Is a Smaller Agency Mightier in the Age of AI? (290)

Transcription provided by Podhome.fm Created: 06/25/2026 23:31:59 Duration: 1876.704 Channels: 1 Welcome back to Digital Marketing Masters. I'm your host, Matt Rouse.

Welcome back to the Digital Marketing Masters podcast. I want you to give a warm podcast welcome to our headliner today. The founder of agency together, the Thank you for inviting me. I'm excited about our conversations all about small but mighty agencies today.

I own two small but mighty agencies since we have one in The USA and one in Canada. The biggest question for this season is in the age of AI that we're in right now, is it better to be a smaller agency who can maybe pivot faster or for whatever reason, it's it's easier to use AI versus a larger agency or even, like, an enterprise sized marketing department? I think the future of agencies is smaller. We can't deny that AI has changed how agencies work.

And, you know, back in the old days so when I say the old days, I've been in the agency world for, like, twenty five years. And I come from a background where agencies used to have to have a roof, and you have, like, a 100 people in the agency, and those are the agencies that serve the the Fortune five hundreds of the world. And I think during that time, that season, of course, the large agency was how agency model was run. Over the years that have passed, even in the last couple years before before AI really showed up into the conversation for marketing agencies, I think the trend has been towards more smaller agencies.

And and that's because we've seen a lot of experts who are just really good at what they do in marketing start to branch out into their own businesses. And they're really good at what they do. They maybe start with two clients, and over time, they build a portfolio of, like, 10 clients. And before they know it, they have a small agency.

And so we've seen that. We've seen a lot of small agencies enter into the space over the last five years. But I think with AI in the mix, the way the future is the small agency. AI helps remove a lot of the busy work, the overhead that is typically needed for an agency, and it helps agencies be more efficient.

In that way, I don't know if the 50% agency plus is gonna be what the agency model looks like five years from now. That's, you know, that's that's my opinion. And and, Matt, you and I had conversations in how AI has made things more efficient. So I'd love to hear your feedback.

What what do you see in terms of the small agency space and how efficient it's become with AI? I see it going two directions. One of them, I think you're absolutely right, is the smaller agency is gonna thrive. We probably disagree a bit on if an agency should be a specialist versus an agency kind of having general knowledge.

Absolutely. But I do think that in most cases, the specialist is gonna win out. Mhmm. Because as AI systems improve over time, they get better at things, and they become more capable.

And when they call it the the jagged frontier, which means AI agents are really good at some things and really bad at other things. And so it's jagged. It's not like it's this good at everything across the board. Mhmm.

And as it gets good at different types of marketing, the general knowledge that it has does rise. It's like kind of the the tide that lifts all boats. And I think being a generalist is gonna be really difficult, you know, two years from now. Yes.

And so anyone who knows me knows that I champion small agencies. Specifically, I talk a lot about the specialist agency being the future of small agencies. So in the age of AI, I think AI can't wipe out one thing, that's relationships. And I think when you have marketing agencies that are specialized, the relationship looks different between the marketing agency and the industry.

So for example, I come from a background of having been in a very niche type of agency, and it was a agency that served orthodontics. Now why why did we do so well in sales conversations compared to a generalist agency is very simple. It's because we could come into those conversations and speak the orthodontics language. We could say, hey.

This is the actual problem that you're seeing in your business, and we would be able to name the problem being that perhaps the treatment coordinator is overwhelmed with having to do the marketing because we understood that was a general challenge across the orthodontics field. We've come into that conversation more educated, whereas a generalist would come in and they'd be asking very general discovery questions. Right? We come in as an expert stating things that that we knew already.

And in addition to that, because all our clients were orthodontists, we were able to collect that information and make some predictions about where things were headed and have credibility in doing that. Whereas with the generalists, they just simply don't have that information available to them in terms of, like, the depth of clients that they they were serving. So, yes, in in that way, I do champion the specialist because specialist has an advantage over the generalist, especially as we get into this AI world.

And anyone can pop into AI, dump a question in there about marketing, and get a very general response back. Right? That's not that's not people are doing that right now. And I think what people really want when they hire a marketing agency right now is a strategic partner.

