04/27
2018

New Report Suggests “Big 5” Agencies Don’t Have the Sway in the Advertising World They Once Did

04/27/2018

New Report Suggests “Big 5” Agencies Don't Have the Sway in the Advertising World They Once Did

Madison Avenue’s “Big 5” still looms large in advertising, but as companies come to rely on in-house teams and small, independent agencies, this group of powerful industry players will likely lose more influence as time goes on.

Investment in advertising is only growing as the years go on: PQ Media estimates that global advertising and marketing revenues totaled $1.225 trillion last year. But while the numbers themselves continue on their upward trend, a whole new set of industry players responsible for generating that revenue are emerging.

A new Research Intelligencer study reveals that the “Big 5” of large ad agency holding companies — WPP, Omnicom, Publicis, Interpublic, and Dentsu — command approximately 50% of that total spend. Considering how much influence this group of agencies used to wield, the fact that another 50% is now commanded by small agencies or handled by in-house departments is pretty impressive. And that share is only going to increase in the coming years.

Losing Ground

In the summer of 2017, the Wall Street Journal reported that “shares in the world’s largest advertising company, London-based WPP PLC, fell nearly 11%…after it reported a steeper-than-expected slowdown in global ad buying.”

And WPP PLC is far from the only major player that now finds itself in hot water: Pivotal analyst Brian Wieser claims that the Big 5’s combined revenues grew just 0.9% in 2017, compared to 3% in 2016 and 4% in 2015. While it’s still too early to jump to conclusions, these patterns could indicate that these agencies are currently losing market share.

There may be a number of reasons for this slowing growth, including digital disruption, increased implementation of zero-based budgeting, fee compression, and the elimination of traditional revenue streams. But what’s likely making the biggest impact of all is the improving capabilities of the small marketing organizations that for decades had to compete for the scraps that fell from the Big 5’s table.

The Rise of In-House Solutions

Digital media and technology have given marketers all the resources they need to open in-house content studios where they can make and distribute the bulk of a company’s overall creative content. All the powers that traditionally belonged to agencies are now in the hands of small teams of in-house marketers, including not just media execution, but even the handling of media contracts. Companies are cutting out once-critical agencies that have become overpaid middlemen, allowing these brands to save on costs and streamline their advertising operations.

But not all ad agencies are being squeezed by the digital revolution. Smaller agencies and start-ups are making a name for themselves by offering greater flexibility and a better understanding of today’s digital marketing landscape than the bigger names can. Weather Company CMO Jordan Bitterman spent some 20 years at large agencies, and predicts that while the large agencies won’t die out, they are certainly going to shrink. As Mike Shields writes in Business Insider, “Bitterman sees more marketers using smaller agencies and vendors on a short-term basis as needed.”

What’s becoming progressively more clear is that the future doesn’t necessarily belong to the Big 5. Smaller marketing and ad agencies can hold their own — and it looks like they’re taking a bigger bite of the total market share each year.

A New Playing Field

New and innovative ad tech has been instrumental in helping in-house teams and smaller agencies compete. Thanks to autonomous AI marketing platforms like Albert™, these organizations can take on projects that once would have demanded hours of grunt work and budgets of impossible scope with ease and efficiency.

Albert is the first platform of its kind, and the only AI solution that can autonomously manage cross-channel media buying and campaign optimization. Albert performs testing and optimization of your creative materials, and can process huge volumes of user data in real-time to identify valuable audiences and target them with amazing precision. Clients who have integrated Albert into their marketing strategy have seen their conversion rates rise by up to 600%, with some seeing boosts in ROI over 330%.

With the power to revolutionize digital marketing altogether, Albert is the only solution for small firms that want to play big.

04/27
2018

New Report Suggests “Big 5” Agencies Don’t Have the Sway in the Advertising World They Once Did

04/27/2018

Madison Avenue’s “Big 5” still looms large in advertising, but as companies come to rely on in-house teams and small, independent agencies, this group of powerful industry players will likely lose more influence as time goes on.

Investment in advertising is only growing as the years go on: PQ Media estimates that global advertising and marketing revenues totaled $1.225 trillion last year. But while the numbers themselves continue on their upward trend, a whole new set of industry players responsible for generating that revenue are emerging.

A new Research Intelligencer study reveals that the “Big 5” of large ad agency holding companies — WPP, Omnicom, Publicis, Interpublic, and Dentsu — command approximately 50% of that total spend. Considering how much influence this group of agencies used to wield, the fact that another 50% is now commanded by small agencies or handled by in-house departments is pretty impressive. And that share is only going to increase in the coming years.

Losing Ground
In the summer of 2017, the Wall Street Journal reported that “shares in the world’s largest advertising company, London-based WPP PLC, fell nearly 11%…after it reported a steeper-than-expected slowdown in global ad buying.”

And WPP PLC is far from the only major player that now finds itself in hot water: Pivotal analyst Brian Wieser claims that the Big 5’s combined revenues grew just 0.9% in 2017, compared to 3% in 2016 and 4% in 2015. While it’s still too early to jump to conclusions, these patterns could indicate that these agencies are currently losing market share.

