Why the agency model is broken

For most of its history the agency sold one thing: the time of talented people. A brief came in, a team was staffed, and the invoice counted the hours. The pitch, the awards and the office all sat on top of that arithmetic.

AI breaks the arithmetic. When a draft that took a day takes an hour, a business that bills by the hour earns less for the same result, or has to pretend the hour still exists. We know the model from the inside. We ran an agency before we built products, and we stopped selling hours when the work no longer took the time we billed.

The billed hour

The trade bodies now say it openly. In March VoxComm, the global voice of agencies with more than 35 national associations, published guidance called Redesigning the Agency Value Model. It argues that AI cuts revenue by reducing hours and fees, and that agencies should sell productised solutions built around business outcomes, priced as fixed fees, subscriptions or on performance, so that revenue no longer follows headcount. Its president, Charley Stoney, put the problem plainly: hour based models reward volume.

Some networks have started. Joe Maglio, who runs Cheil’s agency network, told Digiday in July that all of its agencies are moving towards output based pricing instead of time and materials, and that half of the existing clients had already switched.

Clients are pushing from the other side. Digiday found that procurement teams tend to see AI as a reason to pay less, not more. Jay Wilson, an analyst at Gartner, said in March that CMOs renewing their agency contracts were still not seeing the savings in the fees. “The honeymoon around AI and agencies is essentially over,” he said.

The holding groups cut and merge

The largest groups are rebuilding, each in its own way. Omnicom completed its takeover of Interpublic on 26 November 2025 and retired three of the best known names in advertising. FCB moved under BBDO, while DDB and MullenLowe joined TBWA, as Adweek reported alongside 4'000 job cuts. In March its chairman wrote that the expected synergies from the combination had doubled to 1.5 billion dollars by mid 2028, mainly from labour efficiencies, real estate and overheads.

WPP chose one company around one platform. Its Elevate28 plan, presented in February, folds the group into four units for media, creative, production and enterprise solutions, connected by WPP Open, which WPP calls its agentic marketing platform. It targets 500 million pounds of annual savings by 2028 and a return to organic growth during 2027. WPP shed about 1'260 jobs in the first half of this year, and in September The Drum, citing the Financial Times, reported that another 1'000 would go before the end of the year. Gartner’s Wilson described the staffing pyramid as actively inverting, towards smaller and more senior teams that direct AI systems instead of doing the labour themselves.

Publicis went the other way. It raised its growth forecast for 2026 in July after organic growth of 4.8 percent in the second quarter, and its chief executive, Arthur Sadoun, called his strategy “the polar opposite of our peers’”. The answers differ. The direction underneath them does not: a technology platform at the centre, and the work organised around what it can do.

Paying for results, slowly

The big groups talk about outcomes too. WPP’s plan speaks of outcome based growth strategies for clients, and in January it won Jaguar Land Rover on an outcome based model. By the end of August, Digiday reported, the carmaker was still the only client to have signed up to such an offer. Cindy Rose, WPP’s chief executive, told Digiday she suspects the change will take a few years.

Paying for results sounds simple until someone has to define the result, and agree who carries the risk when the market moves. The direction is settled. The pace is not.

Clients take the work in house

Some of the work is moving inside. In its 2026 report on bringing work in house, the Association of National Advertisers in the US found its jurors five times more likely to say that marketers are doing so more than ever than to say they are pulling back. And 53 percent agreed that the main role of an in house agency is to be a strategic partner.

The holding groups see the same thing from their side. “Increasingly, clients are looking for fewer partners that can do more, with greater speed, precision and accountability,” Omnicom’s chairman wrote to shareholders.

AI makes the move easier. Work that used to need an outside production team, the resizing, the versions per market, the monthly batch of posts, can now be done by a small team with good tools and a clear brand pack. What tends to stay outside is the work that needs distance, a specialist, or a system nobody wants to build alone.

What stays human

Even Omnicom’s letter to shareholders, which counts the savings of its merger, draws a line. AI can improve efficiency and scale, it says, “but it cannot replace judgment, imagination, relationships and leadership.” We would name three things.

Taste is the first. A machine can produce a hundred options in a minute. Choosing the one that is right for this brand, this season and this audience is still a judgement someone has to make and defend.

Judgement is the second. Knowing when the rule does not apply, when a campaign should not run, when the number on the dashboard tells the wrong story. That comes from experience, and from caring about the result.

Accountability is the third. A client needs a name on the work, someone who answers the phone when it goes wrong. A model cannot be held responsible for a campaign. A person can, and clients pay for that.

Where we stand

We wrote about our own move from hours to products in Customer zero. Every product has a name, a result and a price, and in every one the machine does the production while a person approves what goes out.

Tempo runs social media from strategy to posting and reports, and a person approves every post. Reel makes photos, film and 3D in styles locked from a brand’s own references, so the hundredth picture still looks like the first, and a person picks what is used. Lookout finds the companies that need what a client sells, reaches them on every channel and hands over the conversations worth having. Studio puts a company’s marketing in one place, with a website that publishing cannot break, and a version agencies can run under their own name is on the way.

Further out sits Helm, a vision we are shaping with our partner Eigna Labs: a whole company run by one responsible founder with agents. It is not live. It shows where the question leads, and that the responsibility stays with a person.

The hours are going. Taste, judgement and a name on the work are what is left to sell. They were always the valuable part.