The AI Challenge to Agencies/Part 2 - What AI Has to Say About AI
In our previous mailing (Part 1 of this three-part… formerly two-part… series), we shared what ChatGPT had to say regarding the five biggest threats posed by AI to marketing and communications agencies (public relations, public affairs, advertising, integrated and digital).
According to ChatGPT, these five threats are structural - not just tactical inconveniences - and include:
Systematic fee compression and devaluation of core services.
Client disintermediation and in-house AI enablement.
Strategic commoditization and “Good enough” creative.
Talent model breakdown and cultural erosion.
Loss of strategic authority and trust.
For each of these, we included ChatGPT’s key points followed by some of Prosper Group’s own thinking.
To review the detailed piece for Part 1, click here.
Today in Part 2, we’re sharing ChatGPT’s recommendations for how these agencies can best defend themselves against AI. (Next week, in Part 3, the focus will be “What are the opportunities AI might present to marketing and communications agencies?”)
As before, ChatGPT’s responses are included below (virtually verbatim). Then, “Thoughts/insights from Prosper Group” have been added at the end of each section.
Per ChatGPT: How agencies can best defend themselves against AI.
The defense is not “Use AI”. Everyone will.
The defense is repositioning what you sell. The agencies that will survive and grow are those that move decisively up the value chain – away from execution-as-product and toward judgment, ownership and business impact.
1. Tie Fees to Outcomes, Not Outputs.
AI collapses the perceived value of outputs.
Agencies should move pricing towards:
Performance retainers.
Risk-adjusted fees.
Value-based compensation tied to defined KPIs.
Advisory + Execution hybrids.
Even if AI lowers execution cost, clients will still pay well for confidence, speed and reduced downside.
Thoughts/insights from Prosper Group:
Define the value of successful outcomes to clients and price accordingly.
Sell the value your service offerings deliver. For example: Media relations delivers awareness, authority and trust (among other benefits).
Codify how high-value offerings are delivered (insight, strategy, landscape analysis, messaging/narrative and more) and sell them at a premium before tactical budgets are sold to clients.
In addition to execution, sell agency as strategic, proactive partner providing judgment and intuition based on experience and agility.
2. Stop Selling Labor. Start Selling Liability.
Agencies must shift from “We produce marketing” to “We are accountable for business outcomes, reputations and risk.”
Clients will not trust AI. They will trust someone who stands behind the AI.
This is the moat.
Thoughts/insights from Prosper Group:
Agencies must reinforce their human assets and advantages vs. AI. These include nuance, insight, creative judgment and experience.
Better define the business problem the client is facing including the cost of failure or inaction to the client.
Quantify the value delivered from the services offered and price accordingly.
Add categories to client budgets that reflect “judgment” (e.g. – “Strategic counsel reporting and discussions” as a line item priced at 15% of any tactical budget).
As discussed in Part 1 of this series, judgment, experience and knowledge are the main differentiators for niched agencies. If that’s valued by clients, they should pay for it at a premium rate.
Sell agency’s ability to navigate a myriad of diverse and complex stakeholder landscapes.
3. Ruthlessly De-Commoditize What AI Does Best.
AI will rapidly undercut agencies that sell:
Content production (Press releases, social posts, copy, SEO text).
Design variations and templated creative.
Basic media planning, reporting and optimization.
Desk research, monitoring and summarization.
If a client can reasonably believe “AI can do this”, you cannot defend it as a stand-alone revenue line. Agencies should price these services as AI-augmented utilities, not premium offerings, and bundle them into higher-order engagements.
Thoughts/insights from Prosper Group:
Use AI to build internal platforms to save time and handle basic tactics expertly.
We’re seeing many agencies hiring consultants to help build internal AI platforms for the activities noted above.
4. Shift from “Campaigns” to “Operating Systems”.
Campaigns are episodic. AI thrives on repetition and scale.
Defensive move for agencies - Build and sell:
Always-on messaging platforms.
Narrative platforms.
Issue-monitoring and response engines.
Demand-generation and reputation flywheels.
This turns the agency into a long-term operating partner, not a project vendor.
Thoughts/insights from Prosper Group:
AI consultants can work with agencies to develop closed AI platforms and products such as monitoring and reporting channel activity.