There may be a number of reasons for this slowing growth, including digital disruption, increased implementation of zero-based budgeting, fee compression, and the elimination of traditional revenue streams. But what’s likely making the biggest impact of all is the improving capabilities of the small marketing organizations that for decades had to compete for the scraps that fell from the Big 5’s table.

The Rise of In-House Solutions
Digital media and technology have given marketers all the resources they need to open in-house content studios where they can make and distribute the bulk of a company’s overall creative content. All the powers that traditionally belonged to agencies are now in the hands of small teams of in-house marketers, including not just media execution, but even the handling of media contracts. Companies are cutting out once-critical agencies that have become overpaid middlemen, allowing these brands to save on costs and streamline their advertising operations.

But not all ad agencies are being squeezed by the digital revolution. Smaller agencies and start-ups are making a name for themselves by offering greater flexibility and a better understanding of today’s digital marketing landscape than the bigger names can. Weather Company CMO Jordan Bitterman spent some 20 years at large agencies, and predicts that while the large agencies won’t die out, they are certainly going to shrink. As Mike Shields writes in Business Insider, “Bitterman sees more marketers using smaller agencies and vendors on a short-term basis as needed.”

What’s becoming progressively more clear is that the future doesn’t necessarily belong to the Big 5. Smaller marketing and ad agencies can hold their own — and it looks like they’re taking a bigger bite of the total market share each year.

A New Playing Field
New and innovative ad tech has been instrumental in helping in-house teams and smaller agencies compete. Thanks to autonomous AI marketing platforms like Albert™, these organizations can take on projects that once would have demanded hours of grunt work and budgets of impossible scope with ease and efficiency.

Albert is the first platform of its kind, and the only AI solution that can autonomously manage cross-channel media buying and campaign optimization. Albert performs testing and optimization of your creative materials, and can process huge volumes of user data in real-time to identify valuable audiences and target them with amazing precision. Clients who have integrated Albert into their marketing strategy have seen their conversion rates rise by up to 600%, with some seeing boosts in ROI over 330%.

With the power to revolutionize digital marketing altogether, Albert is the only solution for small firms that want to play big.

by Oren Langberg
Lead Sales Engineer

04/20
2018

New McKinsey Report Reveals AI Successes Across Industries

04/20/2018

New McKinsey Report Reveals AI Successes Across Industries

Investment in artificial intelligence technologies has exploded over the last half-decade thanks to impressive early returns in five key industries, according to a new McKinsey report.

Roughly 2.2 exabytes — or 2.2 billion gigabytes — of data is produced every day. Our inability to process such huge volumes of information even with traditional computing methods has led to a renewed wave of interest in a technology that has captured the imaginations of computer scientists since the 1950s: artificial intelligence (AI).

In fact, according to a recent report from the McKinsey Global Institute (MGI), the number of think pieces and academic articles addressing AI quadrupled from 2014 to 2016. That spike in public interest was matched in the business world: MGI estimates that investment in AI technologies enjoyed a 40% compound annual growth rate (CAGR) between 2013 and 2016, a 10% increase over its CAGR during the previous four-year interval.

This impressive expansion of global AI investment has been driven by promising early returns in a number of vanguard industries like retail, electric utilities, manufacturing, healthcare, and education, all of which are covered in some detail by the MGI report.

Retail

Inventory management has always been one of the most challenging aspects of running a retail operation. If a retailer orders too much of a particular item, excess units will sit idly on its shelves for months; if they don’t order enough, they risk losing potential sales. According to the MGI report, by leveraging an AI platform to forecast its product needs, a retailer can reduce excess inventory by up to 20%, and cut lost sales by an astounding 65%.

For ecommerce retailers, AI facilitates dynamic pricing based on the day of the week, the current season, the time of day, the weather, current competitors’ prices, and more. This enables online retailers to charge each customer the highest possible price they are likely to pay, a critical differentiator in an ecommerce space defined by razor-thin margins.

Electric Utility

AI has immense potential at nearly every link in the electricity value chain. As the MGI report summarizes, “Machine learning can help optimize wind turbines’ yield based on their own past performance, real-time communication with other wind farms, the grid status, and changes in wind speed and direction.” GE Renewables predicts that this kind of machine learning-driven optimization could increase energy production by nearly 20%, creating an additional $50 billion of value across the wind power industry.

For consumers, AI-powered “smart” energy meters can optimize a home’s energy consumption, all but eliminating energy waste. This technology could save the average consumer 4-12% on their monthly energy bill, according to MGI’s estimates.

Manufacturing

Both the R&D and production sides of manufacturing are ripe for AI disruption. By executing test and run scenarios at superhuman speeds, AI-based analytics platforms can help companies streamline the product development process, significantly reducing times-to-market. In fact, MGI reports that Intel achieved a 10% higher yield for its integrated-circuit products by introducing a single AI-based analytics component into its R&D cycle.

Similarly to its value-add in retail, AI can help manufacturers improve their input forecasts, ensuring production never has to slow down due to a lack of materials. As automation continues to find its way into the industry, AI will also play a critical role in minimizing machine downtime and maximizing machine performance through pinpointed preventative maintenance.

