The news: AI is reshaping the future of work at agencies, from reducing junior roles to cutting down on hiring altogether.

• 91% US senior agency leaders expect AI to reduce agency headcounts, per Sunup’s AI’s Effect on the Marketing Industry report. All of their agencies are using AI in some capacity.
• Over half (57%) of agencies have slowed or paused entry-level hiring, and 59% of marketing-specific agencies plan significant headcount reductions in the next three years. By contrast, only 21% of creative and branding-focused agencies expect headcount reduction.

The use cases: Agencies are using AI for everything from basic design and image generation to higher-level tasks like performance optimization and upskilling workers.

• On average, agencies say their AI tools for media pitching, media planning, training employees, and creative direction perform at the maturity of a mid-level professional.
• AI applications in strategic planning, sales pitch development, and research analysis remain closer to an entry-level stage.

But agencies aren’t done exploring yet: Three-quarters are looking to hire for AI-skilled roles that “blend creative and technical depth.”

The risk: As AI takes over entry-level work, agencies and brands may shrink the pipeline of young talent that can fuel company growth and add diversity of thought and knowledge to teams.

Workers ages 20 to 24 made up just 6.5% of advertising, PR, and related services jobs in the US last year—the lowest share since 2020 and down from 10.5% in 2019, per US Census Bureau and Department of Labor Statistics data cited by Adweek.

What agencies should do: Using AI for content creation, market research, media planning, and upskilling presents notable opportunities for cost savings and productivity. But if agencies lean too heavily on automation, they could erode the creativity, expertise, and human oversight that clients pay for and lead those clients to do that work in-house.

To maintain value in the AI era, agencies should protect and cultivate talent pipelines and use AI to deepen offerings like audience insights and personalized campaign plans, which automation alone can’t replicate.