As Marketing Evolves, The Middle Layer Of Generalists Stands To Crumble

By Dan Kahn

If the world of marketing agencies were a cake, it would have three layers—the top, middle and bottom. At the top? Those that offer high-end, specialized strategic expertise and services. In the middle are those that offer more generalist marketing approaches. At the bottom are those that offer convenient, cost-conscious services.

There’s a time and place for all three types of marketing agencies. But I’ve observed that against the backdrop of increased AI and automation, marketing is rapidly evolving as an industry—and with that evolution, the middle layer of the cake stands to crumble.

Reasons Why Companies Usually Opt To Work With Marketing Agencies

To understand why the middle layer stands to crumble, it’s helpful to backtrack and focus on why many companies opt to hire marketing agencies in the first place, versus handling marketing in-house. In my experience, companies usually choose to work with marketing agencies for one of three reasons.

The first reason is cost-effectiveness and efficiency. If a small-to-medium-sized business wants to hire, say, a copywriter, videographer, graphic designer and publicist in-house, it could cost them half a million dollars a year in payroll. Then there’s the management side—the business’s leaders must form the right strategy, get the right technology, etc. On the flip side, by hiring an agency, companies can get access to a pool of experts for the cost of approximately one good hire.

The second reason I’ve seen is access to deep expertise. Many companies will hire a marketing agency because they want to work with specialists who are focused on a specific subject matter or type of marketing work, rather than work with generalists.

Finally, the third reason why companies tend to work with marketing agencies is that they need to form a substantive marketing strategy. In many cases, plug-and-play marketing tactics, like running ads in a few magazines and making a few tradeshow appearances, can only go so far for businesses.

Why The Middle Layer Of Generalists Stands To Crumble

The bottom layer of the cake (convenient, cost-conscious services) fits into the first reason (cost-effectiveness and efficiency) and can also fit into the second reason (deep expertise). The top layer of the cake (high-end, specialized strategic services) fits into the second and third reasons (deep expertise and forming a substantive marketing strategy). The middle can somewhat fit into the first and third reasons, depending on the situation, but not the second reason.

Research (paywalled) has shown that “consumers like extremes when options are nonaligned”—they “reflexively eliminate the middling options so they won’t kick themselves later.” This research aligns with what I’ve observed in the marketing world in recent years, which is that the middle layer is on the path to obsolescence. The increase in AI-powered tools has, in my view, hurt the middle layer. Many brands that were willing to pay for generalist marketing that checked off the standard boxes (such as SEO blog posts that touched on the basics of their industry and social media calendars filled with templated content) can now more or less achieve that generalist marketing on their own with AI. If they decide that they need extra help, I believe that they’re likely to either pay for high-end, specialized marketing services or convenient, cost-conscious services.

Strategy-Minded Marketing Agencies Stand The Greatest Chance Of Success

It’s an inflection point for marketing agencies. Marketing agency owners should decide whether they should move to the top or bottom layer of the cake. In my view, the days of being in the middle are numbered.

In terms of how to decide, if you’re an agency owner, start with your business model, identify who your customers are and figure out your margins. For instance, if you work with luxury brands, such as fashion and beauty companies, you’re better off in the top layer. If you work with more common service-based brands, such as plumbing and home repair companies, you’re better positioned in the bottom layer, delivering efficient, cost-conscious marketing solutions.

Additionally, moving forward, I predict that the marketing agencies that stand the greatest chance of success will be those that are strategy-minded versus production-minded. Whether you choose to operate in the top or bottom layer, put strategy first, then decide if you’re going to niche by subject matter or marketing specialty. For example, you could be a high-end, specialized marketing agency that only works with fashion and beauty companies, or you could be a high-end, specialized marketing agency that only focuses on social media marketing. Or if you run an agency that offers convenient, cost-conscious services, you could niche by only working with plumbing and home repair companies or only focusing on SEO marketing for small businesses.

As AI and automation continue to transform marketing, I urge marketing agency owners and other marketing professionals to get away from the middle. Being a generalist, in my view, is becoming increasingly risky in marketing. Finding a specialty and sticking with it can increase the chances of success.