The Impact of Zero Marginal Cost Models on Advertising

Take a break from your daily work, or getting upset with AI taking over jobs, and consider all the possibilities and specialties the industry will need in the future, writes Amandeep Singh.

We live in wonderful times of different generations who have had very different experiences growing up in the world. A disproportionately high number of people in higher management in any business organization would naturally be people who are older and have more experience.

A large chunk of the biggest marketing-oriented companies are also what we call traditional businesses. This further means that if you went to business school more than a decade ago like me, chances are all the case studies you were taught and trained in, were obviously traditional business models.

The businesses which have grown to become the biggest and most profitable ones in the last decade or two are companies that are digital or built on a “Zero Marginal Cost” model – unlike the traditionally-modeled ones which actually incur marginal costs of producing and distributing their products.


 

You would ask me why are we talking about all this and how does it impact the marketing world?

Well, the shift is the fundamental reason for where advertising has moved to in the last many years – more digital, more agile, based on data and analytics, and so on.

But with the rapid progress of generative AI, we are moving to a future with Zero marginal cost of content creation.

Until now marketing departments have been relying on specialist agencies to create advertising and content for them to run their full-funnel marketing campaigns. The science and art together as we know is a special skill as well as proven science in building large profitable brands.


 

“When the AI starts getting better at creating this content, the actual cost of content creation is ultimately going to become zero.”

Brands follow where the consumer’s eyeballs go, their engagement goes, and more importantly where their attention goes. And in the hyper world where attention is the biggest currency, they create content that aims to break the clutter and evoke an emotional response from the target customers.

When the AI starts getting better at creating this content, the actual cost of content creation is ultimately going to become zero. Of course, the content for all social media networks is zero marginal cost already as they depend on their users and creators to do it.

So where does that leave us?

Well, there is no fixed answer, the world is divided or pretending to be united on many things. But the fact remains that these are fundamental shifts in our world, and they directly impact the world of advertising.

Sometimes, looking at the larger pictures unlocks many doors. Take a break from your daily work, or getting upset with AI taking over jobs. Instead, think of the possibilities and specialists we will need in the future where the content created by brands would start moving to a zero marginal cost.


The views expressed in this article are personal, and not necessarily those of the author’s employer.

Amandeep Singh

Amandeep Singh

Amandeep is SVP - Client Solutions & Integration at VML in Mumbai.

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