By Kimeko McCoy  •  November 4, 2025  •

Ivy Liu

Agencies on the defense

As it currently stands, agency budgets are at their lowest in 10 years, with the share of marketing budget going to agency fees reduced, according to Jay Wilson, vp analyst at Gartner. According to Gartner’s 2025 CMO spend survey, 39% of CMOs plan to cut back on agency budgets this year. Meanwhile 22% of CMOs said generative AI has enabled them to reduce their reliance on eternal agency partners for creativity and strategy building, per the report. 

Meaning, cost savings and efficiency are in large part the appeal of AI-powered tools for small businesses. Already, companies like Poppy Flowers and Bartesian cocktail maker say they plan to rely more on generative AI-powered creative tools and less on creative agencies. Meanwhile, brands like Gorgie energy drinks, do creative work in-house and plan to continue to do so leveraging AI marketing tools.

Michael Babyak, general manager of revenue operations at Poppy Flowers, estimates the company is saving $10,000 per month in agency fees by using tools like Claude and Nano Banana to generate on-brand content, data analysis and more. 

“AI lets us do 80% of the early creative work in-house — we can test messaging, imagery, tone, and performance before an agency ever touches it,” said Ryan Close, Bartesian founder and CEO, in an email to Digiday. 

That’s not to say SMBs are ready to close the door on traditional creative shops in favor of agency-in-a-box tools. But independent shops are feeling pressure to differentiate themselves from these AI-powered tools offered by tech companies, like Google and Canva, as well as ad behemoth WPP, which recently launched its own self-service marketing tool aimed at smaller companies.

‘We create the system’

Back in June when the Wall Street Journal reported Meta’s plans to fully automate ad creation using AI by next year, creatives mostly shrugged. But the stakes are getting higher. 

“My gut says that there will be pressure to adopt, and to tell the story of our use of AI-based tools,” said Mark Wahl, vp of technology and innovation at White64, an independent agency based out of the Greater Washington D.C. metro area.

Agencies like SuperHeroes, White64 and Manifest say they’re differentiating themselves through high-level strategy and intimate client-agency relationships.

“Rather than creating all the end assets, we create the system, the idea and seed content that the work is produced from,” said Steve Slivka, chief experience officer and partner at Manifest, a New York-based independent ad agency. 

Not an easy sell

While tech companies have high ambitions for their agency-in-a-box offerings, not all companies are convinced. In large part, AI tools are good at replicating but struggling to innovate, experts say. Case and point, Dan Murphy, svp of marketing at Liquid Death, said AI has made the company’s in-house team more efficient and faster in terms of content resizes, code optimization and the like, but “we’re not in the market for a “Liquid-Death-Idea-o-Matic.” 

Murphy at Bartesian made a similar comment, adding that AI stands as an agency collaborator rather than a threat to client-agency relationships. While AI-powered tools manage ground level creative work, agency partners focus on big-picture storytelling and production, he said. At least that’s the case for now. 

“We just don’t want everything to start looking ‘AI-generated’,” Murphy said. “Down the road, if AI can enhance that without losing authenticity, we’ll use it. But for now, the heart of the brand is still built in the real world.”