And a strategic a strategic partner is able to look into the industry, know the industry already, and are able to gather intel that they might be experiencing and share that with the actual client. And for that reason, you know, I I do think that small agencies that are specialized are gonna thrive in the age of AI. I think you're absolutely right most of the time. And I think that the amount of exceptions to the rule, though, is gonna grow over time.

And the reason that I think that is depending what type of specialist you are is gonna depend on whether you make it or not in the next, you know, decade. A good example would be something like design pickle. Unlimited graphic design for one price is what that agency does. I don't know them personally.

Nothing against them. But I would guarantee that AI is cutting into their profit margin right now, probably a lot. Mhmm. And the risk is when all your eggs are in one basket and AI comes to town.

You know, you basically end up being the taxi driver when rideshare comes to town. Mhmm. I guess the other edge is if you're a a skills expert. So if your expertise is, like, our agency specializes in monetizing YouTube channels or something like that.

If you are still the expert in that, even if AI gets good at it, your expertise is still probably gonna be beyond the level of the AI for a long time to come. Mhmm. But there is sort of that winner takes all kind of thing that happens with pretty much every digital marketing industry. The top spots are always the top spots who get the majority of the business, and I don't think it's as much of a threat if you're the industry leading expert or you're the industry leading SaaS or whatever that is.

Industries pivot, and the agency model agency industry will also pivot. What I mean by that is if you look at the introduction of social media to marketing, Lot of people thought that it would wipe out traditional marketing, like signage. Right? So Yeah.

I remember that. And and it didn't wipe out signage, but it changed its effectiveness. It changed its effectiveness signage. I feel going back to the graphic design conversation and agencies that are graphic designers, I think that AI will change the nature of the graphic design business.

And graphic design businesses, the ones that I work with are asking smarter questions right now. Like, where do they need to be as an agency doing graphic design to support their clients with where and what AI is able to do? And I think being an agency that asked that question is really important right now. Do I think it's gonna wipe out all graphic design agencies?

I don't think that's the case. I do think it will change the nature of it. Just like when social media was introduced and it changed the nature of advertising on post on sign on signage, I think graphic design will have the same type of pivot. And and, you know, I that's that's how I see it.

Do I know where that pivot is headed? I don't. Right? Can can all of us any of us guess what the next two years is gonna look like?

I doubt it. And, you know, I I put that out there to you, Matt. I don't know if you you know, if you're if you're making predictions what the next two year looks like, but no one has a hard kind of, like, this is where everything is headed right now. I also think that, one of the keywords in the agency space, whether you are big or whether you are small, is this keyword pivot.

I think a lot of agencies right now are looking at what is possible with AI and then looking at their capabilities inside and making strategic bets. I call them strategic bets. So strategic bets are, like, an analysis of, like, where you think the value is gonna be in the future for your agency and starting to test that. Right?

That's what a strategic bet is. And if you are whether you're a big agency or a small agency, it's making those strategic bets right now that are the of the highest value. It's identifying, hey. Like, this is what it looks like we're headed towards.

Although we don't know concretely what what two years looks like for now, let's put some tests out in the world and see where that lands us. I think that's what's really important right now for all agencies. The idea of strategic kind of bet is a good idea. I think the problem with that, at least in my experience talking to people in other agencies, is that they're making their bets on what's available now and not what's going to be available in the future.

Right. And we don't know exactly what's gonna be available in the future, but you could whiteboard this out pretty simply. What you do is you go, what was it like to make images with now with, like, Nano Banana Pro or, like, mid journey, you know, 7.5 or whatever it's at and and write write down what they're good at, what they're bad at.

Right? Test them out. Use GPT image. Use plant and banana.

Use all the things. And then go back and go to the other image models that were available last year, and then go to the ones that were available the year before. And you could see where the improvements of the largest kinds of improvements are, and you can also determine where those models are going to be developed. Like, where their shortcomings are is where the development is gonna be spent.

The biggest shortcom of the models between last year and this year was that they were not good at putting text accurate text on images, and now they do it nearly perfectly. There's this, like, problem with the range of design capability. They seem to be, like, amalgamations of graphic design, not good graphic design. Right?