Healthcare

AI’s ability to analyze huge datasets at an incredibly rapid pace has the potential to revolutionize the healthcare industry as we know it. Everything from diagnosing specific patient conditions to curbing the spread of infectious diseases depends on analyses of patient histories, medical images, epidemiological statistics, and more, all of which can be done quicker and, eventually, more effectively, by an AI than by a human doctor.

All told, AI-driven improvements to the precision of patient treatments stand to reduce overall healthcare expenditures by up to 9% and increase average life expectancies by 0.2 to 1.3 years.

Education

In an ideal world, a teacher would be able to adapt their instruction to suit the unique needs of each and every student. But instructors today deliver a single, standardized lesson to entire classrooms, leaving struggling students behind and fast learners bored out of their mind. AI promises to help teachers tailor their lesson plans on a student-by-student basis, integrating reams of performance data to facilitate “just in time learning” — that is, the delivery of the right educational content to the right student at the right time.

And as natural language processing becomes more sophisticated, AI platforms will be able to handle many of the monotonous tasks that currently monopolize teachers’ time. In fact, all the way back in 2012, a study conducted by the University of Akron found that an AI-based grading tool and a human grader returned matching marks for nearly 85% of a 16,000-essay sample.

Marketing

While not highlighted in the MGI report, marketing is another field in which AI has already proven its worth. A tool like Albert™, the world’s first fully autonomous AI marketing platform, can execute the kind of high-volume, multivariate testing necessary to pilot thousands of micro-campaigns simultaneously, guaranteeing that a company’s ad spend only goes towards promoting the most effective messaging.

By allowing Albert to handle the “nitty gritty” details of ad spend optimization, marketers are able to dedicate more time to the tasks that marketers do best — big picture strategy and creative production. Albert has already helped companies in a wide range of industries bolster their bottom lines, and can help any company take its first step into an AI-driven future.

by Diana Illiano
Marketing Director

04/13
2018

How Customer Experience Is Transforming in the Age of AI

04/13/2018

How Customer Experience Is Transforming in the Age of AI

The widespread adoption of AI-enabled technologies is set to revitalize customer experience, making it far more personalized, empathetic, and effective.

Customer experience is at a crossroads. Despite the fact that customers are spending more and interacting with brands at a historically high level, they also report record low levels of satisfaction with and trust in those brands. There are more opportunities than ever for brands to communicate with consumers, but brands aren’t delivering experiences that allow them to actually capitalize on those interactions.

Thankfully, new innovations are changing the field, promising better interactions between brands and their customers. Artificial intelligence will soon be used to eschew creative fatigue and create efficient, personalized experiences. Technologies like chatbots, for example, draw on AI and machine learning to provide lifelike service available on-demand, 24/7. Here’s how CMSWire predicts customer experience will be transformed in the coming years, and why AI is expected to play a big part in that transformation.

Moving All Employees into Customer Engagement

Despite worries that automation will create a soulless, impersonal world, most of the available evidence suggests the opposite is true. Instead, these technologies will make business even more personal by reorienting the work of all employees towards the customer experience.

With the help of AI, for example, all customer-facing workers will be able to provide personalized service in the moment, while back-end positions will focus on delivering client-centric outcomes. Consumer satisfaction and trust should then increase, since organizations will move with the customer, instead of forcing the customer to move in complex ways across channels.

Increasing AI Transparency

Familiarity tends to breed trust — as a recent Pegasystems survey shows, the more people are exposed to AI, the more comfortable they become with businesses using it to engage with them. In order to rebuild lost consumer trust, companies will need to share more information about how they implement AI and how the technology works.

Take Albert™, for example, the first autonomous marketing platform built from the ground up on AI. Our Inside Albert module gives users a look under the hood to show what decisions the autonomous marketer has taken, which in turn makes it easier for users to collaborate with and put trust in the AI.

Responding to Regulation on Customer Rights

Landmark legislation is coming in May, when the EU’s General Data Protection Regulation will enable European citizens to legally demand that businesses delete their personal information. As a result, every single brand interaction becomes an opportunity for consumers to reconsider whether they want a company to have access to their information. The stakes surrounding customer experience will be raised, since negative interactions will not only impact sales, but could lead to the deletion of valuable virtual assets.

Creating Empathetic Experiences

Advanced AI provides companies with the ability to collect more data than ever before in real-time from a variety of inputs, which makes it possible to get a comprehensive understanding of the customer in any given moment. Companies will need to harness this power to create personalized, empathic customer experiences that optimize service delivery and customer satisfaction. Correspondingly, workers and leaders in the field must become experts in harnessing this technology to ensure it’s really capturing the needs and wants of each customer.

Providing Robotic Assistants to Everyone

Chatbots, robotic software, and automated tools will become increasingly widespread and prominent in fields like sales, marketing, and of course, customer service. Their impact will be immediately apparent, eliminating many mundane tasks, increasing efficiency, and providing more time to focus on the more complicated elements of customer experience.

At the end of the day, AI adoption will boost both employee and customer satisfaction, and that’s a good thing for everyone.