Five Agency Trends You Cannot Afford to Ignore with Drew McLellan

Danyel McLellan [00:00:01]: Welcome to the Agency Management Institute community where you’ll learn how to grow and scale your business, attract and retain the best talent, make more money, and keep more of the money you make. The Build a Better Agency podcast presented by White Label iq, is packed with insights on how small to mid size agencies are getting things done. Bringing his 25 years of experience as both an agency owner and agency consultant, please welcome your host, Drew McLellan.

Drew McLellan [00:00:32]: Hey everybody. Drew McLellan here from agency Management Institute and I am excited to be back with you this week for another episode of Build a Better Agency. This week is one of my solo casts. So for those of you that are regular listeners, you know, this is just you and me hanging out, talking about something that I think you need to know about, but no guest. And for those of you that are new, I just told you what it is. So if you’re here waiting for a guest, you’re gonna have to come back next week. But I promise you do not wanna miss this week. So every year about this time of year, I do a solo cast all about the trends that are shaping our work today. The things that Danielle and I are tracking and watching and seeing kind of bubble up and the things that we believe are gonna impact your agency, your business, your work for at least the next 12 to 18 months. So that’s what we’re gonna talk about today. So don’t go anywhere.

But before I do that, a couple things. Number one, I want to give a shout out and thank you to our friends at White Label iq. They’re the presenting sponsor of this podcast and what that means is they make it possible for us to be with you every single week. They help us curate guests, they help us financially and they support us so that I have the time to do this with you, that I have the time to provide this content for you and all these amazing guests that we have. You know, we’ve, we’re coming up on episode 600 already, which is crazy. I think about all the incredible people that we have had on the show and White Label has been a, the presenting sponsor for several years. And so a lot of those guests are directly because they support us and allow this to happen. So what they do, if you’re not familiar with them, is they do white label design, dev paid media and AI automations and implementations for agencies. So they do work directly for you, for your agency, but they also do a lot of work. Most of their work actually is their agency, is their client and their partner. And then they do work on behalf of that agency’s clients. So they do amazing work. They come from an agency so they understand how to price in a way that you can still make money. You can delight your client and you’re going to give them a product that they’re going to be really proud of. So head over to whitelabeliq.comami to learn a little bit more about them, to maybe send them a quick thank you note for being a sponsor and to just reach out to them and learn a little bit more about them. All right, so white label iq.com ami

Also, on every solo cast, we give away a seat to one of our workshops. And so what that means is, and it’s super simple, the way you get in the drawing is super simple. But what you win is you get to come to Denver and attend one of our two day workshops absolutely free. You just have to get to Denver. That’s it. After that, the workshop is on us. Depending on whether you’re a member or a non member, it’s about a $2,000 prize. So not a bad deal. And here’s all you have to do to get in the drawing. Go to wherever you download this podcast and leave a rating and review. Then what I need you to do is I need you to take a screenshot of that rating and review and send it to me. Because even though we read every single rating and review we get, we in most cases, you have some sort of a username tied to that account. And I have no way of knowing who Biker Mama 69 is, and I have no way to reach that person because there’s no email attached. So I do need you to send me the screenshot and so I can, I can put you in the drawing. Here’s the deal. You stay in the drawing until you win. So just throw your name in the hat and just wait. Sooner or later, you’re going to get a $2,000 free workshop. And I’m telling you, the hat is not that full. There’s maybe 40 or 50 entries in that hat. So odds are good that you’re going to win. Well, you’re going to win sooner or later, but odds are good that you’re going to win sooner rather than later. So why not take the five minutes, leave the rating and review, which helps us immensely both from learning what you like and don’t like, but also just for getting on other people’s radar screens. And in exchange, we will put you in the drawing and sooner or later, we will meet you in Denver. Okay?

All right, so this week’s Winner is Nicole Bojic. Nicole, congratulations. I’m going to send you an email and let you know that you won and how you redeem your workshop. And by the way, the workshop winning has no deadline. You don’t have to use it within 30 days or 60 days. If it takes you a year to get out to see us, that’s absolutely fine. So again, I don’t know why you wouldn’t do it. It’s a free workshop that sooner or later you’re going to get. Just as our way of saying thank you for leaving the rating and review. Okay, all right, so let’s get to today’s topic.

So we spend all year tracking the trends that are impacting all of you. And we track from multiple resources and we put this deck together that we present in the spring to all of our live peer groups and then I turn it into this solo cast. So this is fresh, fresh, fresh, fresh data that we’ve been talking about for the last three or four months with our peer groups. And, and now I want to talk to you. And you know, it’s an interesting year. I believe that your clients have actually handed you, your agency, the greatest promotion of your career. And there is huge opportunity, bigger and better opportunity than we’ve seen for a long time. And my fear is that a lot of agencies are going to fumble that opportunity.

In the last couple of years, marketing has gotten more chaotic, it’s more AI driven, it’s more political, and frankly, it’s exhausting. And I get it. I hear from you guys all the time how tired you are, and yet there’s something really interesting that’s happening underneath all of that noise. Clients are saying louder than ever. We don’t want our agency to be vendors. We want grown up partners. We want somebody that we can actually trust more than ever before.

So this trend report that I’m going to walk you through today is packed with stats and scary headlines. But when we boil it all down, which we’re going to do together, it really comes down to five big truths. Number one, trust is the new currency and it’s incredibly personal. Clients are nervous. They just like you. They’re not sure what the future holds. And they want someone by their side that is going to be someone that they can trust to have their best interest at heart, to be smart and strategic. And they are looking for that in you. Trend number two, consolidation at the top at the big hold cos is creating a huge opportunity in the middle for privately held independent agents. Trend number three, AI is no longer about Faster content. It’s, it’s about whether or not you are a strategic grownup or a production vendor. There is a great chasm that is growing between the agencies that are leaning on strategy and the agencies that are leaning on output or deliverables. And we’re seeing that chasm grow deeper and deeper every single day. Trend number four, you need to recognize that you and your team are tired and many of your team members are staying put. And we’re going to talk about this new trend and that they are quietly looking to you to sort of step up as a leader. And we’re going to talk about what that looks like. And the fifth trend is that buyers behavior has fundamentally changed. So this is about our buyers, so our clients, but also the buyers for our clients. And the truth is, if you do not show up as an authority, pretty soon, you are just not going to exist. And this is a drum that I’ve been beating on for a long time, but I am beating on it louder and harder than ever before.

So we’re going to talk through those five trends and some, some underlying trends underneath them. But bottom line, this is a sort yourself out moment for owners. You can keep doing what you’ve always done and you can squeeze out a living and feel like the world is happening to you, which I know a lot of you are struggling with, or you can hear these trends as a personal job description, a call to battle, and let them push you towards a lighter, more profitable and more intentional version of your agency. Completely up to you. So let’s walk through what actually matters and then more important, I want to talk about what you need to do about it tomorrow morning. Okay? All right, so first I’m going to talk about trend. So I, I think of this segment as the trend recession and why it’s to your advant.

