Optmyzr Blog

AI Is Making Good Ad Agencies Better and Bad Agencies Worse

May 03, 2024
AI Agency

Gil Gildner




You know an idea has jumped the shark when you walk into a coffee shop, and the first thing you hear is a customer leaning over the espresso machine, asking the barista if he’s ever used ChatGPT.

That is exactly what happened this week—even the wildest LLM couldn’t make this stuff up—right as I stepped into this shop to pen an article on AI and agencies for Optmyzr.

For a long time, what Google liked to call AI was actually just fairly crude machine learning. Nobody was impressed with ML, to be honest, and even a few years ago the concept of this technology replacing agencies was too far-fetched for any rational marketer to even consider.

Then we hit an inflection point, the future became the present cluttered with Groks and Midjourneys and Claudes, and this possibility doesn’t seem too crazy anymore. Because it’s already happening.

AI Is Replacing Tasks

First AI came for the entry-level beginning marketers. Next, it’s coming for the agency owners.

It’s easy to ignore what has happened over the past year or two, since most experienced freelancers, consultants, and agency owners don’t do the sort of daily grunt work that entry-level marketers do.

I’m so far distanced from the sort of work I did right out of college that it’s incredibly easy to forget how mind-numbingly grueling that work can be.

For better or worse, a lot of that work has already been replaced. For the paid search and paid social world, I’m talking about cleaning up data dumps, editing banner images in Photoshop, writing headlines and descriptions for responsive search ads, keyword research, topic brainstorming, and even some fairly complex data analysis.

As it turns out, a single-click generative fill in Photoshop replaces 15 minutes of tedious clicking. Using Code Interpreter to analyze a CSV does things I didn’t even know were possible in Excel. And using Grok in “Fun Mode” gives ideas for ad copy that even the most experienced copywriter might miss.

All that to say, it’s tasks like these that are being delegated away to the machines. We can feel sorry for the budding digital marketers out there, but the reality is that those jobs are being decimated.

A Business Model Dependent Upon Service Delivery Is Fragile

Many agencies revolve around delivering tasks.

  • They set up Google Ads campaigns.
  • They send a performance report at the end of the month.
  • They fulfill their contract to post social updates five times a week.
  • They click around in Merchant Center and make sure the feed is optimized.

While this model works for a while, at some point Google Ads introduces Merchant Center Next and years of best practices go out the window, tools use LLMs to write better ad copy than most humans, ad platforms develop native integrations with even more tools, reporting is automated, and these agencies are left out to dry.

So what is going to differentiate a thriving agency from a floundering agency?

Everyone always says “ideas and strategy” but that’s sort of a cop-out. Here’s the real answer:

  • Economics and Finance: Agencies with a strong understanding of the client’s P&L, margins, business goals, and market position will be able to allocate budget and direct the campaigns more efficiently than any AI can yet do.
  • Branding and Awareness: Digital marketers are often allergic to the idea of spending resources on branding, since we’ve been so spoiled with attribution over the years. But a brand voice won’t ever be able to be truly captured by AI: a human with taste still has to shepherd this.
  • Deep Anecdotal Experience: Digital marketers are even more allergic to the idea of gut feelings, because we tend to view things in terms of data dumps. But for those of us who’ve run thousands of campaigns spending millions of dollars over the years, eventually we just have gut feelings about strategies or tactics that will almost certainly save the client both time and money.
  • Sales: The reality is that as you go upmarket, it’s less about tactics and more about relationships. Good luck hopping on a plane and grabbing drinks with Gemini.

Strategy and Data Analysis Must Be Folded In

There are some agencies out there which split out strategy, or data analysis, or conversion tracking, or creative production as separate line items.

My personal belief is that this is short-sighted. It’s sacrificing long-term value for a quick buck now.

Because as AI develops—more rapidly than many of us want to admit—we’re quickly realizing that the emperor has no clothes, and many agencies aren’t really offering that much value in comparison to the prices they charge.

At our agency, we fold in everything.

There isn’t a single thing we charge extra for, because we consider that our expertise comes as a package, whether that’s market research, product pricing analysis, competitor research, reporting, data visualization, strategy, meetings, or just the standard old campaign management.

It’s all part of the same deal. After all, we only win when the client wins, so isn’t it in our best interest to do everything within our power to increase their ROI?

Good agencies will embrace their role as close-to-the-money sales advisors. They’ll embrace their role as ad brokers and sales guys. They’ll embrace their role as a consultant, strategist, tastemaker, and research analyst, offering as much as humanly possible to improve campaign performance.

Bad agencies will continue in a rut of service delivery, nickel-and-diming clients, upselling more deliverables, thinking in terms of hourly billables and gatekeeping information, reporting only in numbers and not in holistic long-term results.

xGood agencies will use AI to streamline their delivery process, increase the quality and creativity of their ad campaigns, discover new ways of analyzing data, and decrease turnaround time — but retain the very human element of taste and experience.

Bad agencies will use AI as a crutch, and churning out deliverables on autopilot.

In every industry, there comes a tabula rasa, a pivotal point in which the slate is wiped clean, the board is reset, and the players start again. I’d say we’re very close to that point—even the barista knows it—and the resulting chaos may very well filter through every agency in existence.