The New Marketing Agency Economics: How Senior Talent and Client Outcomes Are Redefining Industry Success

When agency clients say their biggest frustration isn’t creative quality but how agencies operate, it signals a market ready for a different model. And the talent required to make it happen.  

Independent agencies are capitalizing on this shift by ramping up technology innovation more quickly while keeping senior talent focused on delivering business outcomes—a combination that holding companies are not necessarily aligned to deliver.  

I’ve spent over 20 years in this business—first inside global holding companies and independents, then the last decade in executive search, helping investors and independent agencies find the leadership talent needed to scale. Recently, I interviewed agency CEOs, former CMOs, and private equity advisors to understand what’s actually driving the shift. The conversations revealed that success has nothing to do with scale and everything to do with solving specific client frustrations. 

The Client Expectation Gap 

Jim Reath understands both sides of the agency relationship. After running retail at BBDO, he became CMO at major retail brands—a shift that revealed how differently agencies and clients view success. His experience running a billion-dollar agency review showed him what CMOs actually need: partners who understand that advertising is one-tenth of their responsibilities, not the center of the universe. 

What he found instead was agencies chasing their own agendas. “I was really struck with the arrogance of some of the top agencies who not only acted arrogantly, but some came out and said that we were lucky to have them participate,” Reath said. 

This disconnect drives the surge in agency reviews. The Association of National Advertisers reports that client-agency relationship tenure is about 26% higher in independent agencies than in holding company agencies. 

Eric J. Bertrand built Mod Op to solve this exact problem. His agency acquired seven companies over the last two years, creating enough senior talent to maintain quality throughout client relationships. “Most companies have a triangle with a few senior people at the top. For us, we’re more of a square, with a deep bench of senior talent supported by AI-enabled tools. This future-proof structure ensures clients get real expertise and creativity at every level, not just at the pitch,” Bertrand explained. 

“At Mod Op, our clients don’t just see senior leaders during the pitch — they experience their expertise every step of the way. We make sure our most experienced people stay engaged on the business, so clients consistently get the strategic insight and creativity they were promised from day one.” 

This approach works. Jim Reath measures agency success differently than most: “I judge success as an agency partner on whether I’m being invited into meetings that have nothing to do with advertising.” That only happens when senior talent stays engaged. 

Why Hourly Billing Hurts Both Sides 

Bob Morris, Managing Partner of Bravery Group, advises companies within the marketing services and digital agency sector on M&A initiatives. From his perspective, the traditional hourly billing model is increasingly unsustainable and a drag on enterprise value. 

“The world that we used to live in was hours times rate,” Morris noted. “That framework creates a caustic internal culture—project management driving everything down to meet finance targets, until finance becomes the business itself.” 

The tension becomes more pronounced when technology compresses delivery timelines. Agencies investing in proprietary models or AI-enabled workflows can deliver client outcomes with far greater efficiency. “What used to take hundreds of hours can take a mere percentage,” Morris explained. “If billing is tied to hours vs. outcomes, clients capture the efficiency and value, while the agency is effectively punished for increasing its effectiveness.” 

Morris highlighted one firm that abandoned hourly billing entirely. Instead, the agency developed proprietary diagnostic tools to identify gaps in a client’s marketing operations. Pricing shifted to a retainer-based structure tied to solving defined problems, not to the time required.  

For investors and acquirers, the implications are clear. Agencies that continue to rely on hourly billing model(s) risk compressing margins and valuations, while those that reframe pricing around outcomes and scalability are better positioned to command premium multiples in M&A processes. 

This shift toward value-based pricing is industry-wide. The World Federation of Advertisers found that 74% of multinational brands want to change their agency remuneration model, with 58% planning to increase outcome-based pricing. Clients are willing to pay more for strategic value and 61% expect agency fees to increase over the next three years. 

The Leadership Gap Nobody Discusses 

Patrick Hounsell led teams at Razorfish and Merkle before joining Dentsu. He identified what’s wrong with holding company leadership: “They culturally elevate people who were great client leaders and subject matter experts. They haven’t put emphasis on business leaders.” 

Running a big account requires different skills than running a business. Patrick spelled out what business leadership actually means: “The ability to have a vision, understand how you build services within that vision, and get people moving in the same direction.” 

