The AI-Driven Workforce Reset: Can Agencies Survive the Next 3 Years? with Paddy Woods

[00:00:00] Paddy: Example, this client where they have 200 agencies, who is the right strategic partner to listen to? Whereas my thoughts is that actually you're all strategic partners. You should all be collaborating, working together for the best of that client. And so you've gotta come out be that proactive strategic partner.
It's almost like how do you collaborate when you're competing?
[00:00:19] Mike: My name's Mike Lander, and you are listening to Higgle, the B2B Sales Club podcast, where we bring you actionable insights about sales, RFPs, negotiations, and difficult procurement discussions from sales leaders, ground leaders, and procurement leaders.
Please subscribe to get updates when new episodes are released.
Paddy, thanks ever so much for joining me on Higgle, the B2B Sales podcast. Great to have you as a guest.
[00:00:47] Paddy: It's great to be here, Mike. Thanks very much.
[00:00:48] Mike: So we've known each other now, I dunno, on and off for what, a year or so?
[00:00:52] Paddy: Yes, it must be.
[00:00:53] Mike: And like all these things, you get to know someone you really like them, enjoy their company, and they're thinking, Paddy, you've got some great thinking around how the industry's about to change, but before we get into that, for the audience, who are you, what do you do, and what's your favorite song?
[00:01:09] Paddy: Mike, thank you. Great to be here. I'm Pat Woods. I'm actually a consultant running a business called Fuse. And my whole ethos is around supporting and working with agencies to help them build their own pipeline so they've got much more control and much more authority in how they work it, how they can grow and where the opportunities come from.
So it's working with them from positioning ICP all the way down to actually how do we continue client growth.
[00:01:33] Mike: Brilliant. And what's your background, Paddy?
[00:01:35] Paddy: It's a varied one. Worked with government campaigns. When I was at COI. Working with Learning Skills Council, NHS Ministry of Defense before moving to British Gas and then became an intermediary.
Working with clients to help solve their agency problems, help find the right agencies for their solutions, or work with them and saying, as you, they want to cut back from 200 agencies to five, how do we go about doing that? So it's being a consultant to clients to help them shape their agency relationships before deciding to turn to the other side.
And worked for the MEA to help agencies understand what clients want, and then decided to jump into agency life itself and worked at iProspect.
[00:02:17] Mike: Oh, right
[00:02:17] Paddy: Then Smithfield Media Agency. And then COVID hit and I've decided to set up by myself.
[00:02:22] Mike: Very good.
[00:02:23] Paddy: I've worked with Pimento for a bit and still do for a bit, but mainly for myself.
[00:02:28] Mike: So favorite song on why?
[00:02:30] Paddy: I was thinking about this, I was listening to your podcast and I thought, what is my favorite song? I think there was too many to choose from, but I dunno if you know Viola Beach.
[00:02:38] Mike: No.
[00:02:38] Paddy: There was a young group that died quite a while ago, but my favorite song is that Boys That Sing and Reason Why is One Taken too soon, and I love that sort of style of music.
But there's some of the lyrics around boys that sing. It's around together, we can take on the world. And that's sort of my sort of ethos. Love the industry and love what we do. But it's that sort of, sometimes you need that collaboration working together.
[00:03:02] Mike: You
[00:03:02] Paddy: do. So that's my song and it's a great song.
And Coldplay did a tribute at Glastonbury.
[00:03:07] Mike: Oh wow.
[00:03:07] Paddy: And really made it sort of sing.
[00:03:08] Mike: Oh, amazing.
[00:03:09] Paddy: That's my favorite.
[00:03:10] Mike: Uh, cool. It sounds like a sad backstory. A great entree also into the topic we're gonna talk about, about the whole collaboration piece and what's going on with the industry. So what we're gonna talk about is summary and insights from your recent report called the Workforce Transition Program for the UK Marketing and Creative Industries, which you are now talking to a number of industry bodies about.
First of all, what is it and what was the genesis of the idea for the audience? I've collaborated with Paddy on it as well, which I think is a brilliant piece of work, but what was it and why?
[00:03:41] Paddy: What is it? It's basically a document. We're looking to change the way the industry works from starting at secondary school all the way up because.
