What the History of Ad Agencies Tells Us About CMO Power: Order-Takers to Strategic Partners—and Back Again

A love story older than television.

The tension between CMOs and advertising agencies didn’t start with AI, procurement, or any media disruption. And history makes one thing clear: agencies only gain power when CMOs don’t—or can’t—fully exercise theirs. It’s embedded in the very origin of the advertising agency itself. To understand today’s agency–CMO power dynamics, you must look at how agencies have repeatedly risen—and fallen—based on where strategic authority sits inside a business.

Agencies Were Never Born to Lead

The first advertising agencies weren’t strategists or storytellers. They were brokers— “middlemen” reselling newspaper space. Their value came from access, not insight. Strategy lived with the advertiser. Agencies executed what brands decided.

That origin story matters; it reveals a truth many agencies still resist; authority has never belonged to them. The advertiser defined the message. The agency placed it. Meanwhile CMOs begin to succumb to the next wave of change.

The Creative Revolution Was the Exception, Not the Rule

In the 1950s and 1960s, the Creative Revolution briefly flipped the power dynamic. Agencies didn’t just run campaigns; they shaped brands, culture, and meaning. Creativity became strategy. Brand voice became cultural currency.

But this moment coincided with a weaker, less analytical corporate marketing function. CMOs lacked data, attribution, and operational leverage. Agencies filled the void.

That time wasn’t Agency or CMO destiny. It was a moment.

Accountability Changed Everything

From the 1980s onward, marketing matured. CMOs were expected to prove impact, manage complex channels, and justify spend to CEOs and CFOs. Data, technology, and governance moved inside the enterprise.

Agencies struggled to follow. Creative excellence no longer equaled strategic authority. The commission model collapsed. Performance mattered more than persuasion…accept when it didn’t.

Digital Fractured the Agency Value Proposition.

The digital era didn’t break agency value; it shattered it. Search, social, commerce, experience design, martech consulting—each demanded specialization that agencies either didn’t possess or wouldn’t embrace. CMOs responded by spreading work across rosters of agencies, platforms, consultants, and internal teams. Suddenly, CMO control increased, coherence suffered and creativity was at risk.

CMOs now controlled more than ever but were drowning in complexity they never intended to manage alone. That power imbalance promising to command brand excellence and cost efficiency—became a bust for some and burden to most. Instead of a recalibrating the relationship, CMOs tightly held authority while agencies absorbed complexity, risk, and integration burden. Now, AI exasperates an already existing problem – cloaked as a hero.

AI Is Forcing A Reckoning on Both Sides

The relentless drama to do more with less continues. But now access to large language models (LLMs), diffusion models, and transformer architectures with the magical capability to “create” is accelerating a long‑running reckoning that’s been building for decades.

For CMOs, AI promises efficiency, scale, and personalization—but also introduces unprecedented levels of complexity across experience design, data governance, and brand integrity.

For agencies, AI threatens commoditization of execution and the overall marketing value chain—but reopens the door to strategic relevance.

Here’s the rub: agencies have never been most valuable for owning the execution. Their rare moments of influence came when they helped CMOs make sense of disruptive change—when they restored clarity while internal systems broke down.

That’s exactly the moment we’re in now. AI has literally and irreversibly changed how consumers consume, how CMOs deliver and how agencies advise.

The New Power Equation Is About Sense‑Making.

The modern CMO has more authority than ever—yet less clarity. They control spend, data, and decisions, but still operate to unobtainable expectation inside tangled ecosystems of platforms, partners, and technologies.

CMOs don’t need agencies to generate more stuff. They need help answering harder questions:

How does discoverability and influence change in the AI era?
How does AI change brand integrity at scale?
How do experience, commerce, service, and loyalty reconnect?
Where should humans still decide—and why?

Agencies that can frame these questions, not just execute answers, will regain influence. Not supremacy. Influence. This isn’t a return to the Mad Men era. Power will not swing back to agencies wholesale. But influence can—if agencies stop selling outputs and start restoring coherence.

This Historical Lesson Is Unforgiving

Every time marketing enters a period of structural change, the agency’s role is renegotiated. Those that survive do so by aligning with the CMO’s real problems at that moment—not by defending old models.

Today’s agency–CMO dynamic isn’t broken. It’s unfinished.

CMOs still lead this dance. But the agencies willing to challenge, simplify, and re‑architect how marketing actually works in an AI-shaped world may once again shape decisions—not just receive them—partners helping to make sense of it all.

History says that door only opens briefly.

Stay tune for our new report, “The Future of The Agency”. Jay Pattisall and Keith Johnston will see you in June for its debut at Cannes Lions, which promises to be the most pivotal turn in a storied relationship.