AI Is Breaking Agencies — Here's What Comes Next

Literally lose sleep. I'm like, okay, I'm the C-suite person that tells their team to track time, but I can't even track my own damn time. Rize has solved all of that for me. So it's been great.

That makes me so happy to hear. I think you're really going to love the next month of updates. We have a Slack integration, we're redoing profitability tracking so it's much better, and we'll have budgets built in. So you can set time costs or hourly rate budgets and get alerts along the way. And then we're launching an MCP.

You'll be able to chat with Claude directly with your Rize data.

That's amazing.

It's so cool because now Claude can generate graphs. We have custom dashboards — some templates you can drag and drop to create exactly what you want to see. But we were like, dang, I think Claude just kind of built this feature for us.

Claude's insane. I have my little chief of staff that I call him. And as I was getting the MCPs up, I was like, dang, I can't connect Rize. But it's coming.

Yeah, I think in like, honestly, probably two weeks.

I'm so happy with you guys. And I'm even more stoked that you asked to chat. So happy to help however I can. I'm a big, big supporter.

Well, Tessa, thank you so much for joining for this very impromptu conversation. Do you want to do a little introduction?

Sure. I'm Tessa Rolfe. I started Agency Ops Co. actually just in 2025. Been in the agency space since about 2011. Started as an associate project manager, worked my way up the PM chain, came on the leadership team as director of PM, then went operations, found my way all the way up as SVP of operations for a $12 million agency. Then had a baby and was like, I kind of want to be working for myself. So that's why I started Agency Ops Co. The demand has been large, which I'm very grateful for.

Thank you so much for joining today. AI is changing everything so quickly. I know you're on the front lines working with agencies in operations. Today we thought we'd talk about what you're seeing, get some spicy hot takes of what's going to happen in the next few months.

So what's actually changing that you're seeing inside of agencies right now because of AI? What are the real shifts?

The actual changes I'm seeing — it's a lot of the connectivity between tools. AI at large is connecting many different types of software in a way that makes a person pause and be like, okay, well, I got to go do this thing. That's kind of my qualifier for AI — if I'm dragging my feet on something, AI can probably do that. It's a big connectivity tool that compounds over time and makes everything faster. Specifically in agencies, I'm seeing it interconnect the different tools and systems. You have a meeting, the note taker goes and updates your project management timelines. It's little things like that where I'm seeing actual tangible change.

Do you think agencies particularly have that problem of things being scattered?

So scattered. ClickUp came on the scene and that was their whole positioning of being an all-in-one tool. They did a good job for a while, but things are changing so quickly that even ClickUp is having trouble keeping up with how substantially the agency world is changing.

Are agencies using one AI — Claude, ChatGPT, Gemini — or is it sort of even?

A year ago it was OpenAI and ChatGPT. Then Gemini had a release about five months ago that blew it out of the water. Now I'm personally an avid Claude user. I find a lot of agencies work with Gemini more, but I'm pretty dedicated to my buddy Claude.

We're a product team at Rize. It's been crazy how much things have changed since December. I would say 40% of our code was AI generated in December, and now it's 99%.

That's only three, four months ago. That shows how fast it's changing. If you're not getting on board, it's a one-way train and you're getting left behind. If you want to remain competitive, you gotta get on this train.

Teams that adopt AI quicker and learn to work with it are going to have that edge. How do you recommend agencies approach that?

This is probably a hot take — AI has the opportunity to introduce a lot of noise. You don't want to automate or amplify noise and chaos. The only way to not amplify chaos is to be very clear and grounded with how things work. Ideally documented, especially with a team. Agencies are really struggling with productizing their services. If you're more traditional with RFPs and custom scopes, I would not even consider AI until that's been fixed. You're just going to automate chaos, create more noise, then be jaded and say AI hurt my business.

If the underlying system or process isn't right, nothing's going to fix that. Where are agencies overestimating AI?

If you're not educated on AI, you're overestimating how much it can reduce your workforce. The barrier to truly eliminate roles is still quite high. That's not to say six months or a year from now we won't be there. But right now, we're just not there.

Is there anywhere agencies are underestimating AI's impact?

I was part of an agency about a year ago that was saying in Slack, hey team, you should educate yourselves on AI. But that's all they were doing. No enablement across departments. They're underestimating AI and will probably be out of business within two years. Agency owners who don't know how to respond to AI are acting like it's not there.

