In 2026, agencies are primarily focused on two main issues: client budgets and the repercussions of artificial intelligence (AI). A survey conducted in the last quarter of 2025 by Digiday+ Research, which involved 62 agency professionals, revealed that 38% expected reduced client spending to be the most significant challenge facing the agency sector in 2026, while the same percentage expressed concerns about the impact of AI.
This reflects a continuation of the trend of budget-related pessimism observed in 2025, where 47% of agency professionals indicated that diminished client budgets were the industry’s foremost worry, surpassing other concerns like scope expansion (16%) and external AI impacts (11%).
Nevertheless, the concern over diminishing client budgets has slightly lessened in 2026, with a decrease of 9 percentage points compared to the previous year. Some agencies are even optimistic about a potential increase in spending in 2027 based on discussions with their clients.
Rob Davis, president and CMO of Novus, and Scott Shamberg, president and CEO of Mile Marker, noted to Digiday last fall that clients had indicated an intention to allocate more funds in 2027.
“Some recent pitches have revealed expectations for the 2026 budget to be a certain amount, but the budget for 2027 is anticipated to be significantly higher,” Davis remarked. “[The feedback has been] ‘we’re cautious for now, but expect increased spending next year—over the next 18 to 24 months.’ This perspective suggests clients believe their current budgets are limited, yet they’re confident they would rise in the subsequent year.”
Shamberg echoed this sentiment, adding, “I’ve noticed the same shift, which is quite unprecedented. It seems to me that there’s an understanding that while the budget for next year [2026] may not meet expectations, clients truly believe the following year [2027] will be substantial.”
Growing Concerns About AI’s Impact on Agencies
Although apprehensions regarding client budgets have slightly waned in 2026, concerns regarding AI have intensified. The same survey revealed that 38% of participants flagged AI’s impact—including new AI tools, emphasized by 29%—as the top challenge for the industry. Internal issues related to workforce development were also highlighted, garnering a 9% response.
In contrast, concerns about AI were significantly lower among agency professionals in 2025, with just 11% citing external AI effects and none identifying internal effects as problematic. The second major issue last year was scope creep, mentioned by 16% of respondents.
Moreover, many agency clients lack familiarity with specific types of AI technologies. When agencies were asked about client understanding of agentic AI for the 2025 Media Agency Report, approximately 73% indicated that their clients did not grasp what agentic AI entails or its potential to enhance ad campaigns.
Agency holding companies are also struggling to establish a sustainable AI business model. Recent earnings calls from major holding companies, such as WPP, Publicis, Omnicom, Havas, and Dentsu, reveal a common language used in AI, including elements like layers, agentic orchestration, and human-supervised automation. This uniformity renders their AI strategies indistinguishable to clients, who report a lack of tangible cost reductions.
According to Gartner VP analyst Jay Wilson, “The initial excitement surrounding AI and agencies is fading. A year earlier, agencies were promoting their AI systems as pathways to cost efficiency and faster market introduction. CMOs inquired, ‘Will it reduce costs?’ to which agencies responded, ‘Not yet.’ Now, as I consult with CMOs revisiting agency contracts, they still aren’t observing any cost benefits.”
Both agencies and clients are also increasingly worried about shifting search marketing dynamics and the impact of zero-click searches on traditional advertising methods. Agencies and platforms are working rapidly to provide clients with zero-click analysis tools, such as Jellyfish’s Share of Model platform, and tools from SEO experts like Ahrefs and Semrush, as well as WPP’s Generative UI initiative, a collaboration with Google.
However, monetization of these tools presents challenges. To enhance their performance regarding zero-click searches, brands must improve their awareness or earned media exposure—areas advertisers constantly strive to optimize. This realization often leads clients to cease using tools after initial trials.
“Clients were essentially seeking a quick fix that would instantly boost their ranking in ChatGPT,” explained Benjamin Houy, a London-based app publisher who launched a zero-click monitoring tool known as Lorelight, which he discontinued after six months. “Ultimately, they continued their previous strategies without altering behaviors… So why pay for it?”
