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Are agencies becoming obsolete? We don't think so. However, the traditional agency model isn't just evolving, it's breaking. Today's featured guest believes the core of every business is dying and that agencies that want to adapt and win need to adopt the mindset of rebuilders.

He shares why agencies have been in decline for over two decades and what it actually takes to rebuild a business that survives AI, commoditization, and shifting client expectations.

Tactics alone won't help because, at its core, this shift is about identity, positioning, and stepping into a new role as someone who doesn't cling to the old model but actively creates the next one.

Jonathan Lewis is the President of McKee Wallwork, a brand strategy and implementation firm. Starting as an unpaid intern, Jonathan worked his way up to eventually acquiring the agency from its founders.

Over the past decade, he's led the firm through a major repositioning, moving away from traditional agency work toward upstream strategic advisory. His perspective is shaped by firsthand experience navigating succession, industry decline, and the current AI-driven disruption.

In this episode, we'll discuss:

The declining agency model
Why identity is the real problem
Moving upstream
The rebuilder mindset

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Sponsors and Resources

E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design and development agency that has provided white-label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service.

Toggl: Most agencies are losing 15–30% of their profit every year: lack of time tracking, messy manual timesheets, scope creep, untracked revisions, and all those "quick" client requests that never get billed. Toggl has created a fast, interactive way to uncover exactly where your margins are leaking. Start your investigation now at toggl.com/smartagency and use the code SMARTAGENCY10 at checkout for a 10% off annual plans.

The Agency Model Has Been in Decline for Years

Most agency owners think the pressure they're feeling is recent, but it's not.

Jonathan makes a strong case that the traditional agency model has been declining since the early 2000s, starting with the collapse of mass media dominance and accelerating through the rise of the internet, social media, and now AI. The old model was simple: control distribution, create decent creative, and scale results through reach.

That model is gone.

Today, agencies are fighting for perceived value in a world where clients question everything: speed, cost, necessity, and even whether they need an agency at all. This shows up in commoditized RFPs, price pressure, and constant comparison to cheaper or faster alternatives.

The frustration many founders feel isn't personal failure; it's structural misalignment. They're trying to win using a model that no longer works the way it used to.

The Real Problem Isn't AI, It's Identity

A lot of agency owners are blaming AI for the disruption.

That's not the real issue.

The deeper problem is identity.

Most agencies are built by craftspeople, designers, developers, media buyers who tie their value to the tools they use. When those tools become automated or commoditized, it creates an identity crisis.

If your value is "I build websites" or "I run ads," you're in trouble.

Because now those things can be done faster, cheaper, and in some cases better, without you.

Your value is not the tool. Your value is the thinking before and after the tool, the judgment, the strategy, the ability to define what should be built and why.

Moving Upstream: From Execution to Worldview

In 2018, Jonathan and his team made a critical shift.

They stopped trying to compete on execution and moved upstream into strategy, specifically, helping clients define their worldview.

This is where things get interesting.

AI can generate outputs. It can execute tasks. But it still depends on inputs, the prompt, the context, the perspective.

That's where agencies have leverage.

Instead of being the ones producing deliverables, they became the ones shaping direction. Helping clients answer:

Who are we?
What do we stand for?
Who are we actually trying to reach?
What matters most?

From there, everything downstream becomes easier, whether it's done by internal teams, AI, or external vendors.

This shift moves the agency from vendor to strategic partner.

And more importantly, it removes them from the commodity trap.

AI Is a Multiplier, Not a Replacement

Jonathan takes a grounded view of AI.

AI increases productivity dramatically. But historically, when something becomes more accessible, demand increases. Lower cost per unit doesn't eliminate demand; it expands it.

The opportunity isn't in resisting AI.

It's in integrating it while strengthening the human layer around it.

You can use AI to analyze markets, generate insights, and accelerate content creation, not to replace thinking, but to enhance it.

The real advantage comes from combining:

Pattern recognition (AI)
Judgment (human)
Perspective (worldview)

Agencies that only use AI for execution will get commoditized.

Agencies that use AI to amplify strategic thinking will gain leverage.

The "Rebuilder" Mindset

Jonathan wrote a book around the idea of becoming a "rebuilder" because that's how he sees people getting through these times of reckoning in the business.

Every major shift, from the internet, social media, COVID, and AI, breaks existing models. Most people respond by resisting, waiting, or reacting.

Rebuilders do something different.

They accept that the old model is broken and take responsibility for creating the next one.

That means:

Rethinking how you create value
Redefining your role in the business
Rebuilding your offer, positioning, and delivery model
Leading your team through uncertainty instead of avoiding it

It's ownership at a different level.

And it's the difference between agencies that survive disruption and those that disappear with it.

Do You Want to Transform Your Agency from a Liability to an Asset?

Looking to dig deeper into your agency's potential? Check out our Agency Bluepri nt. Designed for agency owners like you, our Agency Blueprint helps you uncover growth opportunities, tackle obstacles, and craft a customized blueprint for your agency's success.

The Identity Crisis Killing Agencies (And How to Rebuild Before It's Too Late) With Jonathan Lewis | Ep #985

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The Identity Crisis Killing Agencies (And How to Rebuild Before It's Too Late) With Jonathan Lewis | Ep #985