Why the Gap Exists
The logic is simple. Buyers do not just pay for revenue; they pay for resilience and defensibility.
- Recurring revenue makes cash flow predictable.
- Leadership depth reduces dependency risk.
- Technology hardwires efficiency and creates moats that competitors cannot easily copy.
Agencies that build this foundation are not just delivering services; they’re running like platforms. That’s why they command premiums.
Data points back this up:
- In 2024, 77% of agencies adopted AI tools.
- However, the Boston Consulting Group found that 70% of AI implementations fail, typically due to weak processes, poor adoption, or leadership gaps.
- Global digital ad spend in the UK is expected to reach £45 billion by 2026, but most agencies will likely miss out on the premium because they treat AI as a bolt-on solution.
The winners aren’t the ones buying tools, they’re the ones embedding technology into delivery and culture.
Founder Pain: Where Most Get Stuck
Most founders know they need to adopt AI, but the pain arises when adoption stalls or backfires.
Chasing Trends Without Embedding Tech
Buying tools is easy; embedding them into delivery is hard. Agencies burn cash on subscriptions that sit unused because nobody knows how to operationalise them.
Experiment Without Process
We see agencies trialling AI in pockets of the business, but without a process backbone. It creates silos, not systems. Clients don’t feel the benefit, and efficiency gains never materialise.
Losing Pitches to Shops With Dashboards
Buyers and clients now expect data-driven delivery. If your competitor shows up with a proprietary dashboard and you show up with a PDF, you’re already priced down.
One founder told us they lost three RFPs in a row because their competitors had live data dashboards while they had static slides.
The Unusual Group’s Experience
We worked with a founder who trialled four AI tools, none of which stuck. Every experiment sat outside the core process. When we embedded automation into client reporting, adoption increased to 100%, efficiency improved by 28%, and client satisfaction scores rose significantly. Tools became transformation because they were operationalised.
The Contrarian Take: Tools ≠ Transformation
The market is full of noise about AI. But here’s the contrarian view: tools do not create transformation.
- Chatbots without process integration create noise.
- Automation scripts without leadership buy-in become abandoned projects.
- Shiny tools rolled out as gimmicks erode trust instead of building defensibility.
A fundamental transformation occurs when technology is integrated into workflows, culture, and delivery. That’s when it moves from gimmick to moat.
The AI Adoption Ladder
From our work with founders, we see agencies climb an adoption ladder, and where you sit determines your valuation trajectory.
Experimentation
AI is tested in silos (copywriting tools, chatbots, reporting assistants). Exciting at first, but fragmented. No client impact. No valuation premium.
Embedded
AI is integrated into one or two core processes (client reporting, forecasting). Teams adopt, efficiency gains appear, and clients notice. Margins expand.
Engineered
AI isn’t an add-on; it’s the operating system. Automation, dashboards, and proprietary IP are hardwired into delivery. Clients see measurable value. Investors see defensibility. This is where the 20%+ premium lives.
Self-assessment for founders: Are you experimenting, partially embedded, or fully engineered?
What Transformation Actually Looks Like
True AI transformation delivers three things:
Efficiency Gains
Technology reduces manual hours, freeing teams to focus on higher-value work. Our Phase 4 AI Transformation consistently delivers efficiency improvements of 30% or more within ten weeks.
Margin Expansion
Every efficiency gain passes directly to the bottom line. In an industry where procurement pressure has squeezed margins to 16%, AI can help agencies return to the 20–22% range. Buyers reward that expansion with higher multiples.
Defensibility
Proprietary dashboards, data pipelines, and integrated AI tools create switching costs. Clients stay because leaving means losing access to the unique IP.
Case in point: A paid media agency we advised built a proprietary AI-powered forecasting tool. It didn’t replace strategists; it amplified them. Win rates rose 35%, client tenure extended from 14 months to 26, and buyers valued them as a platform, not just another shop.
Case Contrast: Fragile vs AI-Enabled Agencies
Metric / Fragile Service Shop / AI-Enabled Agency
Revenue / £5m / £5m
Retainer Revenue / 20% / 65%
EBITDA Margin / 16% / 22%
Client Tenure / 12 months / 24 months
Valuation Multiple / 9–10x / 12–15x
Investor View / Risky, replaceable / Defensible, inevitable
Same size. Same market. One priced down, the other priced up. Infrastructure and AI made the difference.
The Unusual Group Lens: Hardwiring AI the Right Way
At The Unusual Group, we’ve seen both sides: the AI experiments that fizzle, and the transformations that multiply value. That’s why we codified it into Phase 4 of the Unusual Method™.
Our lens is simple:
- Embed AI into core workflows, not as side projects. Reporting, forecasting, creative iteration, places teams and clients feel it.
- Design for adoption, not novelty. Technology must be intuitive for teams, visible to clients, and embedded into culture.
- Measure by efficiency and margin. If it doesn’t shift operating metrics by double digits, it’s noise.
And here’s the difference: while most PE firms bolt tech on after an acquisition, we hardwire it years before an exit. That’s why valuation gaps open up.
Why This Gap Will Only Widen by 2026
The AI premium isn’t static; it’s compounding.
- Client demand: CMOs now expect data transparency to be the standard. If you can’t provide it, you won’t even be in the room.
- Investor diligence: Buyers are running AI/data audits in diligence. Weak integration is already priced down.
- Market polarisation: Holding companies are shedding staff while tech-enabled independents are gaining share.
- Procurement pressure: Buyers are benchmarking efficiency as a prerequisite, not a differentiator. Agencies without hard evidence of efficiency will be squeezed out.
By 2026, agencies that still look like service shops won’t just be discounted. They’ll struggle to be valued at all.
FAQs
The 20% premium for AI-enabled agencies isn’t about hype. It’s about survival.
Tools don’t create transformation. Embedded technology does. Agencies that hardwire AI into their processes expand margins, deepen defensibility, and command valuations buyers cannot ignore.
As Luke Tobin puts it:
“The gap between service shops and platforms isn’t 20%. It is survival versus irrelevance.”
Benchmark yourself: take The Unusual Group’s Exit Readiness Assessment or book a confidential conversation about embedding AI transformation into your agency.
