The Pipeline Paradox: Why Agencies Struggle — and How AI Could Save Them
For agency leaders, there’s a persistent, maddening reality we don’t talk about enough: new business is hard. Really hard. Despite all our creativity, strategic brains, smart teams, and deep client experience, the pipeline still feels more like a trickle than a torrent. And yet — here’s the kicker — most agency clients are looking for more help, not less. Our latest national research reveals a striking disconnect: while many agency leaders fear clients will cut us out or slash budgets because of AI, clients are actually looking for our guidance. They don’t want to replace us — they want us to help them navigate AI safely and strategically. Agencies See Uncertainty Ahead, a 2025 study released this summer at the Build a Better Agency Conference in Denver, was conducted by Agency Core, a new non-profit research organization founded by myself and Brian Gerstner of White Label IQ, providing free research with and for agency leaders. It offers a deep dive into the attitudes and challenges of marketing agencies, and reveals the tremendous challenge for most agencies of maintaining a robust pipeline of right-fit clients. Leading Through the AI Revolution: The New Competitive Edge for Agencies is the latest in the 12-year Agency Edge research series we conduct with Drew McLellan at Agency Management Institute, and explores the opinions of agency clients around their agencies’ use of AI Fielded just months apart, these two studies reveal a paradox most agencies haven’t yet recognized. While many are cautiously adopting AI, worried about how clients will react, they’re also struggling to stand out and win new business. Meanwhile, those same clients are overwhelmed by AI and actively looking for strategic agency partners they can trust — not just to “use AI,” but to help them leverage it wisely, protect their brand, and gain a competitive edge. Let’s unpack what’s going on — and see how savvy agencies can flip their fortunes from frustrating to flourishing. Agencies in the Trenches: The Core Struggle The Agency Core 2025 study gives us a data-backed look into the internal landscape of small to mid-sized agencies. Spoiler: the new business challenge is real — and it’s not just a temporary dry spell. The research includes an attitudinal segmentation that reveals five different “mindsets” of agency leaders. Two say their agencies are doing far better than those of their colleagues: Thought Leaders are agencies with a clearly defined niche, strong positioning, and a commitment to thought leadership. They’re not just surviving — they’re thriving. They’re not worried about the pipeline because they’ve built a brand that attracts the right kind of attention from the right kind of prospects, and those prospects come to them based on their expert reputation. These agencies struggle less with challenges, including new business, than any others in the survey. Loyalty Builders have robust, long-term relationships with their clients. They prioritize maintaining an expert reputation while deeply understanding what makes clients leave and ensuring their client communication and reporting underscores their value. The other three segments revealed have critical issues that make new business efforts (and agency survival) much more difficult. Staffing Strugglers wrestle with talent shortages that make it difficult to even pursue new business opportunities. They can’t afford the employees they really need, and are losing current members to agencies that pay more. They’re in a tailspin of less-experienced, overworked employees and price-focused clients. Change Seekers feel pressure to evolve in the face of a changing marketplace and new technologies, but are handicapped by their focus on tactical work over strategy, which they believe clients won’t pay for. 89% of these respondents strongly agree that finding new clients is harder than ever. Cobblers’ Kids know the importance of agency marketing, but never seem to get around to doing it. Their clients love them and stay loyal, but few prospects are aware of their strong track record so they’re limited to word of mouth from their existing client base. Without more exposure to ideal prospects, their pool of new sales is severely limited. While the other respondents don’t match the Change Seekers’ extreme struggles with new business, about one-third strongly agree that finding new clients is harder than ever, and 61% cite maintaining a robust prospect pipeline as a severe challenge. This makes pipeline the #1 challenge for agency leaders by a significant margin. For many agency leaders I know, this issue has led to a disheartening loss of optimism about their agencies’ prospects in the coming years. Again, the research confirms what many of us are feeling. In our 2022 Agency Core survey, 73% of agency leaders felt strongly optimistic about opportunities for their agency. In 2025, only 47% do — a shocking drop. The Disconnect Between Struggle and Opportunity This is where the Agency Edge 2025 study flips the script. It gives us the client perspective — and reveals a giant opportunity for agencies willing to claim it. Despite the fears of many agency leaders, most clients aren’t looking to cut agencies out. They’re not trying to replace us with AI or squeeze our margins. In fact, they want better ideas, better strategies, and more guidance from agencies they trust who are experts in AI. Across the board, clients say they value agencies that lead — that offer clarity, expertise, and partnership. Not just deliverables. Not just billable hours. Leadership. And when it comes to AI — the big, scary disruptor everyone’s whispering about — most clients don’t want to go it alone. They’re not looking to become prompt engineers. They’re worried about the potential for the use of AI to create issues for their brand or fall behind competitors using it well. They’re looking for partners who can help them understand what’s possible, what’s risky, and how to use AI to make smart marketing decisions. AI: The Trust Accelerator Agencies Didn’t See Coming Let’s talk about the three client mindsets that emerged in the AI-focused Agency Edge study: AI Embracers: These clients
