Smaller And Smarter Organizations Will Master
Intelligent Creativity
August 2, 2021
JPJay PattisallJPJ. P. Gownder
with Keith Johnston, James McQuivey, PhD, Joe Stanhope, Craig Le Clair, Nick Monroe, Alex Sobchuk, Rachel Birrell
Summary
Agencies are introducing technologies that
reshape how they work: Artificial intelligence (AI) and intelligent automation
(IA) in particular turbocharge agencies’ ability to enhance and scale creative
production and to scale marketing campaigns with data-driven, real-time
precision. But introducing these tools fundamentally changes the way agencies
work, automating 11% of their workforce by 2023. This report shows the huge
impact that AI and IA will have on agencies, how agency leaders should plan
their staffing, and how CMOs at client companies should evaluate their
agencies.
Topics
· AI And Automation Radically Alter How Agencies
Work
· Agencies Will Shrink In Size As They Grow In
Technology
· Enhance Your Workforce Strategy With
Intelligent Creativity
· Transform Your Workforce To Realize
Intelligent Creativity
· Humans Plus Machines Yield An Era Of
Intelligent Creativity
· Supplemental Material
AI And Automation Radically Alter How Agencies
Work
Technology
is revolutionizing the decades-old agency services model that provides CMOs and
brands with human expertise to create, execute, and manage marketing. Creative,
digital, and media agencies are now wrestling with the possibilities and
drawbacks of machine learning (ML) and robotic process automation (RPA). “You
would expect agencies to be excited by automation and AI. But, ironically, an
industry famous for innovation is holding back the tide,” criticizes Wesley ter
Haar, founder of MediaMonks. Despite lingering dissonance, agency holding
companies have invested at least $12 billion since 2014 in acquiring
technology to power their martech, adtech, and data initiatives. The melding of
AI and intelligent automation (IA) with agency strategy and creativity impacts
every aspect of the development of marketing communications.
·
Data
science seizes consumer insight. Data management platforms and agency audience activation
technology produce audience insights in a fraction of the time it takes to
manually gather, process, analyze, and report qualitative and quantitative
research. Insights that once took days and weeks are revealed in hours.
Publicis Groupe’s Epsilon PeopleCloud registers more than 178 instances daily
to reach 200 million consumers, providing near-instant understanding of
consumer behavior among audiences at an individual level. “Imagine unlocking
all the data and insights on what audiences want, who indexes higher for certain
behaviors, or who already buys in a particular category — even before starting
marketing planning,” says Bryan Kennedy, CEO of Epsilon.
·
AI
propels the velocity of content production. Technology has made time-intensive labor
within the studio production process faster and smarter. Adobe incorporated its
Sensei AI technology into Photoshop’s Lasso tool, speeding up image processing
from hours to seconds. Autodesk’s photogrammetry software allows
creatives to take 2D photos and rapidly convert them into detailed 3D
landscapes, the capture of which used to require days of set-up work. Dentsu
uses machine learning to power its CGI studios to speed up work and manage content
velocity. “We’re seeing a 60% increase in content production as we leverage
CGI,” says Vikalp Tandon, global chief technology officer of creative and
experience business at Dentsu.
·
AI
and intelligent automation push the boundaries of creative craftsmanship. Software can now assist the intuitive,
human process of creative development, resulting in a “human + machine”
creative team. Martech application Persado uses natural language processing, a
language database, and multivariant analysis to generate multiple campaign
iterations and identify the best performers. The software helps determine
effectiveness, such as selecting the word “nutritious” versus “nourishing” in
advertising copy. Matt McNeany, creator of Omnicom’s content platform ADZU,
suggests that the volume of data and content used to train algorithms is
becoming a differentiator. “Ads are better than [another agency’s ads] because
the algorithms are better trained,” says McNeany.
·
AI
steers media planning and buying. While legacy systems and processes for buying broadcast
media persist, all the major holding companies have built audience platforms
to automate much of
the media planning workstream. Numerous agency audience platforms use AI to
generate purchase journeys based on audience definition: Dentsu’s M1, GroupM’s
mPLATFORM, Havas’s Converged, IPG’s Kinesso, Omnicom’s Omni, and Publicis’s
Epsilon PeopleCloud all deliver AI-assisted planning. Similarly, myriad programmatic
adtech companies and agencies provide automated bidding exchanges to buy
addressable media; they include DV360, MediaMath, MightyHive, Seizmic, and The
Trade Desk.
