Mad Man in distress: what’s going on in the advertising world?

With the rise of AI, the advertising industry seems to be turned upside down. Digitalization and the rise of artificial intelligence have left advertising agencies struggling to maintain their place in the marketing chain. According to the Financial Times The revenue model of labor-intensive advertising agencies in particular is under pressure. The classic advertising agency relies on ‘big, creative ideas’, the production of campaign material and the purchase of advertising space in various media. The advertising agencies’ piece of the pie is becoming smaller and smaller because marketing changes and companies that want to advertise more and more in house can produce.

At the end of May, the Amsterdam advertising agency KesselsKramer filed for bankruptcy. In Het Parool, Het Financieele Dagblad and trade media, the fall of the thirty-year-old company received a lot of attention. KesselsKramer was known as daring and creative. In one interview with Het Parool Gijs van den Berg, creative director at KesselsKramer, explains how much the relationship between advertisers and advertising agencies has changed. “Previously, creativity was a kind of Pandora’s box. Companies knocked on our door and three weeks later we came up with a surprising and meticulously developed idea, which we then implemented from A to Z.”

KesselsKramer came up with the iconic ‘I Amsterdam’ letters and developed the campaign for, among others, the Stedelijk Museum Amsterdam and the Hans Brinker Budget Hostel. The latter made the advertising agency world famous: instead of listing the advantages of the hostel, it showed its shortcomings in before and afterphotos with the slogan: ‘It can’t get worse than this, but we’ll do our best’. A blank wall as a view? Hans Brinker hung a curtain in front of that. A burn hole in the carpet from a stubbed out cigarette? Neatly cut out with a box cutter. According to the curator and the owners of the advertising agency, the bankruptcy followed the loss of three major clients.

Transactional and less loyal

Media economist and lecturer at Erasmus University Matthijs Leendertse does not know the background of KesselsKramer’s bankruptcy, but thinks it fits into a broader trend in the advertising world, he says on the phone. “Customers are less loyal to the agencies and the mutual relationship is a lot more transactional.” This is partly due to the availability of data. He explains that in the past people looked at how effective campaigns were, but that this cannot be compared to how things are done today. “As a student, I had a part-time job at the Center for Marketing Analysis. I would call people to ask whether they had seen a certain advertisement and what they thought of it. Although that was a large-scale poll, but now you can continuously measure consumer behavior.”

Another development in the marketing world was the rise of social media. This was initially good news for advertising agencies that made a lot of money from the production of campaigns. “Money is made from the implementation of campaigns,” Leendertse explains. “Social media meant that not only did you have to make a TV commercial, but also ten videos for Instagram, TikTok and YouTube. You can sell all those hours.”

But tech platforms are now taking on more and more work and offering tools that advertisers can use to get started themselves. Making and distributing videos, with or without the help of AI, has become increasingly easier, says Leendertse.

The battle at the top

But the largest advertising agencies in the world, Publicis, Omnicom, WPP and Accenture Song (all four with a turnover between 17 and 20 billion dollars), are also struggling, according to Financial Times with the changing market and the rise of AI. The companies are active in the Netherlands and own dozens of advertising and communications agencies. Well-known names are TBWA/Neboko (Omnicom), Ogilvy (WPP) and Boomerang (Publicis).

While smaller advertising agencies are mainly trying to keep their heads above water, the large international advertising agencies are involved in an arms race in the field of data and AI.

The French Publicis has invested billions in buying up data companies in recent years. The last purchase dates from June, when it took over the data company LiveRamp for almost 2 billion euros. According to Publicis itself is the acquisition not only focused on gaining insight into billions of consumer profiles, but it now also has the ability to train its own AI models that it can offer to customers. By 2026, LiveRamp will invest approximately another billion euros in AI, Arthur Sadoun, the company’s CEO, recently told the Financial Times.

As the marketing arm of consultant Accenture, Accenture Song has a better position than the other advertising agencies in the global top four, which rely largely on traditional marketing activities. For example, Accenture is building Song AI platforms for advertisers Mondelezthe company behind snacks such as Toblerone, Milka and Oreo. The new marketing tool must be used by the various brands of the American snack giant faster and more efficient can set up advertising campaigns.

WPP is also trying to join the AI ​​race. The British company, that once Wire Plastic Products was called and produced plastic baskets, closed at the end of 2025 a deal with Google of almost 350 million euros. In this way, the company wants to be able to offer Google services to customers and be the first to have access to the services of Gemini, Google’s AI tool.

But WPP, which issued several profit warnings in 2025, also needs to reorganize. The company lost a listing in the British stock market index FTSE100 in December after almost thirty years. The American Omnicom, which is through a takeover was one of the largest agencies at the end of last year, wants to save approximately one billion euros on personnel costs until 2028. By investing in new technology and saving on personnel, companies hope to be able to transform to the changing market in time, although the question is whether they will succeed in time.

The publicly traded companies may have a war chest, but smaller advertising agencies face different challenges. The already precarious revenue model is coming under further pressure. Media economist Matthijs Leendertse expects that companies will specialize in specific strategic marketing, such as building a brand identity for luxury brands. “But I think it will be difficult for traditional advertising agencies to make money with standard marketing communications.”

If anything shows this, it is the influencer market, according to the American trade association IAB one of the fastest growing in the advertising industry. The large advertising agencies also see this, as evidenced by the many acquisitions in recent years. Publicis paid more than 450 million euros for influencer company Influential in 2024 and last week it was announced that Accenture will acquire Whalar. Nothing has been disclosed about the acquisition price, but Whalar’s director mentioned it “the largest transaction in the creator economy ever“.

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