The Future of Agencies is AI-Ready
The one thing you need to know in AI today | AI-Ready CMO
Y Combinator just published its Spring 2026 Request for Startups. One of the categories they are looking into is AI-native agencies. It confirms EVERYTHING we’ve been talking about... So if you own an agency, are thinking about launching one, or are working with them, this one is for you.
The problem with agencies is well known. They are hard to scale. You have low margins, manual work, and you grow only through headcount. We know, we owned one together centuries ago, and we worked at agencies many times in leadership positions. We’ve seen the numbers. We know the pain.
The opportunity now is this:
Instead of selling software to customers to help them do the work, you can charge way more by using the software yourself and selling them the finished product at 100x the price.
Aaron Epstein, Y Combinator
In practice, agencies will look like software companies, with software margins.
Step back a little. If you are an agency owner, what are you selling? If you work with agencies, what are you buying?
Most agencies either sell time or expertise, or both. In other words: they sell consistency and information asymetry.
This model won’t change with AI. You’re still selling expertise and time. What changes? The scale and the MONEY unit economics.
How? Let’s view this from a good-old-boy old vs new:
Old model: Agency wins a contract for 100 digital ad campaigns. They hire an ad manager, a designer, and an account person to service it (or put existing staff on it). Margin: ~10% (above average for agency LaLaLand). They might use some AI to speed up workflows, but everything ships through the human team because... We don’t know why. Oh yeah, sorry, team culture and creativity! Those do wonders for margins.
New model: Agency pitches 10 clients per week with custom campaigns built upfront using AI. No contract signed, pitching draft campaigns, because why not? They win a client. They don’t hire anyone. The campaign is already set up, can be customized by client data (once the contract is signed), and scales with AI tools. Their 5-person team (ad manager, copywriter, designer, account, strategist) handles 10 clients simultaneously. Minimum. Margin: ~70-80%, like most software companies.
TLDR, the shift:
Old: Humans do production (time & consistency) AND taste/judgment (expertise)
New: AI does production (consistent, fast, scalable). Humans do taste/judgment.
Make production a software problem = get software margins.
Not too complicated.
You may ask: why will clients just produce themselves? Well, some will do. As they do now, some of them have internal marketing departments and don’t rely on agencies at all.
But most of them will need the expertise. They will need YOUR taste, your judgement, your creativity, your POV. Especially now, when production is accessible to all and infinitely scalable, only people with taste and creativity will know what is worth producing.
We discussed this extensively in our Taste-series, a 4-part long article/novel/book/rambling. It’s our gold standard on this topic, start it here:
Those who will have this expertise will print money with AI.
Those who won’t become AI-Ready? Well, you can still defend your prices with “we do 100% human.” We think this is the last year for this type of argument. If you work with enterprises that are moving as fast as an iceberg mid-ocean? Maybe two years.
But be prepared for questions around speed.
Why does it take so long? Is that it? Only this we’ve got? Did you work on this landing page for 2 weeks? For real? Are you serious that you’ve billed us $3,000 for a 10-step email campaign that took 4 weeks to ship? Do I have it right that you charge us $10K for 1x 3-minute video for our brand, and that it takes a month to produce?
The “we do it by hand” won’t cut it when 100 other agencies will flood the client with the same or better-quality work, done 100x faster and at 100x the volume.
For those who are hungry, right now, there’s a massive arbitrage opportunity. You can deliver the same output in 10% of the time at 10% of the cost and still charge traditional rates.
That arbitrage won’t last forever. The "we do it by hand” agencies will either catch up to you fast, or the market will clear out.
The agencies that use this year to build real expertise in curation, systematic quality control, and vertical specialization, and to rebuild their entire workflows around AI, will survive the pricing pressure that’s coming.
Oh, and if you do hire this year, miraculously, please do hire someone who has taste, can curate content, and knows the difference between what’s good enough to ship and what’s just AI slop. Pay the premium, as these people will go through the roof in value in the future, when AI produces everything.
— Torsten and Peter
PS: In our State of AI in Marketing in 2025 Annual Report, we’ve predicted that one of the new agency models for 2026 will be the creative collective. Loosely tied together high-performing creative experts, producing at scale with AI for their clients.
Read the rest in the report. If you are a subscriber, scroll down for the Learning Hub link in the footer, and find the report there. If you are not a subscriber yet, check our free resources, like that study, here.
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Good article gents. I’d say holds true for consultants as well. As u say will push more toward value based pricing only the value expectations will keep going up
Brilliant breakdown on the production/taste split. The arbitrage window on this is narrower than people think tbh. Once mid-tier agencies figure out they can pitch 10 custom decks aweek instead of grinding on one retainer, pricing pressure will hit faster than most expect. Seen this happen in dev agencies when nocode platforms spread, the late movers got squeezed hard.