·
Bots
administer agency operations. IA now aids agency operations and back offices by executing
predictable, routine administrative tasks within finance, IT, and operations.
Digital agency 360i has developed a program of approximately 50 bots to do just
that: For example, one bot sends welcome emails to new employees and writes the
ticket for IT to issue the new employee with a computer; another bot executes
contracts with social media influencers. Andrea Terrassa, chief operating
officer for 360i, describes removing responsibility for certain tasks from
employees so they can be more strategic as “taking the robots out of the
humans.”
The AI Revolution Is Part Of The Broader Disruption That
Agencies Already Face
AI
and intelligent automation initiatives will join several forces reshaping
agencies. They are contending with:
·
An
agency talent drain. The
agency economic model requires agencies to adjust headcount costs thanks to
fluctuating revenues resulting from decreased or stalled marketing spend. In
the wake of the COVID-19 economic downturn, agencies are poised to shed 52,000 US agency jobs through 2021 and
49,000 globally among the major holding companies. Forrester’s model assumes
that approximately half of these jobs will return. The agency talent drain
sparks a migration of talent in-house and into the freelance economy, setting
up a resource void that agency operators and CMOs must fill.
·
The
advance of the in-house agency. In-house agency teams continue to claim more prominent
roles within the CMO’s roster, as the in-house strategy has led to more control
and efficiencies. The 2019 IHAF/Forrester In-House Leadership And Culture
Survey found that 72% of organizations have insourced some marketing functions,
a 68% increase over the past decade. Liberty Mutual Insurance’s in-house
agency, Copper Giants, has grown to produce campaign assets across multiple
channels, including all social and digital channels for its “LiMu Emu and Doug” campaign.
Increasingly prominent in-house agencies force agencies to demonstrate new
value.
·
Rigorous
cost management. Companies impose
budget cuts, scrutinize fees, elongate payment terms, and force account reviews
to drive down their marketing costs. The head of digital marketing at a major
US retailer said, “One question we’re asking ourselves is can we even afford an
agency in this COVID-19 environment.” This persistent cost management pressures
agencies to discount labor fees, restrict the scope of engagements, and allow
fee negotiations to dictate the level of services.
·
Sluggish
agency transformation initiatives. Agencies have been incrementally adjusting their models to better serve
CMOs by simplifying their operating structures, appointing digitally savvy
leaders, and acquiring data and technology assets. But the gradual
transformation of the agency model hasn’t kept up with the CMO’s needs. “We
simply couldn’t afford a global agency to work across every brand in our
portfolio and chose instead to centralize digital media in-house,” says the
digital director of a global cosmetics company. This places the onus on
agencies to hasten the change inside their organizations to put clients at the
center, blend creative firepower with acquired technology, and identify new
compensation models.
Agencies Will Shrink In Size As They Grow In
Technology
Applied
to agency workflows, innovations in AI and intelligent automation will yield a
long-term reduction in the size of agencies. We forecast that agencies of all
types will reduce the number of human employees by at least 25% by 2032 (see
Figure 1). This radical conclusion is grounded in dozens of interviews, an
appraisal of the technologies that are already beginning to change how agencies
work, data on the skills employed by agency jobs, and Forrester’s broader view
on the future of work.
Figure
1 Agencies Will Be Much
Smaller And Technology Laden By 2032
Modeling Employment Changes By Job Category Yields A Forecast Of
Cannibalization
To
understand the shifts in employment, we constructed four composite
organizations, representing small and large creative and media agencies (see
Figure 2). We broke each of these composite organizations into job categories
(see Figure 3). Using data from the American Association of Advertising
Agencies, we broke out each of these job categories into specific jobs and
apportioned personnel in accordance with how common they are at agencies.
Finally, we assessed the likelihood of cannibalization by intelligent software
like AI and automation using two sources: We derived half from Oxford academics
Frey and Osborne’s analysis of the likelihood of job cannibalization and half
from our analysts’ scoring based on objective interviews.