Deploy AI to help with faster analysis of external data, use closed AI platform to more quickly provide insights from the firm’s institutional knowledge, add team’s judgment/experience/intuition/ingenuity for programming and then use AI on back-end to battle-test your program before presenting to client or prospect.
5. Reposition the Agency as the Decision Layer, Not the Production Layer.
AI generates options. Clients still struggle with choosing among them, aligning them to business strategy, managing risk (as well as politics, timing and trade-offs) and being accountable for outcomes.
Agencies can defend themselves by explicitly selling judgment:
Strategic arbitration (“What should we do? What should we not do?”).
Scenario modeling with consequences.
Prioritization under constraints.
Executive-level decision support.
Agency judgment is especially critical in brand architecture and positioning, crisis communications, public affairs, reputation management and high-stakes launches or pivots.
AI informs these decisions. Humans own them.
Thoughts/insights from Prosper Group:
Once again, sell senior-level judgment, experience, knowledge, intuition and ingenuity.
Support this with intellectual property which proves your knowledge and experience.
To leverage the trust factor, reinforce the value of the relationships agency personnel have with clients.
6. Own the Client’s Context, Not Just Their Brief.
AI is context-poor. Agencies that deeply understand:
Internal politics.
Historical baggage.
Competitive landmines.
Regulatory realities.
Organizational capability gaps.
… become far harder to replace.
Agencies should systematically capture and operationalize client context including institutional memory, decision rationale archives, stakeholder maps and risk thresholds/red lines… and then integrate AI inside that context (rather than letting clients use generic AI outputs detached from reality).
Thoughts/insights from Prosper Group:
As noted above, emphasize the agency’s understanding and experience navigating complex landscapes as well as senior-level involvement.
Consultants can help agencies build systems to review, capture and share institutional knowledge efficiently and use that to develop high-value offerings.
7. Build Proprietary Advantage Fast & Own the Client’s AI Stack.
Agencies that rely solely on public AI tools will lose.
To defend themselves, agencies need to develop proprietary assets:
Vertical-specific models or prompt libraries.
Exclusive datasets.
Benchmarking frameworks.
Diagnostic tools (e.g. – brand risk, message effectiveness, reputation resilience).
Agencies get disintermediated by their clients wiring AI directly to Meta, Google, HubSpot, Salesforce and OpenAI.
Agencies must instead:
Specify the tools.
Configure the workflows.
Control the prompts.
Own the models.
Set the rules.
If the agency owns the AI operating system, it owns the client.
Thoughts/insights from Prosper Group:
Hire a qualified AI consultant with proven ability to help build appropriate platforms, processes and systems.
8. Productize What You Know.
Agencies must:
Codify their knowledge/areas of deepest expertise.
Turn these into systems.
Wrap AI around them.
That makes them scalable, sticky and very hard to replace.
Thoughts/insights from Prosper Group:
As described in Part 1 of this series, codify and brand high-value offerings and sell at premium prices since we already know that tactical costs will be decreasing.
AI is perfect for scanning all institutional knowledge in your computer system, drawing insights and sharing with account teams for development of client programs.
9. Raise Prices, Don’t Lower Them.
AI will reduce agency costs by 40-70%.
The worst possible move: Passing that savings to clients.
The right move: Sell outcomes, speed and risk reduction at premium pricing.
Thoughts/insights from Prosper Group:
Believe in your brand proposition and the value it brings to clients. While AI is no doubt a significant challenge, every challenge also presents the opportunity to re-think how you do what you do and price based on value.
While we believe that ChatGPT’s “reduce agency costs 40-70%” estimate sounds high, some level of substantial cost reduction will still be taking place.
The Bottom Line (per ChatGPT)
AI will destroy undifferentiated agencies and make strategic, data-driven, trust-based agencies wildly profitable.
The agencies that win will:
Sell judgment, not just output.
Own context, not just content.
Own the data.
Govern AI risk rather than pretending it doesn’t exist.
Operate continuously, not episodically.
Get paid for outcomes, not artifacts.
Agencies that act now can emerge as strategic partners selling senior judgment/intuition but with more efficient offerings that deliver premium price/value to clients.
We’re here to help you prosper
Prosper Group has many years of proven experience in helping agency owners overcome tough challenges and navigate through the periodic tidal changes that fundamentally alter how agencies do business. AI represents the most recent game-changing evolution in the life of agencies… and it won’t be the last.
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