• by Maarten Albarda , Featured Contributor, Yesterday

This week saw the release of The Cannes Lions and the World Advertising Research Center (WARC)’s evaluation of what makes “successful” advertising. In this instance, success is more than the campaign’s ability to win a category at the Cannes Lions Festival.

“The Creative Effectiveness Study”  found that creativity, humor and market disruption are the keys to commercial success. According to the study, brands that stick with their creative platforms over time achieve greater recognition, loyalty, and financial returns (provided that the platform is a good one, of course).

Sadly, while the need for this kind of work has never been more relevant, clients are less willing to pay for it. The classic agency model, built on selling billable hours, is under threat, just as it is for consultants, law firms and the finance industry. Advertisers, pressured by their own CFOs, are reviewing every line item, and agency fees are an easy target. 

The most talked-about response, of course, is the industry's rapid embrace of AI, which is becoming crucial to finding efficiencies. In a telling statistic, 6% of young male college grads find themselves unemployed, now matching their non-college-educated brethren. This stat is apparently mostly due to entry-level jobs disappearing in favor of AI in the industries mentioned above. Funnily enough, college-educated young women — especially Gen Z women — are doing comparatively better. But they find employment in growing sectors like health care, education and hospitality.

So there are fewer recent college grads to create spreadsheets. Agencies are leveraging AI to automate many of the repetitive tasks in media buying, generating creative variations for digital campaigns at scale, and analyzing massive datasets into actionable consumer insights in a fraction of the time, employing a fraction of the number of people it once took.

The hope is that this tech-fueled efficiency allows agencies to protect margins by doing more with less, streamlining workflows that once required manual labor. But AI is not the only tactic agencies are deploying to drive margin. Many agencies are actively tackling high overhead by exploring agile headcount models. Client scopes now routinely include flexible team structures, consisting of a core client team of only a few critical roles, augmented by a fluid, project-based team.

As a strategy to manage cost and margin, these moves make sense, especially because they are precisely what clients are requesting. Advertisers driving “stuff at scale” (regardless of whether it is media, creative or analysis) seem to want to push out work at low cost. And that goes directly against what WARC and The Cannes Lions have demonstrated: that smart, well-placed creative is far more effective than blasting mediocre messaging with an overkill of frequency.

In an ideal world, agencies would evolve to become part creative powerhouse, part tech company, and part strategic consultancy. In this scenario, they could sell their high-end thinking at high-end prices, supported by smart tech to manage the ecosystem in a cost-effective way. Success would depend on demonstrating a clear return on marketing investment, proving how creative work directly impacts the client's bottom line.

In the real world, advertisers just ask for lower agency costs. They would be better off aiming to find the right balance between the understandable desire to drive down costs while maintaining a competitive advantage in strategic thinking.