The Entertainment Pivot: Why Agencies Are Trading Ad Briefs for IP Ownership

The traditional advertising agency model—built on the pillars of billable hours, procurement-led fee structures, and campaign-based cycles—is facing an existential crisis. As AI commoditizes production and performance marketing reaches a point of diminishing returns, a new breed of creative leadership is looking toward an unlikely savior: the entertainment industry.

From independent shops like Ralph to established players like Elvis, agencies are actively pivoting away from being mere service providers. Instead, they are evolving into IP-owning entertainment studios. The objective is clear: to move from being a cost center on a client’s balance sheet to an asset-generating partner that builds audiences, owns distribution, and creates "fun worth finding."

The Genesis of the Pivot: Moving Beyond "Work-for-Hire"

For Chris Hassell, who launched the independent agency Ralph fifteen years ago, the realization was visceral. "You can’t performance-market your way to a hit," Hassell argues. After years of running a shop focused on traditional advertising, he concluded that the one thing procurement, automation, and AI cannot replicate is the messy, human-centric art of entertainment.

Hassell’s response to the agency stagnation is "Ralph," a multifaceted business that is intentionally blurring the lines between agency, production house, and media owner. Ralph is currently developing a TV channel, a magazine, a podcast in partnership with Time Out, and a "labs" division. By developing intellectual property (IP) across comedy, music, and lifestyle sectors, Ralph is positioning itself to derive revenue from licensing, merchandising, and distribution, rather than relying solely on the volatile cycles of client briefs.

This shift is not merely cosmetic. It represents a fundamental change in the business model. "If your business model is still aiming to be fee-based," Hassell says, "you’re not really approaching it wholeheartedly."

Chronology of a Shift: From Analog to Entertainment

The evolution of the agency model has been a long, often painful, migration:

• 2010–2015: The Digital Awakening. Agencies focused on scaling social media reach and optimizing display campaigns. The goal was volume: more impressions, more clicks, more frequency.
• 2016–2020: The Procurement Trap. As brands sought efficiency, advertising creativity was increasingly treated as a line item. Procurement departments standardized creative output, leading to the "sameness" that plagues modern brand identity.
• 2021–2024: The AI Disruption. The rise of generative AI commoditized the "execution" of ads, making standard production cheaper but less distinctive. Agencies were forced to justify their existence beyond just "making stuff."
• 2025–Present: The Entertainment-First Era. Agencies like Small World (launched 2021) and the newly restructured Elvis are betting that the only way to escape the "race to the bottom" is to create content that consumers actually want to spend time with—not just tolerate during a commercial break.

The Case Study: Small World and "Entertainment-First" Creativity

Dan Salkey and Harvey Austin, founders of Small World, have built their reputation on what they term "entertainment-first creativity." Their work with U.S. retailer Hot Topic is a definitive blueprint for this new model.

Facing a decline in relevance with Gen Z, Hot Topic didn’t commission a traditional ad campaign. Instead, Small World assembled a writers’ room featuring five creator-writers and a showrunner. They produced a social-first, serialized sitcom. The results were not just vanity metrics; they were bottom-line drivers. Viewers of the content were 16% more likely to visit a store and 12% more likely to purchase online. Most importantly, the brand’s "cool factor" increased by 6%. The series was so successful that it was commissioned for five additional seasons, transforming the agency’s output into a long-term property rather than a one-off project.

Structural Challenges and Internal Calibration

The transition to an entertainment-first model is not without friction. For agencies, it requires a complete overhaul of internal architecture.

Claire Prince, who recently joined the London creative agency Elvis as head of entertainment, notes that the shift is as much structural as it is creative. "Staying as a traditional advertising agency means you’re just going to get smaller," Prince says.

To pivot, Elvis is changing its production partner roster. Instead of leaning on traditional production houses (Stink, Pulse), they are engaging with entities like Banijay and Fremantle. This changes everything from how a strategist drafts a brief to how the creative team leads a project.

The primary hurdle remains the sales cycle. While brands like SharkNinja and JD Sports are comfortable running entire annual marketing slates through social-first series, others remain tethered to the slow, bureaucratic process of traditional greenlighting. As Prince observes, the success of these models often hinges on the individual CMO—do they possess the vision to champion a multi-month entertainment project, or are they trapped by quarterly P&L reporting?

Supporting Data: Why the Machine is Breaking

The shift is driven by a stark reality: the old "reach and frequency" machine is failing.

• The Attention Economy: According to recent data, YouTube has overtaken Netflix in average daily viewing time across 20 global markets (99.1 minutes vs 93.4 minutes). This signals that the future of content is not long-form, polished, and expensive—it is creator-led and platform-native.
• The Micro-Drama Boom: The rise of serialised, sub-two-minute "microdramas" on platforms like ReelShort is projected to reach $3.8 billion in U.S. revenue by 2030. Brands are now looking to capitalize on this, though experts warn that the format only rewards brands that commit to the narrative, rather than those who treat it as a trend-chasing billboard.
• Procurement Pushback: Even as agencies attempt to move toward asset-based pricing—where clients pay for the value of the asset rather than the hours spent—procurement departments remain the primary barrier. They prefer the "apples-to-apples" comparison of traditional fee structures, which discourages innovation.

Official Responses and Strategic Implications

The industry is currently in a state of "transitional anxiety." While agencies are hiring heads of entertainment and building labs, the proof-of-work is still being established.

Scott Spirit, chief growth officer at S4Capital, recently highlighted the movement toward asset-based pricing, noting that while the industry is moving in that direction, the friction with procurement is significant. "I think this is very much the way the agency landscape will work," Spirit noted.

For agencies, the implications are profound:

1. From "Client" to "Partner": Agencies are no longer looking for budget-holders; they are looking for partner brands that will co-invest in IP.
2. Succession Planning: As creator-led collectives and agencies mature, they face the same challenges as any startup—governance, equity, and IP rights. The departure of key creators (like KSI from the Sidemen) serves as a warning that these new businesses need professional management structures.
3. Human-Led Creativity as a Premium: In a world flooded with AI-generated content, the value of human-led, narrative-driven creativity has paradoxically increased. The agency of the future will be the one that can harness AI for efficiency while keeping human talent at the helm of the creative vision.

Conclusion: The New Definition of "Agency"

The era of the "advertising agency" as we knew it—a factory for ads—is ending. In its place, we are seeing the rise of the "entertainment studio." Whether it is Ralph’s magazine and TV channel, or Small World’s writers’ room, the common denominator is a refusal to compete on volume.

The industry has spent the last decade making itself cheaper, faster, and more automated. In doing so, it nearly forgot its original purpose: to capture attention. By pivoting toward entertainment, agencies are not just chasing a new revenue stream; they are reclaiming their role as architects of culture. As Hassell puts it, "I refuse to believe that people don’t want human-led creativity." For those willing to do the hard work of building audiences and IP, the runway ahead is long. For those who stay the course of the traditional agency, the path is likely to be a slow, steady decline.