I think you could easily spot a flyer on a wall that somebody made with Chad GPT. I think it's a great exercise for any agency in any service niche to look at. You've just laid out a great example for the graphic design world, but this applies to all other areas of marketing as well too. And that's our job as entrepreneurs is to look at where is this market headed, make an analysis, which is what you've just done, and then figure out where you wanna put your business.

And that's what we call that strategic bet, right? And that's what we have to make right now because if you're still doing the same thing that you were doing two years ago, that's that's a dangerous place to be. We all know that the marker of what's possible in the last two years has changed so much. And so if you are still doing the same thing two years ago, survival is something that and I hate to say this.

It's it's gonna be hard for you. And I think you and Matt you and I are talking about the same things here where, yes, we both believe that small agencies is the agency model of the future. That being said, it means plugging into the realities of what's working right now to make sure that your small agency can function more effectively and efficiently, right, than it ever has. And, yeah, I I mean, that is a conversation.

I also wanna go back to this thought that you had about certain service based in in agencies. For example, someone who might have a core expertise in, like, YouTube marketing, and those types of services might still thrive. I think that's because they have a strategic expertise. Right?

That certain platforms and stuff like YouTube are always changing and switching. Right? And because they have to be right in there with those changes of that platform. But also in terms of audience consumption, there's an understanding of, like, in the immediacy, in the present, how do people consume things?

I think those things, those, like, those things are consistently changing, like, right away in our world that don't just stay the same always. Those are the areas where I think agencies actually need to plug into more because they're gonna need human eyes on it. They're gonna need humans to look at the reality of what's happening now and then pivot the marketing content to meet that in that very present moment. So I think those are the types of services that, yeah, they they have more longevity in them.

I think you're right with that. I think another thing with the small agency model, I think when people hear the word pivot, they think I have to change my entire agency's focus in, like, everything we do. And I don't think that that's true. Right?

And and that's probably not what you mean, but I know that a lot of people in agencies are like, I'm not gonna change my whole business. I think what you need to do is, number one, maintain the current business that makes you money. Right? The the thing that's keeping the lights on.

Yep. But use your AI systems, your automation systems, whatever it is that that you need to make that business more efficient, more profitable. And then at the same time, you know, you also need to, on the other hand, be saying, what's business gonna look like in six months, twelve months, two years? What capabilities or systems are there gonna be available, and where is the risk to my business if those things happen?

Yes. Abs like, that is a 100%, that's a 100% it. I think it puts additional workload on very busy agency owners at the same time. I think that's what future proofing an agency looks like right now.

It is putting on the extra hat. You're absolutely right. Whatever's making money right now, you can't just piece out on that. You can't just Right.

Say, hey. See that later. Like, see see you later because you just have to keep the business running. So, yes, absolutely.

You've gotta do the thing that is, making you money right now. And you absolutely need to look at how AI can make it more efficient because there's profitability when you're able to have AI in your business and and make it more efficient, which increases your bottom line. And then the third element, like you just said, yeah, like, it's not enough just to stay in those two lanes. I think there are a lot of agencies who are happy to look at what's working right now, stay stay in what's working, and then add AI into their business to make it more efficient to make more money.

Right? And there's nothing wrong with that, of course, but there's that extra layer, the strategic bet layer that we're aiming at, looking at right now, you and I, Matt, that every agency really needs to plug into. It's making a analysis in terms of their industry and perhaps their service offering where it's headed. Because if you don't know where it's headed, you're gonna be left behind.

That's the the reality of it right now. And, you know, with the changes that are just happening so fast, I think you have to choose in your agency very specifically what you want to be good at, what you wanna be great at. You have to know what that is and then look at the change that's happening in that area and then make those strategic bets from there. Because the reality is, like like I said, it's hard to be a generalist right now.

It's hard to it's hard to be a generalist in terms of the next two, three years and where AI is headed. So as a specialist, you're really able to hone in what what is it, like, that you wanna be really great at and what is and how is AI, I should say, how is AI impacting and affecting that, and then looking at where you wanna put your company, your your agency with that understanding. I think another problem that a lot of agencies are gonna see is the sort of I don't know what I would call it.