Bob Morris traced the problem to its source. “Most leadership came out of account management, which means they never actually delivered the services.” These leaders managed relationships but never built websites, ran campaigns, or analyzed data. They can’t lead what they don’t understand. 

Morris recommends looking outside traditional agencies entirely. “I’d absolutely be looking in martech and ad tech. If you don’t understand the technologies used to deliver services today, hiring somebody solely because they were at Ogilvy but their background was account management, you’re putting yourself in a difficult position.” 

Reath’s experience as a CMO proves why technical understanding matters. His team at DXL “used AI for an influencer piece at Holiday. It took 5 minutes versus 8 weeks and $250,000 in the old world.” 

Yet most agencies misuse technology. Jim warned: “AI is predicated on what’s been done in the past, optimizing things that exist. Really good creative work is about creating something that never existed before.” 

Marc Landsberg, who ran MRM and later built Social Deviant, knows exactly what AI cannot do: “Two things AI cannot replace: an insight and concepts. AI can produce content, but conceptual thinking that flows from insight is still an AI bridge too far.” 

According to McKinsey’s State of AI research, 78% of organizations now use AI in at least one business function, while 71% regularly use generative AI. Meanwhile, Forrester found that 91% of U.S. advertising agencies are either currently using (61%) or exploring use cases (30%) for generative AI. But as Landsberg and Reath point out, the agencies that win will be those that understand AI’s limitations, not just its capabilities. 

What 15% Growth Demands 

Patrick Hounsell knows the math that drives independent agencies: “Independents need to grow 15% a year or they stall. They lose talent and momentum.” Holding companies operate in a different universe. “Holding companies have existed in a world where 2% growth is ambitious.” 

Achieving this growth requires different attitudes about everything, starting with sales. At Merkle, Patrick’s media business was smaller than Dentsu’s, yet “we had more salespeople because they didn’t view sales as a function.” 

The culture clash runs deep. “Sales is a dirty word in big agencies,” Patrick said. “In a small business, it’s your lifeblood.” 

Bob Morris sees this in compensation structures. Independent agencies have “a higher percentage of frontline people on commission.” When holding companies acquire these agencies, “they say we don’t do commissions, even for salespeople.” 

Patrick’s growth formula requires both organic expansion and acquisitions: “Probably two-thirds of growth needs to come through M&A and one-third through organic.” But integration determines success. New people need “the right incentives, playbook, and subject matter experts supporting them.” 

Marc Landsberg listed four requirements for agency leaders today: “One, modern in their approach to brands. Two, they have to be fast. Three, smart wins—you can’t coach speed or smart. Four, zero ego.” 

Finding Leaders Who Can Deliver 

The market is changing dramatically. Holding companies’ share of U.S. ad spending declined from 44% in 2019 to 29.6% in Q1 2024, according to Advertiser Perceptions. Meanwhile, private equity firms completed 221 transactions in marketing, consultancy, and tech services sectors in 2024, representing a 21% year-over-year increase. 

According to Digiday’s analysis, “the independent side came out just slightly ahead” in 2023 new business wins, thanks to their ability to “stay nimble and not be bogged down by large amounts of debt.” 

The opportunity exists because independent agencies solve real problems. When a Fortune 500 executive told Eric Bertrand their company had over 75 agencies and wanted to consolidate to 25 or 30, Bertrand had a simple response: “We do nine things at the expert level because we’ve brought on experts from each of those nine areas through our acquisitions.” 

For investors and agency leaders, the challenge becomes finding executives who can integrate acquisitions while maintaining entrepreneurial speed. These leaders need technical fluency, business acumen, and the ability to keep senior talent engaged. They must understand both creative excellence and operational efficiency. 

This type of leader rarely comes from traditional agency backgrounds. Bob Morris advocates recruiting from consulting firms early in people’s careers, or from martech and ad tech companies. Marc Landsberg emphasizes finding people with “raw intellectual curiosity and processing power” combined with zero ego. 

The search for this talent requires understanding what actually drives agency success today. At Stanton Chase, we’ve seen different leadership needs emerging. Independent agencies scaling through acquisitions need leaders who can integrate without destroying what made each agency special. Holding companies need leaders who can restore client focus and eliminate bureaucratic friction. Both need executives who’ve actually delivered services rather than just managed accounts, who understand technology as a multiplier rather than a threat, and who put client business outcomes ahead of agency priorities. 

