Principal Principles
Who bears the brunt of AI costs?
The advertising industry hasn’t settled on an answer yet, but many agency holding companies are striking a compromise with clients. They’re willing to pay the full AI infrastructure bill so long as the brand agrees to run a predetermined amount of paid media through principal inventory – meaning inventory the holdco purchased in bulk and resells at a markup.
The ethics of this practice are up for debate.
“Agencies like to claim they have invested a lot but much of it is manufactured to justify exactly this – skimming money out of media,” Robert Webster, a former WPP exec and founder of AI marketing consultancy TAU, tells Digiday.
But adding to the ambiguity, as Digiday points out, “nobody, including the holdcos, actually knows what a fair price for tokens looks like yet.” In that context, building an AI billing model on top of existing media-buying infrastructure is a logical move.
Agencies are “good at assessing risk on the media side, and they have the financial engineering and credit lines to do it,” says Daniel Knapp, chief economist at IAB Europe.
So why not apply that same model to the AI world if, assuming, “they can come up with a way to price the outcome,” Knapp says.
This Too Shall Passkey
Google will begin requiring all Ads API customers to have a passkey – essentially a biometric or device-based authenticator, like a fingerprint, facial recognition or other screen-lock method – in order to refresh a token and operate an account.
When you first generate a brand-new passkey on your device, Google subjects it to a seven-day “trust period” (more like a distrust period) before it’s considered fully trusted. Because the change takes effect on August 5, advertisers should make sure anyone who needs access sets up their passkey at least a week in advance, Search Engine Land reports.
This passkey update is likely to catch a lot of agencies and SaaS vendors flat‑footed, especially if they have new employees or team members rotating onto an account who need immediate access – and suddenly don’t have it.
It’s a necessary change by Google, though.
One gnarly scam tactic in recent years has been to target Google Ads account operators (particularly agencies and mar tech vendors) with fake Google login pages. Victims search for some variation of “Google Ads login” and click the top result, which looks like the platform page but is actually a sponsored scam link.
Users willingly approve the two-factor prompt, thinking they’re logging in themselves, but they’re actually authorizing the scammer. Once inside the account, the scammers drain campaigns and fund their next round of search ads.
You’ve Got A Face For Licensing
Hollywood is still very skittish about using generative AI tools to develop and produce new TV shows and movies. (Well, the actors, writers, artists and crew members involved are skittish, at least. Management, maybe not so much.)
But the burgeoning microdrama industry, for better or worse, has already fully embraced AI-generated content – much to the chagrin of its contract employees, Business Insider reports.
Some microdrama apps in the US have already faced criticism for using AI versions of non-union actors in ads without proper consent. But now, some are using the likeness of real actors to create completely new AI-generated content or, in other cases, producing remakes of existing content and replacing the original performers with new AI characters.
For advertisers who want to make their own AI-generated content, the trend – and the ensuing backlash – is worth keeping in mind.
A slightly more ethical and consent‑driven model is, ironically, emerging in China. As Rest of World reports, a number of online platforms now pay people in China between $15 and $700 to license their faces for AI-generated content.
Many even allow candidates to choose what types of products, settings and genres their faces can appear in, and to set their own prices.
But Wait! There’s More!
Why Omnicom merged Mediahub and Hearts & Science. [Digiday]
Meta has major data center expansion plans, but it wants to build them in secret. [NYT]
If you’ve created a public share link for a Claude conversation, you should know that it can be surfaced in Google Search results. [404 Media]
An artist has sued a meme generator for selling copies of his comic as part of a subscription-based ad template. [Ars Technica]
You’re Hired!
AI decisioning platform SWYM hires Jon Young as its chief customer officer. [release]
Here’s today’s AdExchanger.com news round-up… Want it by email? Sign up here.
