What happens to agencies when AI does the busywork?

**Kamiko McCoy** (0:10)
Hello, hello, and welcome to another episode of The Digiday Podcast, a show for anyone trying to justify a hold co in the age of AI. I'm Kamiko McCoy, Senior Marketing Reporter here at Digiday.

**Tim Peterson** (0:21)
And I'm Tim Peterson, Executive Editor of Video and Audio, DigiMedia. So Kamiko, this week, you're taking us back to Cannes.

**Kamiko McCoy** (0:29)
I am. Let's do the time warp again.
I am taking guys back to Cannes where I had an interesting conversation with Omnicom Media North America CEO Ralph Pardo. One of the things that a lot of people have been talking about is the role of a hold co in the age of AI. And who better to ask about that defensive position than the CEO of Omnicom Media in North America. So real juicy for you.

**Tim Peterson** (0:56)
Yeah. So I'm curious what he has to say, because I feel like usually the agency holding companies, you know, say, you know, talk about their size and especially their leverage when it comes to being able to secure inventory at scale. Like basically, these are the people who can go into the media version of a Costco with like a wheelbarrow while the rest of us are in like usual shopping carts, and they can just like really be buying in bulk. And so the idea is like, if you want to be buying Disney or NBC or YouTube or TikTok, we can get you those and we can get you those at probably a better deal because we're buying so much from them, which is valid. But if I can just use AI to do a lot of the things.

**Kamiko McCoy** (1:46)
Well, I was going to say, is it? That's kind of the whole argument that is, that brands and clients are now asking, right? Because if AI can do it, why am I paying you a shit ton of money to do this?
And that's kind of the argument here. So if the promise of a holdco is scale, because they've got a seemingly endless flood of people working on your account, right? Pardo is making the argument that agencies, especially holdcos, are no longer in the business of just placing an ad. Now, they're doing this thing that I've heard.
Agencies kind of repeat, we're strategists now. If AI is handling the grunt work, you still need a person at the end of the day to do the higher level thinking. So at this point, they become AI strategists and for first-party data and things like that, that more clients are concerned about. They're like the gatekeepers of this. So I think of Ralph's argument now as being a gatekeeper, being an interpreter when it comes to AI and data, as opposed to a media buyer.

**Tim Peterson** (2:51)
Do you think that exposes the agency holding companies to the consultancies? There was that period of time, and it's still going on, like Accenture Song is very much still doing this, but where it was like, oh, is McKinsey, Boston Consulting, Accenture coming after the agency holding companies' businesses?

**Kamiko McCoy** (3:13)
I think that starts to be a bigger concern going forward for a hold co. It's the same thing. If you look at the parallel with publishers where they started trying to sell white label services and their CMSs and things like this, competing with those already existing structures.
There is no choice but to pivot in the age of AI. Right now, I think we're in a wet spaghetti noodle at the wall kind of stage as they figure this out amidst things like layoffs, do more marketing with less marketing dollars. So I think it was a really good conversation in talking with Ralph.

**Tim Peterson** (3:49)
So this is a conversation that agency holding companies have been having for years at this point, I feel like every earnings call that these companies host, they're having to kind of defend their position, their business models. Kamiko, was there anything that Ralph said in the conversation that surprised you or felt like a new take on this topic?

**Kamiko McCoy** (4:12)
I think the thing that I thought was interesting is that at a hold co, he felt like the term hold co was outdated. It's no longer about agencies, you know, hold co is kind of like owning agencies and having them all under one roof. Now they've really got to position themselves as like specialists here.
When typically the pitch has been scale, now it's specialization. So that's what I found most interesting in the conversation with Ralph.

**Tim Peterson** (4:39)
Interesting. Well, I am interested in hearing this conversation. So let's get right into it.