The Competitive Challenge in Post-Internet Advertising: Appraising the Functional Divide Between Agencies and the Newcomers

Abstract

Although they have made modest gains in revenues and employment, ad agencies face challenges in utilizing different media platforms and the latest technologies. Advertisers’ negative perception of ad agencies as not having the expertise needed for post-Internet success was the first major threat agencies faced, resulting in increased competition from newcomers. Advertisers’ adoption of algorithms generally, particularly AI-related algorithms, poses the latest threat to agencies. Based on a conceptual framework, the article analyzes the threat factors agencies face and proposes some strategies to contain the newcomers’ encroachment and new technologies such as AI.