Looking at the research and talking to lots of people, I realized that our industry is in decline. Our industry, if we don't change, is potentially going to fall outta favor and not be the economic generator that it has been in the past. I think that's down to ai. I think it's down to. Current client challenges that are going on and the cost of living crisis, everything like that is causing this sort of thing, circling our industry, which is really having a negative impact from actually, there's no junior talent being hired, or very few.
I think we're 45% down. We've got people making redundancies, agencies going outta business. And also just a prediction that this is gonna continue with ai and I think it was Morgan Stanley saying that 8% of companies that used AI in the last year have made redundancies 'cause there's no longer a need for people and talent.
And when you talk about it was in news over the weekend, you got the support for youth unemployment is gonna be about 125 billion in the next sort of five years. I think there's this real knock on effect and yet our industry thrives on young talent coming through. And how we can nurture them to actually become the next agency leaders of the future.
And that is gonna stop.
[00:05:00] Mike: And that's, I think something that we talked about a while ago, wasn't it Paddy? About if you follow the thread of if there's 24 and a half thousand agencies or so in the uk, a lot of those will be in the production area. Obviously also a large number in creative and strategy media, et cetera, in performance marketing and social influencer.
But if you look at the production engine, broad brush strokes, the production engine is being automated. So AI is doing what a lot of the. More junior people would've done when they entered the industry. So if that layer gets chopped out, which is what I kind of call the pyramid collapse, if the bottom layer gets chopped out and we don't recruit those people, then as the senior people get older and there's no junior people coming through, then the whole thing just implodes.
'cause there is no more talent left.
[00:05:46] Paddy: There is no more talent in left. And actually the weird thing, our industry is a young industry. It seems to not like old people.
[00:05:51] Mike: Yeah.
[00:05:52] Paddy: That thinking and insight and knowledge disappears because they're inexpensive overhead. So actually they're the people that are first leaving the industry or being made redundant.
I think there's a stat in the US that's of 8% of people over 45 are forced outta the industry. So we end up with this knowledge gap and the middle layer trying to manage, workout, build their knowledge and expertise. And service clients and change the way the industry needs to operate without actually having the skillset or knowledge to do that.
[00:06:22] Mike: I mean, if I look at two things I did in my career just as examples, one, I left school at 16. I did an apprenticeship. The apprenticeship system was designed in the northwest of England, which where I lived in the engineering sector, was to bring through young talent. You started as an apprentice. You did your four year apprenticeship.
You did day release at college. You were trained up. You worked alongside very talented engineers, and then you yourself became an engineer, and then you helped the next generation and all the apprentices moved between different companies, and that's how industries got created. That's how talent got developed.
And then the other one was at KPMG. When I joined KPMG, I joined as a consultant. Loved working there. Loved the kind of work that we did. Same thing. Consultants came in. You worked for directors and partners. They were very talented people. You learned from them. If you found your niche, then you became a director.
And then if that went well, you might make partner and server cycle continued. But if you chop out that entry. Then what happens?
[00:07:19] Paddy: Do you know? This is something that the CEO of HSBC said about eight years ago. There is no succession plan,
[00:07:25] Mike: right?
[00:07:25] Paddy: There is no leadership coming through that we can build on, and I think it's just got worse.
I think with COVID remote working has challenged the way we learn and develop, and I think actually it's also made us slightly lazy. And not wanting to go out there and be in front of clients or be talking to things. It's had this negative impact. So there is a lot of fragility between agency and client relationships on top of that.
And you look at what's going on with the networks, how much they're having to transform and change their business, and how they need to adapt to become their people. Their middle management become their strategic thinkers. It involves time and it involves money, and I think a lot of agencies are struggling with that at the moment.
There is positivity from the WOW Benchmark and the New Bay Agency 2026 release that's saying it is positive, but we're just talking about it the other day and there is a shock down the road and I think agencies heads are buried in the sand and they're not really thinking about what do we need to do?
Clients are asking 'em, but they're not really shifting the dial quickly enough.
[00:08:25] Mike: So some people out there, maybe a lot of people out there don't know might be saying, yeah, yeah, yeah. We've been here before. It'll all be fine because it always is. Lots of things have come and gone and the industry's always grown, so actually it's not gonna happen.
