Why Indian agencies are racing to become consultants before AI does

The advertising industry in India is undergoing a quiet restructuring. Across Mumbai, Bangalore, and Delhi, agencies that once prided themselves on creative campaigns and media buying, are now pitching themselves as something else entirely: strategic consultancies. 

In 2025 alone, at least six players, including Havas India with Gate One, RK Swamy's Brand and Marketing Consulting Group, AdGlobal360's dXfactor, Rohit Ohri's Ohriginal, Brand Raga's 360° repositioning, have either launched or significantly expanded their consultancy arms. 

Just a decade ago, global consultancies like Accenture and Deloitte were the ones acquiring creative shops, trying to get closer to consumers. Today, the roles have flipped; it's agencies selling consulting to stay ahead in strategy and influence. 

Ashish Bhasin, Founder of The Bhasin Consulting Group, is direct about the motivation. "Agencies have always aspired to be consultancies. There's a certain respect and remuneration that consultancies command—sometimes just for making strategic presentations—that agencies have envied for decades," he says.

This isn't merely about adding a service line. It's about survival in an era where AI can generate 50,000 images and 500 videos per month for L'Oréal, where Kraft Heinz compresses eight weeks of production into eight hours, and where S4 Capital openly admits that "65% of the tasks agencies get paid for currently could be done by AI agents with today's technology."

Why now? Decoding the dual pressures

Harsha Razdan, CEO, South Asia at dentsu, frames this shift as a return to form with modern tools. "Agencies have always been part consultant, part creator. We sit with clients, try to understand what truly matters to them, and then work alongside them to turn ideas into action," he explains. He observes that over time, the industry had broken into silos, be it media, creative, tech, and data, and while each part had become faster, the overall ecosystem had slowed down. Efforts are now being made to bring it back together.

Dentsu's top clients now have a single leadership interface, with teams working in unison so advisory, strategy, and execution feed one another. Arms like Media++, their B2B focus, BX (brand experience), and Dentsu Lab allow the network to test ideas fast and turn concepts into scalable solutions. 

The consultancy wave isn't happening in a vacuum. It's being pulled from above and pushed from below, pulled by evolving client needs and pushed by shrinking margins and technological disruption.

Meghana Bhat, Co-founder of Early, a fractional marketing consultancy backed by Talented, comments, "Brands have needed specialist strategic input and large agencies have simply bundled it with creative output for decades. What’s new perhaps is that agencies now feel confident charging for that advisory role, instead of treating it as a value-add that is sometimes not even paid for to its full value.”

This shift in confidence comes from a shift in client behaviour. Razdan observes that the surge in agency-led consultancies reflects how clients are thinking differently. "They are looking for partnerships—guidance that can be implemented, ideas that drive measurable outcomes, and support that combines creativity, strategy, and execution," he says.

Early-stage startups reflect this demand. Bhat has spoken to over 100 founders and marketers over the past couple of years, and she's found a clear need to change marketing's reputation as the most misunderstood aspect of business. Traditional agency models, built for large brands with established budgets, simply don't fit the nimble, resource-constrained reality of startups. 

With Early, Bhat works with companies like Pickyourtrail, beginning with strategic planning, reshaping positioning, and building marketing strategy from the ground up, then building an execution roadmap to ensure strategy lives in the market rather than becoming "a pdf gathering dust."

This hybrid model, consultancy plus execution, is critical for startups that don't have the luxury of separate teams for strategy and implementation. They need what Bhat calls "a fractional partner who can set sharp direction and make sure it turns into results."

But Bhasin warns of the double-edged sword. Running a full-service agency inherently involves consulting, even if it's not marketed as such. Expanding into higher-end, value-added services can be advantageous, but it's important to remember why clients hire agencies in the first place. "Agencies are custodians of the brand—they provide consumer insights, brand-building ideas, storytelling, and the ability to execute at scale and relatively lower cost, which consultancies often cannot do," he points out.

The economic imperative & the AI threat

But client demand alone doesn't explain the urgency. The economics are brutal. The average profit margin for marketing agencies stood at around 15-20% in 2024, with rising revenue, overhead expenses, and both direct and indirect costs putting pressure on profitability. As a result, media buying margins have been squeezed by programmatic automation and transparent pricing, while creative fees face pressure from faster, cheaper production options.

