In a recent LinkedIn post, Lee McCabe argues that the significant job cuts and restructuring seen across major advertising holding companies are not solely due to the rise of Artificial Intelligence, but rather stem from a fundamentally flawed business model. McCabe contends that the traditional agency model, built on principles that are becoming increasingly obsolete, is the primary driver of these industry challenges.
McCabe highlights the scale of recent layoffs, noting that “WPP cut 9,000 jobs. Omnicom and IPG are smashing themselves together and still taking out thousands of roles. Dentsu cut 3,400. Havas is basically flat.” He contrasts this with the growth experienced by Publicis, which “added around 5,000 people.” This disparity, he suggests, should be a wake-up call for leadership in the holding company sector.
The Flaws in the Traditional Agency Model
The prevailing narrative attributing job losses to AI is, in McCabe’s view, an oversimplification. He states that AI is more accurately “exposing agency jobs that were only ever there because the model was bloated, manual, political and weirdly proud of being inefficient.” McCabe elaborates on the inefficiencies inherent in the old model, pointing out that many agencies continue to rely on outdated revenue streams.
Selling Hours Over Value
According to McCabe, a core issue is the continued emphasis on selling traditional services that no longer command the same client value. He lists these as “hours, theatre, decks, strategy days, workshops, alignment sessions and eleven people on a call saying ‘great build’ while one junior updates the spreadsheet.” This approach, he argues, is meeting diminishing returns as clients become less tolerant of such inefficiencies.
“Too many agencies still sell hours, theatre, decks, strategy days, workshops, alignment sessions and eleven people on a call saying “great build” while one junior updates the spreadsheet.”
Publicis as a Model for Change
McCabe identifies Publicis Groupe as an example of a holding company that has successfully navigated these challenges by fundamentally altering its business model. He asserts that Publicis “stopped behaving like a loose federation of logo farms and built around data, tech, identity, media and AI.” The strategic acquisitions of Epsilon and Sapient, which may have seemed costly at the time, are now presented as prescient moves.
Shifting Towards Infrastructure
The financial results reported by Publicis serve as evidence for McCabe’s argument. He notes that the company achieved “5.6% organic growth in 2025, 18.2% operating margin and over €2bn of free cash flow.” McCabe attributes this success to a business model that has evolved from being focused on “interpretive dance with a rate card” to operating more like essential infrastructure.
“That is what happens when the business model moves closer to infrastructure and further away from interpretive dance with a rate card.”
McCabe argues that the historical agency holding company model, which prioritized scale through headcount, physical offices, and procurement relationships, is now outdated. He posits that future success will belong to those who leverage AI to streamline production, integrate data with media execution, and directly link their work to measurable business outcomes.
“The winners will use AI to collapse production cycles, connect data to media, tie work to revenue and prove what actually moved the number.”
In contrast, McCabe concludes with a stark warning for those who fail to adapt:
“The losers will keep calling it ‘transformation’ while quietly firing another floor.”
His analysis suggests a critical juncture for the industry, where strategic adaptation of the core business model, rather than a mere acknowledgment of AI’s impact, will determine survival and success.
📝 About This Content
This article is based on insights shared by Lee McCabe on LinkedIn.
📅 Originally posted on June 22, 2026 | View original post on LinkedIn →