Eyeing future growth and opportunities, ad agencies across the world have time and again launched new verticals to cater to a specific service and often it is these designated wings that grow popular to become specialised agencies.
As per Madhu Sudhan, Co-Founder, Punt.Partners, most agencies, today, are acutely aware of the fact that the world is standing at the brink of a monumental transformation in the industry's fabric and that this isn’t going to be an everyday change but a once-in-a-lifetime shift.
Recognising this, agencies are wholeheartedly diving into the AI bandwagon, allocating resources in anticipation of which segments of the industry might surge or diminish. That being said, the impetus behind establishing separate AI studios is robust because firstly, it's about creating an unmistakable brand identity and conveying the sheer significance of the initiative, and secondly, it's rooted in the understanding that the required skills and talent often diverge from the usual agency draw.
“Here, a fresh, distinct brand can become the beacon attracting and persuading talent to embark on the agency journey. However, let's be clear– slapping the ‘AI-enabled’ label on tools for particular outcomes isn't the game-changer we're envisioning and what's truly on the horizon is a forthcoming wave of applications designed from the ground up for AI-native use cases. This is the tide that will wash away much of the current discourse, rendering many of these discussions and distinctions obsolete,” he said.
Expressing his viewpoint on the emerging trend of AI studios becoming the new black for ad agencies in India, Sanjeev Jasani, Chief Operating Officer, Cheil India, stated the driving force behind AI Studios stems from the realisation that AI's transformative potential is best harnessed through focused expertise. The complexities of AI applications warrant a dedicated space, distinct from routine agency functions, to explore its full capabilities.
“By setting up AI studios, agencies can foster an environment conducive to innovation, collaboration, and deep exploration of AI-driven solutions,” he said.
Cueing from the GenAI takeover and global agencies launching new AI-focused verticals, Indian ad agencies such as Rediffusion, SocioWash, etc. have also upped the ante and doubled down on the AI momentum in the country with the launch of their own AI studios.
Having launched Rediffusion AI Design Lab a couple months back, Sandeep Goyal, Chairman and MD, Rediffusion, stated that if an agency wants to really focus on something and develop expertise and attract the right kind of people, then it needs to ensure that they work in a well-defined business and that’s precisely why the idea of AI Design Studio came into being and a special team headed by Rohan Parab was carved out of Rediffusion Studios.
“Had we not launched a specialised AI wing out of Rediffusion Design Studios, the AI-led work would’ve got diffused amidst all of the agency's other projects as it wouldn’t have been possible to focus on excellence in multiple product lines,” he said.
He also went on to point out that when it comes to AI studios, one needs to have in place a higher level and backed with better quality machines as well as top quality software before investments are made in talent because it is all a combination of talent, infrastructure, technology and ensuring enough clients to get business.
“90% of clients don't understand how AI will be useful for them at this point in time, which is why both time and energy are actually being dedicated to evangelising the product and explaining to clients what extra work can be done by AI Design Studio over and above the Design Studio and how can the brand benefit from the same,” Goyal said.
Another agency to launch its AI Studio a couple of months back is Sociowash, whose SW AI studio, was birthed as a specialised agency set up especially to cater to the AI needs of clients.
As per Raghav Bagai, Co-founder, Sociowash, rather than the pent-up demand for AI-led creatives, the rationale behind launching a specified AI vertical under Sociowash as an entity and betting big on the same was the identification of an opportunity as well as sheer curiosity of what AI is and how can such technology influence the creative world.
In his view, through this move, the clients by default will get notified of the agency’s new offering and it’ll be easier for him to make them understand what SW AI Studio does.
In fact, in just a couple of months, the AI vertical of the digital marketing agency has seen growing interest for its AI-led activations from both mid and large-scale brands dealing in jewellery, automobile, beauty, etc. Additionally, the agency has picked a few projects already.
Similarly Ankit Banga, Chief Business Officer, FCB/SIX India, also attributed the driving force behind AI studios to the need to constantly stay ahead of the curve and offer a wide range of innovative solutions to the clients.
“AI studios are not just a new function, but a new way of thinking and creating that leverages the power of AI to enhance human creativity and intelligence. By setting up a separate unit, we are able to focus on developing our own proprietary tools and services that cater to the specific needs and challenges of our industry and clients,” he opined.
Having launched FCB’s own AI Studio with a modest budget but with a clear vision and strategy to scale up gradually, not just in terms of portfolio but also clients, Banga emphasised that the key areas for the IPG Mediabrands’ creative agency’s AI wing include data-driven creativity, dynamic content and interactive experience.
“The main motivation that led us to invest in AI technology for creative work includes improving the quality and efficiency of our work by automating repetitive and mundane tasks; augmenting our creative capabilities to help us craft more engaging and effective campaigns for clients and to explore new possibilities and opportunities that AI can offer- such as generating novel ideas, formats, channels, etc. that in turn have the capability to enhance our competitive edge and differentiation in the market,” he said.
In Cheil India’s Jasani’s view, launching an AI studio is also financially viable due to the robust returns it can yield for the agency by enabling them to explore creative avenues such as anticipating trends, optimising content strategies and creating immersive experiences that transcend conventional campaigns in terms of captivating audience’s interest across platforms owing to the harnessing of AI's predictive capabilities.
“AI studios also broaden an agency's reach across diverse sectors along with the ability to provide AI-driven solutions that appeal to clients who actively seek innovation and competitive advantage. Conversely, the agency's expertise in AI can attract clients looking to infuse cutting-edge technology into their brand strategies,” he opined.
Similarly, Sociowash’s Bagai also shared that from a monetary perspective, the financials that the AI-led studio would eventually have in the long run will make a lot of sense because being the future, a lot of investments and interest are bound to come to such space and if one is able to give solutions to brands, even if that doesn’t match with the typical retainer, because it is just going to be so much more efficient and with bigger margins.
Commenting on whether the clients of Rediffusion AI Studios are different from that of the existing clients of the agency, Goyal responded that while there may be 20-30-40% internal clients, at least in AI Design Studios, Rediffusion expects that 60-70% of the business will be external.
“In the case of AI, most clients will work with agencies on a project basis as compared to an AOR basis since things are at a nascent stage as of now and even the agencies are learning and experimenting with sorts currently,” he said.
As per Punt.Partners’ Sudhan, while it's still early days, and discerning the exact nature of the forthcoming changes remains a complex puzzle, brands are unquestionably diving into AI with genuine enthusiasm, primarily to enhance productivity and, of course, for the allure of its novelty.
However, truly harnessing AI's potential demands a significant exposure of organisational data to external parties, and that inevitably sparks friction between the brand and the agency, he opined.
Furthermore, Sociowash’s Bagai also suggested that since AI is an evolving space and the agency wanted to be the first one to come to mind for utilising AI in advertising, it was only prudent to have an AI studio for the understanding of AI will be like a powerhouse when it comes to advertising in the future and when every brand and agency will have to invest in the same.
“We want to get the first mover advantage and hence our investment in AI studios to be one of the drivers in advertising that use AI to their advantage. At the same time, we also want to be one of the leading digital agencies around the world and our weapon or powerhouse for the same is going to be the SW AI Studio,” he said.