Everyone sees the front-end impact of AI: content at scale, faster research, cheaper ideation. But the fundamental transformation isn’t just in the work – it’s in how that work is structured, staffed and sold. And nowhere is that pressure more visible than inside the walls of agencies.

AI is quietly dismantling the economics agencies were built on. For decades, agencies sold time. Now AI is compressing it.

The PR and integrated agency model has long relied on selling time. Retainers calculated on expected hours. Project fees built around effort. Time & Materials billing as a proxy for value. Utilization as a measure of profitability. AI isn’t just speeding up execution, it’s shifting where value lives. Tasks that once took days now take hours. Sometimes minutes.

“What used to take months, we now do in days,” said one marketing executive who previously worked agency side and is now in-house. “We’re no longer constrained by traditional agency timelines. If an agency can’t move at our pace, we won’t work with them.”

This isn’t about price sensitivity. It’s about pace sensitivity. Clients are accelerating. And they expect agencies to keep up. For agencies contemplating a future sale, adapting to this shift is no longer optional.

Signals That the Model is Breaking

Clients have leveled up. Many in-house teams now use AI tools themselves for research, content and even strategy. According to recent research from MuckRack, 75% of PR professionals use generative AI in their work. Client expectations of agencies are rising in tandem, as one marketing leader I spoke to said: “We expect more from the time we have. We can go deeper and craft better work faster. Agencies need to follow suit.”

Competition from in-house teams, who are now able to complete many of the tasks typically handled by junior agency teams, is very real. Agencies need to work harder than ever before to demonstrate value in both thinking and speed of execution.

Value has migrated. Speed hasn’t diminished the need for quality. It’s made it more important. What clients want now is trusted expertise, delivered quickly. Authority and industry knowledge matter, but only when paired with velocity. When high-quality work comes from deep experience, delivering it quickly only enhances its value.

Speed alone doesn’t win. Speed + great judgment does. The opportunity for agencies is to bring clarity, strategic counsel and trusted execution at a pace faster than their clients expect.

The pyramid is collapsing. The traditional agency pyramid, with a lot of juniors at the bottom and fewer senior folks at the top, is now being hollowed out in the middle. AI and client scrutiny are squeezing mid and junior levels, while simultaneously increasing demand for senior thinking and lower-cost execution. Productivity expectations are shifting dramatically.

“The pyramid is becoming an hourglass,” one senior comms leader told me. “The middle’s getting squeezed. And that’s where a lot of agency talent development used to happen.”

That’s not just a billing challenge. It’s a structural one that’s also hitting the heart of agency talent development, agency economics and how much your agency is worth to a buyer. It also raises big questions about where value lives. Relationships, domain knowledge and specialist capabilities continue to hold the key. Routine tasks, not so much. The future of talent development is a whole other topic.

Time & Materials Can’t Explain Value Anymore

The Time & Materials model was built for an analog world. It rewarded volume over velocity. But as AI drives productivity, time becomes a less credible explanation for cost and a less relevant measure of value.

“AI isn’t replacing billable hours, it’s making them more effective,” one agency creative leader told me.

That might be true today, but it won’t last. Clients will surely ask why work that takes less time or effort yet still costs the same.

What Clients Want Now: Speed, Expertise, Impact

The feedback is consistent:

  • Speed, not time

  • Insight, not process

  • Impact, not effort

Clients aren’t seeking perfection. They’re seeking performance. And they’re increasingly clear on when “good enough, fast” is what’s needed or when brilliance is worth the wait.

Agencies must double down on what they’re best at: category expertise, creative judgment, business counsel, real relationships and earned trust. That’s the differentiator AI can’t touch. And that’s what clients will pay for, if it arrives fast enough. At times, good enough delivered quickly will be more valuable than perfect delivered too late.

At TobinLeff, every buyer we speak to now wants to know how AI is being implemented or leveraged by the seller. Not just for the benefit of efficiency, but for AI’s impact on margin and scalability. Firms already leveraging AI for margin expansion stand out. Those who don’t stand out for the wrong reasons.

So Where Do We Go From Here?

This isn’t a gentle evolution. It’s a reckoning. Agencies need to rethink the models they were built on, from billing and staffing to scoping and performance management.

The new billing model needs to be blended:

  • Value-based pricing for strategic thinking

  • Fixed-fee sprints for execution at speed

  • Transparent AI augmentation to justify outcomes, not hours

This is a call not just to CMOs and client leads, but to COOs and CFOs. If your financial model still relies on time as a value and profitability proxy, you’re not keeping pace with your agency’s delivery capabilities.

When it comes to M&A, buyers aren’t looking backward. They’re buying future cash flow. They want companies with a vision for growth, differentiated value propositions and modernized operations that signal resilience and opportunity in a changing market.

Transitioning from time-based models is operationally difficult. But smart agencies are already thinking about it. They know this isn’t just a tech moment, it’s a business model inflection point and an opportunity to create future enterprise value.

And timing matters. With the economy teetering and clients reevaluating agency relationships, this is a perfect storm – and a perfect window for brave agencies to step up, modernize their commercial models and lead.

AI won’t replace agencies. But it will expose them. If your value is how long something takes, AI will make you less relevant. If your value is how fast you deliver smart, strategic, trusted thinking, you’ll thrive.

The agencies that survive this shift will rebuild around what clients actually value now and deliver it at speed.

If time was the old currency, speed is the new one. Expertise and trust are the multipliers. Enterprise value is the reward.

James Beechinor-Collins is a partner at M&A advisory TobinLeff.

Note: This article reflects the views of the author and is published as part of PRovoke Media’s opinion section. It does not necessarily represent the views of PRovoke Media or its editorial team. We welcome a range of perspectives and invite readers to submit thoughtful responses or counterpoints for consideration to [email protected].