So it's irrelevant. Let me just talk through a few data points that I've got that start to reinforce that basic kind of direction of travel. OpenAI have launched their own deployment company, what they call a Ford deployment engineering company. It's valued at $4 billion on day one, and its job is to go out and basically help companies implement.
AI automation and AI technology to improve efficiency, improve outcomes, and drive growth that will have an impact on jobs. It's absolutely bounty because the lower level work will be automated. Adobe has acquired samr. Stawell. Hass launched something called The Machine. Publicis acquired LiveRamp.
They're all trying to get into the space of owning the end to end value with the client. They're getting into owning the data and the signals that come at the beginning of the journey, as well as the machines that deliver the production capabilities at the end. There's lots, I mean, look at the Omnicom merger with IPG.
Huge cost savings being driven out of that. There's enough signals in the industry to tell us. This isn't just hearsay, this is, it's really happening. However, there's also data that currently supports the fact that agencies currently aren't doing badly, they're profitable and they're growing a little bit from memory, but my fear is that's a shock wave about to happen in the next 12 months is that it's fine today, but it won't be fine in 12 months time.
What are your thoughts on that?
[00:10:07] Paddy: I completely agree, and actually if you look at the Omnicom IPG merger, I think Omnicom announced that they're putting a lot of their staff through the mini MBAs.
[00:10:16] Mike: I heard this
[00:10:17] Paddy: and investing a hell of a lot of money because what they've realized is they need their talent to be able to be that strategic advisor to clients.
[00:10:23] Mike: Exactly. Just go through that again in case someone missed that. I think this is a really, really important point. I think it's a super smart move. Personally.
[00:10:32] Paddy: I completely agree. So Omnicom following their restructure with IPG and their sell merger and sort of reduced reduction of a lot of the talent, they are putting a lot of their mid-level to senior people who a mini BA, it's about.
I think 1500 people they're putting through from top of my mind. I can't remember, but I'll find the stats. And a mini MBA basically trains him up to be strategic
[00:10:53] Mike: advisors. I did an MBA paddy, I was an engineer, and then I left my job and took a punt and did my MBA. It completely transformed the way that I think about business problems and the way that I engage with senior execs.
I mean, I would say it's a smart move because I did an MBA, but I actually fundamentally believe training people across disciplines. Giving them a much broader perspective using a case study based model, which is what a lot of the MBAs are based around. Certainly, crown Fields was to get you into understanding complex business problems.
Then you can sit at the table with the CMO and have a business conversation. It's a great idea.
[00:11:33] Paddy: And also if you think about it, there's a lot of CMOs recently have only been bought in because they might be an expert in performance marketing. They're not necessarily understanding the wider market case.
And I had a friend who was bought in as a head of marketing for a big tech company. Because the CMO hired him because he had understanding of traditional media and she really only understood influencer marketing. She needed someone to help be that advisor to help grow and accelerate their business.
That's sort of what's going on. The other shock, I think that we're expecting is what I've been looking, playing around with in the next three years, we could lose between 53 and a hundred thousand people from our industry.
[00:12:09] Mike: Wow.
[00:12:09] Paddy: Based on current trajectory of the talent base. And if that continues, one, it shapes us.
To be their strategic advisor, and actually it'll reduce the number, but how much of that could become into the networks, how much the networks are restructuring. So there's a lot of talent play around with at the moment
[00:12:28] Mike: and what happens to that talent? So let's pick a number. Let's say it's 50,000 people come out of the agency world in the UK alone.
And let's say that they are middle and senior people, junior people aren't being recruited in, that's gonna put a flood of people onto the market, who bluntly can't find jobs. The job market at the moment is very, very, very tough as we know. So they'll all become consultants and advisors, but the problem is a lot of companies aren't paying for advice currently.
So we're gonna end up with this horrific situation.
[00:12:57] Paddy: If there's another 50,000 consultants out there that's extra two consultants to an agency, which won't work.
[00:13:05] Mike: Correct. The work isn't expanding
[00:13:08] Paddy: the other thought as well, which is actually, if they are a older generation, they're gonna find it very hard to get a job.
So the economic impact will be on the government to support them.
[00:13:16] Mike: So now we've got a problem at the bottom. We're not taking junior people in and at the middle and top, we're stripping people out through dcy programs. And the danger is you end up in this kind of mindset of, well, it's structural unemployment, however, is there hope Paddy?