Figure 2 Our Composite Organizations Rest On Size Assumptions
Figure 3 We Modeled A Variety Of Creative Agency Roles
Four Agency Segment Composites Reveal The Changing Composition
Of The Workforce
From
content creation to production, broadcast buying to computer sciences, global
client executives to HR and finance, AI and automation will transform every
level of the agency on a task-by-task basis. To help CMOs and agency execs
better plan their resources, talent, and investments, we developed a composite
model to guide the industry in adopting automation at a department and job
level. We forecast for 2023 and to 2032 to provide for both immediate and
long-term action — and to allow for strategy, planning, budgeting, and
workforce development. The numbers we present here represent the composites;
your individual mileage may vary, with higher or lower numbers depending on your
level of investment in AI and intelligent automation. But a typical agency in
each segment would look like these. Our model shows that our composite agencies
will all contract in the next few years, losing 1 in 10 or more employees (see
Figure 4 and see Figure 5).
·
Large
creative agencies will lose 11% of jobs to automation by 2023. The changing composition of large agency
workforces starts with back-office and support functions; we anticipate a
finance department that’s 14% smaller, for example, led by intelligent
automation and RPA investments. But core professional areas won’t escape
unscathed: Production jobs will drop by 15%, led by roles like associate
producer and project manager that will see parts of their jobs digitized and
moved to software. Adobe Sign and Scan both leverage Sensei AI to automate
processing purchase orders. Workfront’s use of AI automates resourcing and
scheduling production teams. Creative jobs won’t be fully shielded, either; we
see 9% fewer creatives due to scaling, automation, and assistance from smart
software.
·
Small
creative agencies will contract by 10%. Small creative agencies look similar to their large cousins, but
they start with a much smaller employee base. We see comparably high job losses
in areas like finance (13%) and production (14%). Creatives will face a
slightly lower impact than at large firms, with a 7% loss; you need a minimum
base of creative talent to execute this core function successfully, no matter
how much software you deploy. Independent creative agency Wieden + Kennedy recently
reduced its staff by approximately 11%, illustrating that that even the most
creative organizations aren’t immune to automation.
·
Large
media agencies will lose 11% by 2023 but the most by 2032. Large media agencies resemble large
creatives in 2023, with a top-line job loss of 11%, but the details look
different. Large media agencies see leading losses of 20% in media operations
jobs like QA, tagging, and reconciliation, which are increasingly automated.
Jobs like research, account management, and media buying and investment will
see steeper-than-average declines due to intelligent software. For example,
media buying is now a real-time automated task thanks to AT&T’s Xandr,
Google’s DV360, The Trade Desk, and Verizon Media. Longer term, large media
agencies will see the biggest contraction of 31% by 2032.
·
Small
media agencies will lose 11% by 2023. Small media agencies see similar losses to their large
cousins, but there is a cap on losses by 2032 of 27%. A small media agency of
150 employees would shrink to 109 over that longer time period, and some job
categories — including executive, media operations, and new business/communications
— would employ only one employee each, aided by large strategy and planning
teams and lots of software. “In the context of AI, training the machine
learning algorithms with segmented first-party data is among the best value
that agency workers can add to the martech stack and media execution,” says
John Faris, president of Red Door Interactive.
Figure
4 Creative Agencies Will
Be Significantly Smaller By 2023
FIgure 5 Media Agencies Will Shrink By 2023
Enhance Your Workforce Strategy With
Intelligent Creativity
It’s
time for CMOs and agencies to move beyond an intuition-only method of creating,
producing, and activating marketing and embrace a more scientific, accurate,
and scalable one. Creativity — the act of applying novel solutions to elicit
human responses — hasn’t changed. But the way that companies apply creativity
must. “Intelligence is based on how efficient a species became at doing the
things they need to survive,” wrote Charles Darwin. Evolve into the leaner,
smarter agency of the future by combining human intuition with machine prowess.
The result? Intelligent creativity, which Forrester defines as:
“A process of creative problem-solving in which teams of
creators and strategists conceive, design, produce, and activate business
solutions with the assistance of AI, intelligent automation, and data.”