Then came AI. And it surely didn't arrive quietly. Its impact was seen and felt by every industry and country. 

S4 Capital's September 2025 earnings call noted that 65% of the tasks agencies get paid for currently could be done by AI agents with today's technology. S4 Capital has reportedly already created a film for Google's Pixel smartphone where AI handled scriptwriting, storyboarding, and directorial decisions. Pre-production, production, and post-production, all generated by agents. What would have taken months with a traditional team was compressed into weeks. 

Sir Martin Sorrell, S4 Capital's founder and executive chairman, reportedly said on the call that the industry might see a significant reduction in the proportion of create costs to media costs over time, driven by macroeconomic uncertainty, the tariffs and the need to be more efficient and disciplined.

Razdan acknowledges this reality head-on, noting that consultancy isn't just a reaction to shrinking margins in media or creative work. "AI will take over routine tasks, but human insight, judgment, and strategy remain the premium value agencies bring, the work that can't be automated," he asserts.

Kiran Khalap, Co-founder & MD, Chlorophyll brand & communications consultancy, is more cautious. He points out the elephant in the room: management consultancies themselves are facing real danger. “There are enough learned articles that point out how AI is making analysis lightning fast. The second big change is that digital transformation is now a key aspect of change management; it’s something that consultancies have very little clue about.”

He continues that the third big change is costs: organisations under cost pressure will opt against expensive management consultants.

If AI is democratising strategy creation and analysis, then what exactly are agencies selling when they position themselves as consultants? The answer appears to be integration. Not just strategy, but strategy that can be executed. 

The commercial model is changing

The shift is also reflected in how agencies structure deals. Razdan reveals that dentsu works differently with clients commercially. "Fees are often linked to outcomes, milestones, or long-term transformation, reflecting a skin-in-the-game mindset," he explains. 

Consultancy has become one of the network's fastest-growing revenue streams. Sometimes a standalone entry point, often a multiplier that amplifies the impact of creative, media, and customer experience work.

This outcome-based model represents a fundamental departure from traditional agency compensation—monthly retainers or project fees based on time and materials. Now agencies are betting on results, accepting risk in exchange for higher potential returns.

Ashish Bhasin thinks linking pay to performance would be brilliant, making agencies true partners in success. “If a client’s business grows from ₹100 crore to ₹1,000 crore thanks to an agency’s strategy and campaigns, the agency doesn’t earn substantially more.”

However, in the Indian context, Bhasin doesn't see it happening soon. He shares, “Clients may pay lip service to performance-based models, but when it comes to actually investing in them, they tend to be extremely conservative.”

The consultancy landscape in India is already crowded. Accenture Song, Deloitte Digital, and PwC have been active for years, bringing deep pockets, global networks, and access to C-suite executives across functions, marketing, technology, manufacturing, retail expansion, and even HR. They walk into boardrooms with credibility that took decades to build. How do agency-led consultancies compete?

Bhat believes that agencies need to introspect to understand what their specific talent pool is really good at, double down and focus, versus trying to jump onto whatever they think is the next gravy train. "Consultancy is a big word and so is Agency—both can encompass all kinds of specialist services and hybrid models as long as there is a clear understanding of the customer problem," she notes.

The jury's still out on whether agencies can truly walk into the boardroom and advise multiple functions the way Accenture Song or Deloitte Digital can.

Will execution become secondary?

The existential question haunting this transformation is whether consultancy will become the core identity of agencies in the next decade, with execution relegated to a secondary, lower-margin afterthought.

The leaders are aligned on this: both will coexist, and must coexist.

"I don't think execution becomes secondary—it's the natural next to strategy and both aspects require specialists," Bhat states firmly. "Consultancy at its core is about strategy and without execution that is toothless, while execution without strategy is wasted spend and effort."

Razdan echoes this sentiment from dentsu's perspective. "Looking ahead, consultancy will remain central to our value, but execution will never be secondary," he insists. "Both coexist, and together they allow us to co-create missions with clients that unlock growth in ways that are meaningful, lasting, and real."

Bhasin strikes a cautionary note based on structural realities. "It would be unwise for consultancies to try to become what agencies excel at—working with lower costs, smaller margins, and executing quality work at scale," he warns. 

Consultancies operate with higher profit margins, fewer people, and focus on value-added services. It's more in their interest to outsource execution to agencies rather than handle it themselves.