Is there a light?
[00:13:34] Paddy: I'd love to be negative, but I shouldn't say that. But actually I think there is a light. I think there is things, agencies and, and I'm looking to get Common Grant to help fund a program that we can really start to understand what the future looks like for the industry. I think there are things that agencies can start to think about, which is how do they reshape their talent?
I think Omnicom have shown a prime example of that, which is we need to be sitting at the board as strategic advisors. They need our support, and without that support then the agency relationship will fall apart. And if this continues, actually, there are agencies all over the world that clients can now go to.
It puts the UK at a weaker status. So actually agencies need to think differently. Actually, I've got a webinar coming up in the near future, which has got Tom Salmon and, and actually yourself, Mike, which is talking about this whole agency reset, which is, yes, there is positive stuff, but actually we need to start to reconfigure.
And if you haven't read Mike's research where a lot of this came from, that whole pyramid collapse and what agencies need to do, you should do, because it gives really valuable insights into what. Things you need to think about and how AI needs to start and how your commercial model needs to start changing.
And you've gotta talk away from let's do an hourly cost. It's about what is the value we bring and what is the senior value we bring to our client partners.
[00:14:48] Mike: Exactly.
[00:14:48] Paddy: That's gonna make the real difference. And where do we stand in this marketplace.
[00:14:52] Mike: Thank you for the reference, Paddy. I appreciate that. And yeah, it was a really interesting piece of work and it continues to evolve.
I do now a quarterly update, and what's interesting is I'm also starting to pick up now. What kind of roles are emerging? If you look at within an agency, take a performance paid media agency. Let's see if this makes any sense. Patie, the kind of roles that are emerging. Measurement and test, I think is still a area that will be requiring human talent.
But you've got governance. Someone's got to run the governance spine to make sure that what the AG AI is doing is controlled and it's doing the right thing in the right sequence at the right time. With the right assets. You need people that have got taste. You need to be able to moderate the output to make sure that what's being distributed at scale actually has got some worth to it has a craft to it, has an impact to it.
Report came out recently about the flattening problem, which is because all the AI models are developing content. Because companies are delivering content at scale. Unsurprisingly, what we all suspected was the quality standards flattening out. It all looks the same. It's not bad, not great. It's just all looking a bit similar.
Well, we need people that can elevate, that can work out well. What is the right kind of campaign to run? So there are lots of roles emerging. I think that strategic advisor role personally, I think is very important. I think the growth advisor that sits alongside the CMO and generally acts as a partner, I think that role, it's not missing in our industry, but there aren't that many of them.
[00:16:25] Paddy: No, and I think when I worked at Dentsu, I prospect, I think there was some client account directors there that were phenomenal at doing it and building those relationships. I think a lot of time, those relationships, you are right. There hasn't been the investment into building that sort of strategic advice.
I think there's been this fit, which is say for example, this client where they have 200 agencies, who is the right strategic partner to listen to. Whereas my thoughts is that as you all strategic partners, you should all be collaborating, working together for the best of that client because they pay your bills.
[00:16:56] Mike: Yep.
[00:16:56] Paddy: They work with so many because they don't know what they want. And so you've gotta come out, be that proactive strategic partner that's really gonna shape it. And actually the tools beneath you, the AI tools that you can start to bring in are gonna have that sort of massive benefit. But it's almost like how do you collaborate when you're competing?
[00:17:13] Mike: This is something that probably won't get out very well with my audience. I suspect if you look at organizations that I think are well suited to this Accenture song are very well suited to this, why they are a business consultancy at scale. They absolutely understand technology infrastructure. They're an outsourcing organization and they get how to partner with clients to bet their fees also on outcomes and to basically outsource or run large parts of functions within organizations.
You can see a world whereby marketing operations becomes basically an outsourced area where basically all of the stuff that delivers against marketing objectives is run by third parties. Organizations like Accenture Song and many others like them. I'm not saying that's gonna happen across the piece.
But agencies don't have that consultancy piece. Some do, not many, and you've got this kind of what I think now is a bit of a kind of three-legged stool. You need to have the technology skills, you need to have the marketing skills, but you need to have the business advisory and change management skills if you've got them in one agency.
I think you are in rare territory, and that's when you should be helping clients rethink entirely how marketing is done.
