Infographic
The current state of marketing and advertising agencies
AI is no longer the story. The story is the agency: how it organizes, how it decides, how it bills and how it proves value to the client now that execution is cheap.
The challenges of 2026
Profitability first. AI made the podium.
Two out of three agencies name profitability as their number one operational challenge. And this year a new factor shows up and changes the conversation: integrating AI into their processes.
The new operational pressure
If you produce faster with AI, the client assumes they should pay less.
The old equation —more hours, more output, more revenue— breaks down. Selling hours is no longer enough: you have to prove impact, judgment and results.
Too many companies talk about efficiency. We talk about effectiveness: how to amplify your ability to generate results.David Sable · Vice Chairman, Stagwell · former Global CEO, VML
AI moved into operations
AI is already here. Maturity is not.
Practically the whole industry uses AI. Almost nobody can say what it is actually worth to their agency. That distance is the central finding of the report.
Adopting ≠ integrating
with measured impact
in some form
Nearly 60% of leaders admit usage is limited to individual initiatives or isolated applications. And only 10% have mature AI governance: someone clearly accountable for how it is used, what gets delegated and how it is measured.
point to time savings as AI's most visible impact.
tie it to a direct improvement in profitability.
admit they don't measure that impact anywhere.
Looking ahead
Nobody sees collapse. They see reorganization: smaller structures competing for projects that used to belong to the big players.
Finding
AI needs a structure to accelerate on top of.
When the operation is already chaotic, more speed doesn't improve the system: it amplifies the same problems. More rework, more versions, more pressure on the teams.
With clear processes, AI speeds them up. Without them, it amplifies the mess.
Visibility and operational control
The margin is already gone by the time most people find out.
This is the conversation that didn't move forward versus last year. It actually went backwards.
Visibility of billable hours · in any form
The industry made no progress on the most basic indicator of its business. The remaining 58.5% navigate with partial or nonexistent information, and only 14.9% have it in real time.
Tracking gaps between what was sold and what was delivered
88.3% find out late. By that point there is no room left to renegotiate scope.
1 in 2 agencies
lose between 15% and 40% of their time to rework. Another 27% can't measure it.
Profitability per client
know in real time what each client or project actually leaves them.
Confidence in the data
decide with medium confidence, leaning on historical data.
Fees, models and profitability
Agencies started negotiating with real evidence.
If you had to pick a single move the industry made between 2025 and 2026, this is it. And it isn't a technological one.
Basis for renegotiating fees · real cost and time data
Almost half now come to the table with real costs, historical timings, measured deviations and concrete margins. An agency like that isn't asking for an adjustment: it's justifying a business decision.
The tension still open
managed to use AI as an argument to defend or raise fees. Meanwhile, 13.1% already report downward pressure.
For now the economic value of AI shows up inside the operation, not in the commercial negotiation: today it gives the client more leverage to push than the agency has to push back.
Average operating margin
The retainer is still the dominant model: 61% work with monthly or annual fees.
Talent in transformation
The traditional junior gets automated. Seniors used to be built from there.
The challenge no tool solves: keeping judgment in training when the step where people learned it disappears.
Biggest talent challenge
Fear of losing what they have and of not finding what they need, almost tied. Talent stopped being an HR topic: it's strategic.
Team structure
already report fewer junior positions, replaced by hybrid profiles. Another 27.5% are re-skilling existing roles.
If you're not bringing people in at the bottom, how are you going to grow them at the top? Mentoring has never mattered more than now.David Sable
How leaders feel
are on the positive side: excited or cautiously optimistic. Only 8.3% are worried.
Events and awards
Effectiveness over pure creativity.
Leaders pick the awards that help them sit down with the client and defend their work with numbers. The circuit stopped being an ego exercise: it's commercial positioning.
Conclusion
The industry isn't disappearing. It's reorganizing.
The technology is here. What's left to build is everything else, and it comes down to four concrete moves.
Put the house in order before accelerating
Gaining efficiency without operational visibility doesn't improve the operation: it amplifies the mess.
Negotiate with evidence
Walking into the fee conversation with real data changes the commercial dynamic structurally.
Rethink how talent is trained
Without a model that replaces what the junior role built, you're left with execution and no judgment. And judgment is what the client can't get anywhere else.
Stop selling hours
Charge for impact. Clients don't want creativity in the abstract: they want business results.
If I'd had AI in the Renaissance, I would have trained it on 200 years of painting. But I would have gotten a Giovanni. Never the Da Vinci.David Sable · Vice Chairman, Stagwell · former Global CEO, VML
AI trains on what already exists. Only the agency can create what doesn't exist yet. That part doesn't get commoditized.
4th edition · 2026
Agency leaders across 18 countries