Media Buying Briefing: How generative AI is being applied in big and small settings

By Michael Bürgi  •  November 11, 2024  •

Ivy Liu

Let’s start with the holding company level.  

Fresh off its third-quarter 2024 earnings, which delivered strong results, Stagwell continues to push the envelope of what an agency holding company is — by placing tech, engineering and AI much closer to the center of its mission. Total revenue growth through three quarters grew 10% to $2.1 billion while organic revenue grew 4% in the same period. 

Stagwell CEO Mark Penn uses the term digital transformation more than perhaps any of his fellow holdco CEOs, but he may be onto something — Stagwell is trying to integrate generative AI into virtually every corner of the company, from its cloud-based polling arm to its media and creative agencies, to its Code and Theory Network, which just launched a government experience practice in hopes of getting more government work. 

“One cannot underestimate the workflow that will be required to make AI usable by consumers and the role our Code and Theory Network will play in bringing that about for tech and non-tech companies,” said Penn in prepared remarks during the company’s Q3 earnings call. 

Penn sees AI’s arrival as the result of technology going through an era of efficiency that led to an era of competition and has now arrived at the era of application.

Perhaps the clearest example of Stagwell’s AI ambitions is the planned launch of The Machine, an AI-powered content development platform it’s developed with brand new creative client Adobe — which is a heavy adopter of AI in its design software. 

Penn indirectly addressed The Machine’s goals in his comments to analysts. “There are internal uses of AI, like better production or creating new images, storyboards, and making ads with less production money,” Penn. said. “It will still take more advanced creativity to make a differentiated ad. It will primarily benefit the production process, which is 90% pass-through expenses for us anyway. So, lower cost of production will only generate more and interesting creative high-level work…It doesn’t take revenue away.”

Though details besides Penn’s comments are vague at this point, the content management platform is being developed through Code and Theory, which has become the central resource for all Stagwell’s tech ambitions.

“We’ve taken all the digital transformation resources, brought them together under the Code and Theory Network, and that enables us to rely on them for some of the system-wide innovation work like building The Machine,” Penn told Digiday after the earnings call. “It also means that within that group, you have such a variety of engineering skills and design skills that it can meet bigger customer problems.” 

On a much smaller scale, independent agency Marcus Thomas offers up its own use of generative AI, a practice it has dubbed AI twinning. AI is used to replicate what humans do in the fact-finding process on behalf of clients and uses lookalike modeling created when clients’ first party data is merged with other inputs to mimic the perfect customer or would-be customer. 

Raf Rivilla, chief media officer at Marcus Thomas, explained the process of AI twinning for a few prospective clients, including a new snack product that sits between a candy bar and a health bar, as well as a workers’ comp provider (due to client sensitivities, he declined to name the clients).

Working with a company called Consumr.ai, which developed the software used to crunch the AI twinning, Rivilla said the clients offer up their first-party data that’s then paired with either Simmons, MRI or even Meltwater data, and added to informational feeds from all manner of social platforms that Consumr.ai has. The result is the fleshing out of an AI-generated synthetic lookalike of the prospective customer of the new product or service.

Once the lookalike is created, Rivilla and team prompt it with questions about what that consumer might want. The AI twin “literally will converse right back at you,” said RIvilla. “The more you converse with them, the more they converse back and literally will give you insights into the product, why they would buy something or not buy something. Then taking it a step further, you can then start asking, ‘If we create this concept, this advertising campaign, does it resonate with you?’”

Marcus Thomas also uses it to create entire panels of lookalikes, which he explained saves time and money, since putting together human panel research requires much more of both.

“It’s cheaper than getting a panel, recruiting a panel, all the time you would spend as an agency sorting through all the questions, getting the questions in one place,” said Rivilla. “It also has an analyzer, so if you have multiple AI twins and you’re asking it the same question, it’ll extract the similarities.” 

These two examples offer specific pictures of how AI is settling into the day-to-day of the agency world. 

Color by numbers

X may have lost billions of dollars in potential ad revenue since Elon Musk’s takeover in 2022. Based on WARC Media data, the social platform’s ad revenue is down by more than 40% in the last two years – and is projected to continue slipping this year. But will X be able to bounce back with a new president who vows to have Musk at his side? — Antoinette Siu

WARC identified salient stats for a variety of social platforms. :

• Global social media ad spend is expected to reach $247.3 billion this year – up 14.3% year-on-year.
• The average time spent on social platforms has increased to more than 2.5 hours a day – up by 50% since 2014.
• More than half of social and video platform users watch short-form videos daily – and more than three-quarters of them watch on smartphones. 
• TikTok users spend an average of more than 1 hour a day on the app. It reaches a reported 1.05 billion users, including 409.1 million users aged 18-24.
• X earned $4.5 billion in ad revenue in 2022 but only $2.2 billion in 2023 – down by nearly half (46.4%) year-on-year. The platform is expected to earn $2 billion in 2024.
• Snap is keeping up: After a few years of flat revenue, the app is projected to grow 13.7% in 2024 to $5.2 billion.

Takeoff & landing

• Insurance giant Zurich is reportedly reviewing its media in hopes of consolidating with one agency from the current 20 it uses, including GRP Media in the U.S.  
• Beer conglomerate Carlsberg Group tapped We Are Social as its global social AOR. 
• Full service agency T&Pm named Victoria Appleby its new U.K. CEO, effective in January. She most recently had been head of sales at Channel 4, but has experience work at GroupM’s EssenceMediacom and Wavemaker. 

Direct quote

“It bothers me that every five years, a part of our industry seems to invent a new way to defraud brands and clients and to drag an otherwise really amazing industry through the mud … If we would make sure every single interaction was a win — publisher wins, client wins, agency wins — we’d all still be doing fine financially and otherwise.” 

— Jared Belsky, co-founder of agency group Acadia, who has launched an anti-principal media crusade.

Speed reading

• Given Donald Trump’s win in the U.S. Presidential election last week, Seb Joseph and Kristina Monllos examined the “manosphere” that helped get him re-elected, while Joseph looked at the implications of a Trump presidency on media and advertising.
• Antoinette Siu dove into the redefined distinctions between creator and influencer as the creator economy gets bigger and bigger. 
• Ronan Shields looked at the growing number of ad-tech mergers and acquisitions, brought on by a changing economic and political climate. 

https://digiday.com/?p=560183