Focusing on AI’s efficiency instead of effectiveness makes it harder to adopt essential new commercial models.
After a sweaty week in Cannes, it’s clear that agencies are not yet adapting well to AI. “The Cost Of AI Productivity Is Less Creativity” panel at the mercifully cool Microsoft Gardens, introduced by Amanda Richman, which saw Digiday’s Michael Bürgi interview Forrester’s Jay Pattisall and the 4As’ Mollie Rosen about their new, co-produced report, ‘The State Of AI Inside US Marketing Agencies, 2026″
The sobering headline is that 81% of agencies are using generative AI primarily to enhance internal productivity. In contrast, only 65% use genAI to ‘improve the quality of creative ideation’. And that drops to 35% with agentic AI.
So, everyone’s using AI, but the focus is on efficiency rather than creativity and effectiveness.
To be clear, this isn’t just agencies missing a trick – it’s existential. To understand why, we need to untangle two intertwined dynamics: the evolution of AI and the decades-long commoditization of agency services.
Commoditization as standard
Agencies have spent 40 years (poorly) selling time and materials. By conditioning clients to value inputs, they’ve practically begged procurement to drive down prices. Rude not to, in fact. Agencies are now seen as interchangeable other than by price – the very definition of a commodity.
So when AI arrived, the lure of efficiency was insanely seductive. Drop the headcount, decrease costs and maintain prices. Et voilà – instant margin boost.
But in the least surprising twist since the iceberg in Titanic, clients demanded those savings be passed on. After all, less input equals less value, right?
The great hope
With their margin flush busted, agencies turned to their next best hope: new pricing models. But despite everyone talking about products and outcomes, most agencies struggle to sell them in. The discouraging denouement? ‘The client said no’.
Their refusal has two very different explanations. First, agencies bizarrely conflate ‘outcomes’ with payment-by-results, with all its tricky necessities around risk, attribution and trust. That’s like attempting a marathon on day one of your couch-to-5k. So – quelle surprise – clients say ‘too hard’ and chastened agencies retreat to day-rates on spreadsheets.
Clients also push back on new pricing models because they’d rather wield their buying power to compare pommes-with-pommes. So the race to the bottom continues, but from an even lower, AI-powered benchmark.
A better case for change
But here’s the thing – AI is killing time-and-materials. As machines overwhelmingly take on the legwork, agencies have no option but to better capture value. Unfortunately, they’re not making a compelling argument.
Seen as commodities, agencies are trying to solve a perception problem with a pricing solution. But until you’re perceived as different, why would clients explore new models and compromise their buying power?
Happily, AI’s efficiency promise is maturing into something more interesting – effectiveness. Once new tools become standardized, like Photoshop, Excel or the abacus, advantage comes from the operator. From here, it’s your expertise that creates value – and this offers a far stronger case for change.
Better propositions enable better pricing
Leveraging deep expertise creates genuine differentiation. And once your agency is seen as tangibly different, you earn permission to sell differently. Only then can you demand the right to price differently. That’s why agencies must prioritize proposition innovation before pricing-innovation.
A modern proposition solves a specific problem for a discrete and ownable target audience. That doesn’t have to feel narrow or limiting, like a vertical sector. Global advertisers are an ownable audience for Hold Co.s, just as challengers, faded icons, mid-market brands or a bajllion other options are for shops of any size. Figure out who you can super-serve and focus there – they’ll thank you for it (and pay more for the privilege).
Next you need to change the conversation from day one. Prioritise fit over sales. Less persuasion, more consultation. Show up with a point of view to shape the client’s understanding.
Trusted advisors don’t ask ‘what keeps you awake at night’, they say ‘here’s what you’re not seeing’. They don’t take the brief – they make the brief.
And once you progress to pitching and pricing, your scarcity earns you leverage. You’re no longer one of many – you’re now the only one. You’ve been clear from the start that you don’t sell time. Most importantly, you’ll happily walk away if clients won’t explore pricing models to find a win-win. And you no longer have to fill in their bloody spreadsheet.
An existential challenge
It’s time to stop optimizing the old world and start inventing the new one.
As Mollie Rosen said in Cannes, “AI is an opportunity to redefine the value that agencies bring.” And with agentic AI coming hot on the heels of genAI, this opportunity is only going to grow.
In the meantime, AI is making everyone faster and cheaper. To avoid sliding deeper into commoditization, your proposition must express enough differentiation to escape the gravitational pull of selling time.
This commercial transformation is now an existential imperative. The only questions are ‘how?’ and ‘when?’. And unless you upgrade your ‘how’ from pricing-first to proposition-first, you might not get a chance to answer the ‘when?’.
Featured image credit: Compagnons (via Unsplash)
Robin Bonn is the CEO of agency positioning and business transformation specialists, Co:definery. He’s also the author of Market of One and host of The Immortal Life of Agencies podcast.
