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AI Agency pricing

AI technology has been making waves across various industries, and the advertising and PR agency sector is no exception. As AI continues to advance, agency chiefs are beginning to see the potential for AI to revolutionize agency pricing models. In this article, we explore the thoughts and opinions of agency chiefs on the impact of AI on agency fees.

The Death of Hourly Billing: Embracing Value-Based Pricing

One resounding sentiment among agency chiefs is that AI will bring an end to time-based fees, and many view this as a positive development. Paul Stollery, co-founder and creative director at PR agency Hard Numbers, expresses his satisfaction with bidding goodbye to time-based fees, stating, “Time-based business agency fees are done for. And good riddance.” Stollery believes that AI-driven content production will render time in the scope of work easily questioned and removed, ultimately leading to the demise of hourly billing. He cautions that agencies that sell time rather than value will be most at risk of losing revenue to automation in the long run.

Andrew Bruce Smith, founder of AI, PR, and marketing agency Escherman, echoes Stollery’s sentiments and predicts that AI integration into PR business processes will profoundly impact time-based agency fee structures. Smith believes that the increased efficiency brought about by AI will lead agencies to shift from hourly rates to value-based pricing, emphasizing the value delivered rather than the time spent. He also highlights the potential for agencies to introduce novel services leveraging AI, opening new revenue avenues. Smith notes that professionals will need to upgrade their skills to focus on strategic roles and that increased transparency will enable more accurate billing.

Embracing Value-Based Pricing: Aligning Client and Agency Goals

Shalon Kerr, founder of healthcare PR firm PR-it, raises the dilemma of whether hourly billing is still the right approach for agencies. She argues that AI can expedite many agency tasks but cannot replace the essential elements of counsel, strategic thinking, creativity, and relationship-building that are crucial for executing successful campaigns. Kerr expresses her perplexity at the lack of adoption of value-based pricing, which aligns client and agency goals. As AI advances, the notion of billing by the hour becomes increasingly outdated, particularly for tasks that AI can handle almost instantly. Kerr believes that agencies should embrace value-based pricing to reflect the true value they provide.

AI’s Potential: Charging More for Enhanced Services

Debby Penton, CEO of PR agency Wildfire, believes that AI can help agencies charge more for their services. She emphasizes that PR professionals are multi-skilled and that their job has become more challenging over the years. Penton argues that using AI to create efficiencies in tasks just makes sense and that agencies embracing AI should be able to deliver more by the hour, warranting higher fees. She suggests that AI allows agencies to have more time for strategic high-value consultancy.

Cost Reductions and Increased Transparency

Lisa Rehurek, founder and CEO of RFP Success Company, highlights the long-term cost reductions that AI integration can bring to agencies. While there may be an initial investment required for AI technology integration, Rehurek explains that AI-driven automation optimizes processes, leading to streamlined operations and decreased resource requirements. These cost savings can be reflected in client fee structures, making the agency more attractive or bolstering profit margins.

Rehurek also emphasizes the increased transparency that AI can bring to the agency-client relationship. AI’s analytical capabilities enable agencies to provide clients with comprehensive and up-to-the-minute reporting, instilling trust and confidence. This transparency can potentially justify higher fees as clients recognize the value of having access to timely and detailed insights.

AI Consultant Perspective: Creative Freedom and Client Expectations

David Hart, a communications, marketing, and business development consultant at AI consultancy InferenceCloud, offers a consultant’s perspective on the impact of AI. Hart believes that AI solutions enable agencies to make a bigger impact for their clients by offering in-depth, research and data-driven content. He argues that agencies should be cautious about low-cost or free AI solutions that offer fast content, as quality may be compromised. He adds that many clients are already asking agencies for AI solutions, as they have been given KPIs by management to incorporate AI elements into their communications departments.

In conclusion, agency chiefs are optimistic about the impact of AI on agency pricing models. The death of hourly billing and the rise of value-based pricing are seen as positive developments, with AI enabling agencies to deliver more value and charge accordingly. The integration of AI into agency processes promises increased efficiency, cost reductions, and enhanced transparency. While challenges and ethical considerations may arise, the potential benefits of AI in agency pricing are clear.

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