Redesigning the Agency Value Model outlines why pricing changes alone are no longer sufficient and recommends that agencies adopt solution-led productised offerings as AI challenges traditional ways of working and cuts revenue by reducing hours and fees.
Aimed at CEOs, CFOs, and leadership teams, the report seeks to encourage agencies to decouple revenue and profit from staffing numbers and is designed as a guide for change across the agency community.
The report includes insights and examples from agency brands that have already started on this path, including 72andSunny, BOND, Bond Brand Loyalty, FIG, Monks, Time Under Tension, VCCP and We. Communications.
Redesigning the Agency Value Model highlights the urgent need for a new business model if agencies are to remain financially viable, one that moves them from staffed services to business outcomes.
The agency of the near future will need to sell productised solutions designed around business outcomes rather than time and people, codifying expertise into repeatable solutions that have a track record of delivering proven results for clients.
The report identifies four recurring patterns agencies experience along the journey – Busy By Design, Scaling with Strain, Expertly Undervalued leading to the ultimate goal Distinctly Scalable. At the final stage agencies are built around expertise and outcomes rather than effort, pricing aligns with impact using a range of fixed, subscription or performance models and revenue has become decoupled from headcount.
Agencies that have already embarked on this journey report increased profitability, improved client retention and growth, higher client satisfaction scores and stronger campaign performance.
“Incentives shape outcomes. The truth is that AI amplifies the power of solution-based models but erodes the current service-based approach because the economics don’t work in the same way. Hour-based models reward volume; while outcome-aligned incentives reward ambition and strategic depth. Agencies need to redefine their value around the solutions they can provide to their clients’ business challenges,” said Charley Stoney, President of VoxComm.
The transition will also require culture change so that agency teams focus on outcomes, not tasks, providing even greater incentives to take advantage of AI’s ability to drive faster results.
Redesigning the Agency Value Model opens with a foreword by Tim Williams, founder of Ignition Consulting Group, followed by practical guidance from Brian Kessman, founder of Lodestar Agency Consulting. It draws on interviews with agency leaders and patterns observed across hundreds of commercial model transformation engagements, offering practical roadmaps that agencies can use to redesign their business models.
“Pricing is the last step in making the transition. Agencies must first redefine what they sell before changing how they price and strong value definitions are critical. Vague terms such as ‘full-service’ invite commoditisation, while productized solutions can be differentiated and repeatable,” says report author Kessman. “Repeatable solutions enable outcome-based pricing. They build a body of proof, reducing risk for agencies and increasing credibility for clients.”
The report also addresses the most common concerns agency leaders raise when considering a shift away from time-based models, including:
Client reactions depend less on the pricing mechanism and more on how clearly value and outcomes are defined. When agencies lead with clearer accountability and proven solutions to their clients’ most critical problems, taking on ownership of business outcomes, clients are often more open to change than expected.
Pushback is rarely about price alone. It more commonly stems from uncertainty around scope, predictability and risk – particularly when agencies attempt to change pricing without first changing how value is framed and communicated. When those elements are unclear, price becomes the default focus of negotiation.
Senior decision-makers are typically less focused on hours and deliverables and more concerned with outcomes, progress, and being able to justify the spend internally. Many respond positively because solution-led models reduce ambiguity and shift the conversation from analysing hours to impact – making value easier to recognise because it is tied to decisions and momentum toward a result, not just activity.
Existing clients are usually defending stability and managing risk rather than the hours themselves. When agencies introduce more structured, repeatable, proven solutions with clear scope boundaries and a track record of outcomes, clients often feel more in control and less exposed. That clarity and delivery accountability replace the need to monitor effort, reducing anxiety and strengthening the relationship.
While some agencies can quickly replace fee-based retainers, many find that larger, more traditional clients prefer a more gradual transition. Agencies introduce solution-based engagements alongside existing agreements, allowing clients to experience the same work structured in a different way. As the value of the new approach becomes clearer, confidence grows, and hours and effort become less relevant as a point of comparison, easing pricing pressure over time.
“For an industry that prides itself on effectiveness, it makes little sense that we are still largely paid for inputs rather than impact. In South Africa, where agencies operate in one of the most commercially demanding markets in the world, we cannot afford a model that rewards busyness but punishes efficiency. AI is not the threat, misaligned incentives are. The real opportunity is not simply to price differently, but to redesign what we sell around clearly defined business outcomes.
Agencies that codify their expertise, build repeatable solutions and align remuneration with the growth they help create will not only protect profitability, they will strengthen trust and relevance in the market” says Gillian Rightford, executive director, Association for Communication and Advertising (ACA).
