Agency economics hit the AI wall

Agencies are bolting AI clauses into existing MSAs rather than rewriting them, as hourly billing collides with AI doing more of the work, and Omnicom's CFO called losing PepsiCo to Publicis a disappointment and promised a root-cause review.

The crux

AI is compressing the hours agencies bill for while the contracts that govern payment still assume those hours, and a 25-year client walked without a review.

Sell-side read

Agency fee pressure flows upstream; if agencies cannot charge for hours, publishers feel it in the programmatic and direct deals those shops negotiate.

Watch

How quickly AI cost structures get standardised, and whether Omnicom counters by chasing Coca-Cola's media business.