Approx. 15%-25%.<\/em>\n<\/div>\nThe Agency will now offer genuine specialist depth, cross-client learnings that power speed of innovation, cross-platform OEP consumer behavior informed strategy creation, and new outside-in scale\u2026 Or additional fees reductions become possible.<\/p>\n
Everybody Wins, YES!<\/strong><\/span><\/p>\nIf you lead an Agency, I\u2019ve likely added to your discomfort. Let me make the case for why this change is incredibly exciting for Agencies.<\/p>\n
A. You are no longer a hamster furiously rotating a wheel connected to nothing.<\/strong><\/p>\nAgency gets to work on really cool, smart, high-value, unquestionably outcome-impacting initiatives. This extends the life of the Agency. This enriches the careers of every Agency employee.<\/p>\n
B. You don\u2019t need to be doing $50\/hr or $100\/hr work. <\/strong><\/p>\nYour new SOW contains more expensive $500\/hr and $1,000\/hr work streams, along with $yyy,yyy per week costing strategic projects!<\/p>\n
Glorious impact: This new and exciting work allows you to hire large numbers of entirely different types of experienced individuals \u2013 while paying them well (vs. the current: charge the client a lot, hire the most junior employees you can get away with, and pay them below market wages in exchange for \u201cexperience\u201d).<\/p>\n
C. (As with every revolution\u2026) Better Agencies will emerge.<\/strong><\/p>\nAgencies have died and were born each day last decade. I anticipate both accelerating in the next two years. <\/p>\n
Births will be so exciting. Modern Agencies attuned to persuasion in an AI world, responsive to shifting consumer experience, embracing\/leading radical evolution of platforms, structurally built to be outcomes-centered strategic partners! Mamma mia!!<\/p>\n
The Core Shift.<\/strong><\/span><\/p>\nThe old Agency fee was largely rent on an execution army: campaign builds, keyword lists, audience segmentation, manual bidding, painful upfront contract negotiations for the next 18 months, pacing, trafficking, QA, reporting, and constant \u201cmicro-optimization\u201d on ad platform to feed Clients with the illusion of \u201cwork\u201d \u2013 and have something to show in the 2x\/wk meetings Client employees demanded to \u201cprove value.\u201d<\/p>\n
Except for the illusion need, most levers above are pulled by the platform\u2019s own AI for Performance Marketing and many for Brand Marketing. You\u2019ve heard the names: Smart+, ASC, PMax, AI Max, yada, yada, yada. <\/p>\n
[<\/strong>Premium Subscribers: Calculate your sophistication score: TMAI #508: Google Ads Maturity Model. +Discover what your Agency should have been doing mid-2025 onwards.]<\/strong><\/p>\nAn Agency\u2019s value has migrated upstream: Cross-platform OEP consumer behavior informed strategy creation. Value signals hunting and automation. Creative concept ideation and pre-testing (execution and variations are AI helped or solved). Super advanced holistic full-anywhere-outcomes analytics. Governance (guardrails, Agentic wrangling, brand safety). Some or all of these create new client impact and new client fees.<\/p>\n
The Agency should not be paid primarily for touching the account.* In fact, over-touching now actively degrades algorithmic performance by messing up AI learning!<\/p>\n
The Agency should be paid for automation, more senior judgment, governance, scaling intelligence, and bleeding edge innovation risk reduction (not \u201cA\/B Experimentation\u201d).<\/p>\n
Agencies are not becoming worthless. The basis of their value is materially changing.<\/p>\n
Exactly as, Analysts \/ Creative Directors \/ Content Creators are not becoming worthless. The basis of their value is materially changing.<\/p>\n
* If in July 2026 your Agency is touching your account more than once every dozen so days, do not blame them\u2026 Fix the source by firing your Marketing Manager & Director.<\/p>\n
Subtractions & Additions to Power Your Shift.<\/strong><\/span> <\/p>\nAs someone with leadership roles at Clients (15+ years), Ad Platforms (15+ years), working closely with Agencies (10+) and leading one (2+), I say with confidence that the future is super bright for Agencies with good CEOs.<\/p>\n
To support that transformation, presenting my\u2026 Client < > Agency Operating Model. <\/strong><\/p>\nThis week: Subtractions. Everything transitioned to Platform AI or reduced or eliminated entirely, resulting in changed Agency scope and resulting contract savings.<\/p>\n
Next week\u2019s Premium edition: Additions. A.<\/strong> Everything your team should own now. B.<\/strong> Streams of higher value work the Agency needs to grow into and be paid more.<\/p>\nSubtractions: What You Stop Paying For.<\/strong><\/p>\nExtracting from a typical past Agency contract, the subtractions contain twelve dimensions to focus on. For each, I\u2019ve identified the typical cost weight, reduction in Agency effort, and contract savings.<\/p>\n
