Transforming Creative Agency Efforts and Fees in the AI Era -- It Can Be Done Now
AI can simplify and lower the cost of creative execution across fragmented SOWs. This will simplify fees and free up agency resources to develop strategies to rekindle client brand growth rates
Credit: Adam Douglas Thompson, The New Yorker, The Cartoon Bank
During the past 15 years, Scopes of Work (SOWs) have grown and become increasingly fragmented.
At the same time, advertisers have seen a serious decline in the growth rates of their advertised products, well below nominal GDP growth rates. Since 2009, 40 out of 60 major advertisers saw their collective sales grow at only 2% per year, well below the nominal GDP growth rate of 4.7% per year.
A SOW that we diagnosed a few years ago for an advertiser specified 5,382 unique deliverables that would require (per our diagnosis) the efforts of 36 creatives, 27 production people and 33 Client Service + Planners, for a total requirement of 96 agency FTEs and a fee of about $22 million — a very expensive SOW that substantially exceeded the client’s $9 million fee budget.
The client had suffered from serious growth problems for the past 6 years and hoped to reposition itself in the marketplace through an aggressive marketing program.
The SOW would have required a creative agency to develop and produce highly specified outputs for TV; Radio; POP; Sales Signage; Program Signs; Circulars; Direct Mail; OOH; Video; Rich Media Ad Banners for Web Broadcast, Homepages, Landing Pages, Microsites, and Mobile Phones; Applications; SMS Texting; E-Mail Scripts; Social Media Posts; Dealer Franchise Materials; PowerPoint Decks; Corporate Internal Materials; Design / Brand Identity Materials; Brand Books; Style Guides; “New Initiative” Materials; and two Experiential Proposals. All of this in English plus Spanish.
100% of the detail outlined in the SOW was about the quantities and formats of the various deliverables. Here’s a sample:
Web Broadcast
· Up to 6 web broadcast units (video banners, etc.) to provide brand awareness, specific product launches, sales and promotional events, etc.
Rich Media
· Up to 6 unique rich executions,
Standard Banners
· Up to 100 unique banner concepts over the contract period, includes three associated resizes,
· Up to 20 banners developed from existing creative from the General Market and translated to the Hispanic Market, production includes 3 resizes.
· Up to 40 revised/versioned banner concepts e.g., revised price point, updated legal, product replacement, etc. over the contract period.
Homepage Slides/Rotations
· Up to 180 unique concepts
Landing Pages
· Up to 56 unique landing pages over the contract period
· Up to 12 revised landing pages e.g., revised price, product swap, updated legal, etc. over the contract period.
Custom Placements
· Up to 24 unique rich media executions associated with Media’s quarterly digital plan
· Up to 48 unique banner size executions associated with Media’s quarterly digital plan.
DIY Microsite
· Maintenance and up to 1 design re-skin of the current microsite
The SOW described the extensive number and types of diverse deliverables that required creative efforts.
There was nothing in the 30 page SOW about “the brand problems to be solved” or “the type of creative concepting” that might increase brand growth rates.
Today, a SOW of this nature can be simplified and improved for cost and effectiveness through the use of AI. As a result, more effort can be put into identifying and solving a client’s brand growth problems.
AI-driven Marketing Mix Modeling (MMM) can reduce the number of deliverables in a SOW. AI-driven MMM can identify the costly “non-performing fluff” versus the “truly effective stuff”:
Innovative MMM programs, like Mutinex, provide an up-front AI interface that allows CMOs to query “what changes in our marketing mix should I implement to improve the growth rate of Brand X?” — and receive an instant and detailed report and recommendations.
Other AI programs can do the hard work of tailoring creative concepting for diverse and fragmented deliverables. Creatives will no longer need to spend their time mucking around with the specific needs of the different kinds of deliverables. AI programs under senior creative direction can be prompted to take high-level creative concepting work and customize it for broadcast, print, OOH, promotional, banner, Web design and other formats. This will substantially reduce the amount of creative effort required for the diverse deliverables in their SOWs.
The use of AI, as described above, will free up fees and resources to do more up-front strategic work that is designed to rekindle brand growth — as long as clients do not try to use 100% of AI efficiencies to cut agency fees.