CMOs
and agency executives who establish intelligent creativity as their firm’s
organizing principle for growth can anticipate:
·
Differentiating
brands by heightening execution. AI doesn’t replace agency creativity; it improves it. AI,
intelligent software, and automation give CMOs and agencies the ability to
execute in volume using a deep understanding of audience interests. For
example, applying intelligent creativity to media planning and operations
increases both accuracy and impact. “In the future, media professionals won’t
make the decision of where to place the ad, but they will set the parameters
for where the tool places the ad,” says Sean Corcoran, president of Mediahub. CMOs
and agencies leveraging the scale and insight of intelligent creativity will
differentiate their brands and executions.
·
Delighting
customers by better meeting their emotional needs. Emotional connection with consumers is core to
developing a strong brand connection.
AI, intelligent software, and automation go beyond efficient delivery to
provide efficient understanding of consumers. Accenture Interactive describes
this shift as “empathy at scale powered by creativity focused on customer
needs,” explains Zach Newcomb, MD at Accenture Interactive. Brands that use
intelligent creativity to better anticipate and address the emotional
requirements of customers and prospects become more meaningful, relevant, and
purchased.
·
Empowering
employees by swapping the mundane for the fulfilling. Let’s face facts: CMOs and agency
executives have a morale problem. Fortunately, AI, intelligent
software, and automation take over mundane, repetitive tasks, freeing employees
to focus on creative problem-solving. As Lynn Lewis, US CEO of UM, says:
“Machines won’t take jobs. They’ll make them more interesting. They will take
the highly monotonous and repetitive tasks, freeing up time for people to focus
on higher-value, more impactful, and personally rewarding aspects of their work,
resulting in more innovation and enhanced quality throughout the ecosystem.”
CMOs and agency executives can use intelligent creativity to boost morale and
provide employees with more rewarding career opportunities.
·
Rewarding
shareholders by shaping intangible value. Companies that wield intelligent creativity
deliver higher market valuations through their firm’s intangible assets, such
as branding, reputation, intellectual property, and innovation. AI, intelligent
software, and automation can identify the underlying opportunities that people
find hard to detect. Look no further than Apple, which recently posted the
first $2 trillion valuation. Or Tesla, which recently overtook Toyota as the
largest automotive valuation. Or Procter & Gamble, which posted a 5% increase in organic sales during
Q2 2020 while most of the globe was shut down for business due to COVID-19.
CMOs and agency executives can uncover untapped economic value by tapping into
intelligent creativity. CMOs must rush to capture this before their CIO
counterparts beat them to it.
Transform Your Workforce To Realize
Intelligent Creativity
CMOs
and agency CEOs: AI and automation are now realities in the context of slashed
marketing budgets, scores of layoffs, empty real estate, and societal
disruptions. Take advantage of these unprecedented times to create
extraordinary change. The profound possibilities of human and machine
collaboration will rearchitect your industry for the next decade. Make
marketing and agencies relevant again by transforming the agency workforce to
deliver the benefits of intelligent creativity.
·
Reimagine
how the organization works. The
pandemic has already affected where we work. Turn your focus to how. “It’s an
org design problem for agencies because it does require people to change what
they are doing and who they are doing it with,” says Andrew Carlson, chief
experience officer at Organic. Future fit organizations provide the tools,
training, and support for employees to navigate the modern workplace and reach
their full potential. Start by using the Forrester model to understand which
roles will benefit from the inclusion of automated tools; then, build a 2023
plan for integrating AI and automation tools and adjusting headcount levels.
·
Combine
human intuition with machine prowess. You can best realize creativity when you take repetitive,
predictable tasks or labor-intensive tasks off the plate of human employees.
They are then free to use their creative intuition to develop and test
concepts. Just as stop-motion animation gave way to CGI, all aspects of
creative development are improving. The first step is to map existing employee
journeys; then, tap into the wellsprings of technology innovation that can
improve employees’ capabilities and experiences along that journey. Alicia
Enciso, CMO of Nestlé USA, describes this as added-value talent: “This change
will make those jobs more interesting by focusing on opportunities to improve
results while removing the boring work.”
·
Use
data to inform decisions, not make them. Data is part of the answer, not the entire answer. When
CMOs and agencies let data make all the decisions, customers lose out.