I like to call it the rural agency. Right? So we deal with the customers who are nearby us. We do web design that's pretty good, but not great.

We can we could run some ads, but we're not experts in those things. Mhmm. They're sort of at the bar, but the bar is gonna keep raising. And you can't level up every one of those skills at the same time because you just don't have time.

Mhmm. You don't have time by two years from now to get twenty years of experience. So you've gotta select something. Mhmm.

And if you're gonna have to select something to be really good at, like, you could still do all that other stuff. But if you're gonna select one thing to be really good at, you better make sure it's not something that's coming out in g p t six. Right? Yes.

Because otherwise, you're in real trouble. So And that's the conversation, right, that we're having here right now. It's it's what do you truly need to specialize in? What is what is other part of conversation?

I think we wanna do things that still let us up and so where that conversation diverges is what do you wanna be a specialist in right now and looking at what's happening, is that thing you want realistic? Is it gonna be there two years from now? Is it gonna be there three years from now? I think that that's a a big question for a lot of agency owners.

It's kind of it's trying to meet what they wanna do with where the industry is headed and also where AI is headed. Right? And I don't like I I think that that I you know, to be fair here, it's not just the agency world that's impacted by this. Right?

It is in all businesses are impacted by this. But because you own an agency and I serve agency owners that this conversation is really concentrated on talking about the agency space. I'll also add this. I think because agencies are in the in the forefront of providing marketing and because marketing just seems so much accessible with AI right now, it just seems like the whole agency world is, you know, in a in a shakeup right now.

And I would say that the shakeup can be seen as a bad thing or a good thing. Right? And I choose to see the shakeup as a good thing. I choose to see, like, there's more opportunity in this shakeup if we actually look for those opportunities as opposed to thinking as opposed to sitting in this in this, this negative space of thinking, AI is gonna wipe out marketing.

I think if you take that perspective, you will be left behind. Right? I don't think AI is gonna wipe out marketing. I firmly believe it's gonna change the nature of it.

And, yes, of course, I do believe specialization is the way to go. But I think the ideal way forward is to take the perspective that marketing really is gonna still be here. How agencies do marketing is gonna change, and now it's time to figure out how you wanna set yourself up in that new future. Yeah.

I couldn't agree more. And I think there's a reason that marketing seems to be such a focus point of AI. And that's because when you think about it, what are you really producing, right, at your agency? You're you're essentially producing media, and that media is writing, which AIs are good at.

Mhmm. It's music, which an AI can create faster than you can listen to it. It's, you know, images. It's video.

AIs are all good at those things. And the reason that they're good at those things is where do you think they got the training data? It's from marketing material. Right?

It's people's websites and blogs and songs and commercials and videos and all of the things. Right? That's why it's good at those things. But I think that as the the AI systems for these things become really good at those things Mhmm.

They're going to be really good at raising the bar of the crap that used to be on the Internet is gonna be, like, instead of a lot of terrible marketing and a small amount of good marketing, you're gonna have a lot of mediocre but less crappy marketing and still a small amount of good marketing. Mhmm. Because it takes a lot of effort, a lot of creativity, a lot of thought, a lot of research to do really good marketing. Right?

And I think what you're pointing to is excellence is what's gonna excel in in the marketplace. Right? Excellence. So I think that's what you're pointing out too.

Like, there's there's gonna be very low tolerance for mediocre. I think that's what you're you're pointing to right now. And I would say we see that like, we see it happen on, our social media media channels right now. You and I are on LinkedIn a lot, Matt.

And, when you scroll through LinkedIn right now, you're pretty much you're probably like me where you can easily smell the AI. Yeah. You can smell it. Right?

There's just a certain way that AI writes that is very obvious. And I think most people online and not everyone right now can smell it. Like, my husband, he's a chef. Okay?

He he can't he doesn't have the nose for it like I do. And I think us in the marketing have a nose for But over time, it's, you know, over time, the majority of the population are gonna be able to see it and recognize it more easily. Right? Which is why mediocre is gonna be the thing that you'll just scroll past.