The use of AI can change the way creative agencies are paid for their services.
Creative concepting and other associated actions need to be based on clear strategic diagnoses of brand performance. Agencies need to develop a deep understanding of “why brand growth slowed after 2009” and “what needs to be done about it.”
This type of work is not generally done by creative agencies today, and client service executives, in particular, do not usually have the skills or experience to do the work.
Among the many causes of brand slowdowns are the following:
Reduction in the rate of new product development and launches;
Changes in the generational composition of consumers, from Baby Boomers to Millennials to Gen Z;
The extraordinary rise of no-brand and private label brands of online and brick-and-mortar retailers (Amazon, Walmart, Costco, Target, Kroger and other supermarkets), who sell at lower prices with more “purpose-focused” positionings and ingredients;
The shift in media mix spend from traditional advertising to programmatic advertising.
Corrective action programs can be based on these and other relevant factors.
Identifying the right creative concepting and associated actions requires a consulting-like mix of skills, analyses and data. Fees can be charged on a consulting-like basis for this type of work.
Understanding and solving brand-growth problems requires the kinds of skills that the BCGs and Bains of the world have used for the past several decades: deep dives into understanding the history of brand pricing, competitors’ strategies, market share changes, cost positions, customer behaviors, distribution strategies and technology. How have these factors come together and conspired to reduce brand growth rates?
(Full disclosure: I was a strategy consultant at BCG and a Director of Bain for nearly two decades, so I have some insights into these consulting methodologies).
These brand diagnostic consulting skills are not rocket science. Newly-hired consultants are trained every year to do this kind of work by the strategy consulting firms. BCG published The Boston Consulting Group on Strategy: Classic Concepts and New Perspectives, and it is available on Amazon. Bain outlined its approach in The Breakthrough Imperative: How The Best Managers Get Outstanding Results, and this book, too, is available on Amazon. These are useful books. Additionally, there are literally thousands of trained freelance former consultants who are available for hire on a part-time or full-time basis. Many of them are available through networks like Umbrex.
Creative agency fees for these brand strategic activities can be charged on a consulting-like basis — fixed fees based on the resources, timing and value of the work.
These fees can be calculated as a percentage of media spend. Why not? DSP and SSP and other martech fees are charged as a percentage of media spend. Why not do the same for this important consulting-like effort?
Fees for creative delivery, driven by AI, can be calculated on the basis of the quantity and type of deliverables, using rate cards for this purpose.
The detailed list of creative deliverable types is outlined in most SOWs.
How many pieces of work, by media type, by channel and specification will be required to satisfy the client’s media mix and spend?
Rate cards for the different types of deliverables can be developed, using programs like Farmer & Company’s ScopeMetrics® program, which has been used for decades to quantify and value the different types of creative deliverables.
Human-completed deliverables. Some originations require considerable human creation and have higher rate card prices. This is certainly the case for original TV and video deliverables that use real actors.
AI-assisted deliverables. Other deliverables, like adaptations, can be largely supported by or created by AI, and these will have much lower rate card prices.
ScopeMetrics® can calculate rate card prices for all creative deliverables, whether they are originations or adaptations, human-created or AI-created.
AI can help to make creative agencies more effective strategic partners for their clients.
Scopes of work can be pruned and refocused through the use of AI-driven MMM.
Creative efforts to execute diverse deliverables can be simplified and reduced.
Fees and resources can be freed-up to do more brand strategic diagnoses to uncover the reasons for brand growth rate problems.
Fee structures for creative work can be vastly simplified.
Focused training for agencies will be required, along with adopting a system to generate rate cards for the delivery of completed outputs, but both of these are well within reach.
Creative agency C-Suite executives need to embrace AI and fee transformations, committing their agencies to help clients grow again.
Agencies will need to begin discussions with clients about this implementation in the coming year.
My third book about the advertising industry, Madison Avenue Revisited, is now available for pre-order on Amazon. The book, which focuses on the evolution of media and creative operations, the effect of holding company ownership and the brand performance challenges faced by clients will be launched at Cannes in June 2026.
