The AI Challenge to Agencies/Part 3 - What AI Has to Say About AI
In our previous mailings (Parts 1 and 2 of this three-part series), we shared what ChatGPT had to say regarding:
The five biggest threats posed by AI to marketing and communications agencies (public relations, public affairs, advertising, integrated and digital).
How these agencies can best defend themselves against any downside from AI.
According to ChatGPT in Part 1, the five biggest threats are structural, not just tactical inconveniences. They include:
Systematic fee compression and devaluation of core services.
Client disintermediation and in-house AI enablement.
Strategic commoditization and “Good enough” creative.
Talent model breakdown and cultural erosion.
Loss of strategic authority and trust.
For each of these threats, ChatGPT provided considerable detail to which Prosper Group added our own thoughts.
To review the detailed piece for Part 1, click here.
In Part 2, ChatGPT cited nine actions which agencies can take to minimize any negative impact from AI:
Tie fees to outcomes, not outputs.
Stop selling labor. Start selling liability.
Ruthlessly de-commoditize what AI does best.
Shift from “campaigns” to “operating systems”.
Reposition the agency as the decision layer, not the production layer.
Own the client’s context, not just their brief.
Build proprietary advantage fast and own the client’s AI stack.
Productize what you know.
Raise prices, don’t lower them.
For each of these actions, ChatGPT again provided supporting details to which Prosper Group then added some of our thinking.
To review the detailed piece for Part 2, click here.
Today in Part 3, we’re sharing ChatGPT’s response to “What are the opportunities which AI might present to marketing and communications agencies?”
As before, ChatGPT’s responses are included below (virtually verbatim). Then, “Additional thoughts/insights from Prosper Group” have been added at the end of each section.
Per ChatGPT: What are the opportunities which AI might present to marketing and communications agencies?
As its overarching response to this question, ChatGPT says that:
AI is not a “tool”. It is a structural shift in where value is created and captured. Agencies that understand that will do very well. Those that don’t will be hollowed out.
AI does not destroy demand for marketing. Rather, it destroys the value of labor while increasing the value of judgment, integration and risk management.
This creates five new agency profit pools… and here’s exactly what ChatGPT has to say about each of them.
1. AI Strategy & Governance (High Margin, Low Competition).
Every client is now deploying AI to create content, automate marketing operations, analyze customers and replace staff.
They are doing it badly, dangerously and incoherently. This creates a new category: “AI Marketing & Communications Governance” which includes:
Which AI tools should and should not be used.
Brand voice protection.
Legal and PR risk management.
Data leakage protection.
Bias, hallucination/fabrication and compliance.
Disclosure policies.
No CMO or General Counsel wants a junior marketer wiring ChatGPT into their CRM.
Agencies can own this because a) they sit at the intersection of brand, messaging, law, PR and data, b) consulting firms are too slow and expensive and c) tech vendors have conflicts of interest.
This is a revenue-based advisory revenue stream – not project work.
Additional thoughts/insights from Prosper Group:
- Review your agency’s brand proposition and determine if any changes are needed to incorporate legal risk mitigation.
- Also review the agency staff as well as partners to determine the AI management/governance capability which you can bring to clients.
2. AI-Augmented Creative = Explosion in Output, Not Decline.
AI does not replace creative departments. It removes creative scarcity. This creates two massive new demands:
1. Volume-based marketing:
10X more ads.
10X more versions.
10X more testing.
10X more personalization.
2. Continuous optimization:
AI creates.
Humans curate.
Performance models select winners.
AI regenerates.
This turns agencies from “We deliver campaigns” into “We run an always-on growth system”.
Clients cannot manage this internally because it requires creative, media, data, martech and brand control… which agencies already integrate.
Additional thoughts/insights from Prosper Group:
For creative and marketing agencies, review and enhance your work in each of these areas, optimize their integration and demonstrate to your clients that you’re using AI to be an “Always-On Growth System” for them.
3. Performance + Trust = A New Premium Category.
AI is flooding the world with fake news, deepfakes, synthetic reviews, automated propaganda and fake thought leadership.
Brands will therefore need:
Reputation defense.
Narrative control.
Crisis preemption.
Authenticity verification.
This is a massive expansion of PR and public affairs, not a reduction.
This leads to a new offering: from agencies: “AI-era Trust & Reputation Management”.
No software platform can do this because it requires relationships, credibility, media intelligence and human judgment.
Additional thoughts/insights from Prosper Group:
As stated in our two previous pieces on AI, niche-focused agencies that are perceived as knowledgeable, experienced and offer senior account involvement can win this new territory.
Carefully review your brand proposition to effectively convey AI-era trust and reputation management capability.
4. Proprietary Data Becomes the New Oil.
Clients have data. But agencies have cross-client pattern data.
Agencies that build:
Proprietary benchmarks
Performance models
Audience intelligence
Message response curves
… can turn themselves into AI-powered marketing platforms instead of labor shops.
This is where the billion-dollar agencies will be born.
Additional thoughts/insights from Prosper Group:
This is an area where AI consultants can help agencies build their capabilities.
It also strikes us that many agencies may require private equity backing to fund the development of the capabilities noted immediately above as well as in other sections of this piece.
5. Mid-Market Clients Will Outsource More, Not Less.
AI makes execution cheap, strategy confusing and mistakes catastrophic.
Mid-market companies will not build in-house AI marketing teams. Instead, they will outsource to agencies that already know their business and can safely run AI for them.
Additional thoughts/insights from Prosper Group:
- Again, building your brand around being viewed as a strategic partner to a niche set of prospects will best position your firm to win reputation and AI-management work from mid-market clients.
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Overcome tough challenges and navigate through the periodic tidal changes that fundamentally alter how agencies do business.
Take advantage of new tools, new thinking and new outcomes.
AI represents the most recent game-changing evolution in the life of agencies… and it won’t be the last.
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