Data-driven display advertising and retargeting have created poor advertising
experiences. According to Forrester’s data, only
40% of US online adults indicate that they find advertising a useful way to
learn about new products and services. Instead, let data play its role in
fueling intelligence and providing a base of knowledge on which analysts,
strategists, creators, and marketers can build. “Data is the new oil,” says
Pete Kim, founder and CEO of MightyHive.
·
Protect
the creative craft from technological doom and gloom. As AI and automation become integral to
producing customer-centric strategies and campaigns, you must articulate that
technology is meant to heighten creativity, not replace it. “The chief creative
officer is in the idea business. We haven’t figured out how to automate that
and likely never will,” jests Andrea Terrassa of 360i. Make room for human
expertise in your stated AI vision so that it’s clear to all employees that
your intent is to support their experience, not usurp it.
·
Prepare
tomorrow’s employees before they are hired. “As we implement more and more automation, there will be a
need to go back and look at the school curriculum and formalize in school what
is learned on the job,” says Courtney Acuff of Ansira. The educational burden
here goes beyond obvious skills like familiarity with software and AI.
Tomorrow’s employees need a higher robotics quotient (RQ) — a measure
of how well individuals and organizations adapt to, collaborate with, and drive
results from AI, automation, and other intelligent software. High-RQ employees
are continuous learners; they adapt well to the introduction of new
technologies and embrace the value of human/machine collaboration.
·
Work
with the contingent workforce. As agencies digitize, it becomes easier and more flexible to
work with contingent talent rather than FTEs. Why? Because the future workforce will be adaptive, able
to burst up or down rapidly. In the agency world — where projects start and end
— this can become a superpower. To do this, agencies will tap into guru.com,
talent.com, or Upwork to find specialized labor and invest in SAP Fieldglass or
Beeline for software to manage contingent labor. The end result will be a
low-friction cycle of acquiring, onboarding, and then offboarding contingent
talent pools. And these freelancers have top skills — many of them will result
from agency shrinkage — so agencies’ tech investments will create a more robust
pool of contingent workers.
Humans Plus Machines Yield An Era Of
Intelligent Creativity
When
asked whether humans or computers will dominate future chess competitions,
world champion Gary Kasparov said neither: A human with a computer will dominate both. He suggested that the machines
reveal previously undetected permutations of moves — and that the “inimitable
spark of human creativity and intuition” shines through to complement the
computers. The future is human plus machine, not machine or human alone.
The
same is true for agencies. The long-term vision of a smaller agency
complemented by copious amounts of technology paints a picture of the future.
In 2032:
1.
Competitive
complexity and confusion will take hold. While agencies contract in size, selecting one will become
more complex. Firms will find it increasingly difficult to distinguish among
agencies, consultancies, systems integrators, and adtech firms — each wielding
similar services and platforms. Publicis Groupe digital agency Sapient calls
itself a consultancy. Technology consultancy Accenture Interactive calls itself
an experience agency. Systems integrator Wipro has acquired multiple design,
marketing, and digital agencies. Programmatic adtech companies like MightyHive
and Amobee frequently replace or augment media agencies as companies move media
in-house. CMOs will face a blur of platforms and services as they attempt to
identify and divine true combinations of creativity and technology.
2.
The
“human + machine” approach will reshape the agency career path. Agency experts of the future will be
immersed in technology — and not just one technology but a web of different
technologies addressing each stage of their employee journey. These
technologies will evolve and change increasingly rapidly, reshaping jobs. To
offer an analogy, Anna Wintour of Vogue will be the last editor of her kind.
Condé Nast will probably over-rotate and replace her with a pure data-and-technology
guru, whose lack of fashion expertise will cause them to fail. The publisher
will then hire an “Anna Wintour who’s also a technology native and expert.”
Future agencies must have the creative chops and the technology prowess in
every employee.
3.
Clients
will select agencies based on the best algorithm and data. Intelligent creativity will set off a
software race among agencies for which can best wed software, data, and
learning to their operational models. ML isn’t the only key technology in play,
but it suffuses all others, helping agencies complete tasks more effectively
and aesthetically. Agencies with better data and better algorithms — though
some will be commonly sourced — will benefit, as will those with more creative
subject matter experts to partner with the machines. The result? Marc
Andreesen’s “software will eat the world” thesis will come to life as agencies
differentiate on their software, data, and ability to reach algorithmic scale
across clients.
4.
