At Advertising Week, CPG Leaders Explore How AI's Promise, Trepidation Will Reshape Industry

Walk the floors of Advertising Week this year, and you could feel the uncertainty. The CPG industry is caught between two opposing forces: slumping post-pandemic sales and Wall Street's relentless demand for growth. This clash forces a hard look at new solutions like AI, retail media, and the creator economy. However, each new path forward has its pros and cons, surfacing underlying tensions across the ad world.

To understand the pressure on CPG leaders, we spoke with Peter V.S. Bond, a CPG and retail industry expert with over 30 years of experience, currently serving as the Head of Industry & Client Engagement at Flywheel. As the founder and co-host of the popular "The CPG Guys" podcast and a recognized Top Retail Influencer, Bond is uniquely positioned to dissect the hype from the reality. He finds that while the industry is captivated by emerging tech, the most successful brands navigate the moment with a practical focus on application and long-term strategy. "There’s both great promise and great trepidation around how AI will change advertising. Brands are excited, agencies are concerned, and no one has cracked the code yet," he says.

• Dilemma at the top: The technological disruption unfolds against a backdrop of severe economic pressure. CPG brands that took on major price increases during the pandemic now often face volume declines, creating a difficult choice for leadership. "If your volume is declining but you're committed to hitting your EPS target to make Wall Street happy, the question becomes: how do you do it? Do you reduce advertising, invest less in innovation, or cut headcount? It's a real quandary right now for brands," Bond explains.

• Servicing the long tail: Enter AI. For many brands, its most practical promise lies in the ability to solve mundane, repetitive work at an unprecedented scale, moving beyond the hype of flashy creative generation. "With AI, brands can finally give the same level of service to every product in their assortment," Bond explains. "It means the long tail of their business can be treated equally to their most important products, giving them a new chance to grow and succeed."

• The agency squeeze: But the technology also creates real anxiety, particularly for advertising holding companies, whose business models now face a direct threat. Their pricing structure, built over decades on billable hours, is being fundamentally challenged. "The advertising model that has existed for years is based on headcount and number of hours worked. Now, holding companies need to rethink how they price out their solutions because a lot of the work they were charging for can now be done by AI."

This search for growth is also fueling a move into retail media, a sector that grew quickly on the promise of high-margin revenue for retailers and measurable performance for brands. The boom accelerates with the decline of linear television, creating a valuable audience that many brands are eager to reach. "There's a growing community of consumers that industry analysts refer to as 'the unreachables.' These are people who have cut the cord on traditional linear television, meaning brands can no longer reach them through those channels," he outlines.

• In-aisle attention: As brands grapple with these new channels, Bond suggests the solution to reaching the "unreachables" extends beyond the digital realm. "Those 'unreachable' consumers may not be watching linear TV, but they are still shopping in grocery stores. According to data from Placer.ai and Comscore, the in-store audience for Walmart is 75% larger than its digital audience. Once you understand that, you realize that influencing purchasing behavior in the physical store can help compensate for the declining power of traditional television."

• Software solution: In-store, however, does not always mean physical displays. AI agents are taking over Walmart and other grocery retailers are using digital ads to drive in-store sales. "Sam's Club has done a better job by delivering personalized ads through its Scan & Go mobile app. That's the way of the future because it's a software solution, not a hardware solution," he observes.

• A two-horse race: However, this promising new channel also carries its own forms of trepidation, particularly regarding market consolidation and internal conflicts. The retail media market is overwhelmingly dominated by two players: Amazon and Walmart. "According to eMarketer, 75¢ of every dollar invested in retail media goes to Amazon and another 10¢ goes to Walmart," Bond says. "That means 170 other retail media networks are fighting over the remaining 15¢ on the dollar. That model can't last for long."

With the retail market so consolidated, leaders at Advertising Week are also looking toward the rapidly maturing creator economy. But this area, too, presents both immense promise and potential pitfalls. "If you’re a CMO, you need to invite the younger people on your team to regularly show you the platforms and trends you don’t understand. If you can’t have the humility to admit what you don't know, and be willing to learn, then you shouldn’t be in that job. To me, that is professional malfeasance," Bond emphasizes.

Whether leveraging AI for operational efficiency, investing in scalable retail media, or partnering with creators, the path forward is about a strategic embrace of technology focused on long-term value. Ultimately, navigating the promise and trepidation of this new advertising era requires clear vision and strategic execution. Bond concludes, “The brands that succeed will be the ones who embrace AI and creators strategically, not just chase the hype.”