What the ad industry should learn from Klarna’s AI labor cuts

The news: Payments company Klarna wants to use AI to cut 2,000 jobs—while increasing pay for remaining employees, according to statements from CEO Sebastian Siemiatkowski.

• Klarna’s goal to replace jobs with AI is no secret: Siemiatkoski told the Telegraph in December 2023 that it was freezing hiring to lean more on AI. Since then, its workforce was culled from 5,000 to 3,800, significantly cutting operating expenses.
• Siemiatkowski is signaling that another 1,800 jobs will go the way of the dodo. As of this writing, Klarna has 47 open listings on its careers portal. Anyone interested?

The specter of AI: Klarna’s industry is just one of many experiencing a dramatic increase in the use of AI. The advertising industry is also seeing a precipitous rise in AI adoption across the funnel that has spurred concern about job losses.

• But first, some reassurance: If artificial intelligence is coming for advertising jobs, it doesn’t appear to be happening yet. Ad industry employment hit a record 524,000 jobs in April, per the Bureau of Labor Statistics, declining to 522,200 as of the most recent jobs report.
• At the same time, major ad companies including all the big four ad firms are investing hundreds of millions into artificial intelligence products. In January, Publicis announced a $326 million investment into AI that will affect every part of the company, from creative to data analytics.
• That has created broad industrywide fear that jobs could be on the line. The US workforce at large shares those concerns: Generative AI is expected to disrupt 2.4 million jobs by 2030, per Forrester, with those earning under $60,000 most likely to be affected. The same report states that AI will account for over 30% of automation-related job losses by 2030.

Our take: Klarna’s steep layoffs and transparent desire to cull its workforce cast an uneasy shadow over the ad industry’s aggressive AI adoption. Some AI products show signs of not being entirely cooked yet, which could give employees time to develop safety plans and find ways to make themselves more essential.