If you really wanna catch attention, it's excellence. The reality of what excellence is, though, it's creativity. Right? Excellence at the end of the day is full creativity, and that's an area that the machines can't replace, at least not right now.

It's ideation. It's creativity. And I also and there's another layer here. I also think that and for anyone who's using AI to do marketing, AI can pump up a whole bunch of things, and it could create a quick decision fatigue.

If you don't know what you're doing in marketing Right. It can create decision fatigue because it can give you, you know, five different directions. Right? Which one do you take?

Right? If you're not an expert in marketing, if you don't know the basic principles and concepts of marketing, and if you are in an industry and you don't understand how that industry actually works, well, you're gonna choose probably the first thing that AI tells you you should do, and that's not always gonna be the right thing. So I do think that what we are gonna see is the need for more decision makers, high level decision makers in the marketing space. I think there's also one thing that nobody, at least that I've seen talking about, is there's a cultural angle to marketing that is vital in all marketing, and culture is current.

Right? Absolutely. And AIs are trained up to a date. There's no continuous learning in AI systems, though they can look at trending data and stuff like that.

You can put in documents, that kind of thing. You can get some sorts of insights. Mhmm. But you have to know to do that for one thing, and you also have to know what data to put in in the first place.

And it's really hard to look at the culture and say, okay. Like, these types of locations are where people who are between 16 and 20 are hanging out now that there's social media bans in a lot of countries. This is where those kids go. Mhmm.

The AI doesn't know that kids are hanging out in, like, chat rooms inside video games. Mhmm. You know? That's a cultural thing that's happening right now, and that's why the AI systems don't know that that's a thing.

Mhmm. And it's it's also something you're only gonna find through actual research with actual people. Mhmm. Yeah.

I love what you what you're pointing to. Agencies have an advantage if they have cultural fluency. I think that's what your yeah. And cultural fluency is being very present in the moment we're in to connect the dots.

Right? So like you just said, if your demographic is gonna be 16 year olds, then if you can connect the dots of what's popping for 16 year olds as they would pop it put it, what's what's what's really happening for them, what they what they really connect with. If you're connecting those cultural pieces, then you are one step ahead of the AI because the AI can't, like you just said, jump into those moments. Right?

They can't they can't look at a, like, a group of teenagers and and peek into the conversation and see what exactly they're talking about right now. Yeah. I think that there is cultural relevancy that a lot of marketing agencies can step into and start owning. And I think that also changes the reality of the service offerings for agencies.

Right? Because because I to be honest, I don't know if there's any agency out out there right now that's offering cultural research. Like, that's not something that I see agencies doing at this moment in time. And like we just talked about, the offerings will change as, as, you know, as we see, AI infiltrate and and change how marketing is done.

And maybe that's one example that we can leave people with. Maybe it is cultural fluency and what does that look like for an agency offering. I mean, there's gonna be plenty more coming our way, but the goal is to look out for them. Yeah.

And you may get a lot of that from your client. Right? They're the ones dealing face to face with with, you know, the people that they serve, and and that might be a a good place to start that conversation. Audrey, thank you so much for being on.

We could probably talk about this for several episodes, but we do have to cut it at some point. Yeah. Somebody wants to reach out to you, what is a good way for them to do that? Well, I have a community called Agency Together.

It's for small but mighty agencies, so boutique agencies to grow by connecting, collaborating, and partnering. If you're interested in checking that out, it is agencytogether.com. We have a free mixer coming up, so agencytogether.

com/mixer. And I hope to see you there if you're a small agency. I also love to connect with anyone who wants to have a conversation about agencies in general, and you can do that on LinkedIn. You can find me as Audrey Kwan on LinkedIn.

Alright. And I'll put some links in the show notes so they are easy to find. Audrey, thanks so much for coming on. Your insight is always amazing.

Thanks for having me. I'm feeling lost. What's coming next? The world is changing.

It's so complex. Will AI take my job? Will I be replaced? Am I just a cog in this corporate race?

I know there is a lot going on, and AI even sang this song. Just read the book. Buy that book. Get the book already.

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