Forget the rate cut: How AI is pushing agencies and procurement to redefine compensation models.

AI is changing what agency work costs and what it’s worth. Agencies and procurement can keep negotiating rate cards, or redefine value together. We’d rather do the second.

What happens if the work takes less time, who keeps the difference?

It’s the question we hear most from procurement teams, and it’s a fair one. AI now turns days of production into minutes: asset variations, resizing, first drafts, performance reporting. The price of that work should fall.

But the question assumes the time was saved. On most accounts, it was spent. When production gets frictionless, expectations rise with it. Teams aren’t doing less work. They’re making, testing, and optimizing far more of it. Roles are shifting, not disappearing: the people who once built every asset by hand now direct, check, and refine what the tools produce.

So the dividend already exists. It’s just being spent on volume by default, before anyone decides whether volume is what the brand needs.

That’s also why a blanket fee cut misses. It’s easy to calculate, and it shows instant savings on paper. But in a recent WFA survey of global advertisers, only 15% said cost reduction was why they were changing how they pay agencies. Nearly three-quarters wanted agency pay tied to business results.

Hours were a proxy. AI severed the connection.

For decades, billable hours made sense because more effort usually led to better results. AI breaks that connection, especially for routine work.

The tasks being automated fastest are repetitive production jobs. The work at the top hasn’t changed: defining a brand’s message, choosing its positioning, and picking the right creative ideas to fund. As asset creation gets easier, strategic thinking and creative judgment matter even more.

Blanket rate cuts treat routine production and big strategic ideas as if they cost the same. That discounts the thinking along with the production, and it removes any incentive to get better.

Procurement seeks value realization, not just discounts.

The WFA finding makes the brief clear: spend less on repetitive tasks, reinvest in high-impact strategy, and expect clear business results. That’s how strategic partners work, not vendors.

The honest complication is that clients will reasonably want all of it: the lower price, the deeper analysis, and the added output. The same study found most advertisers expect to pay less where AI automates routine work, and more for their agencies overall. And the tools making it possible aren’t free. We expect their costs to rise quickly in 2027 as usage scales. A rate cut prices only one of those things.

Among major global brands, traditional hourly fee structures have dropped from over 50% in 2011 to under 20% today. Yet according to the ANA’s latest compensation study, no marketers reported that AI has significantly reshaped their agency contracts yet. The opportunity is open, but a clear modern standard hasn't been set.

Structuring an AI dividend framework.

Getting real value from AI requires a thoughtful plan, not a quick discount. Successful partnerships build on four straightforward principles:

1. Move to fixed output-based pricing for routine deliverables, lowering rates as tools improve efficiency. 
2. Tie agency compensation to business outcomes when you can measure results directly. 
3. Set clear performance baselines together before calculating savings, then share the savings as workflow improves. 
4. Keep tech expenses transparent, recognizing that software tools and specialized talent require real investment.

That’s a starting point, not a standard. The standard should be written by the people who have to live with it.

Our commitment to value alignment.

At BarkleyOKRP, strategy, creative, and media work together as one team. This structure shapes our view: we prefer open financial transparency over clinging to outdated pricing models.

We commit to clear work baselines, output-based pricing that drops as automation expands, transparent tech costs, and performance-aligned fees. Most importantly, we reinvest saved hours directly into strategic research, ensuring faster production drives real business results.

Making more content faster doesn't automatically mean better marketing. Using AI savings only to make higher volume brings shrinking returns. 

But reinvesting those savings into deeper strategy creates lasting value for both client and agency. Procurement leaders have an important role in all of this, even if it means helping partners understand this. Help create a shared, main goal that isn't just lowering costs, but deciding how to reinvest those savings effectively to help both sides win.

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So, what happens if the work takes less time? We’ll be asking that question at ProcureCon Marketing in Phoenix this month. Find us there and tell us what you think.