Is AI undermining agencies’ client relationships or reinforcing agencies’ roles?

“A lot of it hinges on [the question of] ‘Should I pay my agency to take on these challenges and put the cost there, or do I do it myself?’” said Kimeko McCoy, senior marketing reporter and host of the Digiday Podcast in the latest episode.

To answer that question, Digiday executive editor of news Seb Joseph and senior media buying editor Michael Bürgi joined the show. They weighed in on whether brands will adopt AI and in-house marketing en masse as well as how agencies’ compensation models will need to evolve beyond billable hours when AI is accelerating turnaround times.

“It came up in a conversation I had with someone on the brand side recently. They wondered out loud whether the explosion of agentic AI that we’re seeing across the whole ecosystem exacerbates the remuneration problem rather than remedies it,” said Joseph.

Here are a few highlights from the conversation, which have been edited for length and clarity.

AI’s trough of disillusionment moment

Joseph: “You kind of go through that trough of disillusionment, which I think we’re kind of in the foothills of right now, where marketers — CMOs, CEOs, CFOs — start to realize that the technology may not deliver on its initial promises. And I think we’re kind of there with the AI bit now where you’re starting to see brands that have jumped on this thing early and are testing it… but then they’re starting to realize that there’s a lot of work that needs to go into it.

AI focus groups

Bürgi: “On the internal side, agentic is being used predominantly to create virtual focus groups. They’re creating personas so that when a media agency is trying to figure out a new direction for a brand, it comes up with these personas that can represent multi-thousands of people, of consumer focus groups that they would otherwise have to spend thousands upon thousands of dollars and maybe even hundreds of hours parsing through to glean these insights.”

The issue with outcomes-based compensation

Joseph: “It’s that measurement point which I think is really important as well here, right? How can you implement an outcomes-based model as a CMO, if you don’t know essentially what outcomes you want? You know, whether it’s CTV, retail media, even creators, there’s still a ton to unpack there in terms of what they think they’re buying versus what they’re actually buying, and frankly, also kind of how much they’re paying for it.”

AI’s impact on agencies’ employees

Bürgi: “One analyst told me that CMOs at the holding companies are privately acknowledging that they’re using natural attrition to just not replace people. And AI can kind of fill those gaps and cracks where people leave. So when John Wren talks about $750 million in savings, a lot of that’s going to get eaten up on AI-related costs, but they are saving a lot on just shaving down the number of personnel.”