Lina Irawan
The advertising industry is currently undergoing a structural identity crisis. For over a decade, agencies have been squeezed by the dual pressures of procurement-led cost-cutting and the relentless march of AI-driven production. Now, a growing cohort of creative shops is betting that the only way to survive is to abandon the traditional "service provider" model entirely, opting instead to become producers, publishers, and intellectual property (IP) owners.
The Death of the "Work-for-Hire" Monoculture
Chris Hassell, founder of the independent creative shop Ralph, spent 15 years navigating the realities of the agency world before reaching a stark conclusion: the traditional agency model is fundamentally at odds with the creation of lasting cultural impact.
"Entertainment is the one part of the creative business that can’t be procured, optimized, or automated," Hassell argues. His perspective is shared by an increasing number of industry leaders who believe that while AI can churn out functional assets for a display campaign, it cannot build the long-term emotional resonance required for a genuine entertainment property.
Ralph is currently in the midst of a bold transition. The agency is no longer just pitching for briefs; it is building a media ecosystem. With a magazine, a collaborative podcast series with Time Out, a dedicated TV channel, and a research-focused "Labs" division, Ralph is positioning itself as a creator of IP across comedy, music, and food. The firm is currently in production on a cartoon for a major network and is finalizing a deal to revive a legacy children’s brand—a move that signals a departure from the "fee-for-service" grind toward a model built on royalties, merchandising, and distribution.
Chronology: A Shift in Creative Philosophy
The movement toward "entertainment-first" creativity didn’t happen overnight. It is the result of years of industry erosion.
- 2010–2015: The "Efficiency Era." Agencies consolidated under massive holding companies, focusing on global scale and procurement-friendly workflows. Creativity was increasingly treated as a line item to be optimized.
- 2016–2020: The "Platform Squeeze." As social media platforms began charging for reach, the ROI on standard creative assets plummeted. Brands began to demand "social-first" content, but agencies often delivered repurposed TV commercials, leading to a disconnect with audiences.
- 2021–2023: The "Creator & IP Awakening." Agencies like Small World launched, formalizing the concept of putting creators in the writer’s room. Brands like Hot Topic saw success by moving away from traditional ads toward serialized, scripted sitcom-style social content.
- 2024–Present: The "Ownership Pivot." Leading agencies are now actively developing their own intellectual property. The goal is no longer to be the vendor, but to be the studio.
Supporting Data: Why Entertainment Wins
The numbers behind this shift are compelling. When agencies move away from standard retail content, the engagement metrics speak for themselves.
For the U.S. retailer Hot Topic, the creative agency Small World abandoned traditional advertising in favor of a "writers’ room" approach. They assembled a team of creator-writers to produce a scripted sitcom series on social platforms. The results were quantifiable:
- 16% increase in store visits compared to control groups.
- 12% higher likelihood of online purchase.
- 6% increase in brand sentiment (viewers perceived the brand as "cooler").
Similarly, the industry is seeing a seismic shift in how content is consumed. According to recent data, YouTube has officially overtaken Netflix in average daily viewing time across 20 global markets (99.1 minutes vs. 93.4 minutes). This shift confirms that audiences are increasingly moving toward fragmented, creator-led entertainment—a space where traditional ad agencies have historically struggled to compete.
The Agency Perspective: Structural Evolution
It is not just small, agile shops making the move. Larger agencies are also scrambling to adjust their DNA. London-based agency Elvis recently appointed a head of entertainment, Claire Prince, to oversee this transition. Prince, who brings a background in TV development, notes that for agencies, the choice is binary: "Staying as a traditional advertising agency means you’re just going to get smaller."
For Elvis, the change is operational. They are moving away from traditional production partners—replacing standard ad production houses with entertainment-focused entities like Banijay and Fremantle. This forces a change in the internal agency workflow: strategists must think like showrunners, and creative briefs are being replaced by content roadmaps.
However, the transition is not without friction. "Some brands get there quickly," Prince explains. "Others take the better part of a year just to greenlight a single project. The difference is rarely the brand. It’s the person at the brand—whether the CMO understands the value of it enough to champion it internally."
The Economic Implications: A New Commercial Model
The most significant hurdle remains the commercial model. Most agencies are built to trade time for money. Entertainment, by contrast, is a long-term capital investment.
Breaking the Procurement Cycle
Scott Spirit, chief growth officer at S4Capital, highlights that the industry is slowly moving toward "asset-based pricing"—where clients pay for the value of an asset rather than the hours clocked. While procurement departments often resist these changes because they prefer "apples-to-apples" cost comparisons, the shift is inevitable.
The "Partner, Not Client" Strategy
Chris Hassell of Ralph is clear: he isn’t looking for clients to fund projects; he is looking for partners to build them with. By creating investment vehicles, Ralph allows brands to share in the long-term upside of IP.
"If your business model is still aiming to be fee-based," Hassell states, "you’re not really approaching it wholeheartedly." By moving toward a model based on brand partnerships, direct subscriptions, and product sales, agencies are attempting to decouple their revenue from the volatile and shrinking budgets of traditional media spend.
Future Outlook: The "Transitional Species"
As the industry looks toward the next five years, the role of the traditional agency is destined to continue its decline. AI is rapidly handling the "execution" of standard creative, meaning agencies that rely on volume-based output will find themselves obsolete.
The "Chief AI Officer" role, currently a hot trend, is already being viewed as a "transitional species" by industry analysts—a temporary fix until AI becomes a background utility rather than a strategic focus. The real growth lies in human-led creativity that is distributed through entertainment channels.
The challenge for these agencies is immense. They must prove they can produce "fun worth finding" at a scale that satisfies both brand partners and audiences. While the path from "ad agency" to "entertainment studio" is paved with risk, the alternative—a slow, steady decline into becoming a low-margin commodity—is a future that few in the industry are willing to accept.
For brands, the message is clear: if you want to capture the attention of a distracted generation, you cannot simply buy their time. You must earn it. And as the most forward-thinking agencies are realizing, the only way to earn that time is to stop being an advertiser and start being an entertainer.
Nana Wu
Nana Muazin
