Kwittken on How GenAI Will Force a New Business Model for Agencies
The communications industry has long been guided by gut instinct rather than advanced technology, resulting in many agencies operating in outdated ways. Traditional time- and materials-based billing models have prevailed, encouraging agencies to work slowly for higher profits. However, this approach can undermine long-term client success and lead to overworked junior to mid-level employees. Aaron Kwittken, founder and CEO of PRophet, has published an article in AdWeek on how Generative AI (GenAI) tools have the potential to transform this landscape.
GenAI tools offer solutions to the industry's pain points. By empowering junior employees with technology to work more efficiently, agencies can shift from a workforce structure dominated by junior to mid-level staff to a more balanced model. This change will enable the remaining junior staff to engage in more meaningful, productive work.
Value-based billing, which offers compensation based on results rather than time, can become viable with the aid of GenAI efficiencies.
“When leveraging the efficiencies of GenAI, agencies will be able to make the switch to value-based billing, which, as opposed to time-based billing, can give clients more confidence that they’re receiving quality work in a timely manner without overpaying,” writes Kwittken. This shift fosters client confidence and incentivizes agencies to work smarter and quicker, aligning their success with client outcomes.
The adoption of GenAI tools benefits individual workers by upskilling them in various domains earlier in their careers. Writers can become visual storytellers, while creatives and account teams can enhance their writing skills through text generation tools. Moreover, GenAI tools might introduce objective methods for employee performance assessment, reducing internal biases in reviews and staffing decisions.
Agencies can expand their offerings through comms tech stacks powered by GenAI. This versatility reduces the distinction between agency types, emphasizing unique differentiators that appeal to clients. Agencies' tech stacks could even become a criterion for evaluation by clients' procurement departments.
While concerns about job displacement are understandable, the advantages of GenAI outweigh the drawbacks. These tools are progressively improving and already transforming lengthy tasks into swift actions.
Kwittken writes, “Make no mistake: GenAI tools are not perfect and never will be, nor will they ever be able to completely replace human intelligence,” but he firmly believes that GenAI tools have the potential to alleviate mundane tasks typically assigned to junior employees, freeing up industry professionals to focus on strategic endeavors.
The transition to value-based billing requires several steps. Agencies should categorize services, define detailed scopes of work, calculate costs, and collaborate with procurement to demonstrate the client savings achieved through this model. Small to mid-sized agencies are better poised to adapt, given their agility in adopting new technologies.
Agencies can choose to develop their own tools or collaborate with outside partners, keeping in mind the need for a rapid prototyping culture. This experimental approach involves multiple tools working together harmoniously to complete tasks.
Agencies that boldly embrace GenAI can gain a competitive edge and shape the future of the industry. By aligning GenAI usage with strategic goals and values, agencies can ensure favorable outcomes for clients and employees.
In the rapidly evolving landscape of communications, GenAI is a game-changer. Agencies that seize this opportunity can reshape their operations, improve client satisfaction, and create a workforce capable of delivering higher-value work. The adoption of GenAI is not just about staying relevant but leading the industry forward. As Kwittken summarizes that, “the bold agencies that succeed early with GenAI are poised to gain a major competitive edge. Ultimately, those agencies will be the trailblazers moving our industry into the future. “
