3 Agency Models Survive. Pick 1.
The one thing you need to know in AI today | AI Ready CMO
We’re wrapping up 2025, and over the next few days, we’ll be sharing key insights from our year-end report: AI in Marketing 2025 Annual Report.
The report will be available for all subscribers to download in full for free from the 22nd of December.
In our report, we explained 3 viable models emerge by end of 2026.
Generic full-service agencies charging strategy rates for execution work collapse when clients realize AI does most of what these agencies sold.
You have 12 months to pick which model you’re building toward.
The 3 Models That Survive
Model 1: Premium Strategy Boutiques
10-20 strategists. $500-$1,000/hour. No execution.
You’re selling judgment, not deliverables. CMO-level strategic consulting. Multi-year relationships with 5-10 clients maximum. You use AI internally to amplify research and analysis, but clients pay for strategic decisions AI can’t make.
Economics: $50K-100K monthly retainers per client. $3M-6M annual revenue with 10-person team.
Model 2: AI-Powered Execution Factories
Sophisticated AI workflows. 10-20% of traditional costs.
You’ve rebuilt operations around AI automation. Tiny team (5-10 people) serving 50+ clients simultaneously. Competing on speed and volume, not craft. Standardized processes for maximum AI leverage.
Economics: $2K-5K monthly retainers per client. $1.5M-3M annual revenue with lean overhead.
Model 3: Vertical Specialists
Deep industry expertise, maintaining hybrid value.
You own a specific vertical (fintech, healthcare, B2B SaaS) where domain knowledge creates moats AI can’t cross. Strategic understanding of industry dynamics plus AI-powered execution. The hybrid model works because vertical expertise justifies a premium, while AI handles commoditized work.
Economics: $20K-50K monthly retainers. Positioned as an industry consultancy, not a generic agency.
Why Full-Service Dies
Your clients are doing the math.
They’re paying you $25K/month for “integrated strategy and execution.” But they’re realizing:
70% of your deliverables are AI-assistable execution
They can hire a junior with AI fluency for $65K/year to generate that
Your strategic value doesn’t justify a $300K annual retainer
So they split the spend:
Premium boutique for strategy: $40K/month
AI execution shop or in-house: $3K/month or one $65K hire
Total: $43K/month for a better strategy and faster execution than your $25K bundled offering.
You lose both contracts.
The Decision Timeline
Q1 2026: Make the strategic choice. Premium, execution, or vertical? Fire clients that don’t fit the model you’re building toward.
Q2 2026: Restructure operations completely. If going premium, fire execution talent and hire senior strategists. If going into execution, rebuild around AI workflows and cut overhead. If going vertical, double down on industry expertise.
Q3 2026: Reprice and reposition. Premium raises rates 3-5X and serves fewer clients. Execution drops rates 60-80% and serves 10X more clients. Vertical maintains pricing but sharpens industry positioning.
Q4 2026: Survive or sell. Agencies that picked a model and executed are profitable in the new structure. Those still operating full-service are bleeding clients and cutting staff.
What This Requires
If going premium:
Fire 60% of clients immediately
Replace mid-level execution talent with senior strategists
Rebuild service offering around consulting, not deliverables
Accept 12-18 months of painful transition
If going AI-native execution:
Rebuild entire workflow from scratch (can’t bolt AI onto old processes)
Fire expensive mid-level talent, hire AI-fluent juniors
Cut office space, overhead, and everything not essential
Accept that you’re competing on price and volume
If going vertical specialist:
Pick one industry and go deep (can’t be “pretty good” at three industries)
Build industry-specific IP, frameworks, and case studies
Develop genuine expertise, AI can’t replicate
Accept that market size shrinks, but margins improve
All three require painful decisions. None allows you to keep operating the same way.
Most agency owners know this is coming. They see the economics shifting. They recognize the threat. But they’re paralyzed.
Going premium means firing half your clients and risking cash flow collapse. Going AI-native means admitting your team structure is obsolete. Going vertical means abandoning 70% of your current market.
So they do nothing. They keep operating the same model, hoping something changes. It won’t. Clients already noticed that execution has been commoditized.
The agencies that will survive 2026 are the ones making hard decisions in Q1 2025. The ones that don’t make it are the ones still debating whether this is real.
It’s real. Pick a model. You have one year.
3 AI Marketing Tools To Try Today
AdCreative
Generate high-converting ad creatives in seconds—AdCreative AI produces hundreds of variations optimized for performance, not just aesthetics.
Simplified
Design, write, and schedule content from one platform—Simplified combines AI copywriting, graphic design, and social media management so you stop juggling multiple tools.
Semrush
Dominate search rankings with AI-powered SEO insights—Semrush analyzes competitors, identifies content gaps, and tracks keyword performance to outrank rivals faster.