Advertising’s AI Hangover Starts Now
Rosé-Tinted Glasses in the Riviera
I’ve just come back from a sun‑drenched week at Cannes Lions, the annual advertising industry jamboree that revolves around yachts, awards and late‑night networking. Yet while the rosé flowed, practical examples of agencies adapting to artificial intelligence were surprisingly rare. Conversations with execs suggested a belief that business would carry on largely unchanged despite freelancers I spoke to sharing that their work is already drying up as clients use AI tools to bring it in‑house.
It’s Who You Know, Not What You Know
There’s growing discussion about how AI is turning the advertising industry upside down by rewarding scale, automation, and adaptability while putting traditional agency models under pressure.
Two recent Economist articles explore this disruption: one outlines how tech platforms are reshaping the business, and the other looks at how smaller, scrappier players are adapting faster than the big incumbents. Platforms like Meta, Google and TikTok can now generate videos and headlines in minutes, and Sam Altman has openly predicted that machines will soon handle most routine marketing tasks.
Yet at Cannes, the mood felt far from existential. The festival environment favours familiar faces and reinforces groupthink, leaving unconventional creators like the VR fashion magazine team I met on the sidelines. Ironically, they’re pioneering the very techniques the industry will soon need.
Winner Takes Most Economics
Global advertising spend is still rising, yet more than half now flows to four big technology firms. Smaller agencies are losing ground because straightforward campaigns can be done internally with AI tools. There will still be room for genuinely novel ideas, such as attaching step counters to chickens and printing the totals on eggs to show they are free range, but most ads simply announce a product's existence.
Courting the Algorithmic Gatekeepers
One promising new frontier is ensuring that conversational agents recommend your client’s brand, a discipline now known as Answer Engine Optimisation (AEO). As generative AI tools like ChatGPT, Claude and Perplexity become information gatekeepers, agencies that know how to publish structured product data, secure trusted media coverage, and test answers across models can offer clients a measurable competitive edge.
Opulence or Oblivion
At Cannes, it wasn’t unusual to see agencies ordering €10,000 magnums of rosé and entertaining clients on super‑yachts the size of small ferries. These spectacles jar with forecasts that up to 95% of routine ad production could soon be automated by the same tech platforms hosting those parties. Every extravagant bottle or beach-club gimmick is money that could be redirected toward AI investment and staff upskilling.
All Hands on the AI Deck
Agencies will only adapt if everyone, not just innovation teams treats AI fluency as part of their job. That means copywriters, account leads, strategists, producers and finance staff all need hands‑on experience. When teams can prototype directly with language and vision models, dissenting ideas surface earlier, and the best innovations spread faster.
Practical Steps for Agencies
To future‑proof teams and remain competitive, agencies should:
Invest in Training
Make role-specific AI training mandatory for all employees within 12 months. If you need help ups killing your workforce, feel free to drop us a line at hi@generalpurpose.com.
Enable Experimentation
Provide a shared “sandbox” budget and allocate time so teams can explore tools and openly share outcomes.
Rethink Incentives
Reward measurable AI‑enabled improvements and not just billable hours.
Retain outcome based pricing so clients benefit from efficiency gains without eroding agency revenue.
From Anxiety to Advantage
The creative industry doesn’t need to choose between opulence and extinction. But it does need to act with intent. The same creative energy poured into magnums of rosé could power the next wave of reinvention. Agencies that build universal AI fluency and reimagine how they work won’t just survive the shift. They’ll lead it.