The Three Superpowers of Agentic Advertising
The past month saw three of the most monumental events in the history of marketing.
The first two garnered headlines across the globe: The acquisition of the Interpublic Group of Companies by the Omnicom Group, creating the largest advertising agency holding company in the world. The second was the announced acquisition of Warner Brothers Discovery by Netflix, which would produce the world’s largest media company.
The third received no headlines in the mainstream press: the public unveiling (before an audience of over 1,000 eager professionals) of a technical standard for AI-fueled advertising innocuously named Ad Context Protocol (AdCP).
The introduction of AdCP will be the event remembered in business histories. Because while the mogul marriages symbolize the last gasp of declining industries trying to cling to their waning primacy, AdCP represents the fundamental remaking of marketing and media in ways that will alter how consumers buy everything - and how all companies will grow revenue and profits from now on.
Whence Walled Gardens
Before explaining how a single technical standard can reshape the ancient discipline of marketing, it’s important to understand how confoundingly dysfunctional the marketing-media ecosystem became during the 40-year rise and fall of advertising and media conglomerates.
Since the 1930s, the media and advertising industries were stepchildren of broadcasting. The 1980s-era consolidations that created Time Warner, Viacom, News Corp., Omnicom, the WPP Group, and more were prompted by the desire of both advertising buyers and sellers to maintain pricing leverage over TV ad time - a commodity so valuable that, through history, everything else these companies did, from the production of prime-time sitcoms to the creation of enduring advertising icons, was given away to their customers for free.
The calculus was simple: Both the media companies and agencies were advantaged by scarcity. Three broadcast networks collectively owned 84 weekly prime time hours; agencies received commissions or their equivalents on each minute they brokered; both media and agencies benefited from the rising media prices they, ahem, “negotiated.”
For the ad agencies in particular, the margins on the media procurement they managed for the world’s largest brands were so rich that the holding companies tore apart the agencies they acquired and turned them into functionally focused global networks. For most of their first century, ad agencies were full-service providers, performing bundled work for their clients, from marketing strategy to creative ideation, ad production, and media placement. Beginning about 30 years ago, these full-service agencies with legendary human names like Young & Rubicam, McCann Erickson, and Batten Barton Durstine & Osborne got supplanted by faceless global media-buying conglomerates called Group M, Starcom Mediavest, and OMD. The creative function got acronymed into Y&R, BBDO, and DDB, and shoved into the holdcos’ basements.
The Internet, with its billion websites and its promise of infinite customization of both consumer-facing content and advertising come-ons, should have forced these commodities dealers into a rethink. Instead, the opposite occurred. With its atomization of audiences and near-infinite supply of impressions, the Internet proved immensely complicated for marketers. The rise of the ad tech industry and its “programmatic” mechanisms for automating procurement only increased this newfound complexity, and further distanced media buying, consumer content, and advertising content from each other.
The result was increasingly powerful “walled gardens” within the Internet - notably Google, Facebook, and Amazon - which rose because they proved an efficient means for corralling the confusion of the open Web. In effect, they were a response to advertising executives’ nostalgic yearning for the days when they could place a $100 million ad buy with one phone call.
Today, advertising professionals still reflexively invoke the power of creativity, and for good reason: 70 percent of advertising effectiveness derives from the quality of content-based experiences that reinforce an emotional connection with consumers. But the industry’s daily activity for decades has been dominated by the interests of commodities traders: impressions pricing, ad verification, real-time bidding, header bidding, PMPs, deal IDs.
Proliferating ad tech complexity exacerbated the disconnect between marketing channels and marketing strategy, and helps explain why so much of the early interest in AI and machine learning in marketing has been focused on efficiency instead of effectiveness. Marketers are rightly concerned that $20 billion in ad spend seems to go missing every year due to waste, fraud, and complexity in their distribution systems, but they spend very little time reflecting on the trillions in new value they could generate with better marketing activity.
Internet protocol should have helped them on that path, because it fostered customized integration at scale – the right ad to the right person at the right time. Yet it didn’t: The “Creator Economy” and the “Programmatic Economy” grew as entirely separate environments, and consumers reacted to the resulting spam, viruses, and privacy concerns by installing ad blockers.
