Good morning. Analysts at Omnicom’s first investor day pushed executives to explain how and when AI could help marketers do more for less, WSJ Leadership Institute’s Patrick Coffee writes for the newsletter:

Much of Omnicom’s investor day on Thursday focused on the expansion of its AI capabilities, particularly after its acquisition of rival Interpublic last November made it the largest advertising holding company in the world. Generative AI will help clients more effectively reach individual consumers with content designed for them, executives said during the presentation.

But when asked whether clients are demanding lower bills because of the technology, CEO John Wren said AI services aren’t advanced enough to facilitate direct savings for Omnicom clients.

“AI is not, at the moment, creating the kind of environment that you could say, ‘Gee, buy these four tools… and as a result you can cut your marketing budget by X,’” Wren said.

AI, particularly when used in an agentic capacity, will likely provide opportunities for savings as the market improves, Wren added.

Omnicom has begun testing AI agents to buy ad inventory on behalf of its clients in an effort to cut costs through supply chain optimization, Chief Technology Officer Paolo Yuvienco said. The company may eventually use these agents to streamline the buying process by working more directly with the publishers who sell ad space rather than going through third-party vendors, Yuvienco said.

Omnicom’s pitch to investors is that any cost benefits for clients will also accrue to its own bottom line.

“The more measurable the investment, the more tangible the return, the more [clients are] going to invest—and they’re going to invest with Omnicom,” Chief Financial Officer Philip Angelastro said.

More than one analyst asked executives about how so-called principal-based media, or ad inventory that’s bought in bulk and then sold to clients at an undisclosed markup, will factor into the growing role that Omnicom’s media division plays in its growth business.

Angelastro described principal media as a “table stakes” practice that “gets a little bit oversized attention in the press for whatever reason.”

Angelastro declined to provide specific numbers.

Wren, in his opening statements, reaffirmed the fact that Omnicom’s offering will increasingly revolve around media, telling attendees:

• 58% of total revenue will come from “media and media-related activities,” which may include consulting and customer relationship management,
• 24% will derive from practices including public relations, healthcare communications and experiential marketing,
• and 18% will be attributed to creative services, or “advertising as you know it.”

“Media is the closest, easiest thing to understand because it’s a financial transaction,” said Wren. “Creativity is perishable in the environment we operate in.”

More AI: FedEx is building out an army of AI agents to work alongside its human workforce, including a planned hierarchy of manager, audit and worker agents in marketing and campaign management. The goal of the hierarchy is to ensure that the agents have a trail of accountability for their actions. [WSJ] 

The WSJ Leadership Institute’s Megan Graham was at the UBS Global Consumer and Retail Conference on Thursday, where C-suite leaders at major marketers gave conference goers a read on the moment:

Ynon Kreiz, chairman and CEO of Mattel, said the company has been transforming itself from a toy manufacturer into a brand management firm.

“At the time where there’s unlimited shelf space, ubiquitous distribution, big brands are more important than ever,” Kreiz said.

Mattel is also focused on gathering data through direct-to-consumer transactions, he added.

“We’re now touching more and more fans directly through our d-to-c business, self-published mobile games,” Kreiz said. “By owning more of the funnel, and having that capability in-house, we'll be able to convert that relationship to drive more demand and capture more value.”

The war in the Middle East was never far from mind during the conference. Fear that the resulting disruption will last weeks or longer have helped push the price of Brent crude oil back above $100 a barrel and 30-year mortgage rates above 6% again.

Executives at Papa Johns, which has locations in several Middle Eastern countries, were asked at UBS about any impact from the war.

“Folks have been sheltered in place and folks are getting a lot of pizzas delivered at the moment,” CEO Todd Penegor said.

• BuzzFeed’s future. The company, whose listicles and quizzes helped define an earlier era in digital publishing, warned that it lacks the resources to fund its cash obligations during the next year without a plan to address its capital needs. BuzzFeed is exploring strategic options to position itself for profitability, Chief Financial Officer Matt Omer said.
• SXSW. The annual tech and culture festival is underway in Austin. Expect lots of AI talk, including growing AI anxiety, as Mashable notes: “From the creeping fear that AI is quietly hollowing out our capacity to think, to a generational reckoning over what work even means anymore, this year's tech and digital culture programming is shaping up to be one of the most charged in recent memory.”
• Sunday’s Oscars, with the industry’s top honors (and marketing tool) up for grabs after long and sometimes counterproductive awards campaigns. Related bets on Kalshi and Polymarket have topped $100 million. Michael B. Jordan is the favorite among Kalshi bettors, er, traders, for best actor after months trailing Timothée Chalamet and Leonardo DiCaprio.

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