Monday Briefing: Nobody Has Priced the AI Yet

Good morning, it's James here. Big Tech reported last week and the capex numbers did what capex numbers do, which is make everyone gasp and then scroll. Meta guided to as much as $145 billion this year. Amazon went to $220 billion. But the sentence that should change how you write your next agency contract came from a much smaller company, on a call almost nobody in marketing bothered to listen to. Let's get into it.

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The Lead: Nobody Has Priced the AI Yet

What happened: On Omnicom's second quarter earnings call, an analyst asked CEO John Wren where AI was driving the biggest cost savings, and whether those savings were flowing back into client budgets. Wren said, "The marketplace hasn't seen what the cost of this AI is" (Digiday, July 29). He said savings are being shared "for sure, but we're still in the early stages of this," and that clients are largely reinvesting whatever they get straight back into the marketplace. Omnicom Media Group CEO Ralph Pardo put the mechanics more plainly, saying, "Tokens are not free. Being able to query LLMs comes at a cost."

Why CMOs should care: For 18 months the agency pitch has been that AI makes the work faster, better and cheaper. The chief executive of the largest holding company in the world just told investors the price is not set yet. That is a very different sentence from "AI saves you money." A live, variable cost is sitting inside your agency relationship that nobody has agreed how to bill, and this industry has a well-worn place to put costs it would rather not itemize. Holdcos are already offsetting AI infrastructure spend against client commitments to buy a set volume of principal media, the inventory the agency buys in bulk and resells at a markup (AdExchanger, July 28). Robert Webster, a former WPP executive, called much of the industry's claimed AI investment manufactured cover for what he described as "skimming money out of media."

The take: By Friday the next move was public. Agencies are weighing whether to buy tokens in bulk and resell them the way they resell media, which would make compute a principal product carrying every transparency problem that implies. Ebiquity CEO Ruben Schreurs named the pressure driving it, saying that "starting this year, agencies can't afford to continue to subsidize all those costs" (Digiday, July 31). Handle this before your 2027 scope is signed. Ask your agency two questions in writing. What did compute cost to service our account last quarter, and how is it billed. If the answer comes back bundled into a media commitment rather than as a line item, you are not buying AI efficiency. You are financing someone else's infrastructure at a markup you cannot see.

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By The Numbers: 12%

Meta's average price per ad rose 12% year over year in the second quarter, on 14% more impressions, per the company's own results (Meta, July 29). Revenue hit $60.80 billion, up 28%.

On the other side of the same release they shared their operating margin fell to 31% (from 43% a year ago) as total costs reached $42.03 billion. Meta guided 2026 capital expenditures to "the range of $130-145 billion," narrowed upward from its prior outlook. Amazon, reporting the same week, raised its own 2026 capex expectation to $220 billion (Marketing Dive, July 31).

Those buildouts get funded somewhere, and it is usually from us marketers in the ad auction. A 12% price increase on inventory you were going to buy anyway is the funding mechanism working as designed, not a bidding anomaly your team can optimize away. Build the 2027 media plan assuming platform CPMs rise again, and make the case now for the channels where you own the relationship instead of renting the impression.

Channel Shift: Time Started Selling Ads to Robots

Time is running ad units built for machines instead of people, and the reason is uncomfortably simple. The publisher sees "more bot traffic than human traffic most days" (Digiday, July 30).

Working with ad tech firm Mobian, Time converts its pages into markdown, the stripped-down text format models read most easily, then serves one agent-targeted ad per page. The units are "formatted as FAQs with a brand's information and messaging, and labeled as sponsored content," generated from a brand brief and routed to the client for approval before they run. There are no impressions to count and no clicks to attribute, so Time sells against "visibility, favorability and accuracy scores over time." Ally Bank and the Project Management Institute are among the first buyers.

Three years ago the job was getting your brand into the answer. Now a publisher will sell you placement inside the answer, on a page no customer will ever load, priced on whether the model came away with the right impression of you. The measurement is soft and the format will change. The number underneath it is the one to act on, because only about 15% of brands currently have markdown-powered websites. Find out this week whether you are one of them. Buying agent-readable placements while your own site is unreadable to agents is the wrong order of operations.

The Reading List

• Google makes passkeys mandatory for Google Ads API users: Starting Wednesday, generating a new OAuth refresh token requires a passkey, and that extends to Google Ads Editor, Scripts, BigQuery Data Transfer and Looker Studio. Existing tokens keep working, but a brand-new passkey carries a seven-day security delay. Forward this to whoever owns your reporting pipeline before they need emergency access. (Search Engine Land)

• Nike and Lululemon sued over 'phantom discounts': California law requires a strikethrough price to reflect a real price from the previous 90 days. One suit alleges Lululemon showed a $98 reference price on tights that had not sold at $98 since October. Attorney Rob Freund counts "about twice as many lawsuits filed in 2025 compared to 2024." Your promo calendar is a legal document. (Digiday)

• Google is morphing from media to tech: Ad revenue of $81.63 billion grew 14.5% while Google Cloud grew 82% to $24.77 billion. Ads are still 68% of the business and no longer the story management is telling. (Digiday)

• Amazon's ad segment hit $19.8B on a live sports land grab: Up 26%, with Thursday Night Football, NBA, WNBA and NASCAR inventory sold out. Steal this for your own planning: multisport advertisers saw 2.3x the unduplicated reach of single-sport buyers. (Marketing Dive)

• Local Services Ads are becoming Performance Max campaigns: Migration starts this month for US home and storefront categories. Manual bidding goes away, weekly budgets convert to daily averages, and historical campaign-level performance "will not migrate to Google Ads." Export your reports before the notification window closes. (Google Ads Help)

One More Thing

Read the week as one story. Meta is charging 12% more per ad to help fund a buildout of up to $145 billion. Amazon is at $220 billion. Google's growth engine has moved to cloud infrastructure. And your agency is working out how to pass along its token bill without calling it a token bill. Every layer of the supply chain is repricing at once, in the same direction, for the same reason.

None of that is a scandal. It is what happens when an industry retools. It does mean "AI will make this cheaper" has earned a follow-up every time you hear it this year, and the follow-up never changes. Cheaper for whom.

See you next Monday. Stay sharp out there.

- James