Six Ways Your Firm Can Monetize the Value of AI

By Tim Williams

For an agency of 100 people, the cost of licensing the most popular AI tools averages around $120,000 — essentially $1,200 per person. However, the real issue we should be focused on isn’t the cost of AI, but rather the value that it creates for the agency and its clients.

Many agencies unfortunately apply the same cost-based thinking to AI that they do to their basic revenue model; they charge for the cost of the technology in the same way they charge for the cost (hours) of their people. This often takes the form of a “technology fee” equal to 2-3% of the total fee associated with a project. This is a wildly suboptimal way to think about capturing the value of AI.

Here are six ways to turn AI into a new revenue stream that has the potential to significantly boost your profits.

Option 1: Charge a set price for agency outputs powered by AI

Research from the Association of National Advertisers, the World Federation of Advertisers, and other client organizations shows that a majority of major marketers now prefer to pay their agencies for outputs (deliverables) instead of inputs (time).

Output-based pricing is the easiest way for agencies to capture the value of their investment in AI. This approach involves assigning a market value to all the agency’s deliverables, ranging from strategic planning to the production of a banner ad, and then charging the client for the deliverable itself instead of the associated cost of the time and materials.

Agency can and should aggressively use AI-powered tools to help create and produce these deliverables, but in this model there is no need to show the cost of AI as a line-item. Simply quote a price based on the value of the deliverable and you’ll be able to capture all your costs — including AI — in a way that can return a healthy margin to the agency. In fact, your margins should be higher, not lower, because AI allows the agency to produce almost all deliverables at a lower cost.

Does this mean the price for agency deliverables will be less in an AI-powered world? Yes. But if you do it right, the margins will be higher.

Option 2: Charge a price for agency-developed programs that leverage AI

Agencies (and professional services in general) are finally discovering that the way to build a truly scalable business is to sell programs and products in place of services and capabilities. Client problems will still be solved in unique ways, with bespoke creative thinking, but through named programs and products based on the agency’s core strengths and positioning strategy.

While these products will still require human management and direction, they leverage AI in every way possible. In fact, much of the unique value delivered by these products and programs comes as a result of AI’s immense problem-solving abilities.

From a revenue model perspective, the idea is to attach your pricing to value delivered by these products, not the cost of the people or technology behind them. Because programs and products are unique to each firm, agencies can charge premium pricing. Whereas procurement professionals can deconstruct a standard “time and materials” proposal, they cannot redline a bespoke high-value program that is uniquely constructed to solve an inimitable client problem.

“Bravestorm” from the agency Truth Collective is an outstanding example. Bravestorm is human-led, AI supported creative sprint workflow product that guides new brands through brand strategy, to naming, to content strategy, to campaign development in 30 days.

Option 3: Charge a price for using agency-developed AI tools

Many firms are now developing their own AI tools, either by repurposing or white labeling existing technology or developing completely new AI solutions. They monetize these tools through subscriptions or licensing agreements.

An AI products team at the agency R/GA recently developed three flagship AI-powered products: Storytelling Engine, Generative Interfaces, and Brand Creator. “Instead of delivering the same things everyone else is – just cheaper or quicker – we create reusable systems that can be adapted, evolved, and scaled to meet each client’s specific needs,” says AI products team lead Ben Cooper. “Clients don’t have to start from scratch every time,” Cooper says. “We invest in building the core technology, then apply that IP across clients – elevating our services through smarter AI products.”

Option 4: Charge a price for the outcomes produced with the help of AI

It could be argued that the ultimate pricing strategy for AI is to charge for the outcomes produced by the use of AI technology. Because AI tools enable work to be done faster and better, agencies can have a higher level of confidence that their work will produce more predictable results. This is especially true in the area of performance marketing where AI-powered algorithms produce more repeatable results. And because AI enables faster, more affordable A/B testing, agencies can be assured of more effective campaigns.

The AI giant Meta is essentially saying to advertisers, “Tell us what you are willing to pay for a given result” and pricing their AI-powered campaign development services accordingly. Agencies can do the same.

Performance marketing agency Tinuiti works with e-commerce brands on performance-driven contracts where fees are tied to hitting ROI or ROAS target in digital ad campaigns. Leveraging the power of AI tools, Wpromote often operates under performance-based agreements where they are compensated per new customer acquisition rather than by media spend or time.

Option 5: Charge for AI-as-a-Service

Agency professionals are all familiar with the SaaS model, which can be easily applied to AI-powered tools and solutions. Media Monks recently launched monks.flow, an AI orchestration suite, which they sell on a subscription basis to their clients. Supercharger, from the agency Supergood, is an AI SaaS platform that includes a strategy engine, audience insights tool, and end-to-end marketing support.

Option 6: In every area possible, aggressively use AI to do more work in less time

Broadly speaking, AI has the potential to improve agency margins in myriad ways because of its ability to reduce almost every aspect of our cost structure. We can plan, create, produce, manage, monitor and analyze projects and campaigns using fewer people, and therefore at a much lower cost.

Tools like Magnolia, an AI-powered strategic planning tool for agencies, acts like a strategy partner, research assistant, and brief builder, saving immense amounts of time helping agencies speed through competitive analysis, audience identification, persona development, and collaborative idea generation.

Platforms like Media Pilot streamline the complex process of creating and managing social media campaigns, aggregating content from multiple social media platforms into a single dashboard.

Just a few years ago, service offerings like strategic planning and social media management were incredibly time-intensive. These services still require the involvement and oversight of expert strategists and social media managers, but AI enables us to deliver much more, much faster.

The implications are truly disruptive, overturning the basic economics of agency-client relationships. The smart AI-forward agencies are embracing these new technologies in ways that make them better, more valuable partners to their clients. They are also earning higher, not lower, margins because they are pricing the value of AI, not its cost.