A new Typeface report indicates that marketing leaders are rapidly shifting their budgets as artificial intelligence begins to replace traditional agency services. According to the study, 60 percent of global marketing leaders have reduced their spending on external agencies this year, citing AI adoption as the primary reason for the change. The findings highlight how generative AI is moving from experimentation into mainstream marketing operations, significantly altering resource allocation across the industry.
The report reflects the growing confidence of enterprises in using AI platforms to perform tasks once managed by agencies. These include creative design, content generation, campaign optimization, and personalization. With AI tools providing faster output and more scalable options, many organizations are choosing to bring work in-house rather than rely on external partners.
Typeface, which provides AI-driven marketing solutions, surveyed a broad range of marketing decision-makers across industries. The majority of respondents noted that AI is now embedded in their day-to-day operations, with leaders increasingly relying on it for both strategic planning and execution. For many companies, this has translated into reduced dependence on agencies for high-volume or repetitive work.
The study also found that leaders are not only reallocating budgets but also reshaping the structure of their marketing teams. A significant portion of budgets that once flowed to agencies is now being redirected into AI tools, technology infrastructure, and training for in-house staff. This reflects a trend where marketing teams are positioning themselves to act faster and maintain greater control over brand messaging and creative outputs.
While the shift to in-house AI-driven operations is evident, it does not necessarily signal the end of agency partnerships. Many marketing leaders still value agencies for strategic guidance, brand building, and large-scale creative campaigns. However, agencies are being pressured to redefine their value proposition as clients expect them to bring specialized expertise, innovation, and oversight that cannot be replicated by AI tools.
The report suggests that agencies may have to lean more heavily on consultative roles, offering services that complement AI rather than compete with it. Areas such as advanced analytics, complex creative storytelling, and high-level brand strategy are expected to remain in demand, but the scale of routine agency work may continue to decline.
Generative AI’s ability to deliver personalized campaigns at scale is another key driver behind the reduced reliance on agencies. Marketing leaders reported measurable improvements in efficiency, with AI platforms producing campaign assets and variations in minutes, tasks that might have taken agencies weeks to deliver. This speed advantage is particularly relevant in fast-moving markets where timing and adaptability are critical.
The findings also underscore the challenges agencies face in retaining clients. With cost reduction a priority for many companies, AI is seen as a way to optimize budgets without sacrificing output. As organizations navigate tighter economic conditions and rising expectations for marketing performance, the appeal of in-house AI grows stronger.
At the same time, the rise of AI is not without concerns. Marketers expressed caution about issues related to data governance, transparency, and the risks of over-reliance on automation. Many leaders acknowledged that while AI offers tremendous benefits, it must be deployed responsibly to avoid errors, bias, or loss of creative authenticity. This is where agencies may continue to have a role, particularly in ensuring human oversight and maintaining ethical standards.
Typeface’s research positions this shift as part of a broader transformation in the marketing ecosystem. The balance between agencies and in-house teams is evolving, with AI acting as the catalyst. Companies that adapt quickly by integrating AI responsibly and redefining their collaboration with agencies are likely to stay ahead.
The report concludes that the marketing industry is at an inflection point. As AI continues to gain ground, the relationship between brands and agencies will need to be restructured. Agencies that position themselves as strategic partners, capable of navigating the complexities of AI while adding human creativity and judgment, may continue to thrive even as traditional service models are disrupted.
For marketing leaders, the challenge now lies in finding the right balance between technology, human talent, and external partnerships. With budgets increasingly flowing toward AI and technology adoption, the future of agency-client relationships will depend on how quickly both sides adapt to the new reality.