So I want to start with the emotional backdrop that your clients and your team are living with globally. I don’t care where you are in the world. Only about a third of people believe that the next generation will be better off than they are. That’s crazy. That has never happened before. And economic anxiety is at a all time high. People are scared that they’re going to lose their job. And a lot of people, depending on where they are in sort of socioeconomic strata, are very convinced that AI is going to leave them behind, not save them. And that’s the water that we’re all swimming in. Everyone is anxious, everyone is nervous, everyone is afraid. And everyone is looking for someone to trust.

On top of that, the Other thing that’s factoring into the trust is that seven out of 10 people in the Edelman Trust Barometer, which I love, says that they have acknowledged that they have. They don’t call it this, but this is what they say. They have an insular trust mindset, which basically means, if you are not like me, I don’t trust you. Different values, different politics, different backgrounds, all suspicious. People actually say that they would rather switch departments than work for a manager whose values do not line up with theirs. So trust is tenuous and it’s tribal.

And yet, and this is the big crack in the door for you. From every study we’ve been watching, including the Adelman Trust Barometer, but several others, businesses are the only institution on the planet that is currently seen as both competent and ethical. Let me say that again. Of all the institutions on the planet, the one institution that people have confidence in that they believe are both competent and ethical are businesses like yours and mine. My employer is the single most trusted institution in people’s lives. More than the government, more than media, more than NGOs. When you look at professions, scientists, teachers, subject matter authorities are right at the top in terms of trusted people. CEOs, and my neighbors are mid range and could earn more trust if they showed up with visible, everyday leadership.

So understand what that’s saying. People don’t trust the system, but they do trust their employer. So then that. What that means is you as the owner are not just running an agency, you are a trust broker. For your employees and by extension, for your clients, you are a source of trust. So the Edelman Trust Barometer actually uses that phrase, trust brokering. So what does that mean? What does that mean that our clients and our team members are expecting from us? What they mean is that they want us to, particularly our employees, promote a shared identity and culture, build mixed teams where people with different beliefs have to succeed together and provide people with real training on how to have constructive, productive dialogue when things get tense. So for agency owners and business leaders, what people are asking us to do is they’re saying, hey, look, I want you to bring employees together with people who are different from them. I expect you to partner with unexpected organizations that bridge the divide. Because you are a trusted resource. I expect you to care about trust. I want you to consult with people who have different backgrounds before you make decisions, and I want you to model constructive engagement with critics and not just bite back on LinkedIn or other social media.

So here’s how I translate that for us. Number one, you cannot hide behind we’re just here to do great work anymore. Your team and your clients are looking to you to be the adult in the room when things get divisive and not to back away from that. Number two, when you respond to hot button issues, the most trust building move is not choosing a side, but it’s encouraging people to cooperate and collaborate on solutions. That was the number one answer in all of this research of how do we remain most trusted? Because that’s what we all want to be with our clients and our team members. And it’s really about helping them find a way to trust people that they don’t know or they don’t trust. Number three, your local presence. In terms of your country of origin, it may be your state, it may be your city, but matters more than ever. People trust companies from their own country far more than foreign ones. And they’re from their state and their city more than someone who’s far away.

This is a huge shift for us for a long time, especially if you’re a subject matter expert or an authority. Clients don’t really care where you live, but they do care that you show up as a contributing member of your local community, that you invest in your local community, that you hire locally, and that you show up in real life. So all of a sudden in person is starting to matter more. So let’s say you have clients that are scattered all over your country, so you can’t lean on the fact that you live in a certain city, but you can show up in person at things like conferences and trade shows. All of a sudden, eyeball to eyeball contact is really mattering much more than it has in the past. And I think that we’ll talk about how AI has shifted that need to be with human beings, but we need to remember that it’s a big part of the trust.

And if you’re a small or mid sized independent agency with deep roots in your community and your state, you can truthfully say to a prospect, look, we live where you live, our kids go to school here. We see the impact of your marketing at the grocery store. That’s not sizzle anymore. Now it’s an actually, it’s a strategic differentiator in a world where trust is getting more localized and more fragile.

So some practical homework from this section is thinking about your positioning and your credentials to call out your commitment to community and community might be that you sponsor something locally if you’re a locally based agency, rethinking that might be that you are committed to the community of the Organizations that you serve. Let’s say you do a lot of work in the construction space. Maybe you’re a big part of that national association and that’s the community that you can contribute to. But all of that is how you build trust. You need to make sure that you’re working trust and transparency into your sales processes. Be unusually open about how you make money, about how you price, how you handle mistakes. Half the institutions in the world are sitting right at the 50% trust threshold. If you can behave just 10% more transparently, you will feel wildly different to them, and you will feel their response to you as wildly different internally. When you think about trust, get very intentional about culture. And culture is not that you have margaritas on Friday or that you play a zoom game together if you’re a dispersed team. Trust is about a shared language. It’s shared rituals, shared trainings, and particularly shared trainings around conflict. That is not fluff and that is not optional anymore. That is strategic trust infrastructure.

All right, so the next part of all of this that I want to talk about, one of the things that’s shifting for us is we have been watching for the last year or two, a lot of the holdcos are buying each other and they’re shifting and they’re merging and they’re laying off a ton of people. And so when the giants consolidate, this is a heyday for privately owned independent agencies.

So let’s talk about the money and the structure of the industry, because this is where I see a lot of owners telling themselves the wrong story. There’s a lot of M and A activity in general. In 2025, M&A activity hit around $4.3 trillion, up almost 40% from 2024. In our little corner of the world, in our little space, omnicon buying IPG for about $13.5 billion is the headline. But the more important part of that is the pattern marketing. Agency related deals jumped up about 50% year over year. The big six holding companies are collapsing into what’s starting to look like the big few.

What no one has been talking about and no one’s thinking about. But it’s in a really critical trend for us to be paying attention is CMOs are seeing this and 70% of them self report that they are worried that all of the consolidation that’s happening in our space is going to hurt their business. They believe agencies are going to struggle with focus, with service, and that they’re all becoming less differentiated. And what they want most from their agency is differentiation. But they feel like they’re just becoming this homogenous pod of people.

So here’s the picture that the report paints that was talking about this. Massive brands are getting ignored and neglected by these big consolidated firms. Mid market CMOs feel like they are second class citizens and when they go to a larger agency they’re getting the kids, this B team, the second squad rather than senior smart people. The Holdcos in their opinion are turning into homogenous machines where everything looks and feels the same. And they’re very worried that the craft of the work that we do is dropping out in favor of platform driven scale.

This is really good news. What they’re saying is the absence of differentiation is such a problem. I love that sentence because what that means is it’s an opportunity. It is much easier for you as a privately held independent agency to differentiate yourself and to make yourself different than all the other agencies out there. To have an area of expertise, to have a specialty. Let’s be honest, for years you and I have been talking about the idea that when you are specialized, when you are seen as a subject matter expert, you can punch above your weight. There are brands that are too little for little small freelance collectives, but too small to get the big A team at the holding companies. And for all of view, that is a huge opportunity right now. Consolidation is pushing more and more of those middle level brands to look for alternatives and they are not going to go just like they’re not going to go up to a holdco. They’re not going to go to a generic air quote full service independent agency that looks like a mining holding company. They’re not. What they’re hunting for is founder led agencies where they can actually talk to people who are making decisions. They feel like they’re getting the A team. They’re saying what they want is elite talent driven boutiques that bring craft and attention not just about doing volumes of work. They want specialists who understand their vertical and can move quickly.

