As agencies adopt AI to increase efficiency, clients will rightfully question traditional pricing models based on billable hours. This creates an "arbitrage" problem, forcing agencies to redefine and justify their value based on strategic insight and outcomes, not just the labor involved.
As ad platforms like Google automate bid management, an agency's value is no longer in manual "button pushing." The new competitive edge is the ability to feed the platform's AI with superior client data and insights. Agencies that cannot access and leverage this data will struggle to demonstrate value.
Focusing on AI for cost savings yields incremental gains. The transformative value comes from rethinking entire workflows to drive top-line growth. This is achieved by either delivering a service much faster or by expanding a high-touch service to a vastly larger audience ("do more").
The primary barrier to properly valuing creativity in advertising is the industry's reliance on a service-based, billable-hour model. This is a fundamental flaw that prevents creative work from being valued on its impact and outcome, unlike in the tech industry.
As the traditional employer-employee social contract breaks and AI automates cognitive tasks, individuals can no longer rely on physical or mental effort for their value. This shift compels a deeper search for purpose and what makes us uniquely human: our soul and self-awareness.
The future consulting model may flip traditional roles. Instead of hiring firms for primary analysis, organizations could develop their own 'agentic AI' for strategy creation and use external human experts simply to validate the AI's output, relegating consultants to a secondary role.
The transition from AI as a productivity tool (co-pilot) to an autonomous agent integrated into team workflows represents a quantum leap in value creation. This shift from efficiency enhancement to completing material tasks independently is where massive revenue opportunities lie.
Unlike law or accounting, marketing is a "fat-tailed" domain where a few big ideas generate most of the value, often for years. The shift to hourly billing is catastrophic because it rewards incremental effort, not the billion-dollar ideas that create lasting value but may have taken little time to conceive.
As AI systems become infinitely scalable and more capable, humans will become the weakest link in any cognitive team. The high risk of human error and incorrect conclusions means that, from a purely economic perspective, human cognitive input will eventually detract from, rather than add to, value creation.
In a world where AI makes software cheap or free, the primary value shifts to specialized human expertise. Companies can monetize by using their software as a low-cost distribution channel to sell high-margin, high-ticket services that customers cannot easily replicate, like specialized security analysis.
Unlike traditional software that supports workflows, AI can execute them. This shifts the value proposition from optimizing IT budgets to replacing entire labor functions, massively expanding the total addressable market for software companies.