The AI Inflection Infection
There’s a nasty virus spreading through the marketing and communications industry—and it’s infecting both clients and agencies alike. The culprit? Artificial Intelligence. The AI inflection point has hit marcomms hard, leaving many in a fog of uncertainty, especially marketers already fatigued from years of relentless technological upheaval.
AI is being hailed by many as a silver bullet—especially in boardrooms. For executives who don’t fully grasp its complexities, AI promises one clear benefit: cost savings. As a result, marketing budgets are being slashed, departments trimmed (and in some cases, decimated), and pressure on CMOs has intensified. Procurement, meanwhile, continues its unrelenting drive to cut marketing cost, pushing agencies to deliver more for less. This long-standing tension has reached breaking point, with financial models across the industry stretched to the limit.
Agencies, under siege, are fighting back. To remain competitive and relevant, they are pouring resources into technology—through acquisitions, in-house development, or partnerships. They are reinventing their operating systems to integrate AI and automation. But all this investment has to be paid for somehow. Hence, agencies are pushing for new compensation models that reflect modern realities.
However, many clients—and particularly procurement teams—resist. This pushback often stems from misunderstanding. There’s a failure to appreciate that agencies are now expected to deliver complex, tech-driven solutions requiring heavy upfront investment. Procurement teams, armed with spreadsheets but lacking nuanced knowledge of agency economics, cling to outdated payment structures that no longer fit the world we operate in.
Under such conditions, agency consolidation has been touted as the cure. Initially, networks merged specialist shops into integrated agencies to meet clients’ multi-channel demands. Logical, perhaps—but it came at the cost of talent, as waves of redundancies stripped away expertise. Yet, despite these mergers, client pressures persisted. Now, those integrated agencies are being merged again into “mini holding companies,” with once-iconic agency brands disappearing in the process. This consolidation may deliver cost efficiencies, but it risks homogenising the industry. When every agency looks and sounds the same, creativity and differentiation die. Recent developments—like the Omnicom and IPG merger and their new OAG entity—claim to preserve agency brands, yet even within this grouping, everyone now uses the same email addresses. The message is clear: individuality is fading fast.
Some clients won’t care. For them, volume trumps value. They measure marketing success by how many posts or impressions they rack up, not by the quality of ideas or depth of consumer connection. It’s a case of “never mind the quality, feel the width.” But the savvier CMOs—the ones who think long-term—know that real brand health comes from building emotional resonance and loyalty. They seek agencies that can deliver meaningful work grounded in insight and creativity.
Yet finding those agencies is becoming harder. With so much change and so many undifferentiated offerings, it’s increasingly difficult for marketers to see through the fog. For CMOs—and especially for procurement operating in isolation—identifying true capability and genuine talent has become a guessing game. Transparency on remuneration and value is just as murky.
This is where consultancy can play a vital role. The right advisor—one with deep, current industry understanding—can help brands navigate complexity, evaluate agency structures, and design operating models that truly work. But not all consultancies are created equal. Beware the so-called “pitch doctors” whose financial incentives are tied to agencies. Their advice may come cheap, but agencies will inevitably claw back those costs later, creating hidden conflicts and eroding trust.
Instead, brands need consultants who understand the full picture—the evolving client–agency ecosystem, the economics behind it, and the strategic nuances of AI’s impact. Only then can they provide the clear-headed guidance needed to restore confidence and brand health.
Because the truth is this: the AI inflection infection can be cured—but only by experts who know how to diagnose it properly. Just as you’d trust a specialist over a general practitioner for a complex illness, marketers must choose advisors who offer expertise, not easy answers. And definitely steer clear of the snake-oil salesmen promising a painless fix. In this industry, as in medicine, recovery takes skill, not shortcuts.
