Tommy Hilfiger brands, handed North American media duties to WPP’s mSix&Partners following a review.
Omnicom’s PHD retained HP’s global media business following a review. It will handle all traditional planning & buying while the client’s in-house unit will oversee digital spend.
Creative shop Big Spaceship rebranded to Spcshp, and is delving into partnering with media-side agencies including Noble People.

Direct quote

“We have over three decades kind of got to the point where there has to be a new model. That model has to be based on the single asset that you have as an agency. And that asset is not technology, it’s not scale, it is people — what that asset brings to clients and why they would pay us as a professional services industry. So it’s just a little course correction, as opposed to an overhaul.”
— Dave Gaines, founder and CEO of Media by Mother, talking about AI’s role in the agency business.

Speed reading

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