Artificial intelligence is beginning to reshape the advertising industry’s traditional agency retainer model as brands increasingly use the technology to create, adapt, review and publish large volumes of content in-house.
The shift is putting pressure on recurring production work and pushing agencies to compete more heavily on ideas, strategy and client relationships.
AI Takes Over More Routine Advertising Work
Creative and content generation has emerged as the most evolved AI use case among Indian marketers, according to a 2026 study cited in the report. The growing use of AI means parts of the advertising workflow that once required substantial agency involvement can now be automated.
These tasks include producing multiple versions of advertisements, adapting content for different platforms and markets, creating social media assets and making performance-led changes. Such work has traditionally formed a significant part of the recurring business handled by advertising agencies.
The report also noted that as much as 15 per cent of unfinished advertisements tested in India in 2025 were crafted using generative AI.
Bata India Shifts Towards AI-Led Creative Model
Bata India’s move from a fully agency-dependent creative model towards an AI-led system is presented as an indication of the broader change. The footwear company expects the system to generate more than $1 million, nearly ₹1 crore, in annual savings.
AI agents are being used across several stages of the advertising process, including briefing, content creation, review, publishing and post-performance learning. However, the company’s marketing team will continue to control strategy and final approvals.
The emerging model is seen as particularly relevant for businesses that require large volumes of content and frequent adaptations. Footwear, apparel, fast-moving consumer goods and retail are among the categories where such an approach could be replicated.
Agencies Face Pressure on Retainer-Based Work
The changes suggest that the impact of AI on advertising may extend beyond reducing individual production tasks and begin affecting the structure of agency retainers.
“This isn’t headcount replacement; it’s retainer replacement,” Divyat Kanyal, founder of advertising production firm Tall Creative Studios, told the publication.
As brands gain the ability to handle more repetitive production work internally, agencies could increasingly find themselves competing on areas that are harder to automate, including creative ideas, strategic thinking and relationships. The shift points towards an advertising model in which AI handles more of the high-volume execution while human teams retain control over broader strategy and final decisions.
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