Brands still believe in agencies, but they increasingly expect them to deliver sharper thinking, faster execution and a more convincing AI proposition.
An IPA survey of senior marketing leaders has revealed a widening gap between what clients value most from their agency partners and what they believe they actually receive, raising fresh questions about how agencies demonstrate their worth in an AI-driven era.
The research suggests that while client demand for agencies remains robust, many marketers feel agencies are falling short on one of their most important responsibilities: providing strategic challenge and fresh thinking.
Among the survey’s most striking findings is what the IPA describes as a significant “challenge gap”.
85% of senior executives said they highly value agencies that challenge briefs, assumptions and established ways of thinking. Yet only 37% believe their agencies currently deliver this level of critical thinking.
A similar disconnect emerged around growth-oriented thinking. While 83% of respondents said they value agency partners that help them stretch and grow, fewer than half feel they are receiving that support.
For agencies, the findings point to a potentially uncomfortable reality: clients are not primarily seeking order-takers or efficient production partners. They want advisers capable of challenging internal consensus and bringing new perspectives to business problems.
Production valued
The survey also highlights what could become a growing concern for creative agencies.
Only 26% of respondents rated the development of a core creative idea or brand platform as “extremely valuable”. By comparison, 43% said excellent quality asset production was extremely valuable.
The finding suggests many brand leaders currently place greater value on execution than on the original strategic and creative thinking that underpins campaigns.
That trend arrives at a particularly sensitive moment for agencies as generative AI tools make content creation faster, cheaper and increasingly automated. If clients continue to place a premium on production rather than ideas, agencies may find themselves competing in areas where technology is rapidly reducing barriers to entry.
The report warns that agencies need to reinforce the value of original thinking and intellectual property rather than allowing themselves to be positioned primarily as content factories.
“In-housing” driven by speed and control
The research also sheds light on the continuing shift of marketing capabilities in-house.
The most commonly in-housed functions are now:
- Data analytics (66%)
- Brand design (65%)
- Social content (63%)
However, the findings challenge the assumption that in-housing reflects dissatisfaction with agency performance.
Just 25% of respondents cited poor agency performance as the reason for bringing capabilities internally. Instead, marketers pointed to the need for greater speed, agility and organisational control.
Notably, advertising and media buying remain among the functions most resistant to in-housing, suggesting brands still value specialist external expertise in these areas.
The ‘messy middle’
The survey also identifies growing frustration with the way agency services are structured and priced.
Chief marketing officers increasingly see value at two ends of the marketing process: high-level strategic thinking upstream and highly efficient, often automated deployment downstream.
The problem lies in what the report describes as the “messy middle” where layers of process, administration and workflow management consume agency resources and client budgets without creating obvious value.
As a result, agencies face mounting pressure to simplify delivery models and eliminate costs associated with activities clients consider non-essential.
AI is a must-have
If there was any doubt about the importance of AI in agency selection, the survey removes it.
A striking 90% of clients said AI capability is either “critical” or “very important” when evaluating creative and media agencies.
Currently, clients see the strongest AI-driven impact in:
- Data analytics (52%)
- Marketing understanding and insight generation (45%)
- Asset creation (33%)
The figures suggest marketers are currently valuing AI most for enhancing intelligence and decision-making rather than replacing human creativity outright.
For agencies, AI competency has effectively moved from a differentiator to a procurement requirement.
Perhaps the report’s most intriguing finding is the apparent contradiction in how clients view agency remuneration.
While 90% of respondents say they are satisfied with existing fee arrangements, 66% also agree that traditional hours-based charging models undervalue the work agencies produce.
The tension reflects a wider industry debate about the impact of AI on agency economics. As automation dramatically reduces the time required to complete many tasks, charging by the hour increasingly appears disconnected from the value delivered.
The findings add further momentum to calls for value-based pricing models that reward outcomes, expertise and intellectual contribution rather than time spent.
Despite concerns around AI, in-housing and changing commercial models, the overall outlook for agencies remains positive.
Nine in ten clients expect their use of agencies to either stay the same or increase over the next three years. Confidence is especially strong among organisations with annual marketing budgets exceeding £50 million.
The message from the research is clear: brands are not walking away from agencies. But they are becoming more selective about where they see value.
For agency leaders, the challenge is no longer proving they can execute. It is proving they can think, challenge and create advantage in ways that technology alone cannot.
As AI commoditises production and brands take greater control of day-to-day activities, the agencies that thrive are likely to be those that position themselves less as suppliers and more as strategic partners capable of delivering the critical thinking clients say they want, but too often believe they are not getting.