So what do you do with all of this? First, stop trying to be everything to everybody. That game is rigged and clients are saying loud and clear they don’t want it. Secondly, you need to get laser specific about your hunting ground. This is a, it’s a list. It’s a bunch of companies that you know you could delight but maybe are a little bigger or a little more sophisticated than what you’ve gone after. I want you to spend enough time to really value that sophistication level and go at them with great strategy. Remember, they are tired of agencies that bring a Pitch team to a meeting and then hand them a bunch of 23 year olds. They’re tired of the slow response teams at these large firms. They want access to senior people and a tight expert crew who will treat them like a priority. All of the turnover that’s happening in the holdcos and the larger agencies make them nervous. You are the answer to that. You’re senior led, you’ve got years of experience. Most of you have very consistent teams and have been together for a long time. This is a huge opportunity for you.

Then you need to figure out what are the capabilities that those agencies need that you don’t have. And so the next question is, do you build it or what many agencies are doing? Agencies your size is, they’re buying it. They’re buying another agency that does something they don’t do. So it’s build it, buy it or partner. But what it isn’t is trying to have it all under one roof and be everything to everybody so you can buy it. A lot of agencies are acquiring small shops. They’re mostly acquisitions for talent. Yeah, they pick up a little bit of business as well. But you might pick up a little PR shop or an SEO crew agency that is really doing some cool things with AI, not for their client list, but for their skills. Yes, you get some clients, but some of those clients are going to go away. But what you’re really doing is you’re buying, you’re buying tenured, seasoned, experienced staff members. You can also build it. You could create a new service line and invest in it to do it well. Which remember, is going to take time and capital, but there’s nothing wrong with it. Or what many of you are doing is you’re partnering. We saw this a lot at the Build a Better Agency summit. People finding real alliances with complementary specialists and they are going to market together and acting as one team. Now there’s no wrong answer but that we’ll figure it out client by client, is no longer a viable strategy for you. So doing some self assessing, figuring out what it is that you need to be better at or you need to be able to offer that you can’t because that gives your clients a whole picture. And then figuring out are you going to build it, are you going to buy it or are you going to partner is a great way to take advantage of this new trend.

One more nuance here. The market is saturated and clients are cautious. So you also have to know that just like people are struggling with trust and economic uncertainty, so are our clients. 64% of CMOs expect 2026 to be more volatile than 2025 was. And only about half of clients expect to increase spending, which is down from 60% a couple years ago. They are very concerned when we offer them long time contracts. They want shorter contracts, they want more opportunity to kick our tires. They are demanding more flexibility and they want more transparency, which to you feels like more scrutiny. So you need to hold those two truths at once. There is more opportunity than ever before because the big guys are stumbling and they want what you have to offer. But you do not get to coast into that opportunity. You have to be unmistakably different and operationally really sharp.

So some things I want you to think about in terms of this section of our conversation. I want you to define the ideal client in writing. Size, budget, the industry, the challenges they’re facing, and then really sanity proof your positioning your case studies and your team against that list. Can you delight that list of clients or prospects? And if not, what do you need to do that? So do I buy it? Do I build it? Do I partner in the next 12 to 18 months as I’m building this out so I can put a bet on the table that I can serve those clients rather than scattering your attention? Again, these people want subject matter experts. They don’t want the full service integrated marketing agency. So if you’re going to stay local, that’s fine. But if you’re going to start punching above your weight and going regional or national, understand they want an expert. And you have everything it takes to be an expert if you’ll make that commitment. But you do have to make that commitment.

All right, so it is time for us to talk about the giant robot elephant in the room AI. And I know that you thought when I said I’m going to talk about trends that I would start with AI and I purposefully didn’t because is it impactful? Yes. Is it disruptive? Absolutely. But it’s not the only trend we need to talk about. And I want you to be careful about not getting so swept up in AI that you miss all the other trends that we’re talking about today and that are all around you.

But according to the data, 61% of external agencies are using generative AI versus only 17% of in house teams. This is going to become critical that that Delta between the two. And by the way, I think more than 61% of agencies are using generative AI, but a lot of you are still using it in a very rudimentary fashion. Nonetheless, you’ve got 61 plus percent of agencies using AI, 17% of in house teams. Remember that stat. By the end of 2026, roughly 40% of enterprise applications are expected to have AI agents baked in, up from less than 5% today, that is in six months. The key phrase in the report that I pulled that data from is AI is reshaping everything, moving from content creation into strategy execution, biz dev, data analysis and planning.

So what does that mean for you tactically? So what it means is with thoughtful AI use, agencies are actually seeing, we’re seeing numbers between 20 and 40% of reductions in content production time. That’s not hypothetical. Agencies, owners in our community are reporting exactly that. Three days of work, down to 110 blogs a month, down to three with better results. If you’re staying stuck in a time and materials pricing model, that means you’re kind of cutting your own throat right now.

So the old model is all about billing for hours. Many of you have evolved away from that already. You know, many of you are doing flat fee pricing, project pricing, so you’re not at risk of this. Like the agencies that are still doing time and material, but we still need to be thinking about moving. So before we delivered things time and material and deliverables, then it was a project still deliverables though. And now where agencies are moving to is impact the new model. The way we’re going to have to start talking about our work is look for $75,000, we delivered a half a million dollars in revenue. Impact. Clients don’t care how long it takes you. They don’t care that AI is saving you money. They care that they hit their numbers. And we need to start talking about in terms of our value. We need to start talking about it through the lens that matters to them, which is what did we give them that they can walk into a boardroom or their CEO’s office and say, look, my department delivered this and they’re not going to talk about what they bought for a bunch of hours. What they’re going to talk about is bottom line impact could be new trials, could be new customers, could be customer retention, could be new dollars. Whatever it is, we need to start being able to think about our pricing in terms of the outcomes that matter to our clients.

There’s a core tension in this. So if you’re using AI just to be faster and cheaper, that for you is a race to the bottom. Clients see the lower costs and now they’re going to keep pushing you on price and you’re going to get stuck justifying your hours. But if you use AI plus human strategic insight to connect the dots, you can actually charge more. Clients see that smarter as a competitive advantage and they don’t worry about cost savings. In the agency edge research from this year, one of the things that came out loud and clear, and it was a repeat statistic from the 2025 study, is that clients are not concerned about AI and our prices. Meaning they don’t want you to use AI to get cheaper, they want you to use AI to help them get smarter, better, deeper. That’s what they want. And so if you’re still pricing by the hour, or even in some cases by the project by the flat fee, you need to be able to show them that they’re getting something deeper and better for the same dollars because you’re using AI. So again, it’s not taking you more time, you’re just using better tools. It’s no different than when we went from hand drawing our layouts to computer based layouts. We didn’t necessarily charge our clients more money for that. We just gave them something better for the same dollars. And in many cases we were more efficient, so it was actually more profitable for us. Right. We want them to see the competitive advantage and then they don’t worry about the cost saving.