![\"Agency](\"https:\/\/www.kaushik.net\/avinash\/wp-content\/uploads\/2026\/07\/agency_substractions.png\")
<\/center><\/p>\nFor each of the 12 dimensions, in a robust spreadsheet, I\u2019ve identified: Area of Work. Old Model (what an agency did). New Model (powered by platform AI). New Company Role. New Agency Role. Change in Agency Scope. Estimated Contract Savings.<\/p>\n
Since my experience along all of these dimensions would take a mini-book to detail, I\u2019ll compress 12 dimensions into 5 clusters and summarize your actions.<\/p>\n
[Note:<\/strong> TMAI Premium subscribers can reach out for the robust spreadsheet to direct the conversation with their Senior Leadership, Procurement, and CFO.]<\/strong><\/p>\n1. Agency Activity Army.<\/span> <\/p>\nAccount and campaign architecture, \u201ckeyword\u201d research and match-type sculpting, audience segmentation and targeting, radio & tv ad tactic structures. This was the beautiful old world of a hundred thinly sliced campaigns \u201cfor control.\u201d<\/p>\n
The machines devoured this work. PMax, Advantage+ (A+), similar collapse structure into a few asset groups that the algorithm <\/strong> allocates internally. Intelligence reads intent, using additional tens of thousands of data points beyond the keyword or post content. A+ audiences treat your segments as hints, and then finds converts you never listed.<\/p>\nThe Agency’s job is not building, it is deciding. Advertiser (you) sets the reward function hierarchy, brand\/non-brand priorities, brand safety red lines, margin protection bands. The Agency\u2019s real remaining role: One-time architecture design, and occasional restructure IF strategy changes. It is NOT monthly rebuild billed as progress.<\/p>\n
Approx. 22%<\/span> contract cost weight, work that can be reduced by approx. 78%<\/span>.<\/p>\n2. The Bid & Pace Dancers.<\/span> <\/p>\nManual bids, budget adjustments, day parting, device modifiers, daily pacing, spend checks, disapproval fixes, \u201canomaly\u201d checks, \u201chygiene.\u201d Hours and hours and hours.<\/p>\n
AI can do narrow intelligence at a scale and impact that surpassed us in late 2024.<\/p>\n
Smart bidding to your reward function (see: TMAI #432: AI Unlock: Value Based Bidding<\/em>), campaign budget optimization, automated alerts, auto-recovery, now all this work continuously, and better. You just need to let the AI learn. When it starts, results will dip a bit. Your Agency jumps in to rescue by cutting bids\/something. The AI learning resets. The dip returns. Agency\u2026 You know the rest. No stable learning. Company keeps sucking.<\/p>\nReminder: Over-touching does immense damage in an AI world. Your Agency is causing this harm and it is your fault – for not understanding that every \u201crescue\u201d is a sabotage.<\/em><\/p>\nThe Agency job shrinks to setting the true reward function (aka kpi, target), occasional configuration of guardrails IF business strategy changes, and, hardest of all, operate at the rhythm of the AI\u2019s learning cycle.<\/p>\n
Approx. 14%<\/span> contract cost weight, work that can be reduced by approx. 73%<\/span>.<\/p>\n3. The Assembly Line.<\/span> <\/p>\nTrafficking, ad builds, combination making, ad formats \\\/ creatives \\\/ variations, torture of tagging, QA, shopping-feed babysitting. <\/p>\n
Ad platforms \u2013 except TV, Radio, press \u2013 can do this at a scale AND relevance that will shock you. Assembling bits from your ads, text, site, building creative, generating variants with GenAI (try this on paid Amazon!) mixing image video audio in the best version per person<\/strong>. All they need: often just your site link (or core assets) and a reward function.<\/p>\nNote: One reason they can do this spectacularly well is that your creative is judged by your VP of Creative\/HiPPO, while the creative Ad Platforms deliver is judged by the business outcome delivered. 🤯<\/p>\n
The Agency\u2019s role narrows to the genuinely useful: Asset preparation, clean taxonomy, and spot-QA. Feed management is the one line that remains meaningfully skilled for now \u2013 sadly, data quality is still human.<\/p>\n
Approx. 12%<\/span> contract cost weight, work that can be reduced by approx. 45%<\/span>.<\/p>\n4. The Optimization Theater.<\/span> <\/p>\nDaily rituals <\/em>of pausing \u201closers,\u201d shifting budgets by feel, endless small A\/B tweaks, the deeply irritating unfocused \u201clearning agenda\u201d items that will never amount to much.<\/p>\nOften the single biggest cost, and now the most destructive thing your agency is doing.<\/p>\n
Modern AI-led platforms run their own continuous explore-exploit; they are already testing combos of creatives, bids, targeting to find high-value customers \u2013 at scale and cray cray speeds. They can also account for learning cycles that can span weeks\/months, try that with a human. <\/p>\n