Reshaping the Ecosystem
AI and the agentic advertising revolution finally address the unrealized promise of the open Internet to break down siloes between advertising, ecommerce, and customer experience, and deliver a more seamless and friction-free customer journey.
Boiled down to its essence, agent-to-agent advertising has three superpowers that linear and digital advertising lacked:
It renders complexity invisible and irrelevant, eroding the power of walled gardens. With well-governed agents able to reach across sector and functional boundaries to access, test, procure, measure, and optimize all the formatted inventory and other content experiences made available to them, the primary function of these closed platforms - concentrating inventory and corralling complexity - is no longer an overwhelming advantage.
It facilitates rich statistical analyses in the cloud, fostering actionable insights previously foreclosed by complexity and cost. It is now possible to look holistically across the marketing funnel (which encompasses the full customer journey, not just advertising impressions) and measure the business impact of specific content experiences on specific audiences in specific channels. Public relations, experiential marketing, influencer marketing, shopper marketing, loyalty programs, promotions, “native advertising,” and other forms of marketing activity will lose their “ancillary” status, as marketers measure the ways all content-based experiences contribute to marketing ROI. CMOs (and their chief partners, such as Chief Revenue Officers, Chief Experience Officers, and Chief Customer Officers) will finally become the growth champions they have hungered to be.
It rebundles the creative and media functions, enabling all marketing activities to work better together. Agentry allows marketers to continuously assess and improve the combinatory power of their campaigns, cracking the code of marketing effectiveness and heralding a new “cre(ai)tive revolution.” Already, we are seeing the rise of AI-automated “agencies in a box” that can provide all the capabilities associated with the old full-service agencies and their holdco successors. Agencies, clients, and publishers will be able to engage in hyperfast test-learn-launch-optimize scenarios that will transform media mix modeling from an expensive and occasional activity to an always-on capability - available not just to the largest consumer marketers and their suppliers, but to SMBs across the marketing-media ecosystem.
Join the Movement
Of course, AI alone can’t realize this scenario. There are myriad standards and practices that need to be established to determine how agents can safely, securely, and sanely transact with other agents across the vast landscapes of brands, agencies, publishers, and tech companies. Of equal difficulty will be training organizations and their people, as agentic advertising breaks down barriers between companies and among functional silos within them, reshaping the marketing-media ecosystem from the ground up.
That’s why the debut of AdCP was so exciting and why the launch of AgenticAdvertising.org is such an important milestone: They signal the start of a movement, fueled by the willingness of a thousand pioneers across these sectors to start fresh and collaborate to establish open standards, transparent practices, and interoperable systems from the outset. As LLMs start to develop their own standards and practices, it’s vital that the builders, implementers, and consumers of agentic advertising be able to chart our own paths alongside them and other industry bodies, unencumbered by the adversarial boundaries that historically divided our sectors – buyers vs. sellers, marketing vs. sales, creative vs. distribution, efficiency vs. effectiveness.
And it is why we are thrilled to help create the future so many of us envisioned when we first saw the Mosaic browser back in 1993: unfettered creativity harnessed to support individual expression, business development, economic competition, and innovation that benefit the many, not just the oligarchic few.
Go to AgenticAdvertising.org for more details on the launch of the new organization and how you can get involved.
Matthew Egol is the founder & CEO of JourneySpark Consulting, podcast host and author of The CX and Culture Connection: Creating a Growth Flywheel by Approaching Customer Experience and Culture Together. Previously, he was a partner at the consulting firms Booz & Company and PwC, where he specialized in customer experience, digital transformation, and culture.
Randall Rothenberg served for 15 years as the CEO of the IAB, the global trade association for digital marketing, media, and advertising, where he led the industry in public policy, technical standards, marketing, and thought leadership. Earlier in his career, he was the CMO and head of thought leadership at Booz & Company; a reporter, editor, and advertising columnist at The New York Times; and the author of Where the Suckers Moon: The Life and Death of an Advertising Campaign (Alfred A. Knopf, 1994).