The research shows that there’s a gap between what agencies think clients want from AI and what clients actually want. We worry that they want it cheaper and that they want it faster. And what they really want is they’re hungry for smarter and better. They want the story, not just the dashboard. Because part of it is they are not investing heavily in AI themselves. The reason why is because they can’t get permission in their own organizations. They are so tightly bound to what they are allowed to do and not do. They’re actually seeing working with agencies as an advantage. They know AI is going to give them a competitive edge if they can get on it, and they know they can’t do it internally. So they’re counting on us to be their competitive advantage when it comes to AI. They need you to be the grownup and make AI work for them in a way that they can’t do it themselves.

They also have an AI governance problem. They are very worried about the risks of ungoverned AI internally and a surge of AI driven privacy class action lawsuits. So they know that oftentimes their employees are using AI tools without training, without safeguards and no governance framework. That is a massive business risk to them. Guess who they think can solve that risk for them? You. That’s Your opportunity. You need to think about positioning yourself as both. Yes, we use AI to give you bigger, better, deeper. Right? We absolutely do that. We’re using AI internally as an agency to move faster. But what you’re paying us for is the strategy and the business impact. So that’s number one. But number two, what they really are hoping you’ll position yourself as is the AI helper, the Sherpa that guides them and helps them build internal guardrails so they don’t get sued. Help them train their team, helps them figure out how to use AI so it doesn’t embarrass the brand or erode their customer trust. They want you to be their guide internally as well. We saw this in multiple reports, in multiple data points. We’re seeing it happening in a lot of our agencies that they’re leaning into that and making great money doing it. We saw it in the agency Edge research. There is nothing, there’s no piece of data out there that suggests clients want to go this alone. And when we ask them, and when others ask them, who do you think is the expert that’s going to guide you into the AI era? It’s always you. It is my agency. So you got to decide if you’re ready to do that.

But this is also a place where your account managers or account executives or account strategists, whatever you call them, that needs to change because one of the other trends that we’re seeing is clients are over account people who are basically project managing deliverables, passing along updates and being the friendly faces for a transactional relationship. That role is being commoditized and underpriced. They don’t want to pay for it. What they want is they want a strategic advisor next to them. Someone who deeply understands their business, who brings proactive recommendations, who ties the agency’s work back to business outcomes, and who can talk very credibly about data and AI. For many of you, that is a huge shift from what your account people are capable of doing today. And you need to know that what they’re saying with a louder and louder voice is I am not going to pay for. I do not value an AE that is transactional. That is basically just keeping the ball moving. I need a thinking partner, I need a strategic advisor and I want that to be my day to day contact. You, the agency owner cannot do that for everyone. Oftentimes you’re the one that’s stepping in because your account people aren’t capable. Having account people who are not capable is not an option. Anymore, the agencies that are winning are upskilling their account team into strategic advisors or they’re hiring people who can play that role right out of the gate. That’s where you get to justify higher fees, value based pricing and premium retainers, even as the work part, the production gets cheaper.

So some things I want you to think about when it comes to this portion of our conversation. Number one, you need to look at your pricing model. Where are you still selling hours instead of outcomes. And maybe you start thinking about some of the things that you do that are easier to price around outcomes and start experimenting. So pick a pilot engagement where you can price on impact and not time. I want you to rethink about how you define your AI promise. Right. So what clients want to hear from you is here’s how we’re using AI, here’s what always stays human, here’s how we keep you safe, really important using that language in your sales conversation and your scopes of work. And also here’s how we can help you internally with your AI challenges. And then last but not least, understanding that your account people have to be a strategic advisor and building a roadmap for them so that you could understand. So what do my account people need to learn? About finance, about AI, about analytics, about business, about my clients industry to credibly sit at the strategy table, put a training plan against it and not just a fingers crossed open a wish that they get there. Because if you don’t, your account people are going to become less and less relevant to your client and they are going to be less likely to pay you for their time.

All right, since we’re talking about your team, I want to kind of turn the camera inward if you will, because none of this strategy conversation matters if your team is so fried or checked out that they can’t rise to the occasion. So many of you survived the great resignation. So if you remember, that was right after Covid and everybody was leaving because they were disillusioned and they wanted to stay home or they were afraid. And now what’s happening is we are moved into an era that they have named the Great Stay. And what the data says about that is employee turnover has turned from a ridiculous 177% in 2023 down to less than 50% in 2025 and even less turnover in 2026. Many of you have not lost a single employee so far in this calendar year. And on the surface, that feels and looks like stability. Job satisfaction scores are up, salary demands have slowed down or leveled, and many of you are building out customized benefits packages to kind of keep your people happy.

So we think our people are happy. They’re not going anywhere. They’re not asking for big raises, but underneath, a lot of them are feeling trapped rather than committed. They’re staying because the economy feels shaky. So just like we talked about at the beginning of this podcast, that the economic uncertainty is making individuals nervous. It’s making our clients nervous. It’s also making our employees nervous. They’re staying because the economy feels shaky, not necessarily because they bought into the mission of the agency. Burnout statistics remain stubbornly high. About 41% of workers report burnout. And the highest, no surprise, is the gen Xers at 49%. And if people have kids at home, the burnout rate jumps to over half. So let’s be honest, that probably lines up with what you’re seeing when you look at your office or on your zoom grid.

However, at the same time, employees increasingly believe that the businesses are obligated. I want to use that word very carefully because it is the word that every study is showing up as. It is our obligation in our employees minds to provide them with both good pay and future proof skills. They know the world is changing. They know they want to keep being valuable and they’re looking to us to help them sharpen their own skills so that they can stay valuable and keep learning so that they always have a job. So I think it’s important that we recognize that many of you, as things have gotten tight, have actually cut your agency training and this has backfired. It makes your employees nervous. Whether they say it out loud or not. It damages trust and engagement. They want to know you’re committed to them, not just for today with a good salary, but to their future. And you see them as a part of your future.

So strategically the recommendation is very clear. You need to invest in ongoing professional development, including AI literacy for everyone. Not just the creatives, not just the account team, not just the data team, everyone. You need to rise up their AI literacy and comfort but should not stop there. We have to keep making our employees smarter and if we do, they will stay because they are more committed to the mission rather than there’s just not a job to go to. Which means that if you don’t make some of these changes, if you don’t start investing in training. And by the way, training doesn’t mean have to mean you send them to a conference or a workshop, although that is important too. But training can be lunch and learns in your own shop. Trainings can make be make sure that they are having department head level meetings where they’re learning from each other, but you have to invest in them getting better. Why? Because other agencies are going to and you’re not going to be able to compete on salary alone. We did an agency edge study probably 10 years ago. It was pre Covid and we asked them what was the one trait about an agency that would make them stay if they got a job offer from someone else. And it was that they thought that their boss was committed to their ongoing professional development and learning. That has not changed, it’s just gotten to be louder. You cannot compete on salary alone. It’s not sustainable. But you can absolutely compete on growth, learning and meaningful work. Professional development is not a perk, it’s table stakes. And you need to make sure you’re investing in it and you’re talking about it.

