(Bloomberg) — A key stock-market theme of 2025 has been the slide in shares that stand to lose out from advances in artificial intelligence, chief among them being advertising agencies.Beset by contract setbacks, Britain’s WPP Plc has plunged 60% this year, while rivals including Publicis Groupe SA and Omnicom Group Inc. have fallen by a lesser extent amid broader fears that AI will replace much of the manual work behind advertising.Yet a school of thought is developing among analysts that these companies will be able to turn the disruption to their advantage. Bulls argue that major brands will depend even more on agencies to navigate an increasingly complex, multi-platform media landscape. That’s reflected in recommendations for Publicis and Omnicom being near the best levels in years.“The industry is being disrupted, but it’s not being disintermediated — I think that’s the key,” said Morningstar analyst Mark Giarelli. This year saw Google’s Nano Banana and OpenAI’s Sora 2 — which create images and videos from text prompts — gain momentum. Coca-Cola Co. aired a Christmas commercial produced by AI for a second year running.Pressure is also coming from Big Tech, with Alphabet Inc. and Meta Platforms Inc. rolling out tools to help brands design ad campaigns by themselves, rather than relying on third-party consultants.The chief concern is that companies may choose to use these automated tools to build in-house marketing teams. In September, for example, cybersecurity firm Palo Alto Networks Inc. said it developed an entire advertising campaign on its own, without relying on external agencies.‘They Know Where We Are’But what Google or Meta can’t do is to help brands allocate ad budgets across channels, said Morningstar’s Giarelli. And that’s where ad agencies can add value, as they can help clients to avoid duplicating spending between, say, Instagram Reels and Google Search, he said.That capability is based on consumer behavior data dating back to the 1980s when direct mail campaigns were dominant. “Ad agencies are quite good at understanding a variety of characteristics. They know where we are, what we’re thinking to some degree, and they’re able to tailor a marketing message based on that,” said Giarelli.It all comes at a time when the ad landscape is turning more complex, with AI likely to allow personalized digital content to be created “almost on the fly” for each consumer, according to Bloomberg Intelligence analyst Matthew Bloxham.“There is going to be a strategic role for agencies,” Bloxham said. “With more complexity, you want more valued advice to help you navigate through, whether that’s the overall marketing strategy or media strategy.” Another argument in support of ad agencies is that lower production costs should allow more ads and more investments by the biggest brands, according to JPMorgan Chase & Co. analyst Daniel Kerven. When AI raises the bar for ad quality in genera in a formal or creative style for better SEO.Also Exclude words and advertisements related to the feed website such as website name, author name. 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Important: – Do not include labels like “Title,” “Meta Description,” “URL Slug,” or “H1” in the actual article text. – Keep all SEO elements separate from the main content. – Ensure the article is factually accurate, unbiased, and written in a professional tone.
Ad Agency Shares Poised to Leverage AI Disruption for Gain
