How do you add value?

Why do your clients hire you?

Go deeper than “They needed a website.”

They could get a website anywhere. Why do they choose you?

It’s surprising how many owners I speak with who don’t have a good answer. This question is at the very core of why your company exists. With the rapid onset of AI tools, having a good great answer has become critical.

I’ll connect those dots in a moment, but first, some new data on AI adoption by agencies.

​

Survey Results & AI Adoption

We recently published an updated 2023 Digital Agency Tools Report. One of the first questions I asked in it was “What AI tools are you using?”

I expected to see a ton of varied responses from a small group of shops. Basically, I thought we’d see the early adopters playing around with it.

I was wrong.

We’re WAY past early adopters on AI.

Over half the shops in the survey reported using some form of AI in their workflows.

I guess it makes sense, ChatGPT grew to over 100M users in ~2 months. Even with that, it does still surprise me how quickly shops integrated AI into production.

​

Agency Impacts

It’s looking more and more likely that AI will be able to handle much of the execution work in the near future.

Here’s Sequoia’s forecast:

GPT-4 can already do a great job on text content.

With the release of Midjourney5, images are lifelike.

And the early verdict on GitHub’s copilot has been pretty positive.

So, thinking back to that original question: “How do you add value?” Agencies add value by performing functions that their clients don’t have the capability to do, at least not as well. The lack of capability has historically stemmed from the rapid rate of change of tech and high cost barriers (dollars and time) of upskilling their internal teams. What we’re seeing with the advent of AI is, these historically high cost barriers are crashing down.

This puts a lot of the value that agencies deliver at risk.

It’s not all equal though. Some value adds are more at risk than others. If you fall closer to the Factory side in the Factory-Consultancy spectrum (find out where your agency lands), you’re probably more at risk of disruption from AI.

​

The key risks as I see them today are:

Competition and commoditization: As AI tools become more prevalent and accessible, it becomes easier for competitors to offer similar services. This can lead to increased competition and commoditization of services that were once considered unique or specialized. Your service mix and “how you add value” is a critical question.

In-housing: Competition from your clients is another area where AI is causing challenges. We’ve already seen a few instances where owners have mentioned their clients are asking them to justify their costs since “AI can do it for free.”

Data privacy and security: We’ve already seen issues with security at ChatGPT There’s definitely some risk associated with feeding client data into these tools.

Legal stuff: Who owns what is always a fun question /s. Getty is already suing Stability AI There are also a ton of questions around using code “generated” by AI that’s essentially swiped from open source libraries.

Loss of human touch: As AI tools become more sophisticated, they may replace certain tasks traditionally performed by human workers, such as copywriting, design, or coding. This may lead to a loss of human touch and creativity in the work produced, which can impact the overall quality and appeal of the agency’s offerings.

​

What’s an Agency to Do?

Get up to speed: The first thing is to get up to speed on the current AI capabilities. This has been evolving quickly, so it’s a bit tough. Once you have an idea of the current capabilities, it makes planning for future disruptions easier. Here’s a fantastic high-level overview that JP Holecka gave a few weeks ago Then here’s a great dev tools landscape overview and a solid generative AI overview, both from Sequoia. If you’re still looking for more, McKinsey did a decent overview as well.

Unique value proposition: Next, zero in on your unique value proposition. This can include emphasizing your expertise, niche specialization, or tailored solutions that leverage human creativity in combination with AI tools, or even the absence of AI tools. It should also work in concert with your view of where AI is headed.

Human-AI collaboration: If you’re on the “AI is the future” side, encourage a culture that promotes human-AI collaboration. Emphasize the importance of your team’s expertise, creativity, and intuition in complementing AI-generated insights or content. By integrating AI as a support tool rather than a complete replacement, you can maintain a human touch in your offerings.

​

What are your thoughts?

I’d love to hear from you about how AI has impacted your shop.

Is it the game changer everyone’s making it out to be?

Is it another flash in the pan that’ll fizzle out by Fall?

How are you building it into your processes?

Simply reply to this email with your thoughts.

​

Want help navigating this?

I know how challenging it can be to keep up with the rapid pace of the digital agency world. That’s why I created our Agency Assessment, to help owners uncover and realize their shop’s hidden potential.

Optimizing your agency gives you options.

Those options let you react appropriately to changes in the environment. Changes like AI disruption, economic shocks, etc.

It’s an intense look into every aspect of your agency that results in a fully custom report that pinpoints exactly where you should focus your team’s effort for the maximum results.

Check it out at the link below. If it sounds interesting, reach out and we can chat through the details.

​

​