When CMOs pay for agents not agencies: S4 Capital’s AI gambit

Take a recent Pixel smartphone campaign. AI handled nearly every part of the production pipeline: scriptwriting, storyboarding, even directorial decisions. Pre-production, production, post – all generated by agents. What would’ve taken months with a traditional team was compressed into weeks. 

“We personally estimate about 65% of the tasks agencies get paid for currently could be done by AI agents with today’s technology,” said Wes ter Haar, an executive director of S4 Capital on the earnings call for the group’s interim results.

It’s the quiet part said out loud.

Executives like ter Haar aren’t sidestepping the question of AI-driven job cuts anymore, they’re leading with it. He’s expected to brief staff at the group’s operating brand Monks on the scope of those cuts later this week, according to Business Insider. 

“We’re currently in the midst of reshaping our business to be AI-enabled,” he told analysts on the call. “The current cost reduction exercise is a part of that approach, and it improves our full strength heading into H2, as well as setting us up well for 2026.”

How that restructure works at scale remains unclear. But the direction is taking shape: S4 plans to rewire the business around what it calls an “AI workforce”, spanning three areas: data-driven strategy, automated content and optimized media. The goal is to bundle these capabilities into managed services turning reocurrant agency work into recurring revenue streams.

Another piece of that model is consulting. S4 plans to guide CMOs through what these shifts mean for their org charts, workflows and definitions of value. Most of that consulting revenue is expected to come from systems integration, helping marketers implement and manage enterprise partnerships with AI infrastructure providers. 

“We’re on a path that we call mass marketing as a service within the next three years,” said ter Haar. 

Some clients are already further along that path than others – the ones who are moving away from paying from billable service to paying for outcomes. Those deals represent a small slice of S4’s current revenue, but the long-term bet is clear: fewer people, more automation and a business model that looks less like an agency and more like a platform. 

“The reality is AI is eating the agency business,” said ter Haar.

It’s the sharpest version yet of the story S4 is trying to tell about its future – one built around the shift from “agencies to agents”, aimed at lowering client costs by redesigning the marketing supply chain with automation. In many ways, it’s the AI-era upgrade to the group’s “faster, better, cheaper” mantra. 

And it comes at a time when the business needs a new story. 

The company cut its full-year revenue forecast for the second time this year, weighed down by client pullbacks amid global and uncertainty and U.S.-imposed tariffs. That pressure isn’t likely to ease anytime soon but within the crisis, S4 sees an opening: with CMOs under growing pressure to do more with less, the logic goes, AI will take over more of the ad creation process, freeing up ad dollars that can be pushed downstream to media. 

“My personal view is that once we know where tariffs will end up in 2026 we’re going to see significant pressure from clients to reduce create costs and that’s going to be a significant cost for us,” said S4 Capital’s founder and executive chairman Sir Martin Sorrell on the same call.

Of course, there are still plenty of ifs, buts and maybes that need to align for that future to materialize. Still, the signals are hard to ignore. 

L’Oreal is now producing roughly 50,000 images and 500 videos per month using Google Cloud’s Imagen 3 and Veo 2 technologies to scale creative across products and markets. Kraft Heinz used the same tools to cut down production on some assents from eight weeks to eight hours. Unilever said it now uses AI to create 400 creative assets per product for select brands in its beauty and wellbeing division. 

“We think the industry is going to see a significant reduction in the proportion of create costs to media costs over time, driven by macroeconomic uncertainty, the tariffs and the need to be more efficient and disciplined,” said Sorrell.

At this stage, these comments are less a bold prediction than a reflection of where the market is headed. 

To be fair, that direction has been visible for some time – its just that much of the industry wasn’t ready to say it out loud. Now, that’s shifting. What once felt speculative has become operational. Major advertisers – from Dell to Unilever, Mondelez to Klarna – are leaning more heavily into AI to speed up production and cut costs. S4’s pitch is evolving in step with those economic realities. 

But those economics are far from uniform. 

For every CMO eager to automate, there are others hesitant – worried about quality, accountability or their own relevance in the value chain. Until more CMOs reconcile those tensions, S4’s model will remain more ambition than outcome.