Sora’s Expected Impact on Marketers: In-Housing Creative and Pricing Changes

OpenAI’s latest AI-powered disruptor, the text-to-video tool Sora, is prompting shifts in business models and agency pricing structures, five sources told ADWEEK.

Currently in research mode and limited to red teamers, Sora creates original, realistic videos up to one minute long. Creative agencies will be able to use this tool to test ideas and visualize concepts early in the ideation phase, trimming production costs and time spent.

Instead of charging clients for the final execution, costs around ideation and prompt engineering will be integrated into agency rate cards, a departure from providing such services for free to clients, said Jason Snyder, CTO of IPG agency Momentum Worldwide.

“It shifts the business models because we’re going to be changing the pricing structures and the service offerings,” he said.

OpenAI’s Sora adds to a roster of text-to-video tools currently available in the market. Gen2 by Runway has been in circulation for a year. Lightricks, maker of apps like Facetune and Videoleap, announced an AI-powered filmmaking tool, LTX Studio.

These tools may lead to agencies securing a larger portion of production budgets. However, concerns persist regarding the potential impact of AI tools on human jobs.

Sources told ADWEEK that tools like Sora aren’t necessarily job-killers but instead prompt a shift in the skillsets required to maximize their effectiveness. Others question its impact on agency staffing.

“If I can provide a creative service at 30% efficiency gains over what I previously did, not only does the client want to pay less, but I also don’t need as many people doing the work,” said Paul Roetzer, founder and CEO of the Marketing AI Institute. “Publicly traded companies, private equity and venture-backed companies are going to make decisions that are in the best financial interests, not the best human interests.”

Brands in-housing creative

The democratization of AI tools could prompt some brands to bring more creative tasks in-house. Similarly, agencies may be nudged to adopt this approach rather than outsourcing production to contractors and vendors.

“It’s already happening,” said Roetzer. “I’ve heard this come down from the C-suite who look across all functions and find ways to reduce costs because they think they can achieve greater efficiencies as these tools become more prevalent.”

As new tools emerge in the market, brand expectations from agency partners will likely rise.

AI tools are a small contributing factor that are making agencies worried about pricing.

Mike Barrett, chief strategy officer, Supernatural

This presents agencies with the opportunity to build AI expertise and capture a larger share of production budgets, according to Mike Barrett, chief strategy officer at Supernatural. Roles such as prompt engineering will become increasingly prominent.

“Instead of asking for one ad, clients could ask for four ads,” said Barrett. “You may not need as many producers on staff, but you’re going to need people who can work with the new technology.”

However, Barrett remains skeptical of pricing shifts given the oversupply in the market for creative services. On one hand, clients are bringing more creative tasks in-house; on the other, there’s a market saturation of providers offering creative services.

“In that environment, the industry as a whole faces downward pressure on its ability to price projects or retainers with clients,” he said. “AI tools are a small contributing factor that are making agencies worried about pricing.”

New expertise and roles

Still, there are opportunities for agencies to be proactive and bring creative ideas to clients before a client becomes fixated on cost reduction, Roetzer said.

One strategy, according to Roetzer, involves agencies conducting an AI impact assessment on their talent, people and services.

“Look at the services you provide that make up different percentages of your revenue,” he said. “And be critical of how much revenue those services generate.”

Agencies must anticipate client needs that don’t exist today. As agencies are expected to undertake more production tasks, Momentum’s Snyder envisions specialized producers responsible for ethically and responsibly managing synthetic content and integrating it into media production capabilities.

As a result, the agency is introducing the role of synthetic media producer, specializing in creating and managing AI-generated content.

“We [still] have to address the issues around transparency, usage and copyright, and the bias embedded within [AI] models,” he noted.