Key takeaways: Where is the value? Future fit agency models

We recently launched the findings of our latest Annual Survey on the Financial Performance of Marketing Services Companies in the UK. The results were presented by Callum Gritt, Director at Moore Kingston Smith and Paul Winterflood, Partner and Head of Media Corporate Finance at Moore Kingston Smith, who highlighted the key trends and insights emerging from this year’s data. Following the presentation, Esther Carder, Partner and Head of Media at Moore Kingston Smith, chaired a panel discussion with industry leaders: Stephan Pretorius, Global Chief Technology Officer at WPP, Ben Bilboul, Chair and Non-Exec Advisor, formerly CEO of Karmarama and MD, Accenture Song (post-acquisition), Ben Jeffries, CEO & Co-founder at Influencer and Lisa De Bonis, Global CEO at Huge.

The conversation explored how agencies can adapt in a landscape where traditional models are under increasing pressure and technology is rapidly reshaping client expectations. Below are the key highlights from the discussion:

• Why cost-plus pricing is failing: Traditional pricing models tied to hours or inputs are becoming increasingly unviable. As clients demand more for less, agencies face margin pressures that ultimately undermines quality. Agency leaders will need to rethink pricing structures so it reflects the value delivered, not time spent. Agencies such as Huge have moved away from these models in favour of product-based outputs, giving them greater control over margins and making them less vulnerable to procurement price reductions.
• Value-based pricing offers a stronger alternative: Aligning fees with outcomes, impact and strategic contribution protects margins and clarifies the worth of agency expertise. In this environment, deeper, collaborative relationships that are built on trust and transparency are essential when sustaining this shift and justifying value-linked pricing. In more digital areas of the marketing mix, such as influencer marketing, we’ve seen a shift away from traditional pricing models, with agencies willing to share risk with clients in return for an upside based on the elements of the campaign which they can directly influence and control.
• But the transition isn’t straightforward: Procurement often default to familiar processes, rate cards, hourly costs and rigid scopes of work, making it difficult for agencies to break from legacy expectations. To navigate this, agencies need to “play the game” while gradually shifting the rules: using blended models that combine traditional input-based fees with performance incentives tied to measurable outputs. This reassures clients while giving agencies exposure to the upside of strong performance.
• AI is accelerating the pace of change: Large agencies, with access to greater investment capital, are developing proprietary AI tools and monetising them. Independent agencies, though more resource-constrained, gain advantage through agility and speed of adoption, using emerging AI tools to improve efficiency and client experience without major investment.
• AI scrutiny is rising fast: Procurement teams are paying far closer attention to how agencies use AI, manage data and protect client information. Strong governance is no longer optional – it’s becoming a core requirement in RFPs. Agencies must be clear when explaining how client data is handled, how AI tools are vetted, and what safeguards are in place to ensure privacy and compliance.

Overall, the agency landscape has shifted dramatically over the past decade, and the transformation is far from over. The emerging consensus is that the most successful agencies will be those that evolve their propositions toward outputs, value and strategic thinking. High-value strategic work should be priced accordingly, while technology including AI should be leveraged to make lower-margin execution more efficient. Agencies that adapt quickly, embrace new tools and align their pricing with value delivered will be best positioned to thrive in the next era of the industry.

If you would like further information or to discuss how we can support your agency, please get in touch with our team.