Agencies are having a moment and not a comfortable one.

2025 delivered a string of signals that something structural is under strain: a bruising year for WPP, waves of layoffs filling LinkedIn feeds with senior talent, and major consolidation events such as the VML–Wunderman Thompson merger and Omnicom’s acquisition of IPG. These aren’t isolated incidents. They are symptoms.

The industry response has been predictable. When pressure mounts, we reach for familiar explanations. Artificial intelligence. The economy. Clients who won’t take risks. Procurement. Technology platforms siphoning off talent and briefs. Each of these contains a kernel of truth and yet none fully explains what’s happening.

The comfortable villains

It is human nature to fear what we don’t fully understand. For more than a decade, technology has played the role of convenient culprit inside agencies. Having led emerging technology and innovation teams within large networks, I have watched ‘tech’ blamed for everything from creative dilution to margin pressure. In one particularly telling moment, a creative leader jokingly referred to the innovation council I ran as ‘the P45 club’.

Today, AI occupies that same position. It is blamed for replacing human labour while simultaneously being positioned as the industry’s great hope – a tool that will restore efficiency, growth and differentiation in one stroke. When that narrative wears thin, attention shifts to shrinking budgets, risk-averse clients, procurement constraints, or platforms allegedly stealing talent and opportunity.

These explanations feel persuasive because they externalise the problem. They suggest that if only the environment were different, agencies would be fine.

But that assumption deserves closer scrutiny.

Commoditisation is the default outcome

One of the least comfortable truths facing the industry is that most agencies are now commodities. Differentiation has eroded to the point where positioning language often sounds interchangeable, regardless of scale or pedigree. Technological acceleration has not caused this, but it has made it impossible to ignore.

When more people can produce more outputs, faster and cheaper, creative production alone struggles to sustain value. In response, some agencies have attempted to shout louder about creativity. Others have added new capabilities to the org chart. Neither approach addresses the underlying issue.

What has made a difference is where an agency chooses to sit in the value chain. We are seeing resilience, and in some cases growth, among businesses that integrate strategic thinking with production and delivery, as well as among traditional consultancies that have finally built creative studios capable of executing their ideas. In a shrinking market, vertically integrated models are proving more robust than loosely connected ones. This is not coincidence. It is structure at work.

Operating models built for another era

The deeper problem, however, lies in how most agencies are designed to operate.

Leadership remains organised around siloed disciplines: strategy, creative, production, media, technology. These disciplines tend to operate in a linear sequence, governed by hierarchical teams and slow feedback loops. Innovation, when it appears, is often confined to a dedicated function or a slide near the back of a deck rather than embedded into how the business actually runs.

At the same time, leadership teams are attempting to oversee an increasingly complex landscape of SaaS and AI tools, each procured at departmental level in the hope they will make work faster, cheaper or smarter. AI, in particular, is frequently deployed as a volume amplifier rather than a structural rethink — ten art directions instead of three, more variants, more outputs, delivered faster. This kind of faux transformation is easy to mistake for progress. Anyone can buy licences and produce more work in the same amount of time. Very few redesign the system beneath it.

The result is familiar: overwhelmed leadership, disillusioned talent, wary clients, and a growing sense that despite producing more, agencies are becoming less distinctive.

When work walks out the door

It is at this point that something more troubling begins to happen.

Agencies rarely turn work away explicitly. Instead, they do so structurally. When an operating model cannot absorb complexity, cannot iterate quickly, and cannot govern creative risk coherently, certain kinds of work simply cannot be held. Not because they are unwanted, but because the organisation is not designed to support them.

Innovative thinking suffers first. People who challenge briefs before answering them, who test assumptions in the real world, who design experiences rather than assets, tend to struggle in systems optimised for linear delivery and billable efficiency. Risk-taking becomes too risky when pitches must be won at all costs. Innovation is pushed to speculative side projects or unpaid pitches, while the “real work” continues unchanged.

I lived this dynamic for years. Billability became the fixation. People with unconventional ideas were encouraged to work on the margins, to prove value outside the core workflow, while their thinking was quietly excluded from the work that actually paid the bills. Leadership would later express frustration that innovation wasn’t driving growth, even as the system made it almost impossible for it to do so.

Over time, these thinkers disengage or leave — often for technology platforms, consultancies, or the small number of agencies that have redesigned themselves around modern complexity. Leadership frustration grows as growth stalls, and the cycle repeats.

Work has not disappeared. It has simply gone elsewhere.

Why scale and AI won’t save you

Scale is often presented as the solution to these pressures. AI will increase throughput. It will. For a time, it may even improve margins.

That approach is perfectly viable if the ambition is to become a delivery shop — competing on commoditised metrics such as scale, throughput, time to delivery, and cost. In some parts of the ecosystem, that is a rational and defensible position.

But for traditional creative agencies, this is the opposite of the goal.

Inside operating models that are not built for lateral thinking, continuous feedback, or creative iteration by design, scale accelerates commoditisation. As AI enables higher output with fewer human “doers”, underlying dysfunction becomes more visible, not less. Volume increases; differentiation erodes.

Efficiency alone cannot resolve a structural mismatch.

This is not a capital structure debate

It is worth being explicit about what this argument is not.

Whether an agency is publicly listed, privately owned, or backed by private or growth equity is largely beside the point. While certain ownership models make cost-sharing and financial operations easier, they do not determine whether an organisation can govern itself effectively.

The real differentiator is operating literacy: the ability to understand how decisions flow, how risk is owned, and how complexity is managed day to day. Where this literacy exists, modern pressures are navigated. Where it does not, they feel existential.

Redesigning the operating system

The agencies that endure will stop treating disciplines as discrete functions and start treating the business as a living system. They will invest less energy in debating tools and more in redesigning how work actually happens.

This requires multidisciplinary leadership working in close collaboration — leaders capable of questioning briefs, stress-testing assumptions, using data intelligently, and iterating alongside their teams. It requires hiring multi-hyphenate talent fluent across strategy, data, technology, design and delivery, and using technology to remove monotony rather than replace thinking.

Human-machine teaming does not diminish creativity. It exposes the systems that support it — or fail to.

The choice ahead

Agencies are no longer art-and-copy shops. They are platforms expected to make sense of vast data sets, shifting cultural norms, geopolitical context and commercial reality, while helping clients make better decisions in uncertain environments.

The agencies willing to redesign themselves around this reality, to run toward complexity rather than obscure it, will define the next era of brand building. Those that don’t will still look impressive on paper.

But history is not where growth happens.