The Cannes Lions Festival of Creativity, an ad industry conference, awards show and schmoozefest that begins on Monday, is known for its beaches and its sunny atmosphere.
This year, attendees can also expect an existential debate.
For years, ad executives have understood a technological takeover of ad creative was coming, and with it, a power shift from creative agencies to the tech giants that control the platforms. Now, with companies like Google, Pinterest, Snap and Amazon steadily adding powerful A.I. ad creation tools, it feels uncomfortably near.
Anxieties peaked this spring with reports that Meta would soon allow advertisers to make A.I.-generated ads without any agency involvement.
Some believe agencies can effectively embrace generative A.I. (Agencies are a “critical partner” and “an essential channel for the industry,” Dave Dugan, Meta’s vice president of global clients and agencies, said when asked about the company’s new A.I. tools.) Others warn agencies will be displaced by it.
“The advertising world might be at their funeral without even realizing it,” said Geoffrey Colon, an entrepreneur who spent two decades at creative agencies and tech giants. To sum it up, he said: “Iceberg ahead.”
Agencies are dependent on tech platforms for distribution. For years, Madison Avenue’s relationship with Silicon Valley has been somewhere between symbiotic and codependent, with agencies and tech companies working together to buy, sell and serve ads across various platforms.
Around half of U.S. digital ad spending annually goes to Google and Meta, and ad agencies give them plenty of data about their ideas simply by running ads on the platforms.
Holding companies want a stake in A.I.-generated ads. They are investing hundreds of millions of dollars in their own platforms. For example:
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WPP is investing $400 million a year in its own A.I. platforms. It also has a strategic partnership and an equity stake in the generative content startup Stability AI.
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Publicis Groupe has invested in the A.I. content platform Bria and acquired several content creation startups, including Influential, for which it paid $500 million last year.
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Omnicom and IPG are in the process of merging in a deal worth $13 billion that the companies say will create more A.I.-driven capabilities and scale.
In 2024, about 12 percent of entries to Cannes Lions used A.I., according to the conference.
Some ad executives see an expanding pie. Stephan Pretorius, the chief technology officer of WPP, told DealBook that making it easier to create ads is not necessarily a bad thing. “A big reason why search was so successful in adding new advertising customers is because anyone could do it,” he said.
Even if A.I. tools turn ads into commodities, they “can’t come up with the kernel of the concept beyond what already exists,” said Donna Sharp, managing director at MediaLink, which helps arrange deals between advertisers and agencies.
A.I. may push ad creatives from producing to consulting. At Cannes, Monks, a marketing technology agency, will showcase a new process that involves a dozen A.I. agents collaborating on strategic and creative work. Wesley ter Haar, a co-founder of the agency, said the agency is becoming a “system integrator” that helps clients with A.I. adoption.
Not all agencies have gone that far, but most major players — and some smaller ones — are aggressively exploring ways to use generative A.I.
Will A.I. investments pay off for agencies? The agencies think so — or at least hope so. But platforms can place A.I. tools in front of advertisers at the same places where they’re purchasing ads. That could lead some advertisers, especially smaller businesses, to question their need for agencies if Google’s and Meta’s tools work well enough.
The agency Goodby, Silverstein & Partners will use Cannes to showcase how A.I. can aid human creativity, screening a trailer made with content generation tools for a screenplay by the artist Salvador Dalí that was never developed.
“What is it that humans are bringing to the game?” said Margaret Johnson, the chief creative officer and a partner at G.S.&P. “The answer is originality. When you’re starting with a script from 1937 that Salvador Dalí wrote himself, you realize how powerful originality is.”
It’s too soon to know if the optimism is in the right place, but it raises another big question: What’s the market rate for a new idea?
IN CASE YOU MISSED IT
President Trump pauses immigration raids on farms, hotels and eateries. The decision comes as demonstrations against the Trump administration’s crackdown on immigration are planned for today in all 50 states. It suggests the scale of President Trump’s mass deportations is hurting industries and constituents he does not want to lose.
Nippon Steel and U.S. Steel say they’ve reached an agreement to close their deal. President Biden had previously blocked the Japanese steel maker from acquiring its U.S. competitor for $14.9 billion because of national security concerns. A new deal with the Trump administration gives the U.S. government a “golden share” in the company.
The fallout for law firms that cut deals with Trump continues. Seven partners at the law firm Willkie Farr & Gallagher, which struck an agreement with the president to avoid a crippling executive order, will join Cooley, a firm that helped successfully challenge one of Trump’s orders in court.
Anne Wojcicki is set to regain control of 23andMe. A nonprofit controlled by the DNA-testing company’s former C.E.O. and co-founder offered $305 million in a bankruptcy auction for its assets. 23andMe had previously said Regeneron, a biotech company, won the auction, but it reopened bidding after Wojcicki’s unsolicited offer.
The U.S. Open golf championship enters its final rounds. Hosted at Oakmont Country Club in Pennsylvania, and featuring the longest par-3 in major golf history, the tournament has a $21.5 million purse, with $4.3 million going to the champion.
