In my role as Head of Strategy, I am less concerned with quarterly volatility than I am with structural trajectory. The question that occupies my thinking is not whether agencies will survive the AI wave — they will — but rather where sustainable competitive advantage will reside once the market stabilises around new norms.
What is becoming increasingly clear is that the execution-led agency model is entering a period of structural compression. This is driven by a fundamental shift in the economics of production: AI has not eliminated agency value; it has re-priced it.
Where Value Is Migrating
As the marginal cost of production falls, the scarcity that once justified premium pricing erodes. When execution becomes abundant, it ceases to function as a durable moat. The economic value is migrating upward, consolidating around the design of systems rather than the production of outputs.
Clients are no longer constrained by a lack of tools; they are constrained by a lack of integration and clarity. In an environment of proliferating martech stacks and AI governance concerns, what they require is not more activity, but architecture.
Architecture in this context refers to the intentional design of revenue systems: aligning marketing strategy with financial forecasting and integrating AI into workflows in a commercially coherent way. These are coordination challenges that remain decisively human.
The Strategic Risk of Inertia
Many agencies understand the direction of travel, yet remain economically tethered to legacy service structures. Retainers are built around deliverables; teams are organised around production throughput.
The real danger is not abrupt disruption. It is the incremental dilution of strategic relevance. As in-house teams arm themselves with sophisticated AI, tactical functions are absorbed at a lower cost. If you are viewed as a substitutable line item by procurement, your margins will erode gradually, then compound over time.
The Opportunity for the Evolved Agency
There is a widening gap at the level of system design. Agencies that can provide structured frameworks for integrating AI and building measurable experimentation ecosystems will command a different class of relationship.
The Shift from Deliverables to Outcomes:
- Increased Switching Costs: Value becomes embedded in processes, not just files.
- Longer Contract Horizons: Transformation is a journey, not an episode.
- Enhanced Pricing Power: Moving the conversation from hourly rates to business outcomes.
This requires a business model evolution, not a cosmetic pivot toward “AI services.” It demands proprietary methodologies and vertical specialisation in complex sectors.
The Role of Strategic Leadership
Our responsibility is to assess structural risk honestly. That assessment begins with uncomfortable questions:
“If we were building this agency from first principles in an AI-native world, what would we design differently?”
The answer to that question shapes the next five years more than any individual campaign.
How I Work With Agency Leadership Teams
In working with agency leadership, my focus is on structural clarity. This involves:
- Service Audits: Rigorous assessment of service lines against automation exposure.
- Transition Strategy: Designing phased moves that protect existing revenue while elevating positioning.
- Measurement Architecture: Aligning talent, pricing, and commercial models with outcome-based value.
The objective is not reinvention for its own sake. It is deliberate, evidence-based evolution.
The Outlook
The agency sector will not contract uniformly; it will stratify. Execution-led firms will compete on efficiency and cost, while Growth Architecture partners will operate in a different tier of influence.
The agencies that move early will shape the norms of this next phase. Those that hesitate will adapt within structures defined by others. The strategic choice is whether change is undertaken deliberately or imposed by market forces.
