Agencies Were My Best Friends, Where Did They Go?

Remember when your agency called on a Tuesday afternoon, not to discuss a brief but to share an idea they'd been thinking about for your brand? Remember when your creative partner knew your CEO's name, your supply chain constraints, and which board member would kill the ambitious concept before it reached final presentation? Remember when "the agency" wasn't a rotating cast of account managers you'd never met but a genuine extension of your marketing team?

Those relationships built brands. Ogilvy and American Express. BBDO and Pepsi. AMV BBDO and Sainsbury's. Decades-long partnerships where institutional knowledge compounded, where agencies invested speculatively in ideas they believed in, where the best work came from trust earned over years rather than purchased through procurement processes.

If you've been in marketing long enough, you remember. And if you're honest, you've noticed something fundamental has changed.

In December 2024, Omnicom announced it would acquire IPG for $13.5 billion, creating the world's largest advertising holding company. The combined entity immediately announced plans to shed 18% of its workforce, reducing headcount from 128,000 to approximately 105,000. Legacy brands that had defined creative advertising for generations, DDB, FCB, MullenLowe, were shuttered or absorbed. Client response to the merger was telling. As one industry publication reported: "We did not sign up for chaos."

The IPA Agency Census tells the UK story in stark terms. Redundancies accounted for 13% of employee departures in 2024, up from just 5% in 2023. UK job openings in advertising and marketing fell 7.5% between 2022 and 2025. The Q1 2025 IPA Bellwether report showed a net -4.8% of UK firms cutting marketing budgets, the first contraction since 2020.

“The agency landscape will change more in the next 5 years than in the last 25. The question is whether your organisation is positioned as architect or victim of that change.”

Before we mourn the agency relationship, we should acknowledge why trust eroded. The ANA's programmatic transparency study delivered a finding that should concern every CFO: for every $1,000 spent programmatically, only $439 reaches consumers. The remaining 56% disappears into ad tech fees, data costs, verification services, and what the report delicately termed "unattributable spend."

Bayer demonstrated what happens when brands take control. By in-housing programmatic capabilities, they cut costs by $10 million in just six weeks. Not annually. In six weeks. That saving wasn't found through better creative or smarter strategy. It was found by removing layers of intermediaries that had accumulated over a decade of complexity.

When your agency's media buying operation requires forensic accounting to understand where your money goes, the relationship has evolved from partner to intermediary. And intermediaries, as every industry eventually learns, get disintermediated.

The World Federation of Advertisers reports that 66% of brands now have in-house agencies, and 87% express satisfaction with the arrangement. The numbers point to a structural shift in how marketing capabilities are organised, not a passing trend.

The drivers are consistent: speed, cost efficiency, institutional knowledge retention, and data control. When you brief an external agency, you're paying for them to learn what your internal team already knows. When your campaign requires a revision, you're waiting for approval workflows designed to protect the agency from scope creep, not to accelerate your time to market.

“Only 11% of respondents believe their current agency model will fit future needs. The relationship is being reinvented out of necessity rather than abandoned.”

Yet the WFA data also reveals limitations. In-house agencies excel at volume, consistency, and speed. They struggle with breakthrough creative, strategic objectivity, and the diverse talent that major campaigns require. The real question is which capabilities belong where, not whether to choose in-house over agency.

While holding companies consolidate and shed talent, that talent doesn't disappear. It fragments into new models that often serve clients more effectively.

Fractional leadership has doubled from 60,000 to 120,000 practitioners between 2022 and 2024. These aren't consultants offering advice. They're experienced operators taking accountability for outcomes, often with deeper category expertise than generalist agency strategists ever develop.

Specialist agencies focused on specific capabilities, from performance creative to retail media to influencer marketing, are capturing the work that holding companies once bundled. The influencer marketing sector alone reached $32.55 billion in 2025, with much of that spend flowing to specialist shops rather than traditional creative agencies.

Retail media networks add another layer of complexity. Growing 20% year-over-year, five times faster than the overall ad market, retail media now commands dedicated teams, budgets, and often separate agency relationships. Amazon and Walmart control 84.2% of retail media spend, creating a channel that bypasses traditional agency structures entirely.

Artificial intelligence isn't waiting for agencies to adapt. Over 67% of agencies now use AI tools, and more than 80% of creatives have integrated AI into their workflows. The efficiency gains are real: production timelines are compressing, personalisation at scale is becoming viable, and routine creative work is being automated.

“Meta's AI tools could give agencies only 18-24 months to pivot. When the platforms can generate the creative, what exactly is the agency selling?”

The implications are stark. A survey found that 83% of marketing leaders would reduce agency spend if they could automate content creation. Not might reduce. Would reduce. The economic logic is irresistible: why pay agency rates for work that AI can produce in seconds?

As one industry executive noted: "There's no room for purists." The agencies that survive will be those that harness AI to deliver more value, not those that pretend the transformation isn't happening.

Perhaps the most damning data point comes from Setup's client-agency survey. While 40% of agencies rate their brand partnerships as excellent, only 13% of brands agree. That perception gap explains why 40% of clients plan to switch agency partners in the next six months.

The agencies believe they're delivering value. The clients disagree. Someone is wrong, and the clients are the ones writing the cheques. This disconnect suggests agencies aren't failing at execution. They're failing at understanding what clients actually need in 2026.

Marketing budgets dropped to 7.7% of revenue in 2024, down from 9.1% previously. Gartner reports that 64% of CMOs lack the budget to execute their strategy. In this environment, every agency pound must work harder.

This model requires more orchestration than the traditional AOR relationship. It demands marketing leaders who can manage complexity, integrate diverse partners, and maintain brand coherence across fragmented execution. But it also delivers flexibility, cost efficiency, and access to best-in-class capability rather than bundled mediocrity.

The agencies that thrive will look different from the holding company model that dominated the past three decades. They'll be smaller, more specialised, and more willing to share risk with clients through performance-based compensation. They'll integrate AI as a capability multiplier rather than a threat. They'll staff for senior expertise and judgment rather than junior execution that technology can automate.

“The agency of the future doesn't compete on production capacity. It competes on strategic insight, creative distinction, and the courage to tell clients what they need to hear rather than what they want to hear.”

The UK advertising market remains robust, forecast to reach £43.1 billion in 2025 with 6.5% year-over-year growth. It's the largest ad market in Europe and third globally. The spend remains strong but is being reallocated to models that deliver more accountable value.

Your agencies didn't abandon you. The model that sustained those relationships became unsustainable. Holding company economics demanded margin extraction that eroded talent and attention. Programmatic complexity created opacity that destroyed trust. In-housing proved that much of what agencies charged premium rates for could be delivered internally at lower cost.

The CMOs who will succeed aren't mourning the past. They're building hybrid models that combine internal capability, strategic agency partnerships, specialist boutiques, and fractional expertise. They're demanding transparency, investing in AI, and accepting that orchestrating complexity is now a core marketing competency.

The best agency relationships of your career may still be ahead of you. But they won't look like the ones you remember. They'll be smaller, more specialised, more accountable, and ultimately more valuable. The question is whether you're building that future or waiting for it to happen to you.