The other thing that’s happening, and for many of you are already experiencing this, is that your team structure is shifting. Many of you have fewer full time employees, you have more part timers, a bigger blend of contractors and employees. Some of your contractors are full time international team members. And that hybrid work tension is very real. So you’ve got a different mix of people than you used to have. And you have people. Some people who want to be back in an office want to be together FaceTime more often. Other folks that really love the flexibility of remote work. And by the way, your clients want more FaceTime with you and your team. So again, you can’t stay in your bedroom office and be at a client meeting at the same time as often anymore. Clients want to see us in real time, face to face. And so many agencies are feeling stuck in this sort of tug of war of in office remote hybrid. How do we do all of that?

For each of you, it’s going to be a little different. But here’s how I would read that as an owner you need to get really clear and explicit about your in office expectations and why they exist. Because I like having people around is not a strategy. You need to have a reason why you bring people together and you need to structure the in office days to be super productive and super valuable and also super energizing to your team. Many of you are using a talent strategy that uses all of the tools FTEs, part time employees, contractors in offshore talent, both part time but also full time. You are also acquiring, as I said earlier, for talent and you are investing in real training. And you need to treat that training like a line item that protects your Margins long term, it’s not a nice to have when times are good thing. It is a utility bill that you need to invest in on a consistent, regular basis. And you need to bring merchandise that through the organization. You need to let people know that you are committed to helping them get better and that you are committed to investing in them. And by the way, investing in them, you need to do that fairly. That does not necessarily mean equally. Some employees are going to lean into that investment and they’re going to bring what they’ve learned back to the agency. Those are the employees that you really want to double down on in terms of their professional development. Yes, everybody needs to get professional development opportunities. But having somebody in a lunch and learn who’s not really paying attention, maybe that suggests to you they’re not the ones you send to the workshop or the conference, but the ones who are doing learning on their own. Because remember, professional development is a shared responsibility. Sometimes it’s on your time and dime, sometimes it’s on their time and dime. It is their professional life. They cannot expect you to do it all, but it is reasonable for them to expect for you to invest in them as long as they’re investing in themselves as well. So again, treat them fairly, but not necessarily equally. But make sure that they’re seeing that you’re sending people to conferences, to trade shows, to workshops, but you’re also inviting them to come back and teach what they learned to everyone else. Make sure that that learning is contagious and it’s woven through the agency and that you are making it very clear that you’re willing to invest in everyone as long as they’re willing to invest back in the agency and their own professional development and the professional development of their coworkers. Right. One of the other things is more agencies are buying talent not just for clients, but for the people. And we talked about that earlier. And so this is another way for you to think about staffing.

So on the people front, I want you to think about a couple things. Number one, run a brutally honest burnout check with your leadership team, see how they’re doing and then ask them to do the same with their direct reports. Where are people? Quietly drowning a little bit. Who’s fine but exhausted? Building a capacity and staffing plan that aligns with reality is very important. I want you to commit to a training budget for the year and it’s gotta be significant enough that it feels meaningful to your team and make it very visible to them. Let them see you investing in their future selves. And in their coworkers. Figure out where you stand in terms of hybrid in office, all of that. And also in context of your client expectations. We were never meant probably to be a fully remote business where we never spend time with clients and we never spend time with each other. And then communicate that, communicate that to your team. Say, hey, look, here’s what we need to do for clients. Here’s what we need to do for our own team building and ability to work together. And here’s what we’re doing to protect your time and sanity and give you the flexibility you need. You can find that happy medium.

All right, so I’m going to take a quick break and then we’ll come back, we’ll talk about a few more trends. You know, every agency is thinking about AI right now. The hard part is moving from we should do something with AI to here’s a real solution our clients will actually use. You know, client websites are messy, tech stacks are different, content is scattered. And no one wants an AI tool that takes months to launch or creates more risk than value. Navu is built to fix that. Navu adds AI chat to business websites. And with a single line of code, it works with the site your clients already have and answers visitor questions using only the content that you select and manage from that website. That means you can bring clients an AI solution that’s easy to implement, tightly controlled, genuinely useful, and tied to real visitor insights. And for agencies, there’s a major bonus. Navu is completely, completely free for your own website. No catch, no trial gimmick. Use it, learn it, and prove that it works before you recommend it to your clients. If you want to see it in action, head over to the Agency Management Institute website. We installed it and literally it was exactly that one line of code. You can also learn more about it at Navu Co Backslash agencies.

All right, we are back. And I want to turn the telescope, if you will, from your employees to you for a second because let’s admit it, you’re not just doing this for the goodness of your heart. So one of the things we always look at, what owners are getting out of the business. So in 2025, the average agency owner salary in the US was around a little north of $250,000. But the average AMI owner took home almost a half a million dollars. That Delta, is honestly why Danielle and I get up in the morning. We want to get you on the right side of that line. And while I would love to take credit for it, what I will tell you is the Agencies that are making a half a million versus a quarter of a million are the agencies that are paying attention to the financial KPIs. They are. You know, I’ve often said what we measure matters, and you have heard me talk a lot about all the financial metrics and finances that you should be paying attention to. Where your AGI is, how you’re spending that AGI, what you’re doing in terms of profitability.

But most agency owners are actually doing pretty well. Profitability has steadily climbed. It was about 12% on average in 2023, 16% in 2024. Last year it was about 18%. And based on the first half of the year, many agencies are going to hit 20% or better going forward in 2026. 70% of agencies grew in 2025. So the gap between the agencies that were making south of 15% and the agencies that were closer to 20 or higher isn’t just extra gravy. That 4% gives you the opportunity to reinvest in the agency for growth, for talent development, maybe for acquisitions. So all of that, super important, not just to take care of you and your family, but also to keep building and growing the agency. Which is why paying attention to those KPIs matters so much.

Because at the same time that you’re making good money and you’re taking good money home, you’re also facing a triple squeeze. So many of you are feeling, a lot of agency owners will say, wow, this is, it’s harder than it used to be. I’m climbing up a bigger mountain. I hear that every day, every single day. And I think you’re being squeezed in three specific places. Number one, many of you are facing clients that think that, that they can replicate your expertise in house if they hire the right people. What’s interesting is we’re seeing that trend get smaller. So for those of you that are feeling that right now, the good news is many agencies, or many clients rather, are shrinking their in house team. So that’s a pendulum that’s always swinging, but it’s starting to swing to the downside of either making their in house department go away or get smaller. Why? That economic uncertainty that we talked about, but also the lack of permission, the inability to use AI internally, so they’re taking some of those internal dollars and spending more with agencies because they can’t do the kind of work they want to do with the kind of tools they want to use in house. But nonetheless, that squeeze, number one is clients taking stuff in house. Number two, a lot of you are Very nervous and rightfully so. That AI has automated a lot of things that you have been historically paid premium rates to do. And number three, again, this recurring theme, that blinking yellow light of the economy, inflation, tariffs, trade instability, rising costs. So many agencies are experiencing that CMOs are tightening the budget and really demanding hard ROI for every dollar. So yeah, you’re feeling squeezed from all sides and yet there is gold at the end of the rainbow.