Jim Reath summed up the difference: “Be careful showing your strategy. Agencies that don’t succeed are chasing their own agenda instead of caring about your business and what drives it.” 

About the Interviewees 

Jim Reath is a Chief Marketing Officer and board-ready marketing leader with over 20 years of experience spanning both agency and brand-side roles. After running retail at BBDO, where he transformed Lowe’s into the network’s most creatively awarded account with 14 Cannes Lions, Reath transitioned to the client side. He has served as CMO at DXL Group, where he modernized the company’s marketing function and migrated legacy systems to a headless commerce platform while implementing AI-driven personalization. Previously, he held senior marketing positions at Bed Bath & Beyond and Macy’s, where he contributed to reversing 16 quarters of sales decline. His unique perspective bridges the agency-client divide, bringing deep understanding of both the challenges CMOs face and the dynamics of agency relationships. 

Eric J. Bertrand is the CEO of Mod Op, a full-service digital marketing agency known for driving client growth through creativity, data science, and innovation. A visionary leader, he has completed seven acquisitions over the last two years, building a distinctive model that combines deep senior talent with proprietary AI solutions and operational rigor. Under his leadership, Mod Op has become one of the fastest-growing agencies in North America, ranking No. 976 on the 2024 Inc. 5000 list. With a background in private equity, venture capital, and multiple CEO roles at marketing and advertising companies, he brings a rare blend of financial expertise, strategic foresight, and creative vision to the agency. This unique combination positions Mod Op and its clients to thrive in today’s rapidly evolving marketplace. 

Patrick Hounsell is a transformational business executive with a proven track record in marketing services, digital, and data-driven companies. At Merkle, he scaled divisions to $300M+ and integrated five strategic acquisitions while serving as Chief Digital Officer and EVP. Most recently, as CEO of Dentsu Canada, he rebuilt the executive team, returned the business to growth, and launched an AI advisory offering on track to double analytics revenue. Previously, he served as Chief Media Officer at Razorfish, where he established and ran a $100 million P&L for the newly created national media organization. His career spans over 14 years at Merkle and Dentsu, where he built one of the largest Performance Marketing agencies in the market. 

Marc Landsberg is the Founder and Chairman of SOCIALDEVIANT, a social-first creative agency he launched in 2012. With over 30 years of experience in marketing and innovation, Landsberg has led and grown several global and tech-enabled agencies. Prior to founding SOCIALDEVIANT, he served as CEO of MRM Worldwide and President of Corporate Strategy and Business Development at McCann Worldgroup. He is an official member of the Ad Age Collective and brings deep expertise in social media strategy, marketing communications, new media, corporate strategy, business development, and M&A. His career includes leadership roles at prominent agencies and investment firms, including time as a Director at Lake Capital. 

Bob Morris is Co-Founder and Managing Partner of Bravery Group, a bespoke strategic M&A advisory firm specializing in digital marketing, advertising, analytics, and MarTech companies. Morris advises private equity firms on agency acquisitions and brings extensive experience from both the agency and advisory sides of the business. Prior to founding Bravery Group in 2019, he served as Senior Partner at ICF Next and held senior positions at Trade (which he co-founded and was later acquired by ICF Olson), Ogilvy, and multiple other agencies. His unique perspective comes from having worked across WPP, Publicis, and independent agencies, giving him deep insight into the structural challenges and opportunities facing the industry. 

About the Author 

Bill Firing is a Partner at Stanton Chase Denver. With over a decade in retained executive search and more than 20 years in senior leadership roles at global marketing and technology services firms, Bill brings an operator’s perspective that distinguishes his approach. He was a Senior Partner at Ogilvy worldwide and served as Chief Strategy Officer for a PE-backed martech company that achieved one of the industry’s most notable exits. This operational background enables him to work credibly across the full leadership suite, from CEO and go-to-market roles to CFO, product, technology, and people leadership positions. At Stanton Chase, he’s become a trusted advisor to founders, investors, boards, and C-suites seeking leaders who can navigate the intersection of traditional agency models and emerging digital capabilities.