The Democrat suing Trump for firing him from the F.T.C.
Alvaro Bedoya, one of the two Democratic F.T.C. commissioners whom President Trump tried to fire in March, formally stepped down on Wednesday.
He and his colleague, Rebecca Kelly Slaughter, sued the Trump administration over their dismissal, accusing the president of executive overreach. DealBook’s Danielle Kaye spoke with Bedoya about that ongoing lawsuit, the direction of the agency and what he’s doing next. The interview has been condensed and edited.
Walk me through your decision to step down.
I tried to keep doing my job as long as I could, but at a certain point, I couldn’t do it any longer. I’m a dad, I need a paycheck, and I can’t draw a paycheck from anyone other than F.T.C. while I hold myself out as an F.T.C. commissioner.
[As he fought to be reinstated, Bedoya had still been following ethics guidelines that prevent F.T.C. commissioners from taking other jobs. He said he had not been paid nor had he been able to vote since his dismissal.]
How do you view the ramifications of your dismissal?
The protections that apply to us are essentially the same that apply to Federal Reserve Chairman Jerome Powell, to the head of the Federal Deposit Insurance Corporation, to commissioners at the Securities Exchange Commission.
So a world where me and Commissioner Slaughter can be shown the door at a moment’s notice is a world where that same kind of instability affects your retirement account, your checking account — pretty much every aspect of the modern economy.
Do you expect regulators under Trump to continue closely watching tech, as some have indicated?
To his credit, Chairman Andrew Ferguson said — after he was designated but not sworn in — that he wanted to continue to hold Big Tech’s feet to the fire. Assistant Attorney General Slater has a great track record on this.
The reason I’m worried, though, is that in a world where any of them can be removed for no reason at any time, it doesn’t matter what they think. Because either they obey and they stay — or they don’t and they won’t.
You’ve been critical of some recent decisions from the Republican-led F.T.C. That includes the repeal of the pricing lawsuit against Pepsi. What do these actions say about the F.T.C.’s new priorities?
The good is that both Slater and Ferguson have committed themselves to protecting competition in labor markets. The bad is dropping a lawsuit that would have leveled the playing field for small retailers across the country.
What about a potential consent decree in the agency’s review of the Omnicom-Interpublic merger that would prevent the merged company from boycotting platforms because of their political content?
It’s a bizarre giveaway to Elon Musk. I’ve never seen anything like it.
At this point there are effectively just three F.T.C. Republican commissioners. What’s the importance of the Democratic minority?
The decision to sue Meta over its acquisition of WhatsApp and Insta was made by a Republican F.T.C. chairman teaming up with Democratic F.T.C. commissioners.
It isn’t just this blowing-the-whistle function — it is legitimizing law enforcement. The fact that sometimes you have the minority party in dissent, and sometimes you have the minority party in the majority — that validates the impartial nature of what federal agencies are supposed to do.
What are you planning to do next?
I think we need to build up a capacity outside of the government to defend workers and small business owners. And so that is something I want to see if I can build, a nonprofit law firm.
A scramble to avoid Trump’s tariffs
As Trump wages a trade war against China, U.S. companies have timed shipments in hopes of avoiding the most expensive levies. Price changes for shipping a container between China and the U.S. reflect the strategy, Sarah Kessler reports for DealBook.
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Early in the year, companies stockpiled goods from China in anticipation of Trump’s taking office. Demand for vessel space soared, making a usual spike in prices ahead of slowdowns after the Chinese New Year and the U.S. holiday season more severe.
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In April, when the Trump administration announced a minimum 145 percent rate on Chinese imports, much trade between the two countries ground to a halt. Carriers were able to avoid a major price plunge by reducing capacity.
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In May, the U.S. and China agreed to temporarily slash those sky-high tariff rates, setting off a rush to import goods before the end of a 90-day pause. But carriers had already pulled back on capacity, creating a temporary shortage of vessel space as demand surged. Prices shot up, with many hikes starting June 1 before beginning to ease again (possibly because carriers “added too much capacity back to the lane just now,” said Judah Levine, the head of research at the freight booking platform Freightos).
The U.S. and China reached a handshake deal this week, which would leave tariffs on Chinese imports where they are. Whatever happens next, Robert Khachatryan, the C.E.O. of Freight Right Global Logistics, told DealBook, “The uncertainty around the economy, inflation and trade policy are definitely weighing down the factory orders.”
Quiz: Unexpectedly Tame Inflation
Inflation rose 2.4 percent in May, from a year ago, according to new data released by the Labor Department on Wednesday. The report suggests Trump’s tariffs have so far had a limited impact on consumers. Among the possible explanations, reports The Times’s Colby Smith: Companies may have stockpiled inventory before new tariffs went into effect, and consumers may be pulling back on spending.
Prices were down in all but one of these categories. Which was it?
A. Furniture
B. Clothing
C. Toys
D. Eggs
Thanks for reading! We’ll see you Monday.
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Quiz Answer: C
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