Tech Giants' New AI Advertising Tools Threaten Big Agencies

Analysts say large companies will eventually follow small ones in using AI to create ad campaigns

- Patrick Coffee

Tech and media companies' race to automate advertising poses a threat to the giant agency holding companies that have for decades dominated that work, industry analysts say.

Share prices of agency networks including Publicis Groupe, Omnicom, WPP and Interpublic fell by approximately 3% to 4% last week following a Wall Street Journal report that Meta Platforms plans to release AI tools by the end of 2026 automating the entire process of creating and placing ads.

Most of the companies have recovered some or all of those losses in the days since.

But Google and Amazon are also following Meta in developing new tools to help advertisers automate more creative work on their own platforms. And Comcast, parent of NBCUniversal and the Peacock streaming service, plans to provide companies this summer with a free AI-driven tool that will automate creative production for commercials on streaming TV, a spokeswoman said.

Their efforts crystallize a long-term challenge to the agencies' business, said Michael Nathanson, an analyst at equity research firm MoffettNathanson.

Agencies long billed clients by employee hours, but in recent years have experimented with compensation pegged to outcomes, as their own use of AI has sped up their work.

Those experiments will need to expand for agencies to remain competitive once brands have access to powerful creative tools, Nathanson said.