Digital
labor platforms will become agents for the most talented. Matching the right talent to the right project
becomes more complex in a world of ubiquitous technology. Agencies can realize
economies of scale when they employ invisible resources — talent that already
exists in their networks, either internally or externally, that they’ve
previously had trouble discovering. The talent platforms that agency holding
companies manage will become superpowers. Publicis Groupe’s MRCL has already
saved 2,000 jobs during
the COVID-19 pandemic by matching talent among its various agencies.
5.
High-EX,
high-RQ workplaces will attract the best talent. As technology becomes a differentiator, agency
talent will flow to the agencies with comparatively better technology. But
making technology work requires two capabilities: employee experience (EX) and RQ. A smaller agency with better EX
becomes important in a way it hasn’t before, as fewer junior people, a more
malleable “Hollywood”-style labor model, and the ability to work effectively in
teams all require greater EX. EX is also a driver of RQ, a measure of
how well individuals and organizations collaborate with and drive business
results from intelligent software.
6.
The
agency economic model will shift from paying for people to paying for
platforms. Intelligent
creativity will result in agencies being compensated for the AI and automation
they offer. This represents the first meaningful revamp of the current agency
services/time compensation model in over three decades. Agencies and clients
will construct a hybrid model incorporating fees for software-as-a-service
(SaaS) technology and advertising algorithms. Digital agency 360i is already
exploring the concept of a digital FTE. “We’re starting to ask some fundamental
questions about the value an agency brings by asking ourselves, ‘Do the bots
become part of the staff plan?’,” explains Doug Rozen, chief media officer at
360i. The digital FTE is but one example of agencies being paid for platforms,
not just people.
7.
The
term “agency” will become meaningless. The term “agency” will fall out of relevance as it will no
longer adequately describe the value, expertise, and intelligence applied to
client business. “Agency” developed from the practice of purchasing media on
behalf of clients or, quite literally, being an agent. Tomorrow’s leaner and
smarter providers will consult, explain, implement, and, above all, advise
their clients on how to delight customers, differentiate brands, and empower
employees while delivering shareholder value.
Supplemental Material
Forrester Agency Automation Forecast
Methodology
We
created four composite agency organizations based upon firmographics collected
in Forrester Wave™ briefings and other agency briefings, identifying each
department/work category per agency type. Using data from the American
Association of Advertising Agencies (4 A’s), we broke out each agency
department/work category into 90 specific jobs and apportioned personnel in
accordance with how commonly they are found in agencies. We assessed the
likelihood of cannibalization by intelligent software like AI and automation
using two sources: We derived half from Oxford academics Frey and Osborne’s
analysis of the likelihood of job cannibalization and
half from our analysts’ scoring based on objective interviews. Finally, we used
S-curve analysis to determine the rate of growth of automation across each
agency department/work category and each job from 2020 through 2032. The
information presented in this report reflects S-curve data from the forecast
for 2023.
The
IHAF/Forrester 2019 In-House Leadership And Culture Survey was fielded to 482
respondents comprised of IHAF members from US companies and client-side
marketing professionals. Forrester and IHAF fielded the survey from July 2019
to August 2019. Respondent incentives included the opportunity to win a ticket
to the IHAF Conference & Awards Show. Exact sample sizes are provided in
this report on a question-by-question basis. This survey used a self-selected
group of respondents and is therefore not random. This data is not guaranteed
to be representative of the population, and, unless otherwise noted,
statistical data is intended to be used for descriptive and not inferential
purposes. While nonrandom, the survey is still a valuable tool for
understanding the current state and trajectory of the in-house agency industry.
Companies We Interviewed For This Report
We
would like to thank the individuals from the following companies who generously
gave their time during the research for this report.
360i
Accenture Interactive
Acxiom
Adobe
Albert.ai
American Association of Advertising Agencies
Ansira
Code
Cognizant
Dentsu
Digitas
Epsilon
Hero Digital
IPG
Isobar
Kinesso
Mediahub
MediaMonks
MightyHive
MRM
Nestlé Purina
Omnicom
Omnicom Media Group
Organic
Persado
Stanley.ai
TA Digital
UM
VMLY&R
Work & Co
https://reprints2.forrester.com/#/assets/2/1343/RES160075/report
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