Forrester predicts 15% agency job losses in 2026. Is the ‘agencies as agents’ era over?

For decades, marketing agencies have been “singularly focused client partners,” but a paradigm shift will see them “forgoing their franchise to act as agents on behalf of clients,” instead becoming “marketing purveyors,” Pattisall writes.

“With each consolidation, acquisition, or PE investment, marketing agencies’ vision moves further away from being providers of agnostic services and creators of culture to purveyors of enterprise platforms and orchestrators of strategy and execution. Put simply, your agencies will no longer act solely as your agents but also as owners of products/solutions, resellers of technology partnerships and developers of emerging capabilities.”

The result: reduced headcount, increased reliance on media revenues and soul-searching about agency business models.

The triggers

A confluence of factors working together are driving this change, according to Forrester. The nexus of that change: all those factors putting pressure on how agencies charge for services, in turn pressurizing agency structures themselves. Most agencies have long relied on the time-and-materials/FTE/labor-based model, which is getting harder as margins get squeezed from several directions.

First, the shift from long-running retainers to “low-margin product-based engagements” is making reliable revenues harder to come by.

Second, in-housing, which has “created a saturated market, commoditizing creative ideation and execution” and keeping spend within client organizations, away from those external agents.

Third, “procurement pressure,” forcing agencies to “monetize media, technology and data”: it’s harder to ink deals, making selling products and media ever more attractive.

Fourth, AI and automation. Speaking to The Drum earlier this year at Cannes, Pattisall warned of an “existential threat” to traditional remuneration models from AI, with 75% of agencies absorbing the costs of AI work and only 6% so far able to monetize that work.

The 4 new agency archetypes

These pressures have already been leading agencies to look elsewhere for reliable income – monetized media, productized offerings and pushes toward efficiency across the board. And it’s 2026 when the levee will break, Forrester says: “Agencies will no longer act solely as agents; they will also act as owners of products, resellers of media and developers of emerging technology.”

The result? Four new archetypes for agencies, none of which are traditional ‘agents’ of their clients in the sense of client representatives earning fees for their time:

• Vendors, executing programs

• Merchants, reselling software and media

• Affiliates, “contributing capabilities to larger, matrixed organizations”

• Partners, delivering client-centric marketing services

On to Forrester’s fine-grained predictions of the year ahead.

1. Agency jobs reduce 15%

Among advertising’s biggest employers, Publicis is a bright spot with buoyant performance; most of its competitors are struggling, with the likes of WPP and S4 posting concerning figures.

Job losses have already begun, with headcount reductions across those organizations averaging at 8% this year, Forrester says. Pulling forward predictions of AI-related job losses of 7.5% by 2030, it now makes the troubling call that 15% of agency jobs will be eliminated in 2026.

The release cites a nameless “global holding company CEO” who said: “By 2028, we’ll double profits and halve the people.”

2. 10 independent creative shops to be ‘sunsetted’ by private equity

As The Drum has reported this year, private equity (PE) investments in agencies rebounded 21% in the last year, following a brief downturn, while private equity players have been holding on to their purchases for longer than expected as they look for the ‘multiples’ on investment they need to sell. The result is a whole new category of marketing business in long-term relationships with their PE backers.

Forrester analysis shows how deeply changed the agency world now is by PE: 78% of the top 80 digital media agencies, it says, have now taken money from PE or venture capital.

Next year, Forrester predicts a continued surge into creative agencies to bolster existing PE holdings of media agencies. It predicts 10 major acquisitions of creative shops – “expect deals in 2026 designed to grow the likes of Brainlabs, MSQ and Wpromote.”

3. It will only take one more major piece of M&A to ‘trigger a wave of agency reviews’

The mega-merger between titanic advertising holdcos Omnicom and IPG finally received consent from the US Federal Trade Commission this week. It’s far from the only consolidatory move we’ve seen this year, with WPP consolidating its media operations under the WPP Media banner amid falling revenues and share prices and layoffs. Elsewhere, Japanese giant Dentsu has signaled its intent to sell its international holdings.

Forrester predicts that French multinational Havas will follow its recent Horizon Media deal by snapping up some of those Dentsu properties. Another possibility: rumors that WPP is eyeing a sale to Accenture (or private equity) come to fruition.

Either way, the result will be increased scrutiny on agency contracts amid widespread formal reviews, Forrester says – 85% of US B2C marketers are already planning to review their media agencies next year.

4. Creative agencies take control of creator marketing

This year brought news of major brands making splashy pronouncements about their investment in influencer marketing: Unilever, one of the world’s biggest advertisers, said that it will devote 50% of ad spend to social media and work with 20x more influencers (the creator industry didn’t miss a beat; creator rates have jumped 30% since).

Next year, Forrester predicts, “the balance of power will shift,” with control over these deals flowing from media to creative agencies. And as that ‘agencies as marketing purveyors’ paradigm shift sets in (and with “creators take on more ideation and production responsibilities”), “creative agencies will act more like orchestrators of tech and creator access.”

5. Principal media ‘goes mainstream’

Principal media – in which an agency acts as ‘principal’ rather than ‘agent’ in a media deal by selling on inventory purchased from a publisher – will rise to take almost a third of total agency billings in 2026, Forrester predicts. It’s another string to its prediction that agencies’ role as agents is diminishing: “trading as principal marks a departure from trading as agent.”

81% of marketers are planning to increase principal media investment next year and Forrester’s analysis sees advertising’s biggest names gearing up for opportunities in this space.