Executive Briefing: Tuesday 20 October

Executive summary This briefing highlights the commercial imperative of decision science in AI investments and the significant shift in holiday spending driven by Gen Z and Millennials, who heavily leverage AI in their purchasing journeys. Concurrently, the advertising landscape is rapidly evolving with new agentic platforms, programmatic innovations, and critical discussions around AI ethics and algorithmic bias, reshaping how brands connect with consumers. Decision science critical for AI ROI as projects fail Businesses are struggling to derive actionable insights from their data science investments, with studies indicating that 60% to 85% of projects fail to deliver clear guidance for decision-making. This disconnect stems from data scientists focusing on prediction while managers seek choices that improve business metrics like profit. The emerging field of decision science models the decisions themselves, aligning data analysis with strategic business goals to ensure analytics investments deliver tangible ROI. This approach is being adopted by platforms like Konnect Insights, which launched Front Office OS to unify customer-facing systems and translate conversations into actionable business intelligence through natural language queries. Similarly, Kustomer introduced Conversation Intelligence and AI QA to provide CX leaders with deeper insights from customer interactions, structuring unstructured data to feed automated workflows and identify risks like potential churn. Gen Z and millennials reshape holiday spending with AI For the first time, Gen Z and Millennials are projected to account for 50% of holiday spending, driving a forecasted 4% increase in the average US household's holiday expenditure to $1,654. These younger consumers, who report improved financial situations, plan double-digit increases in their holiday spending and show a strong reliance on technology. Notably, 39% of consumers overall, and 49% of Gen Z shoppers and 50% of Millennials, use generative AI for tasks such as budgeting, gift inspiration, and deal discovery. Retailers are advised to cater to these preferences by offering personalisation, fast delivery, and wish-list tools. News Australia is launching a free masterclass for small and medium businesses to prepare for Black Friday and Cyber Monday, emphasising that 8 million consumers now use AI tools for shopping decisions and 84% hold off purchases until sales start. New agentic advertising platforms and ethical concerns emerge The advertising technology landscape is rapidly evolving with the introduction of agentic advertising platforms, with WPP and Omnicom executing live transactions on FOX Advertising's new system. This platform enables agent-to-agent connectivity across audience planning, media transactions, and activation, incorporating a governance engine for compliance. Concurrently, Meta is introducing new ad products like 'Ads Super Burst' and 'First Impression Ads', which offer guaranteed reach and first-view placements, drawing parallels to traditional television media planning. However, these advancements also raise ethical and regulatory concerns; a Brazilian electoral court has ruled that Meta must ensure its AI tools apply identical criteria to political candidacies following allegations of algorithmic bias. Furthermore, new Meta commercial terms are set to permit the scraping of news sites associated with business accounts for AI training, prompting scrutiny from legal experts regarding licensing implications. Out-of-home media surges as a trusted channel The out-of-home (OOH) media sector has demonstrated significant growth, with total net revenue reaching $744.1 million for the first half of this year, a 6.5% year-on-year increase. This growth is attracting a diverse range of buyers, from marketing and print businesses to infrastructure investors and tech companies, each drawn by OOH's ability to reliably reach a mass audience at scale in premium, real-world formats. The channel's proven return on investment, with a potential 7.5x EBITDA once scale is achieved, is driving confident investment. This trend underscores OOH as a trusted and expanding medium amidst the fragmentation and declining trust observed in other advertising channels. The residential media network JACmedia has expanded fivefold in six months to 650 screens across 400 apartment towers, generating over 3 million weekly impressions and reaching more than 150,000 Australians, with plans to introduce "JACtivations" for brand experiences beyond screens.