The well-known Amsterdam-based advertising agency KesselsKramer recently went into liquidation. This appears to be a consequence of the rise of artificial intelligence (AI), which is putting the advertising sector under considerable pressure. Matthijs Leendertse, a media economist at the Erasmus School of History, Culture and Communication (ESHCC), spoke to NRC about developments in the world of marketing and advertising.
“Clients are less loyal to agencies and the relationship between them is much more transactional,” says Matthijs Leendertse. This is partly due to the availability of data; everything is measurable these days. In addition, companies are producing more and more advertising material themselves (partly thanks to AI). Advertising agencies no longer compete on the basis of creative concepts, but on the basis of data and the use of AI. This poses a particular threat to the revenue model of labour-intensive advertising agencies.
He also explains that the rise of social media was a boon for advertising agencies. “Money is made from running campaigns,” explains Leendertse. “Social media meant that it wasn’t just a TV advert that needed to be made, but also ten videos for Instagram, TikTok and YouTube. You can sell all those hours.” But that, too, is changing. Tech platforms offer tools that allow advertisers to get to work themselves. Creating and distributing videos, with or without the help of AI, has become increasingly easy, says Leendertse.
Leendertse expects companies in the advertising sector to specialise in specific strategic marketing, such as building brand identity for luxury brands. “But I think it’s going to be difficult for traditional advertising agencies to continue making money from standard marketing campaigns.” The industry is thus shifting towards the influencer market, which, according to the American trade association IAB, is one of the fastest-growing sectors in the advertising industry.
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