In the latest joint study by the 4A’s and Forrester, The State of Generative AI Inside U.S. Agencies (2025), we find that the game has changed again. Generative AI has rewritten the playbook for agencies and marketers alike. Creativity is no longer enough; fluency in technology, data, and governance has become table stakes.
Even as agencies adopt new tools at breakneck speed, many are still fumbling the fundamentals that define long-term client trust. It is half-time, and the scoreboard shows plenty of opportunity but also a widening gap between potential and performance.
1. The New Tech Exposes Major Weaknesses
Shifting patterns in content creation and marketing efficiency, driven by Generative AI, are revealing deep weaknesses in traditional agency skill sets.
According to the 4A’s/Forrester 2025 study, 91 percent of U.S. ad agencies are already using or exploring GenAI, and more than three-quarters see it as a game-changer agencies must reckon with. Yet adoption alone hasn’t guaranteed strategic mastery.
Agencies that once differentiated through creative instinct must now deliver AI fluency, governance, and ethical leadership alongside big ideas. Technology is no longer the playground; it is the rulebook. If you are not building strategy and structure around it, you are already behind.
2. Agencies Overestimate Productivity and Underestimate Risk
Speed has always been an agency drug of choice, and GenAI offers it in abundance. Seventy-four percent of agencies using GenAI cite faster ideation and brainstorming as a critical benefit, according to the 4A’s/Forrester research.
But here is the danger: the faster agencies move, the more likely they are to trip. The Forrester and 4A’s research shows 94 percent of agencies exploring GenAI and 83 percent of those using it cite legal liabilities, including copyright, IP ownership, and data security, as major obstacles to deeper integration.
Adding another layer of challenge, three-quarters of agencies report absorbing GenAI investment internally rather than passing costs on to clients. This means agencies are funding experimentation and deployment themselves, which puts pressure on profitability and underscores the urgent need to translate AI capabilities into measurable client value.
In other words, the old problem was digital illiteracy; the new one is AI liability. Clients are watching. If agencies cannot protect the client as confidently as they can prompt a model, their strategic seat at the table will disappear.
3. Clients Are Building the Bench and Asking Agencies to Play a New Role
Clients are no longer passive. They are ramping up internal capabilities, including data analytics teams, in-house creative studios, and media buying units. The 2025 report underscores that agencies can no longer rely on the old narrative of “we know the customer better than you.” Today, clients can understand customer behavior in near real time, often through tools the agency does not own.
What this means is that the client-agency relationship is shifting. Rather than being purely the external brain, agencies must be the integrator, helping orchestrate across in-house and partner teams and guiding how media, creative, data, and commerce come together. If you are still pitching “we will be your full-service everything” without acknowledging the strength of your client’s internal machine, you are out of sync.
4. The Agency’s New Superpower: Emotion, Imagination, and Hybrid Expertise
There is hope and genuine advantage for agencies that embrace the new rules. The human moment still matters. In this era, an agency’s unique value becomes threefold:
Emotional brand ownership: The ability to craft a narrative, tone, and connection that resonates at a human level, especially when everywhere else is algorithmically driven.
Imaginative risk-taking: Bold creative that is not just optimized for clicks or Return on Ad Spend but builds brand equity, culture, and distinction.
Technology-fluent craft: Not just using AI or data tools, but embedding them into creative workflows, media strategy, and client advisory. Agencies are increasingly doing this.
Clients may have data, automation, and fast production cycles, but they cannot replicate the human insight and emotional intuition that agencies bring. The winning agencies will combine deep human insight with tech-enabled delivery, serving as translators between machines and meaning.
5. Half-Time: The Pep Talk We Need
It is half-time in the new advertising game. Clients may be ahead on infrastructure and data, but agencies still have what machines cannot replicate: imagination, empathy, and the courage to lead.
For small agencies, here are three practical plays for the second half:
Audit your tech capability: Where do you stand in AI-enabled ideation, data-driven creative, and integrated media-commerce? If you are behind, set a path now.
Reframe your value: Position your agency not just as a service provider but as a brand growth integrator, bringing emotion, vision, and orchestration to the client machine.
Lead the conversation: Do not wait for the client to ask. Invite the dialogue: “Here is how combining your in-house strength with our imaginative muscle and our tech stack will unlock growth.”
The scoreboard may not look ideal today, but half-time means there is still time for a comeback. Agencies that pivot, lean into what machines cannot master, and partner smartly with clients’ internal teams can still win.
Go Team.