The Agency\u2019s role is cut down to: Few, really big (as in 15%+ increase in revenue), clean experiments, with the right altitude (creative concept \u2013 not execution -, audience attribute).<\/p>\n
Approx. 16%<\/span> contract cost weight, work that can be reduced by approx. 75%<\/span>.<\/p>\n[<\/strong>Premium Subscribers: The role of what an Analyst does is quickly changing. Your current role will be gone by Jan 2028, replaced by a better one. If you are willing to learn and change, here’s how to save your career: TMAI #495: Analyst 2028: S.H.I.F.T For Relevance.]<\/strong><\/p>\n5. The Reporting & Servicing Factory.<\/span> <\/p>\nManually pulled weekly decks\/spreadsheets\/update emails. 2x Weekly \u201cupdate\u201d \u201ccheck-ins\u201d with 6-36 Agency attendees. Exhaustive reports on placements and \u201cbrand safety.\u201d Agency \u201caccount management\u201d meetings with other vendors and partners. Detailed hand written commentary of the data already in dashboards. Urgent need it by EOD<\/em> cuts of existing decks\/reports. \u201cClient Training Sessions,\u201d with content already easily available to all anyway. Dinners, outings, offsites, to ensure client happiness.<\/p>\nAI cannot solve for all these items, certainly not dinners and outings.<\/p>\n
But, dashboards and reports are disappearing with Claude-fronted data lakes that can do both what and why to such a great extent that you don\u2019t have to be held hostage by the Agency\u2019s 17-tab spreadsheet. Platforms for automated placement filters, and brand safety tooling that gets better by the hour. Since there is ever increasing automation in Meta and Google, you need drastically less \u201caccount management,\u201d and certainly not as many meetings.<\/p>\n
The Agency\u2019s work is limited to: Aforementioned dinners. Automating in-flight optimization. Shifting focus from Care (99% today) to Do & Impact (TMAI #391: Data Storytelling Framework: Care, Do, Impact). <\/p>\n
Approx. 30%<\/span> contract cost weight, work that can be reduced by approx. 60%<\/span>.<\/p>\nPunchline:<\/strong> Contract Cost Weight * Reduction in Work and in my case equals 65% savings<\/strong>. For you, it might be a little less or a little more. Use the table and the math above to discover.<\/p>\nThe work is not going away, a lot of it is moving to machines. What\u2019s left is more useful, higher impact work. Agencies don\u2019t sell motion anymore. They sell judgement.<\/p>\n
The Conversation Continues in Part 2.<\/strong><\/span><\/p>\nAchieving this transformation in our Agentic AI-era requires you add new roles to your company to thrive in this new universe.<\/p>\n
You also need to add\/increase SEVEN threads of new work to your Agency contract.<\/p>\n
In Part 2, I’ve covered both these critical elements in detail. Additionally, it also contains the complete Operating Model in Excel, to simplify transformation conversations with your CMO, CFO, VP Procurement\u2026 And then, your Agency.<\/p>\n
![\"Agency](\"https:\/\/www.kaushik.net\/avinash\/wp-content\/uploads\/2026\/07\/agency_operating_model.png\")
<\/center><\/p>\nIf you are a TMAI Premium subscriber, please reach out for Part 2 if you are unable to locate it in your inbox.<\/p>\n
Bottom line.<\/strong><\/span><\/p>\nI come to Agencies from a place of respect. The best ones are extraordinary \u2013 taste, courage, and pattern memory across dozens of clients that no in-house team can match. <\/p>\n
I come to AI from a place of trust. A vast majority of performance execution is AI-led, and all of it will be soon enough. <\/p>\n
That respect and trust sit with this pragmatic truth: You can pay for the past or you can embrace and extend the present. <\/p>\n
A new tomorrow starts with knowledge, and now you have it.<\/p>\n
Carpe diem.<\/em><\/p>\nPS:<\/strong><\/span> A little in the weeds but\u2026<\/p>\nA.<\/strong> With the extraordinary criticality of data and automation, it is important that you own your ad accounts, pixels, and any data Agency is piping from sources beyond you. Avoid becoming a hostage or victim. Get immediate and complete ownership. <\/p>\nB.<\/strong> When you kill Percent of Media Spend, you are putting a kibosh on toxicity of undisclosed markups, principal media, and rebates. Awesome. Be aware: There may be people inside your own company for whom that toxicity is a positive incentive. Don\u2019t forget to fix it.<\/p>\n","protected":false},"excerpt":{"rendered":"The intelligence and automation revolution has created\/forced immense transformation at Marketing Agencies. All types: Media. Creative. Performance. Brand. Measurement. CRM\/\u201dLifecycle.\u201d […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[505],"tags":[163,507,508],"class_list":["post-10294","post","type-post","status-publish","format-standard","hentry","category-strategy","tag-brand-marketing","tag-marketing-strategy","tag-strategic-thinking"],"acf":[],"yoast_head":"\n
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