So one of the things that we are seeing louder and more clearly than ever before is that specialized niched agencies are reporting margins 10 to 20 points higher than their generalist peers. So let me just say that again, specialized niche agencies are reporting margins 10 to 20 points higher than their generalist peers. When you focus on a niche price, on value, integrate your services into real business outcomes and lean into your systems and scalability, your margins jump. We’ve seen it over and over and over again. Many agencies are moving actually from the goal that we set, which is $175,000 of AGI per FTE to to north of 200. We have agencies that are 225, $250,000 of AGI per Fte by systemizing, by using AI well and getting really serious about profitability. That’s real money. And more importantly, that’s your money. It’s your mortgage, it’s your kid’s college fund, it’s your retirement, and it is your ability to be generous to your team all wrapped up in one number.

So the owner trend that I want you to really pay attention to this year is number one, specialize there are riches in the niches. I know you have heard me say that so many times. It’s not just a catchy slogan, it is a margin strategy. I know a lot of you do not love the idea of building systems and scalability, but it’s important using AI to support that, not just to do more and getting really crystal clear about your numbers, AGI per fte, profitability, your owner comp, and treat the last few profit points as an engine that you can reinvest in the agency. Not a nice surprise.

So a little bit of homework for you on that. Number one, pick or recommit to no more than two verticals where you can build deep expertise and market around that niche. And I will tell you, one is so much easier than two. When you have one area of specialty, it is so much easier to market, to know who to target, to create sales materials. All of it gets easier to train your team, to get your account people to actually be subject matter Experts like we talked about earlier earlier, really mission critical. So pick a niche, ideally one niche in the show. Notes, we’re going to give you a link to our niche criteria tool. I’ve talked about it before but I want to put it in front of you again. It’s a really great tool to help you evaluate your options and identify which one you should really double down on. I want you to set a two year financial target, AGI per fte, profit margin, your take home pay and then connect that to concrete moves and that might be pricing changes, a service mix, how you’re using AI, how you’re developing your niche. But I want you to get serious about it because bottom line, it’s real dollars in your pocket. It’s real dollars to reinvest in your team, to train your team. It’s real dollars to buy talent if you need to, or be a better partner if you’re going to partner to solve your clients problems. But this is not rhetorical, it is not theoretical, it’s real and it is the reason why you started your agency was to help you make more money, not because you’re greedy. All of you are incredibly generous. When you get an extra dollar you automatically think to how do you give it to your team much quicker than you think about putting it in your own pocket. I see this happen every single day. But if you get $2 you can invest in your team and put a dollar in your pocket. That’s what we want for you.

All right, all right. So one of the ways you get more dollars to put in your pockets is to have a better biz dev program. And so one of the things that we like to talk about in this trends report every year is how agencies are getting business. And really to try and relieve some of the pressure you feel around yourself about how you are growing your business.

And one of the things that is changing is where agency leads are coming from. When I talk to all of you and I ask you how you are finding your best new clients, without exception, you all talk about referrals. Nothing wrong with that. But it’s not enough and it’s out of your control. And the data here is very clear. In 2022, about 16% of agency leads came from web searches. By 2025 that number jumped to 39% which is a hundred and forty four percent increase. And it’s only going to get bigger and more impactful to your business over that same period. All of the things that you think about in terms of how prospects get on your radar screen Networking dropped from 73% to 58%. Past relationships went from 67 down to 48. Friends and co workers as lead sources fell from 60% down to 35%.

In other words, referrals and networking still matter. But more and more of your future clients are finding you by searching not only the web, but AI. And if they cannot find you, they are finding someone else. I think that number is going to grow exponentially in the next 12 to 18 months as AI search becomes more prevalent with how everyone is shopping and they’re not just doing a quick Google search, they are also talking to their peers and getting reference. But then they are going online. And if they can’t find you online, even if their peers recommended you, they are less likely to call you. So external validation is still critical. And by the way, external validation is one of the things that influence influences the AI search more than anything else. Yes, you can talk about your own expertise, but if you’re not showing up in other places, external validation on podcasts, on other People’s websites, in LinkedIn and other places, other people aren’t saying you’re an expert. AI doesn’t think you’re an expert. So we have to rethink our strategy around that. You’ve got to have a very strong online visibility tied to a clear authority position, otherwise you’re invisible. And you have to think about how your prospects would be searching for you. And what they’re not searching for is full service integrated marketing agencies in a region or in a place. What they’re searching for is I want an agency that specializes in medical devices for cardiac care. You need to figure out how they’re looking for you and make sure that your online visibility matches that. And if the world is not vouching for you through case studies, testimonials, if you’re not being invited to speak, if you’re not writing articles or winning awards, you’re not going to make the short list. That’s the goal is to make the shortlist to be one of the top three agencies because for some reason clients always want to talk to at least three. You’ve got to be on the list or they’re never going to have a conversation with you. Buyers do not trust when the only one saying that you’re an expert is you. They want the world to say that you’re an expert.

On the RFP front, there are fewer RFPs overall. Many of you went crazy in 2025 answering RFPs because you figured AI could help you. But what you didn’t Figure was that AI was going to be grading the responses and if you didn’t check all the boxes, no human was ever going to see your response. So many of you have ratcheted back now and you are back to being much more judicious and thoughtful about what RFPs you’re responding to and only choosing the ones you’re going much deeper on them, but only choosing the ones where you are a strong fit. The old respond to everything shotgun approach, what you found last year was it wasted your resources and your win rates dropped. Clients really want to feel like you understand their specific situation, their industry, and not that you are just spitting out RFP responses and they can tell and so make sure that you’re really cautious about what kind of RFPs you respond to. And when you do, absolutely go all in, go deep, but only if you know you have a good shot of winning.

Yes, referrals are always going to be the fastest path to new business. The trust factor that we talked about the very beginning of the podcast makes perfect sense why that’s true. But there’s a massive difference between we get referrals sometimes to we have a systematic referral machine. You want to figure out ways and reasons why your clients and prospects and peers are talking about you. And again, that’s going to be your thought leadership. That’s going to be your subject matter expertise. Agencies that are giving that referral engine, if you will, better attention are recognizing who their advocates are. They’re giving them language to talk about the agency in the way that they want to talk about them, again in a way that they know clients and prospects are searching. They make the introduction super easy. They say thankful and meaningful ways and they close the loop. They let that referral source know what happened.

And then obviously the big engine is thought leadership. The research say that clients prefer being able to find you and your thought leadership and the way you think and that you’re talking about their industry in publications, webinars, LinkedIn, podcasts, newsletters, white papers. They’re looking for those outside resources and they don’t want you just taking a typical marketing tip and giving a construction example or a medical example. They want you to have a bold perspective. In the book Sell with Authority, Steven and I talk about, they want you to have a strong point of view. And if you don’t have that, then they think that you’re just regurgitating what everybody else said, but just throwing their industry in. So make sure you’ve got that strong point of view or that bold perspective.

And also Remember, and I don’t know why this is so hard for many of you to wrap your head around, consistency matters. Consistency beats perfection every single time weekly. Imperfect publishing will build more authority than one pristine article every quarter. So stop making yourself crazy trying to create the Mona Lisa. Just be thoughtful. Make sure your content always answers the question, will this help my prospect be better at their job? And if it does, hit publish every single week or every single month, whatever the cadence is. But consistency wins the day. And again, remember that consolidation trend where clients are nervous about the big hold cos in the larger agencies. They don’t want an agency that looks the same. They want an agency that feels different from the big machine, from the generic agencies. Your biz dev needs to explicitly position you as that alternative, particularly if you’re going to try and punch above your weight and go after some clients that are a little bigger than what you normally shoot after.

