Gen AI’s impact on marketing and creative agencies

Is Generative AI going to kill marketing and creative agencies? 

Klarna, a fintech firm, sent out a press release saying it “cut its sales and marketing spend by 11% in Q1 2024 while increasing the number of campaigns and updating marketing collateral more frequently. AI is responsible for 37% of the cost savings, or about $10 million on an annualized basis.” 

“The key drivers are: 

Cost Reduction in External Agency Expenses: Klarna has decreased its spending on external marketing suppliers by 25%, including translation, production, CRM, and social agencies, with run rate savings of  $4 million.

Savings on Image Production: Achieved a $6 million reduction in image production costs, despite running more campaigns and creating significantly more images. Using genAI tools like Midjourney, DALL-E, and Firefly for image generation—and Topaz Gigapixel and Photoroom for final adjustments—Klarna saved $1.5 million in the first quarter of 2024 alone.

Increased Efficiency and Creativity: Generated over 1,000 images in the first three months of 2024 using genAI, reducing the image development cycle from 6 weeks to just 7 days.”


Yesterday, I had an afternoon chat with an old friend in the SG creative industry and things are bleak – clients have cut marketing budgets and his office rent has gone up 30%. 

His employees wield AI tools like Adobe Firefly well but competition is stiff for major ad projects and there is only so low you can go with your agency fees.

Since 2022, I have been saying that Gen AI will allow everyone to become their own copywriter, artist and graphic designer. 

This is really happening now, but what is going to happen to the marketing agencies and creative houses when all the work goes in-house? 

(Screenshot from Reuters)