The advertising agency world is at a crossroads.
After years of mounting pressure, the forces reshaping the industry have reached a critical threshold. It's one that threatens not just how agencies operate, but whether the business model that has sustained them for decades can survive. Client relationships are more strained. Profits are shrinking. Tech stacks are sprawling. And AI—the technology most agencies are counting on to turn things around—is poised to reshape everything from revenue models to headcount.
To understand what this moment means for the advertising industry, Basis surveyed more than 200 professionals at leading agencies, exploring how they feel about their jobs, their agencies, and the forces shaping their futures.
Select findings include:
- The work is getting harder: 70.0% of agency professionals say their jobs are more difficult today than they were two years ago, and 54.0% say that client tensions have increased over that same period.
- Operational dysfunction is the top challenge: Inefficient processes (44.1%) and siloed systems (40.4%) top the list of obstacles agencies face, while more than one-third of full-service and media agencies are now managing 10 or more tools across their adtech stack—more than twice as many as in 2024.
- The traditional agency model is under threat: 87.3% of agency professionals believe the traditional agency model is either broken today or racing in that direction, including 91.5% of senior leaders.
- AI adoption is booming...and so is AI anxiety: AI is now used at more than 99% of agencies, with 77.7% of leaders planning to increase their AI investment in the next 12 months to enhance their operations. But nine in 10 agency professionals believe AI poses a threat to their agency's primary revenue streams, and the share of AI pessimists has jumped from 19.9% last year to 32.0% in 2026.
- In-housing and layoffs are accelerating: 65.3% of agencies have had clients move work in-house in the past 12 months, and nearly 40% have conducted layoffs over the same period.
- Confidence is falling: For the first time in this survey's history, fewer than half of agency professionals (48.8%) feel optimistic about the future of digital advertising, down from 62.8% in 2024. Additionally, confidence among leaders has dropped more than 21 points over two years.
Despite these challenges, advertising agencies still have ample opportunity. Global advertising spend is projected to cross $1 trillion for the first time in 2026, and brands still need partners who can help them navigate an increasingly complex media landscape. But the agencies best positioned to capture that opportunity may look very different from those that have dominated the last decade.
Download the full report today for the complete findings, along with strategic takeaways for agency leaders navigating the road ahead.
