Bye-Bye Billable Hours? Sorrell Bets Big on Output in the Age of AI

S4 Capital’s Sir Martin Sorrell is inching away from the traditional billable hour, leaning into a future where output trumps time. On a recent earnings call, Sorrell explained how generative AI is nudging the agency world toward performance-based pricing models, especially as marketers face mounting pressure to trim production costs without shrinking media budgets. The shift isn’t wholesale — yet — but hybrid models are taking root, with S4 now blending retainers and payments based on deliverables like content volume.

CMOs are already probing the implications: if AI shaves 20% off execution time, should fees follow suit? Sorrell’s response is volume over discount. While the cost per asset may drop, the sheer quantity of content needed in today’s fragmented media landscape could more than make up the difference. For now, clients are proceeding cautiously — think workshops and pilots over sweeping changes — but S4’s early results with brands like Puma suggest both speed and quality can coexist.

This AI-driven evolution is also reshaping agency structures. Sorrell predicts a pivot away from the agency-of-record model, replaced by smaller, faster teams powered by automation. The winners? Agencies nimble enough to streamline operations and rethink compensation beyond hours logged. As Sorrell put it, legacy players tied to traditional media might struggle, while digital-first disruptors stand to gain. The industry isn't rewriting the playbook just yet, but it's definitely drafting new pages.

Full story at Digiday.