According to Statista, in 2023, the budget for AI in marketing amounted to USD 27.37 billion, and by 2028 it will reach 107.54 billion. If companies are ready to increase marketing budgets for the use of AI, what will be left for advertising agencies? Won’t they become the third wheel? Let’s try to refute the hypothesis that someone is the third wheel and talk about the effectiveness and ethics of such cooperation.

The role of AI in marketing

With widespread access to AI tools, advertisers and creatives were among the first to adopt them. This trend continues in the Ukrainian market: 65% of designers from more than 150 companies surveyed by Projector, 52% of copywriters, and 49% of marketers and PR specialists have adopted new technologies (the study surveyed employees from more than 150 companies ranging in size from 10 to more than 1500 employees in various industries, so it is not representative of Ukraine as a whole, but may show trends within this sample.)

AI is already being used for in-depth analysis of large amounts of data, which helps advertising agencies better understand the needs and preferences of target audiences. Algorithms can detect trends and relationships that are difficult for analysts to see. This approach allows for more precise targeting of marketing campaigns, increased efficiency, and, most importantly, cost optimization.

In addition, AI is used to create content, including writing and editing texts (81%), and almost 67% of respondents use AI to generate ideas. This not only minimizes the cost and time of developing materials but also helps to rethink creative possibilities.

But these are not all the benefits of AI. Personalization has been a marketing trend for years: thanks to AI, it has become not only easier but also more affordable. Stitch Fix is building its business based on AI. Experimenting with DALL-E, visualizes items based on customer preferences in terms of color, fabric, and style. Using text-to-picture generation, the company’s stylists select similar clothes from the Stitch Fix assortment.

So the question arises: if AI can take over all these functions, what do agency teams do and why aren’t their services cheaper?

Challenges

The active use of AI is destroying the standards of transparency in the relationship between brands and agencies. According to Muck Rack’s State of AI in PR study, approximately one-third of PR professionals on the brand side believe that the use of artificial intelligence in agencies should be disclosed, while only 19% of agency PR professionals say they adhere to this principle. About one in five said they never disclose the use of artificial intelligence to clients.

But I want to highlight two more challenges in working with AI:

1. Time and resources. Just like humans, AI needs time and training to get used to new tasks. For example, if you need an AI solution to help you communicate effectively with your clients or even do it for you, you’ll need to invest resources and, above all, time. Accordingly, agency teams also need time to work with AI. However, given the large number and variety of tasks, AI will adapt faster and be more productive in agencies than on the brand side.
2. Data quality and accuracy. A Forbes Advisor survey shows that 76% of consumers are concerned about misinformation from AI tools. Examples of information discrepancies are not uncommon even in the Ukrainian market. This proves that humans are still in charge when working with AI and require competencies to check and possibly correct the results provided by artificial intelligence.

Ethics of use

A week ago, the European Parliament finally adopted the Artificial Intelligence Act (AI Act), which aims to regulate the development, implementation, and use of artificial intelligence. Here are three main principles of practical application of AI outlined in the proposed AI Act:

• Transparency and user information. AI systems should be transparent and users should be informed when interacting with AI. They should be provided with clear information about capabilities and limitations. The AI Act also contains a rule on deepfake: all altered or artificially created audio and video must be labeled.
• Responsibility and supervision. The AI Act introduces human oversight mechanisms to eliminate or minimize the risks associated with AI systems. AI system providers and users are responsible for complying with the relevant rules.
• Respect for fundamental rights. The AI Act emphasizes the importance of respecting fundamental rights, such as the right to privacy, non-discrimination, and consumer protection. This document aims to prevent harmful practices and ensure that AI systems do not pose a threat to security or fundamental freedoms. It also prohibits the manipulation of human behavior and vulnerabilities.

In the Ukrainian roadmap developed by the Ministry of Digital Transformation, the AI Act is also repeatedly mentioned as a reference point. It briefly describes the implementation of rules for business development and the protection of users’ rights when interacting with AI.

There are no universal rules for interaction between clients, agencies, and AI, but some countries and industry organizations are already developing recommendations and standards for the use of AI in marketing, such as the relevant document from the All-Ukrainian Advertising Coalition and the editorial policy of the media.

The future of interactions

In the future, the interaction between clients, agencies, and AI will become even closer. Agencies that integrate AI into their processes will be able to offer clients more innovative and efficient solutions. At the same time, AI and data ethics regulations will become part of the industry and will protect the interests of all parties.

Those companies in Ukraine that reach a new level of interaction with AI will soon be able to talk about its real financial efficiency, while the rest will only play with colorful images, not respecting copyright and not noticing the possibilities of other applications of this technology.