How are the agency owners that are enabling their teams doing it?

For agencies under $8 million, eight times out of ten the successful adoption comes from the agency owner themselves — creating space for leadership teams to figure it out and then dedicating time to train their teams. It may feel like an investment now, but those agency owners know what's obvious: it's going to change the business. They need to do this to remain competitive in the next two years.

It's leading by example. It's hard to break habits. We were doing weekly meetings on what we could do — looking at Rize data to see what we could implement AI on. Customer support was a big one. We switched to a new platform, invested in documentation, and now 80-90% of our chats are handled by AI.

It's an investment. A necessary one if you want to stay in business. I always like to ground AI talk with behavior change — that's really studied and tested. I pull strategies from behavior change studies and apply them to AI adoption. They mirror a lot. That's really helpful when implementing AI at an organization.

What's something people are doing manually in agencies that in 12 months will be unthinkable?

It kind of makes me want to throw up thinking about the stuff we're doing manually. Genuinely, it's time tracking. This is the most major unlock I've had in 2025. I'm going to be introducing Rize to my first agency at the team level. It's a no-brainer. Getting employee privacy dialed in, then the agency gets the data and metrics they need, and the team doesn't have to do the manual, tedious, culture suck of time tracking. Every single agency I've been in my entire career has struggled with time tracking. When you have a good time tracking solution, there's probably at least 2% of profit that can be uncovered just from the data you can crunch.

Some of the teams we've onboarded have spreadsheets where their timer goes off every six minutes and they enter something in a spreadsheet. My heart hurts for those people.

How is AI going to change the structure of agency teams and roles?

In 2016-2018, globalization of the workforce was huge in agencies. We're seeing something similar with AI. The agencies doing it best are treating AI how they treated globalization. The AI solutions most effective for teams are the product teams that have studied rigorously what they do and focus on doing one thing really well. That marriage between a global workforce and specific software that does one thing well — that's changing the structure of agencies you can see in their org chart. Rize being one of them — the old role of traffic manager is literally non-existent anymore. Treat AI as a person. What role do you need? There's an AI tool that can do that role.

Are you seeing roles converging? We had a front-end developer who's now just a developer. Product managers and designers are able to do more engineering.

Definitely. Back in the day it was the T-shaped employee — many skills across and really deep in one area. We're coming to more just across. You need proficiency of all of them but I don't need you to be as deep in one category anymore.

AI gives you the slop, but there may be one thing in that slop that sparks an idea. You take that and pull that thread, and next thing you know, you have something awesome.

Should agencies be niching down or generalizing?

Totally niching. Gone are the days of a full-service integrated marketing agency. Brands can see right through that. There's a renaissance of fractional and consultant roles. Getting more niched and focused on the one thing you do well is important because AI will never be able to replace experience in specific scenarios and use cases. If I can solve your specific use case, you're going to want to work with me over AI because I'm a person who's been there. You're not going to get that level of confidence with AI.

Do billable hours still make sense? Do retainers make sense? Where do you see agency billing going?

I definitely don't think billable hours make sense. You have to ask, why are we tracking utilization? You care if the investment on an employee is profitable. Agencies are 100% underestimating the cost of AI. They're seeing cost of goods dip, but operating expenses get higher. That's throwing off the 50-30-20 ratio. Performance-based pricing is coming. Brands will have less tolerance for retainers and hourly rates.

What's true now is still going to be true — it's only going to be harder. If your service can't hold up, you're not going to last. That's going to be even more true with performance-based pricing.

What should agency owners start doing this quarter to not fall behind? The most important thing?

Don't hire somebody to write SOPs for you. Create the space for your team to document the work as they're doing it. You need some sort of baseline before you can automate. Instill a culture of documentation as you're doing the work in real time.

Fill in the blank — AI is going to kill blank inside agencies.

AI is going to kill time tracking. If you're not already doing time tracking, you're behind. And sign up for Rize.

The biggest mistake agencies are making with AI is?

Just automating crap. Or not giving it the time it needs. Not investing in it.

In two years, agencies that don't do this will struggle.

Figure out a different pricing model. Our pricing models are not going to exist in two years. 100% guaranteed.

The old agency model is breaking because?

Because it's not just people anymore. Agencies are people businesses, but now there's intellectual property behind it. How do you price intellectual property? That's going to change everything.

Thank you for how much you have unlocked in my own personal work life. Rize has really changed the game for me.