So your biz dev playbook for this sort of season, for the next 12 to 18 months, needs to look like this. Treat search, both web and AI visibility as non optional. You need of course, to have a strong website, but you need to have strong SEO around your niche and content that answers the questions that your ideal prospects are actually asking. Make external validation a project, case studies, testimonials. Crazy as it sounds, Google ratings, speaking on stages, doing PR for yourself. These are not vanity, they’re proof. And they’re proof that your prospects need. But more importantly, they’re proof that the web and AI search needs to say you’re an expert. Be super disciplined about your RFP strategy. Only say yes when you are clearly the right fit and you have a real shot. But when you do say yes, you gotta go deep because you know everybody else is going deep and you don’t want to be the one that looks like you kind of phoned it in. Think about how you could systemize your referrals and your thought leadership so you’re not constantly starting from zero every time you have a slow month. I would say have someone who doesn’t love you google the problems that you solve and your niche. Can they find you in the first few results? If not, that’s your starting line. You have to be findable. Commit, commit, commit to one thought leadership channel that you’re going to do something weekly on for the next 12 months. Just one, not all seven. I don’t care if it’s LinkedIn, I don’t care if it’s a podcast, I don’t care what it is. But find a channel and Lean in and lean in hard. But ideally with one niche, one audience that you want to be meaningful to, and you can’t be meaningful to young parents if you’re also talking about, you know, medical devices for 80 year olds. You have to commit to a niche. I’m telling you. And I, and I, I hate to say this, but those of you that stubbornly refuse to commit to a niche, I worry about if you’re going to be here in five years. Because of the way clients are finding us, a generalist is really struggling to stand out. All right, and then I want you to most importantly, get new business time on your calendar. Remember, it’s your job and if you don’t do it, who’s going to do it? So blocking off time on your calendar every single week to serve the new business machine is critically important. Okay.

Drew McLellan [01:07:31]: All right.

Drew McLellan [01:07:32]: So let’s assume that you are out there, you’re doing more new business. I want you to understand some things that are impacting the prospects you’re talking to to because they really fundamentally shift how you talk about your agency.

First, I mentioned before the in housing department reversal in 2025. At the end of 2025, some really big brands like Keurig, Dr. Pepper, PepsiCo, Expedia started to scale back or dismantle their in house agencies. And the reasons lined up with what you’ve already heard in this podcast and other places. Number one, agencies are far more proficient and aggressively using AI than in house teams are allowed to remember that 61 versus 17% statistic. And in house shops are a fixed cost and that’s painful in this blinking yellow light economy that we’re in. And there’s no signs that that economy is going to get different, that we’re either going to go to red or green anytime soon. And so for a lot of brands, that in house agency is a fixed expense that they’re being pushed to shrink or make go away altogether. Variable external partners are much more attractive right now. And brands know that they need specialized skills, they need experts in their industry, but they also need experts who can help them with creator marketing, social intelligence, performance media, and all of that is super expensive and hard for them to maintain internally. And so what they want is an agency that can do all of that. So this is your moment to position yourself as an AI enabled specialist that they cannot replicate internally. That should be explicit in your story, not implied.

But one of the other things that agencies are kind of bumping into right now with clients and prospects are contract terms and flexibility. I mentioned it earlier. A lot of clients are unwilling. So you get into a great conversation with them. But all of a sudden when you start talking about an annual contract or big dollar amounts that they have to commit to right away, they shut down, they ghost you, right? What they want is they want shorter, either project by project deals, maybe three month or at the most a six month contract. And if you are really rigid about the 12 month, we only do annual contracts, take it or leave it. You are going to lose deals to more flexible competitors. The key is to separate term length from value. Shorter terms reflect caution, not necessarily dissatisfaction or disloyalty. You can design 90 day or 180 day engagements that still let you demonstrate value, that you can price appropriately and maybe even put a premium price on it. And you can renew into longer relationships. But you cannot ignore the fact that clients are really reticent to sign longer term contracts.

And the third thing that you need to be thinking about when you’re thinking about how to talk to these prospects or clients is this whole idea of what we started the podcast with, trust and this advisory positioning. Remember, only half of the people in the world right now trust institutions at all. And businesses are the only sector that is seen as both competent and ethical. So in that context, how you show up really matters. You can position yourself as a vendor, right? You’re transactional, we execute marketing, commodity pricing that makes you really easy to replace. Or you can really position yourself as a strategic advisor, partnership based, where you want to grow your business together. Yes, you get to do a premium pricing, but that’s hard to replace and it’s got a high lifetime value for you and frankly a high lifetime value for them too, because they are getting a thinking partner. But to live into that advisor role, you have to make sure that you understand the client’s industry at a deep level and your account people understand your client’s industry at a deep level. You also have to bring proactive, consistent strategic recommendations, not just respond to their requests or only bring them new ideas once a quarter or in an annual meeting. Every time you talk to that client, your account people should have a new idea to put in front of that client. And sometimes that idea has to have nothing to do with you. I need to be able to show you that I’m thinking about your business, not just trying to put my hand back in your pocket. You need to connect the work you do to business outcomes and help your clients sell and tell that story internally. That’s critical. Your client, your direct client may love you and they may know everything you’re doing, but you need to arm them with what they need to make sure that everyone in the organization knows how valuable your agency is to that business.

And AI can actually make this even more important. So remember that a lot of distrust is coming from AI. A lot of people think AI is not going to do ethical things, that companies are not developing their AI prowess responsibly, and that they acknowledge that we don’t have any way of regulating it. So when agencies lead with we’ve got the coolest AI tool, it just escalates skepticism. But when you lead with business outcomes and proof that regardless of how you’re getting the work done, you’re actually impacting their bottom line is critical. And then what you say is, hey, here’s how we’re going to use AI responsibly to drive your business outcomes with always with human oversight and real accountability. So trust plus transparency beats cutting edge automation all day long. But you now have to help your client tell that story and sell that story.

So I want you to revisit your positioning and your website copy through the lens of vendor versus strategic advisor. Do you talk more about what you make or how you help your clients think about and find better solutions? If someone who doesn’t know you lands on your website, which box would they put you in? I also want you to look at your standard proposal and scope documents and templates and make sure that they explicitly address AI, what you use, what you will and won’t use it for, and how you ensure quality and protection and governance really critical that you have that document.

Okay, all right. I know that this is getting long, but I want to cover one more thing before we go. So this is kind of the last piece of the puzzle. Where are marketing dollars actually going right now?

All right, so display budgets are getting cut hard. Many of you are seeing clients. We’re seeing a 30% drop in display spend as consumers abandon the open web. Click through rates are falling, audiences are shrinking, ad fraud is a concern, and many people are getting their answers from AI rather than clicking around. We’re talking a lot with clients and with agencies about the zero click work world. And you’re probably feeling this in your media plans already.

