Why Small Agencies Are Winning in the Age of AI

The Limits of Scale

In a 2012 interview with Fast Company, Bob Greenberg, founder of R/GA and a pioneer of the digital agency model, made a simple observation: once an organization grows beyond roughly 200 people, maintaining a creative culture becomes extremely difficult.

Greenberg’s observation aligns with Dunbar’s number, the idea that a human can maintain stable working relationships with an average of 150 people. Beyond that point, communication becomes more formal, collaboration slows, and the intimacy that fuels creativity begins to fade.

It’s a deceptively simple idea, but one that runs counter to how the advertising industry has spent the past four decades organizing itself.

The Holding Company Era

Beginning in the late 1970s and early 1980s, the established agencies of the day began acquiring competitors and expanding internationally to serve multinational clients, evolving into global networks operating under corporate holding companies.

Today networks like WPP, Publicis Groupe, Omnicom Group, and Dentsu oversee vast portfolios of agencies across dozens of markets. But scale comes with tradeoffs. Publicly traded holding companies operate under constant pressure to deliver predictable financial results. Quarterly earnings and margin expansion are existential priorities, and that pressure inevitably flows throughout the organization.

Profitability and billability dominate decision-making. Restructuring becomes routine. Agencies merge, rebrand, or disappear as portfolios are reorganized to improve financial performance.

When Profit Becomes the Product

In a holding company environment, investing deeply in talent and long-term creative development becomes increasingly difficult.

Clients experience this dynamic firsthand. The pitch meeting features the agency’s most senior strategists and creatives, presenting bold ideas and sharp thinking. But once the business is awarded, most of the day-to-day execution falls to more junior staff. The result is slower execution, heavier process, and far less appetite for creative risk. It’s simply the economic structure of large agencies, where maintaining margins requires staffing projects in ways that balance cost and billability.

For years, the industry largely accepted this model. If you were a large brand, the assumption was that you needed a large agency. The cost and complexity were simply part of the equation. But that assumption is now starting to break down.

AI Levels the Playing Field

For decades, pursuing new business at a large agency could easily cost hundreds of thousands of dollars. Developing concepts, producing prototypes, and assembling a pitch required enormous internal resources.

AI tools have dramatically reduced those costs. Small teams can ideate, prototype, and visualize ideas at a speed that once required an entire production department. Work that previously demanded large teams can now be explored by a handful of experienced creatives using the right technology.

Rather than replacing agencies, these tools are quietly leveling the playing field between global networks and smaller teams. The advantage increasingly belongs to nimble groups that can move quickly, experiment freely, and focus on delivering strong ideas instead of navigating complex internal structures.

AI is also reshaping the value of experience. While tools like Nano Banana or Midjourney can generate imagery, code, and content at remarkable speed, producing meaningful results still depends on judgment, taste, and strategic thinking. Give the same brief and the same AI tools to a designer with ten years of experience and one with twenty-five, and the difference in direction and output can be striking.

In an industry long shaped by the belief that larger teams and younger talent represented the future, the age of AI may be quietly reaffirming the value of senior expertise.

A Return to Smaller Creative Teams

The advertising industry has spent decades building ever larger organizations. But as technology changes how creative work gets done, the advantages of scale are beginning to shift.

As veterans of large agencies ourselves, we know the amount of new business we were able to pursue and win in 2025 would have been impossible even a few years ago. AI tools have dramatically reduced the time and resources required to explore ideas, prototype concepts, and present work to prospective clients.

They’ve also allowed smaller teams like ours to staff projects with highly experienced talent across strategy, design, and technology.

Being small also gives us the freedom to take risks. We can partner with companies we believe in, even when the immediate margins are smaller, because we’re thinking about long-term outcomes rather than quarterly revenue targets. And we can experiment with new tools and creative approaches that might be harder to justify inside large agency structures.

Most importantly, the same senior people shaping the strategy are the ones doing the work.

In many ways, the industry may simply be rediscovering something it once understood well: the most interesting creative work often comes from small groups of highly experienced people working closely together.

Bob Greenberg recognized the limits of scale inside creative organizations more than a decade ago. At the time, the industry was racing toward consolidation. Today, new technology is quietly making it possible to move in the opposite direction. Small teams with the right experience and the right tools can now compete with organizations many times their size, moving faster, taking creative risks, and staying closely connected to the clients they serve.

For an industry that once equated scale with capability, that shift may prove to be one of the most important changes yet.