Klarna cuts agency expenses by 25% using AI

For well over a year, agency and production company leaders have been worrying about AI’s effect on the industry as the threat of robot replacement looms over Adland. Now, one marketer is giving new credence to those concerns. Klarna, the buy now, pay later firm based in Sweden, announced today that it has slashed sales and marketing spending as a result of a greater utilization of AI tools. The company estimates that it has saved around $10 million annually from the strategy. AI marketing blog How brands are using ChatGPT, DALL-E 2 and other tools Read more here In a press release, Klarna Chief Marketing Officer David Sandström touted the savings involved with using AI. “AI is helping us become leaner, faster and more responsive to what our customers care about, leading to a much, much better experience,” he said, noting that Klarna is producing more marketing and “saving tens of millions of dollars a year." In particular, Klarna, which has a partnership with OpenAI, said it has reduced its external agency expenses by 25%. It is now using AI instead of outside agencies for translation, production, CRM and social work, the brand said. Also read: Production companies weigh AI ad threats and opportunities The switch has been especially cost-efficient for tentpole shopping events such as Valentine’s Day and Mother’s Day, according to Sandström. Klarna now uses AI for images rather than creating “bespoke imagery”; in the first three months of this year, the brand generated over 1,000 images, it said. Klarna is also using AI for marketing copy: Its new AI-powered tool, “Copy Assistant,” is deployed for 80% of its copywriting. Earlier this month, Klarna announced that 90% of its staffers use AI daily. Check out the latest Ad Age events and award programs When asked about Klarna’s shift in strategy, Marla Kaplowitz, CEO of advertising trade group the 4As, wrote: “The advertising industry was built on the power of creativity and the uniqueness of the agency leaders working on behalf of brands today. While AI is creating efficiencies and new ways of working, nothing will replace the power of human creativity.” It’s a far cry from just three years ago, when Klarna first emerged on the marketing scene with a splashy Super Bowl spot starring Maya Rudolph as it sought to introduce itself to U.S. consumers. For that ad, and earlier U.S. work, Klarna worked with creative agency Mirimar. The firm also worked with Swedish creative agency Nord DDB and Caviar on a campaign fronted by A$ap Rocky. More recently, Klarna enlisted Paris Hilton’s media agency 11:11 Media for a campaign that featured Hilton herself. When asked about Klarna’s current agency roster given its shift to AI, a brand spokeswoman responded: “We continue to work with our creative, media, and production agencies worldwide.” She referenced “significant efficiencies” that include reducing dependence on external agencies. “This approach allows us to run more campaigns, encourage innovation, and enhance our agility.” The company has been vocal about AI at a time when it has gone through multiple rounds of layoffs. In March, CEO Sebastian Siemiatkowski said AI can do the job of 700 workers. Partially as a result of operational efficiencies, Klarna reported its first quarter of profitability in four years in 2023. As buy now, pay later firms have risen in popularity in recent years, they have come under more scrutiny by regulators. Last week, the Consumer Financial Protection Bureau ruled that such brands must afford their customers the same legal protections and rights that traditional credit card companies give. For example, consumers will be able to dispute charges and request refunds.

Klarna cuts agency expenses by 25% using AI

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