The News
David Droga is unsentimental about how artificial intelligence is already reshaping the industry that made him advertising’s closest thing to a household name. Originality can’t be duplicated, he told Semafor in a recent conversation about the state of the advertising business, so the end result will be the end of a market for human mediocrity in creative fields.
“The majority of stuff done in marketing, advertising, entertainment, music, journalism, is pretty formulaic and average. So have at it. Get rid of that,” Droga, the founder of the agency Droga5 and former CEO of Accenture Song, told us on Mixed Signals. “And if I was a client, 80% of the people that I pay probably aren’t doing an exceptional, stellar job anyway.”
“But the need for distinctions, originality, strategy, context, taste, all these incredible things that set apart things that actually move us forward — AI’s not gonna do that.”
Droga’s confidence in the resilience of true creativity could be reassuring. AI can’t replicate truly original work, says the guy widely regarded as the last of advertising’s Don Draper types. (It didn’t hurt that at the peak of Droga’s career, a television show about a genius ad man with his initials ran for seven seasons to critical acclaim.)
But read another way, it’s more alarming: The vast majority of work that has made up the “mediocre” middle of creative industries is about to get washed away by AI.
The looming and increasingly real threats of AI to the industry will be the No. 1 topic of conversation this week, when the global advertising community convenes in the French Riviera for the annual Cannes Lions Festival of Creativity. In part, that’s thanks to the arrival this year of a company with aspirations to bring in half of Meta’s current advertising revenue in just three years.
On Monday, OpenAI will host its first-ever Cannes Lions event a few blocks away from the Palais where the awards are given, along the boulevard where the major tech players and ad holding companies have traditionally set up shop to show off to clients. The launch of ChatGPT 3 set off the AI arms race three years ago, and jumpstarted the automation of various creative parts of the ad industry.
Now, it wants the industry’s money, too.
Since February, when OpenAI announced it was introducing ads with the goal of reaching $100 billion in ad revenue by the end of the decade, the AI giant has been busy quickly rolling out tools to allow buyers to mimic the experience of search ads. Over the last month, OpenAI rolled out a self-serve advertising platform, began testing ads in Japan, and quietly updated its Ad Tools document to say the company “may make available AI-powered Creative Tools that allow you to generate, modify, transform, optimize, localize, or translate advertising creatives using Ad Materials.”
While the company isn’t bringing A-list celebrity talent or booking massive stages and parties like its competitors, it confidently asserted its importance by scheduling a press event first thing Monday morning. OpenAI disclosed the event to a handful of select journalists just a few days ago, in a vague email, and said only that it would be “previewing its ad business.” A person familiar with the company’s Monday plan said it would feature remarks from Denise Dresser, OpenAI’s chief revenue officer, as well as an update on the company’s ad program and a creative demo of its new ad products.
In this article:
Know More
As Droga sees it, the advertising industry is very much in the throes of a profound technological shift.
The major holding companies that used to pack profits into media buying — that is, the placement of ads in media spaces — are seeing a direct threat from AI tools, whose incredible data is rapidly making that task easier. The creative agencies scooped up by the holding companies over the past several decades are set to become significantly leaner themselves, as tools make admaking cheaper.
Droga, who sold Droga5 to Accenture in 2019 at a value of $475 million, told Semafor that if he were starting an agency today, he’d have to set it up much differently. It would never reach its peak number of 850 staff in New York (Droga5 is now 1,200 across the globe, but only 600 in New York), and it wouldn’t have as many different organizational tentacles.
“Do not be pigeonholed [into just] doing advertising and marketing,” he said. “Try and get into products, try and get into experiential, just try and infuse it into more things where it’s less about just the disposable advertising component of it, and prove that your ideas are liquid; actually try and get paid on outcomes, more than just hours.”
“I would definitely encourage any creative person to start a company that can influence businesses, but I would nudge them to not just start an agency that’s based on the model before,” he added.
But while the creative component has consumed the conversation around AI in advertising, the most lucrative changes from AI are likely on the other end of the process — where the technology is disrupting how people buy the products advertisers want to sell.
AI summaries from Google, ChatGPT, and Claude have already tanked online web traffic, sending panic through the worlds of ecommerce and digital media, which both relied on gaming traditional Google search to attract eyeballs and online purchases. The company has been pushing back against the “Google Zero” concept. Among its programming at Cannes Lions, Google plans to lay out how it is thinking about search in a pitch to advertisers that’s unsubtly titled The New Era of AI Search.
Others agree that the AI-fueled transition is happening, but the end result may not appear as dramatic, at least in the short term.
In an interview with Semafor previewing Yahoo’s presence at Cannes Lions this year, CEO Jim Lanzone laid out his vision for what AI-powered search will look like.
While the Yahoo CEO did not talk about OpenAI specifically, he argued that based on the first few months of the company’s experience with its own AI “answer engine,” Scout, the ad model in the medium term will look a lot like traditional paid search.
“It’s the best model in the history of the internet, maybe in the history of business,” he said. “That model totally works. The only thing about AI answer engines that is different is the [user interface]. You’ve gone from a list of blue links to paragraphs, in our case. … All you’re really talking about is the difference between how your keywords show up in a snippet or a link or how they show up in a paragraph written in sentence form.”
He argued that the clickthrough rate for ads will be lower, because users are getting their information from the AI, but ads will likely convert at a higher rate, because people will understand more about the product before they click.
The View From Quasi-Retirement
AI has already been wreaking havoc on the Cannes Lions awards themselves. Last year, the festival revoked the Creative Data Lions Grand Prix winner, Efficient Way to Pay, after it was revealed that the campaign used AI to manipulate the ad’s case study video.
Droga ran the winningest agency in Cannes Lions history, so the impact of AI on the business does make him a bit nostalgic. He expressed worry at the growing segment of marketing work that seems more concerned with manipulating AI-generated search results than dreaming up a great campaign to win people over.
“From a storyteller’s perspective, it makes me very sad that there isn’t gonna be that audience where you can have that connection point,” he said. “Do I get sad that a good old-fashioned story — or a chance to build an experience and things that have many tentacles, where you can actually build layers — might not be the same? Yeah, of course I do.”
But he said that really creative advertisers will find a way around it.
“I still think original, exceptional stuff is gonna flourish,” he continued. “AI is great at replication, and it’s great at sort of distilling things down to best practices. Everything it’s got is collated from what’s been done before, and it’s bringing that together. And it’s very powerful, and it’s profound. But then everybody’s using the same tools, and they’re gonna all get to the same place. So I’m not as terrified of it as everybody else is.”
Notable
- OpenAI has already been at Cannes. Last month, a “human-led but AI-assisted” short film created by a team with close ties to OpenAI premiered at the Cannes film festival, labeled “one of the first films to use OpenAI’s creative tools.”