Unlocking AI’s Potential: Navigating Transparency and Compensation in Agency Relationships
Artificial Intelligence (AI) is rapidly reshaping the landscape of marketing and agency compensation, prompting large discussions about transparency, risk management, and strategic cost efficiencies. At the Women in Marketing Procurement Forum, on March 11th, 2025, an expert panel of professionals from different professions including procurement, legal, and creative agencies discussed actionable strategies for effectively managing AI within agency relationships. Panelists included Aaron Edwards, Founder and CEO of The Charles Group, Maria Overthrow, Director at RightSpend and Erika Auger, a senior associate in Media & Entertainment at ReedSmith. The panel was moderated by Libra Balian, Director, at AlixPartners.
While there were many areas of discussion, we have highlighted the most actionable take-ways here.
Transparency is Paramount
Maria Overthrow, Senior Client Services Director at Rights Spend, highlighted the current lack of proactive disclosure regarding AI use by agencies. She noted, “most marketing agencies are not proactively disclosing their AI development with brands. Roughly 50% of participants in our recent survey felt uncomfortable with the transparency levels.” Maria advised procurement professionals to take the initiative, urging them to “rather than waiting for agencies to volunteer information, start asking direct questions about their use of AI technologies”.
Aaron acknowledged this transparency gap but provided agency-side context: “Most small and mid-sized agencies are still in the nascent stages of leveraging AI. Big holding companies mainly discuss AI at an enterprise level, focusing on widely available platforms rather than proprietary AI.” His advice emphasized the importance of openly discussing how AI tools specifically influence cost and efficiency within project scopes.
Legal Risks and Safeguards
Erika Auger, Senior Associate at Reed Smith, emphasized the critical legal implications of AI, including intellectual property (IP) rights, confidentiality, data security, and reputational risks. “Agencies should absolutely disclose proposed AI use,” Erika advised. “Contractual protections should clearly outline AI usage and mandate that any AI-generated content undergo thorough human review to avoid potential legal pitfalls, such as copyright infringement or inadvertent bias.”
She elaborated on IP complexities: “AI-generated content presents nuanced ownership questions. Brands must clarify whether they can secure IP rights to AI outputs, which generally require a human element of authorship for protection.” Erika strongly recommended integrating detailed AI clauses into Master Service Agreements (MSAs) to explicitly manage these risks.
AI and Compensation Models
The panel explored how AI impacts agency compensation structures, revealing nuanced viewpoints. Maria noted that, for agencies effectively using AI, cost reductions should be expected: “Agencies successfully leveraging AI in workflows should experience reduced costs for similar output levels due to efficiencies. Yet, agencies typically avoid proposing these savings proactively.”
Aaron countered this perspective, highlighting complexities in creative processes: “Contrary to expectations, our initial experience with generative AI showed increased costs — up to five times traditional methods — because iterative processes require extensive human oversight to manage AI outputs effectively.”
To balance transparency with profitability, Aaron’s agency developed tiered pricing models: “We offer clearly differentiated pricing tiers — fully AI-generated, AI-assisted with human oversight, and fully human-crafted. Each tier has distinct pricing reflective of the time and expertise involved, ensuring transparency and fairness.”
Strategic Agency Negotiations
Aaron also emphasized strategic relationship management, encouraging procurement to view transparency as mutually beneficial. “Good agency partners openly disclose inefficiencies. If we have spare capacity, we proactively inform our clients and reallocate resources, ensuring value and sustained relationships,” he explains.
Maria supported this approach, underscoring procurement’s need for deep insights into agency operations: “You must thoroughly understand your agency landscape — staff roles, project scopes, and overheads. Knowing precisely where AI is applied enables more informed negotiations and realistic savings expectations.”
Future-Proofing Agency Partnerships
Looking ahead, panelists predict substantial changes. Aaron believes automation will have a more transformative impact than generative AI alone, explaining, “The real value in AI lies in automating administrative tasks, streamlining resource management, and improving operational efficiencies. Brands will increasingly use AI-driven insights to produce precise, performance-focused creative briefs.”
Maria agreed, recommending proactive establishment of internal AI committees that include procurement, legal, and marketing representatives: “An AI committee can create internal policies governing AI use, ensuring consistency, compliance, and maximized strategic value.”
Actionable Takeaways for Procurement Leaders
To effectively harness AI within agency relationships, the panel recommends these strategic actions:
- Demand Proactive Transparency: Regularly query agencies about AI usage and mandate detailed disclosures within your contracts.
- Incorporate Robust AI Clauses: Ensure MSAs explicitly outline AI use cases, IP ownership, human oversight, and liability terms.
- Understand Agency Overheads and Margins: Evaluate the impact of AI technologies on agency overhead to negotiate more informed compensation terms.
- Establish Internal AI Committees: Coordinate cross-functional teams to set company-wide AI usage policies, supporting strategic and consistent application.
- Differentiate Pricing Structures: Encourage agencies to adopt tiered pricing models reflecting varying levels of AI integration to maintain transparency and fairness.
End of Story: Embrace Transparency for Strategic Advantage
The future of AI in agency compensation hinges on proactive management, legal clarity, and strategic transparency. As Aaron succinctly advises, “Procurement must remain inquisitive and demand detailed transparency around AI applications. This ensures that AI’s potential translates into meaningful, strategic business value.”
