By Chris Wlach, General Counsel, Huge
dis·in·ter·me·di·a·tion
Seven-syllable words don’t roll off the tongue. And few are as unmanageable as that mouthful.
But these days the term — meaning removal of intermediaries from the supply chain — is on the lips and ears of ad agencies.
Agencies that buy and sell media have felt the phenomenon since the internet’s dawn. Google and Meta’s platforms, and social media generally, made it easier for advertisers to elbow past their agency partners and deal directly with media sellers.
Non-media agencies experience it too. As in-house agencies entrench, their out-of-house counterparts can get sidestepped.
Now comes generative artificial intelligence (AI). Agencies are looking to image-generating programs and versatile chatbots to churn out creative content and streamline mundane tasks. Operating the tech doesn’t demand innate artistic skill or coding expertise; users simply type out directions. Gen AI’s appeal is in its usability as much as its capability.
But there’s the rub. Just as agencies lay hands on these magical devices, their clients upstream and subcontractors downstream are doing the same.
The Merits of Middlemen
If parties can simplify a supply chain, doing so may seem a no-brainer. Those on either side of the intermediary can then capture value once snatched by middlemen.
That does happen. Athleisure brand lululemon’s consistent growth stems in part from its strategy of focusing on direct-to-consumer sales.
But intermediaries can add value even as they grab some for themselves.
Consider the world’s biggest intermediary today: Amazon. The company built a commerce hub just as the World Wide Web made it easier than ever for consumers and producers to connect. Or take digital music. By the turn of the century artists and labels could leap over physical distribution networks directly to listeners; instead they stepped onto streaming platforms like Spotify and Apple Music.
Nobody thrust these companies between buyers and sellers. They emerged as both sides found benefits in centralized distribution. Reintermediation — the last seven-syllable word, I promise — brought value.
With Gen AI, agencies are making their own case for mediation. Here are three of their strategies.
Prompt Professionals
Those of us lacking artistic chops can’t help but marvel at Gen AI. By tapping out a few words, a talentless philistine can paint complex canvases or craft sonnets in the style of Shakespeare.
Or sometimes not.
Gen AI’s flaws and flubs make regular news. While the tech can amuse and wow, it also lies, stereotypes, and — simply put — steps in it.
But just as anyone can swing a baseball bat but only a handful hit homers, some users work these tools better than others.
Enter the prompt engineer, a term whose origins are credited to Google. Prompt engineering encompasses not only the mechanics of drafting inputs (prompts) but also the more labor-intensive — and more creative — art of refining and curating a theoretically infinite number of outputs. It demands not only technical skill but also taste, two things to which agencies lay unique claim. One agency has even built its business and (literal) name around crafting prompts.
That mediation offers clients value. Still, will “engineers” ply their trades three years hence? Maybe. But Gen AI garners demand because it lowers the skill barrier for creating content. And if Gen AI companies can grow by further lowering it — for instance, by making prompting easier and outputs less erratic — then these companies will do that
Technological improvements can’t supplant an eye that knows great from good. But while many clients will demand great — and look to agency prompters to supply it — others will settle for good-enough, especially if it cuts costs.
Partners
Not surprisingly, agencies are making a case for mediation based on more than prompting.
Many have “partnered” with Gen AI providers. That nebulous term sweeps in numerous business relationships. But these partnerships’ core feature involves joining generative AI models with agency products, services or data, into a unified commercial offering.
In February, for instance, Interpublic Group (IPG) announced a global partnership with Adobe GenStudio. “IPG Engine” connects the tech giant’s generative AI technology to the holding company’s marketing technology platform.
Two months later, WPP publicized its own collaboration with Google Cloud, where Google’s generative AI tech powers apps and services that WPP offers.
Collaborations like these have more than PR sheen. They let clients reap a benefit of disintermediation while keeping agencies in the creative loop: by linking with a complementary service, clients can deal with one party instead of two. Working together may also create more value for everyone if it leads to efficiencies for the agency and AI company.
And while AI threatens to displace agencies in some parts of the marketing process, other parts remain under less pressure. Gen AI tools can quickly spit out images, copy, and code, but that content alone doesn’t amount to a brand campaign, product, or marketing strategy. Someone still needs to do that stuff.
Shields
When it comes to emerging technology, agencies play one intermediary role that they rarely tout: shielding their clients from harm.
Like any new tech, Gen AI carries risks. These come in many flavors: financial, operational, regulatory, reputational, and so on.
Companies directly using Gen AI bear these risks. And for less tech-savvy clients, those risks can mount. Even if a Gen AI image generator lets a client crank out content in-house, for instance, the client may lack the infrastructure to do so without risking security compromises, IP infringement or other exposures.
Some agencies offer clients workshops and advice on the pitfalls of emerging technology and how to avoid them. But even when clients aren’t expressly seeking that counsel, they mitigate risks any time they place an experienced agency between themselves and new technology. And if the agency knows the technology well, it should be better suited to bear and control those risks.
“Risk mitigator” won’t be plastered on agency websites any time soon. But for a risk-laden technology it’s a critical role. And agencies shouldn’t shy from embracing it.
Conclusion
Other strategies for mediating between Gen AI and clients are being tested. What unites them all is a shared desire to demonstrate intermediaries’ value, even in cases where technology makes mediation optional.
And agencies need to show as much. It’s no coincidence that in the legal world “agency” denotes an intermediary relationship where one party acts on another’s behalf. An intermediary is what an agency is.
