AI threatens the agency landscape – make sure your key partners thrive

Now the dust has settled on Cannes for another year, it’s no surprise to reflect that the topic du jour was artificial intelligence – a term that’s now so well established that this paragraph contains the first fully spelled-out reference to ‘AI’ in years.

All along the Croisette, the conversation centred on just how far the revolution will go. But worryingly for marketers, much of the agency discourse was limited to efficiency.

In contrast, I recently interviewed WPP Open’s president Matt McNeany on Co:definery’s podcast, The Immortal Life of Agencies. He offered a much longer-term view on how AI plays out.

The efficiency phase – he calls it ‘streamlining’ – is just the beginning. It will be followed by ‘expansion’, when marketers apply their savings to do more than they ever could before. Matt’s third and final phase is ‘disruption’, where paradigms and customer journeys will be unrecognisable from what you’re used to today.

In which case, you’ll need to discern which agencies are focused solely on efficiency versus those that can help you embrace unimaginable change.

When efficiency slides into commodity

Of course, there’s nothing wrong with efficiency – cost-savings are always welcome, especially in a world of uncertainty and instability. But what happens after vast swathes of agency capabilities are delivered via widely available AI-powered tools?

In short, agencies will be further commoditised and you’ll find it harder to find the right partners.

Why brands are rethinking how they pay their agenciesIt’s already true that few ‘hot shops’ escape the sea of sameness and offer genuine points of difference. Now the AI-driven democratisation of services will make it even easier for them to claim to do everything for everyone.

Believe it or not, the daily deluge of DMs, creds presentations and RFPs will actually become more beige. Generic claims like being ‘creative’, ‘connecting brands with culture’ or their people being ‘their USP’ will swell from awkward and prevalent to ubiquitous and fatal.

Hire the most differentiated agencies

Your antidote is to only hire agencies that are super clear on what they’re great at. That doesn’t mean they all need narrow niches (although that can work well). It just means favouring those with the conviction to define the problems they solve.

Ask what makes them tangibly different. Hire those that are easy to choose. Large or small, if they show up with an empty strapline and little else, then show them the door.

If you insist on buying time, then your agency will keep firing talent. And I don’t need to spell out why that sucks for your brand.

Cutting through the agency noise is actually easier than you might think. Sure, there are lots of them. But that only creates oversupply when they all do the same thing. That’s why the agency space isn’t really oversupplied – it’s just under-differentiated. It’s like the bottled water market – crowded as hell, but then Liquid Death came along.

Once each agency creates what I call a ‘market of one’, they become the leader in a category defined by their own uniqueness. And if they’re demonstrably expert at creating the value you need – especially as AI disrupts your business – then you’ll willingly pay the premium that their scarcity demands.

Embrace new pricing models

Speaking of payment, this raises a second issue conspicuous by its absence in Cannes – our industry’s slow progress beyond time-based pricing.

In a world where AI-powered tasks take seconds, not weeks, agency pricing can’t be solely tied to inputs. Ready or not, deals based on outputs and outcomes are inevitable.

Let’s cut to the chase. If you insist on buying time, then your agency will keep firing talent. And I don’t need to spell out why that sucks for your brand.

‘Put the truth on the table’: Marketers on building effective agency partnershipsSo encourage your agencies to embrace a wider suite of pricing and productisation options. Be clear that you’re open to new ideas. Collaborate on models that suit your particular circumstances.

Yes, you and your procurement colleagues will need to invest some effort. But as you navigate unprecedented disruption, securing expert agencies with energised and motivated talent is a no-brainer.

Partnering to navigate an uncertain future

Clearly AI isn’t a fad. And unlike the internet, it’s not just a technological revolution. It might even be more than an industrial revolution, as it reshapes how we think and perceive the world. Time will tell on that.

For now, partner with agencies and support them through change, just as they are with you. Play back the importance of genuine differentiation and be mindful that cost-cutting is only a short-term fix.

As AI reinvents marketing from top to bottom, things are going to get very tricky for you and your brand. That’s why it’s good business to help smart agencies get stronger, not just cheaper. Specialised partners will be your competitive advantage. So make sure they’re in good health when you need them most.

Robin Bonn is the CEO of agency positioning specialists, Co:definery. He’s also the author of ‘Market of One’ and hosts ‘The Immortal Life of Agencies’ podcast.