Is the traditional agency model dying?

This newsletter comes from the hosts of The Marketing Architects, a research-first show answering your biggest marketing questions. Find us on Apple Podcasts or wherever you listen to podcasts!

This week, we're examining how AI is reshaping the traditional agency model and what it means for marketing partnerships. 

—Elena  

41% of agencies bill hourly, but only 24% of marketers prefer this model. 

The gap between how agencies charge and how marketers want to pay reveals deeper issues with traditional agency relationships. Most marketers prefer project-based fees instead of hourly billing. 

Traditional agency models are breaking.           

Agency-client relationships are in a state of flux. AI is forcing a fundamental reimagining of how marketing services are delivered and valued.  

Traditional hourly billing models are going out the window as AI accelerates previously time-intensive tasks. But the shift extends beyond pricing. Here's how agencies and marketers alike should be thinking about change in the next few years. 

1. Platform evolution. Agencies are shifting from service providers to intelligent platforms offering specialized capabilities. This lets them deliver more value while maintaining efficiency. 

2. Specialization premium. As AI commoditizes basic services, deep expertise in specific channels or industries becomes more valuable. Agencies with unique data and proven results will thrive. 

3. Focus on outcomes. Performance-based compensation models are gaining traction as marketers demand clear ROI. This aligns agency incentives with client success. 

4. Hybrid solutions. The future likely includes a mix of in-house teams, specialized agencies, and AI-powered platforms. This gives brands both control and expertise as needed. 

For marketers, this shift means more options but also more complexity in choosing partners. The key is finding those who can deliver measurable results while adapting to rapid technological change. 

Listen in on our discussion.

“If AI saves agency time, does charging by the hour still make sense?” 

This WARC article challenges traditional agency billing models and explores why performance-based compensation may better serve both agencies and clients in an AI-powered world. 

Read the article.

What will it take to grow?       

“Change is inevitable. Growth is optional." 

— John Maxwell, author