GenAI's Threat to SME Marketing Agencies

In the latest issue of the Drum, our MD Kate Ross discusses the pressing issues faced by SME marketing agencies as they navigate the rapidly evolving landscape shaped by GenAI.

At this critical juncture, several key issues emerge:

The Pressure from GenAI

1. The Networks: The major Networks are making aggressive investments in GenAI platforms, promising to revolutionise client marketing ecosystems

2. Billing Models: The traditional billing models based on hours worked are being upended

3. Marketing’s Identity Crisis: As technical prowess becomes increasingly central, there is a growing question about the identity of marketing agencies. Are they expected to transform into software companies, prioritising technology over traditional creative skills?

The Industry Landscape

1. Network Encroachment: SME agencies are being squeezed as Networks leverage GenAI to reduce delivery costs and secure longtail marketing contracts

2. Walled Garden Risks: The development of comprehensive client-wide network/agency platforms creates a risk of SME agencies being 'locked out'

3. Shifts in Resource and Tech Balance: Agencies must now strike a balance between investing in talent and adopting new technologies

The Potential Implications

1. Nothing really happens! GenAI might turn out to be a distracting storm in a teacup, and bar a few automated work streams, normal business largely resumes in a couple of years

2. The Networks dominate + decimate. SME agencies can't survive, and the agency ecosystem becomes rapidly less diverse.

3. Marketing = knitting circles. A lovely, quaint hobby your grandkids will be in awe you ever actually did as a "job".

Read the full piece here.