So where are people spending money? They’re spending it on connected TV and streaming video. Streaming audio, Spotify, podcasts, social video is still on the rise. Ads inside generative AI platforms, although those are really hard to measure right now. A lot of agencies are doubling down on own channels and emails and creator led content platforms. Clients with sort of the old sort of media strategies from five years ago. Heavy display, light streaming and creator are really overspending on declining channels. And you need to be guiding clients and helping them spend their money on the rising channels. Now obviously this is going to depend on industries and dollar spends and all of that, but agencies that are helping clients reallocate their budgets intelligently again are leaning into this trusted advisor role. But now it’s a trusted advisor on media efficiency. Not just order takers are doing it the way we’ve always done it.

Interestingly though, there’s also a real digital backlash. About a third of all consumers are saying that they are choosing offline brand experiences over online. More than half of us adults are saying they’re actively pursuing in person tactical experiences. And that’s way up year over year. People are craving human connection and craft. So it’s interesting to watch what brands are doing. A lot of brands are responding to that. So for example, Starbucks is moving away from drive thru and mobile only stores are closing those and they’re reopening sort of those community gathering space kind of Starbucks stores that we were more used to five years ago. Brands like Coach are actually opening places like coffee shops to create experiences and community around the brand. And even TikTok is adding a feature that actually facilitates in person meetups and they’re starting that with college students as an experiment. So this opportunity for you is twofold. Number one, be the agency that knows how to reallocate budgets and into the rising channels and make sure you have a point of view, not just a menu. And interestingly, help your clients design and promote offline experiential touch points that their customers are craving that will scratch that itch for real world connection, layering that on top of the rise of agentic AI.

So all of that is true and we also have to balance how we are going to plan media buying and where agencies are going to get that help. So many of you are building out AI agents that can take a descriptive prompt and turn it into a complete media campaign and buy. Small agencies with strong AI chops can suddenly play at a very different level of media sophistication. Again always with human oversight. Be careful about this is not a place to set it and forget it.

And one of the other interesting rising trends is voice AI. About a third of AI users are on either Alexa or Siri or some other voice enabled AI. And it’s emerging as a whole new marketing frontier. Voice offers both immediacy and intimacy. So you’re literally in someone’s kitchen or car while they are asking for a recipe or the weather. Agencies are starting to lean in to voice AI as advertising and a commerce channel. And that’s going to give you a head start when clients realize it’s a viable channel.

And then of course we have the creator economy to think about. 97% of CMOs are planning to increase creator budgets in 2026. The shifts here are big, short, transactional sponsored posts are giving way to longer term relationships and ambassador programs. Affiliate programs are surging with big brands launching creator commission platforms. We’re seeing a lot of YouTube creator led entertainment that’s right now dominating and brands are putting more dollars there. AI is used on the back end for creator discovery and performance analysis. They’re not really using them to generate the content itself. So you need to be thinking about your agency’s creator strategy program, understanding how to build affiliate programs, thinking about YouTube distribution and performance analytics. You can, with that expertise, become a premium partner again. 97% of brands and CMOs said they’re going to increase the spend here. So make sure you’re not just somebody who’s helping them find an influencer, but you’re helping them build out the entire program.

All right, a couple pieces of homework before I let you go. You need to audit your if you are a media placing agency, you need to audit what you’re doing and make sure that your recommendations are staying current. You need to start experimenting with voice AI and thinking about your creator strategy and think about if that’s a lane that you want to own. If yes, make sure you’ve got some very strong first moves in place, whether it’s a pilot program or training or find a partner.

So here’s the deal. Let’s zoom out for a second and then I’m going to let you go. What is all of this telling us? It’s telling us that trust is shaky, but that we are uniquely trusted. It puts you in a powerful position if you behave like a strategic partner, a grownup who’s ready to sit at the strategy table with your clients. All of the consolidation of the larger agencies is creating opportunity for you you to punch above your weight because they’re hungry for craft, they’re hungry for attention from senior people and real partnership. We need to understand that AI is blowing up production timelines and it’s scaring the hell out of people, but that shops that combine AI with strategy and governance will be able to charge more, not less. I want you to really do a deep dive into your team. Understand they’re staying, but they’re tired. They want good pay. They help expect you to help them grow. Training, clarity and care are not optional if you want them to stay. How people are finding us is changing. They are demanding proof, they’re looking online and they are rewarding authority. If you do not show up as a specialist with receipts that you can prove that you’re a specialist, you’re not even going to get considered.

Here’s the truth. None of that is neutral for you. Every one of these trends either puts you closer to the version of the agency you want, or it pushes you deeper into the busy, tired, underpaid vendor swamp. I want you to understand that all of these trends are actually great news for you. Every time I talk to you, you say I want to get back to the strategy table. I want to get paid for our thinking. I don’t want to get paid. I don’t want to be commoditized. Everything in this podcast and every one of these trends we’re talking about says that’s what clients want from you too. But you have to be ready. You have to be strong enough, you have to be strategic enough, you have to be willing to sit at the table. You have to be willing to roll up your sleeves and get into it with it with them.

You don’t need to fix everything this quarter, but you need to to fix a few things that are in the way. Pick a few levers and pull on them in purpose. Choose a niche or at the most two and build your entire story, website, content, outbound, where you go, conferences, all of, all of that around being a specialist. Shift at least one meaningful engagement in terms of pricing to a value based model like outcome model and make sure that AI is a supporting character, not the hero. Put real money and time behind training your team and yourself, especially around AI, the business of your clients, the industry that matters to you and leveling up their advisory skills. Make sure you are building or tuning up your authority machine. Make sure that your search visibility is spot on, that you’ve got lots of proof and thought leadership is happening on a regular basis.

You do not run your agency because it’s easy. You run it because somewhere deep down you believe you and your team can make a difference for clients and you want to make a difference for your team. My dad used to always say, we may not be able to save the day, but maybe we can make getting through the day a little easier. That’s your job right now, for your team, for your clients, and frankly for yourself. Take these trends not as threats, but as invitations to make bolder, more intentional choices. Honestly, this is your moment. I believe that there’s never been a moment in agency history, at least recent history, where we can make a greater stride forward than right now. The opportunity is yours. The clients are ready for you. The world is ready for you. People trust you more than they trust everybody else. The only real question is, what are you going to do with everything we just talked about between now and the end of the year? Because it’s a huge opportunity for you to level up and get ready for a killer 27 and 28.

Okay, I know this was a long one. I know it was dense. You may have to go grab the transcript or listen to it again. But I hope you take the parts and pieces of this solo cast and that are really important to you. Share them with your leadership team. Take them into your planning sessions. Figure out how you want to level up your agency to make yourself strong and steady for the future. Okay, that’s it. That’s what I have for you. I’ll be back next week with a guest. And in the meantime, have a great week and know that we are here cheering you on. We want you to be as successful as possible, and hopefully the stuff we talked about about today will help you move in that direction. Okay? All right, I’ll talk to you soon.

Drew McLellan [01:25:35]: That’s a wrap for this week’s episode of Build a better agency. Visit agencymanagementinstitute.com to check out our workshops, coaching and consulting packages and all the other ways we serve agencies just like yours. Thanks for listening, Sa.