Why Agencies Are Really Cutting People (And It Has Nothing To Do With AI)

The oldest story in the industry is happening again. Clients stopped spending. Agencies cut people. AI just took the blame.

Agencies are not cutting people because of AI.

I wanted to understand the real reason. So I did some digging with an LLM.

One of the biggest holding companies saw its stock fall to its lowest point since 2009. Not because of a bad campaign. Because clients pulled assignments and cut budgets across the board.

When clients cut budgets agencies cut people.

That is not an AI story. That is the oldest story in the industry.

But here is what gets buried in the headline.

The people being cut are the planners. The strategists. The ones trained to observe human behavior and translate it into work that moves people. They are not being automated. They are being defunded.

OpenAI’s own CEO said it directly. There is AI washing happening. Companies blaming AI for cuts they would have made anyway.

So before the industry blames the technology, the more honest question is this.

When did we stop asking why clients stopped believing in the work?

Q: Why are agencies really cutting people in 2025? Client budgets contracted. The traditional holding company revenue model built on media markup and production margins had already collapsed. AI became the better story to tell investors.

Q: Is AI causing advertising layoffs? Gartner surveyed 350 enterprises and found no correlation between AI-driven cuts and better returns. The cuts were happening regardless.

Q: What is AI washing? Companies attributing layoffs to AI transformation when the real drivers are revenue pressure and structural business model failure.

Sources: WPP Annual Report 2025 · Gartner Q3 2025 · Georgetown University / WSJ

Frederick Tadeo is a Dubai-based GenAI Creative Lead with 20+ years of digital experience across Leo Burnett, Publicis, and global brands. Through STIRMIND, his creative platform since 2004, he publishes GenAI workflows and breakdowns for creatives who want to move from concept to final output with clarity and control. stirmind.com

Advertising #AgencyLife #HoldingCompanies #ClientRelationships #CreativeIndustry #MarketingStrategy #AdSpend #AgencyModel #FutureOfWork #BrandStrategy #CreativeStrategy #BusinessOfCreativity #MarketingLeadership #ThoughtLeadership #STIRMIND