While the macroeconomic environment and the progress of its merger with Interpublic Group were, inevitably, big topics on Omnicom’s earnings call following its Q2 results, CEO John Wren seemed keen to put AI centre stage in the discussion. Before CFO Philip Angelastro was invited to talk through financials, Paolo Yuvienco, Omnicom’s chief technology officer, took the microphone to lay out the agency group’s AI strategy.
Yuvienco’s key message was that Omnicom has been busy building and deploying specialist AI agents, capable of running multiple tasks autonomously without the need for specific prompting, across the organisation. “We can now orchestrate intelligent agents across campaign life cycles, simultaneously analysing data, optimising strategies, and refining creative elements,” he said. “Additionally, we are fine-tuning and grounding the market-leading foundational and frontier models, effectively encoding our strategic expertise into our scalable AI system.”
Omnicom’s tech chief gave a few examples of how these agents are working in practice. “Our strategy and creative teams across all our agencies are incorporating synthetic audience agents that are grounded in the Omni data sets, allowing teams to conduct synthetic focus groups for ideation, personalised content creation, and pre-launch testing.[…] In our healthcare group, the teams have been able to create a multi-agent reasoning engine that helps in recalibrating campaigns and assets at significantly greater speed when the market conditions change by simulating market scenarios, modelling stakeholder responses, and synthesising existing signals.”
And Omnicom’s executives said they are confident that AI won’t erode the agency’s value proposition. The efficiency generated by AI has the potential to eat away at agencies’ revenues, if savings are essentially passed back to clients and the agencies are billed based on time and resources. But Wren said he expects billing models to change, and argued that brands have learnt throughout the pandemic about the long-term value of investing in marketing. So any savings generated through AI, he argued, will still ultimately be spent with Omnicom.
Cats in hats and looming costs
Amid the AI optimism however, Wren also acknowledged a few limiting factors around AI technologies, which he believes can also play into Omnicom’s hands.
Firstly, while AI-powered end-to-end ad platforms run by the likes of Google and Meta might be sufficient for small companies, larger brands will have a range of legal and business concerns which will still require agency expertise. “I’ll give you one example of something that […] a very small user of a Google product wouldn’t care about, but a big company did,” said Wren. “We created an advertisement, which we were able to create in minutes, and it included an animal, and that animal […] had a hat on it. As a result, the attorneys from that very large enterprise company wouldn’t allow us to use the tools, because it’s illegal to put a hat on a cat. And I’m not Dr. Seuss.”
Of course, tech optimists might argue that in due course, sophisticated AI systems might be sufficiently trained to avoid any of these sorts of concerns. But Wren mentioned another potential roadblock when it comes to AI: companies aren’t really paying the true cost of the AI technologies they’re using yet.
“What hasn’t been factored into this future state, as you get more productive and possibly need fewer people, there’s going to be a cost which hasn’t been fully loaded in by these people developing all these breakthrough wonderful technologies: the cost of compute, the cost of store” said Wren. “All of those things haven’t hit the headlines yet, so they haven’t been factored into the decision-making process at the client level, as to whether it’s better to use the fanciest product that’s on the market, or do it in a more traditional fashion. That’s all going to play out, I think, in the next 24 to 36 months.”
A narrowing field?
The past quarter was another positive one from Omnicom, with three percent year-on-year organic growth across the business. And while Wren acknowledged that there is continued macroeconomic uncertainty, his tone throughout the call was fairly positive. His argument is that while there certainly is plenty of uncertainty, that’s pretty much always been the case since the pandemic started, and the agency is accustomed to working with clients through all conditions.
Wren was also asked about comments made last week by WPP CEO Mark Read, who referenced a steep drop in the number of pitches taking place, making it harder to win new business.
Read’s comments, to be fair, were based on data from industry intelligence business COMvergence. But Wren said he hadn’t really felt such a change, and seemed to suggest that he was encountering more pitches where brands were only interested in either Omnicom and one other unnamed (presumably French) group.
“We continue, along with at least one competitor, to be invited to, I think, every single pitch of any size,” said Wren, “because clients are curious about how our services differ from those of maybe one other in the group primarily. So it’s business as usual, I think.”
He also suggested that if others are seeing a slowdown in pitching opportunities, that indicates that clients aren’t rethinking their partnerships with Omnicom amid its ongoing IPG merger, as some had predicted. “It’s certainly inconsistent with all the projections everybody was making about all the disruption I was going to have in my business when I announced the deal, because that hasn’t occurred.”
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