After highlighting last week that companies are doubling down on AI investments, Publicis took a notable step this week, announcing a €300m investment plan in AI over the next three years. This commitment aims to fuel the development of 'Core AI', an AI-powered integrated platform leveraging the group’s proprietary data. The advertising sector is undergoing major shifts due to the emergence of Gen-AI, prompting marketing service firms and tech platforms to pour resources into AI tools and expertise. Over the past year, industry leaders such as WPP, Omnicom, IPG, and S4 Capital have forged partnerships with big tech players like Nvidia, Microsoft, and Google, to enhance AI capabilities supportive of efficiencies and better client services. Meanwhile, the tech platforms have independently launched Gen-AI tools, empowering brands to bring more creative and media planning in-house. For instance, Google this week unveiled a tool powered by Gemini capable of generating search ad campaigns from a simple URL. Similarly, last year, Amazon and Meta rolled out features enabling advertisers to tailor ad content using AI. While marketing services are collaborating, they are also clearly in competition. In other news, WPP is set to consolidate two large New York-based PR practices, and Amazon decided to close its home insurance price comparing site only 15 months after its launch. Ahead of the EU’s Digital Markets Act (DMA) taking effect in March, Meta plans to allow the unbundling of its products to comply with the new rules set for ‘gatekeepers’, while Spotify plans to take advantage of this change by offering in-app sales without Apple’s restrictions.
News of the week
Meta allows users to unlink accounts between products
Meta has announced that ahead of the EU's DMA, which takes effect on 6 March, users in the EU, EEA and Switzerland will be able to unlink their Instagram and Facebook accounts and use Meta’s products independently. For example, people can use Facebook Marketplace even if they do not have a Facebook account. This change should lead to less targeted advertising and content recommendations. However, it could also result in reduced functionality, such as the need to use email for communication on Facebook Marketplace and being restricted on paying for single-player games on Facebook Gaming. The move follows Google's decision to allow users to stop data sharing across its services, such as YouTube, Google Map and Chrome. The DMA aims to foster competition and regulate how 'gatekeepers' like Meta and Google handle data sharing. Additionally, it plans to push for interoperability between messaging services and facilitate sideloading on iOS. The Verge
Amazon shuts UK home insurance store
Amazon has decided to close its UK home insurance comparison site, the Amazon Insurance Store, just 15 months after its launch in October 2022. The site was introduced as a competitor to established comparison platforms like MoneySuperMarket and GoCompare, offering home and contents insurance with incentives such as a £10 Amazon gift card for new sign-ups. The platform struggled with less competitive quotes versus other price comparison websites (PCWs), having only five insurers on board. A study by Fairer Finance in December 2022 revealed that Amazon's average quote was £164 more expensive than those on other sites. The product faced challenges at launch with reduced consumer switching in insurance due to changes in FCA regulation, which came into effect at the start of 2022. The Times
Publicis plans to invest €300m in AI
Publicis announced plans to invest €300m in AI to capture the opportunity with the new technology. This investment aims to integrate AI at the heart of the business, with a platform known as Core AI. This is to power Insights, Creatives, Media, Software and Operations, allowing functions to be carried out more efficiently and at scale. The decision follows Publicis's strong financial performance in 2023. CEO Arthur Sadoun emphasised that the AI investment would not result in job losses but would transform existing roles, with all staff becoming data analysts and leveraging AI tools for marketing campaigns. Publicis has a history of investing in data services, including acquisitions like Sapient and Epsilon, and the launch of its AI tool Marcel in 2018. The investment is to be allocated with €100m in 2024, split between staff training and technology, and the company expects it to positively impact margins by 2025 without diluting them in 2024. FT, Publicis AI presentation
WPP combines two large PR firms in New York
WPP Group is set to merge two of its New York-based public relations firms, BCW and Hill & Knowlton, as part of its ongoing strategic restructuring to simplify its operations. The new entity, to be named Burson, is to serve over half of the Fortune 100 companies, with a focus on corporate and public affairs, healthcare, technology, and brand marketing. The merged company should boast a workforce of over 6,000 employees across 43 countries. This consolidation follows WPP's pattern of streamlining, which included the creation of the world's largest creative advertising company last year through the merger of Wunderman Thompson and VMLY&R. Additionally, WPP has been contemplating the sale of its 40% stake in the market research firm Kantar, potentially fetching a multibillion-pound valuation, but a decision has yet to be made. FT
Spotify is to allow in-app sales on iPhone in Europe
Spotify is set to update its iPhone app in Europe to offer in-app subscriptions and audiobooks, taking advantage of the new DMA that requires ‘gatekeepers’ like Apple to allow third-party billing and app distribution outside the App Store. Spotify had previously moved away from Apple's billing system, with less than 1% of its users paying through Apple, and this move could help further expand margins and streamline new subscriber signups. This move comes as the DMA is to be enforced starting in March, challenging Apple's current App Store rules that mandate the use of its billing service, which incurs a fee of up to 30%. CNBC
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