Agency Business #47: Fixing agency productivity in the age of AI, with Michael Farmer
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Nov 17, 2025 Michael Farmer, a consultant and author with 30 years in agency economics, shares his insights on productivity challenges in agencies. He discusses how measuring work is crucial to understanding profitability and highlights the impact of excess staffing and rework. Farmer predicts AI could enhance creative productivity significantly but warns it might lead to fee compression. He emphasizes the need for agencies to reinvest AI savings into senior talent and calls for a focus on strategic growth rather than just creativity.
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Factory Analysis That Transformed Ogilvy
- Michael Farmer recounts treating Ogilvy like a factory to measure outputs, productivity, and profitability across price, productivity, and profitability.
- That work revealed excess teams and led Mike Walsh to limit briefs to one creative team, boosting profits from 5% to 14% overnight.
Digital Increased Workloads As Fees Fell
- Digital and social sharply increased agency workloads while client budgets stagnated.
- Agencies faced declining fees and rising work because they rarely measure workload, so the strain went unnoticed.
Toyota Case: Efficiency Funded Digital Build
- Farmer describes a Toyota–Saatchi case where efficiency gains freed resources to build digital capability.
- They found 30% efficiencies and used savings to hire digital talent, enabling much greater output later.
