Place AI In The Business Model To Help Brands Thrive

AI reshapes the way marketing agencies deliver value — increasing productivity, accelerating the speed of insights, assisting creative ideation, amplifying production velocity, and sharpening media and search activation. But they are not being compensated for the value creation. It’s an AI cost center crisis.

It’s reasonable to conclude that AI creativity is now the rule and no longer the exception. One agency increases speed to market by 80% or higher compared to its non-AI projects. Other agencies reduce production costs between 40% and 50%. And global brands that apply AI to end-to-end marketing delivery increase advertising performance up to 70%. The diversity of use cases and multidimensional benefits illustrate the advancement from AI pilots to AI proficiency. Marketing agencies such as Monks, Omnicom, Publicis Groupe, and WPP build AI into their offerings and leverage partnerships from Adobe, Amazon, Google and NVIDIA.

Marketing Agencies Are Missing AI Monetization Opportunities

Yet AI marketing capabilities are absent from the brand-agency remuneration. Most agencies fund the costs to develop and maintain AI marketing capabilities. According to our latest research, conducted in partnership with the 4As, 75% of marketing agencies bear the costs, with generative AI capabilities funded directly by the agency without passing the costs to clients. That’s an astounding 83% increase from 2024, revealing that as marketing agencies become more adept at intelligent creativity, they become less likely to financially benefit from it.

The current services-based commercial model between brand and marketing agencies threatens the long-term sustainability of growth for both agencies and brands. IPG saw a 4% reduction in US revenues. S4 Capital saw a double-digit decline in net revenues during fiscal year 2024. Advantage Solutions reports an 8.5% decline in revenues in 2024. And newly rebranded WPP Media informed its US employees that up to 45% will be impacted by its restructuring. When it comes to brands, there’s little secret that today’s marketing mantra remains “do more with less.” Major retail, manufacturing, and services brands are looking to remove marketing costs and overall opex using AI technology. Zalando, H&M, Mondelēz, and Shopify have all made significant shifts toward AI to provide their companies further efficiency. Without a healthy marketing services industry to support them, brands’ ambition to maintain efficiency and improve growth are less likely.

Reimagine The Brand/Agency Relationship

The solution to the cost center crisis? Incorporate AI into a new commercial model between marketing agencies and brands. Implement a two-pronged approach: transparency and transformation. Increase transparency by 1) monetizing AI-enhanced marketing, thereby removing opaque cost-of-business contracts and deliverables and 2) sharing the value of AI with clients. Brands should compensate for that value. This will require a transformation of the agency/partner commercial model. Forrester advocates for an evolved remuneration model we call the human/technology equivalent to replace the current full-time-equivalent (FTE)-based services model. In this solution, the cost of technologies such as predictive, generative, and agentic AI are permanently coupled with the hourly costs of the experts who wield them. This fundamentally modernizes marketing partnerships by focusing them on value, outcomes, and growth, rather than scopes, FTEs, and billable hours.

In our latest report, The State Of Generative AI Inside US Marketing Agencies, 2025, we detail an explosion of AI growth within agencies, including objectives, use cases, benefits, barriers, partnerships, and remuneration. This reveals significant opportunities for how brands can leverage the emerging capabilities of marketing partners for their own growth.

If you’re a Forrester client interested in learning more about what the current state of play means for the future of the client-agency relationship, set up a guidance session with Jay Pattisall.

Finally, be on the lookout for daily content at this blog during Cannes Lions week and for our upcoming keynote, “The Network Effect Of AI Amplifies How Employees Create Powerful Experiences,” on June 25 at Forrester’s CX Summit North America.