[00:18:26] Paddy: I do thoroughly agree. I think the more we can elevate ourselves to be the strategic partner, and this is something that COI tried to do. Back in 2007, 2008, which is they bought in this consultancy team, which I worked in, and it was all about how do we get in front of the ministers and help shape policy.
And it was fascinating and some of the stuff was really interesting, but helping shape policy to then deliver down into the rest of COI to deliver the communication output was really interesting. And I think that's the sort of way I see the model going, which is you've got these growth advisors and these strategic partners.
And then you have companies, whether it's in-house companies doing the production or whether you've got specialists that are really excellent at doing certain things that can just deliver what you need. So there's gonna be, there's two models that come through. I believe things still need to happen and be done, but they need to be done in the way that works with that client.
[00:19:16] Mike: Another role that I think will emerge is the orchestrator. So an agency is the orchestrator, which is what you spoke about just then. Basically, an agency sits there as an advisor to the client. It might do the strategic brand marketing, for example, but its other role. Its big role is to bring in all of the different third parties required and the internal teams as well, the in-house teams and orchestrate outcomes.
On behalf of the organization, and that's a role. It's not played before, so you get kind of like it's a lead agency, but not contractually. Other agencies are not working for it. The agency's orchestrating other providers, delivering value. And that's a critical role, but requires new skills and requires agencies not to be too protective over their own patch.
It's gonna become more of an ecosystem as a friend of mine talks about.
[00:20:09] Paddy: And I think so. And I think with the reset, I think with the reduction talent and it's gonna come through, which is no doubt because AI is gonna drive that reduction. I think we do need to work to play better together.
[00:20:19] Mike: Yes, exactly.
[00:20:21] Paddy: I think some agencies are really good at it, but I think it's taking it to another level and what that looks like.
It's a work in progress. I think it's testing, it's learning, it's building, it's creating things. It's becoming a really interesting sort of mindset within the agencies, but that means that agency leaders have got to change and they've got to think differently, and they've got to think, well, we're making money at the moment.
That's great. Two years down the line. What happens if they're behind the times? And best scenario to do is blockbuster. Blockbuster existed. It went out business 'cause of the internet. And they said, oh, the Internet's a fad, and lo and behold, they don't exist.
[00:20:56] Mike: Exactly. Kodak, same story. When they looked at digital, they didn't get ahead of the curve fast enough as a business, and that became a problem.
Many, many, many big companies that been well researched by HBR, they fail to see the signs. Then sadly, there's a demise and then there's a reincarnation in many ways. Normally at the end of the episode, I say, you know, obviously what three takeaways, what would you do if you're in the car? This is a bit bigger than that.
I think this is, and correct me if I'm wrong, Paddy. If you're listening to this episode and this has made you really think and want to do something, go and talk to Paddy. 'cause you are collecting a bunch of people around you, aren't you, that basically are interested in this topic.
[00:21:36] Paddy: It's a battle cry, really.
I think that's the best way of describing it. Anyone who wants to be involved, please get in touch. Anyone who's got any contacts that they think we need to speak to, please just let me know. I think we need to re-shift everything because even starting at secondary schools or even universities where it's still marketing theory, it's not shifting, it's not turning the dark.
We need people that one, are passionate about the industry and I love this industry and I want to see it succeed. So passionate about coming into this industry, but with the right skillset that actually they can jump in and start to help shape. Future because that's what we're missing right now.
[00:22:09] Mike: Exactly right.
Paddy, it's been a real pleasure. Thanks ever so much for joining me.
[00:22:13] Paddy: Lovely talking to you. I love this. It's something that's so passionate, so I just want to see it come to fruition and start to sort of drive change within the industry because I think it's gotta be done.
[00:22:22] Mike: Brilliant. And the best place for people to find you.
[00:22:25] Paddy: LinkedIn, Patrick Woods, otherwise patrick.Woods@pimento.co uk at the moment.
[00:22:31] Mike: Perfect pad. Thanks ever so much for joining me.
[00:22:33] Paddy: Thank you so much. Lovely talking to you, and I'll look forward to speaking soon.
[00:22:37] Mike: Thanks for listening to Higgle, the B2B Sales Club podcast series with your host Mike Lander. Please subscribe so that you'll catch all the next episodes.