Lord, who leads the largest independent media agency in the world, focused his critique on the full-time equivalent (FTE) model and principal-based buying strategies. These methods, which are central to how the industry’s major holding companies generate revenue, are increasingly at odds with the modern technological landscape, according to Lord. He argued that the industry is currently caught in a state of "inertia," where the desire to maintain legacy profit margins is preventing the adoption of more agile, growth-oriented frameworks.
The core of the issue, as Lord presented it, lies in the "economic equation" that governs the relationship between an agency’s internal investments and the services they provide to their clients. Over the past half-decade, the industry has seen a massive influx of capital into proprietary technology, data platforms, and automation tools. However, Lord suggested that instead of these tools being used to streamline costs or create more value for the brand, they are being leveraged to justify old billing practices. He noted that agencies, particularly the large holding companies, have made significant investments in technology over the last five years and now feel a structural pressure to monetize those investments by forcing them onto their client base.
This dynamic, Lord argued, creates a conflict of interest where the agency’s need to recoup its technology costs overrides the client’s need for the most efficient and effective growth strategies. He specifically pointed to the FTE-based model, where clients pay for the hours of staff members assigned to their accounts, as a primary culprit. In an era where automation and advanced software can handle tasks that once required dozens of human hours, the continued reliance on hourly billing creates a disincentive for agencies to become more efficient. If an agency becomes twice as fast at a task through technology, a labor-based model would theoretically result in the agency making half as much money, unless they find other ways to bill for that time.
To move past this stagnation, Lord advocated for the adoption of "composable architectures." This approach involves moving away from monolithic, "one-size-fits-all" technology stacks in favor of modular, interoperable systems that can be customized to drive specific business outcomes. By utilizing composable architectures, agencies and brands can be more selective about the tools they use, ensuring that every piece of the technological puzzle is directly contributing to growth rather than simply serving as a line item in a broader service agreement.
The shift toward these modular systems is not just a technological preference but a business necessity. Lord’s comments suggested that the current model is a barrier to the very growth that clients are hiring agencies to achieve. When agencies are locked into rigid billing structures and proprietary tech stacks that they must "force" on clients to maintain their own P&Ls, the focus shifts from the client’s market performance to the agency’s internal financial requirements.
