AI saves ad agencies a lot of time. Should they still charge by the hour?

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Subscribe to enjoy similar stories. Advertising agencies’ ability to work more efficiently because of AI may upend the way those agencies make money.

Agencies have long billed marketers by the number of hours their employees spend producing client work, using rate cards to charge different amounts for contributions by people according to their role. Now, AI is eroding the number of people, hours and roles required to deliver for clients, and agencies may find the standard billing arrangement comes up short.

AI is helping agencies rapidly produce personalized creative images, for example, or altering elements like color, position, lighting and language—tasks that were once highly manual. It’s also letting copywriters, who once may have needed several hours to write 50 variations of copy for a given ad, now generate 100 variations immediately, then choose to edit and curate them.

“Just in ChatGPT and Adobe alone are hundreds of use cases on how the creative side of agencies can shave so much time off," said Tracey Shirtcliff, chief executive and founder of ScopeBetter, which helps companies price their services, among other offerings. Billing for time doesn’t explicitly account for everything agencies do, including valuable aspects of a creative campaign such as generating strategic insights and big ideas, but it helps them cover such costs and keep the marketing machine humming.

“I ran a strategy department for a long time. Strategy is sort of an example of something that largely has been given away over the years," said Noah Brier, founder of BRXND.ai, a company that is organizing events, content and education to help the marketing industry understand how to grapple with AI, and co-founder of Alephic, a consulting firm