Inside the crafty solutions agencies are using to combat shrinking fees

By Lindsay Rittenhouse | March 26, 2026

Key Takeaways

• Marketing budgets are shrinking, making it difficult for agencies to profit off advertising services alone.
• Some crafty shops have responded by adding new revenue streams including building and monetizing products and making landlord plays.
• This guide shows some ways agencies can add new sources of income outside traditional creative and media.

Marketers have shifted to projects over retainers. Budgets are shrinking. Agencies are competing over who can provide the lowest fees, putting pressure on margins. This has been the story for several years, leaving agencies struggling to stay afloat on advertising services alone.

“There’s been a dramatic race to the bottom in our industry,” said David Dweck, president of digital marketing shop Go Fish Digital. “The client just wants the lowest common denominator,” he said. “It’s a big Catch-22 because when you’re degrading the work that agencies provide, it’s going to be this death spiral where the work isn’t as good because agencies aren’t funded as well.”

To bolster these shrinking margins, independent agencies are coming up with crafty solutions for new revenue streams—for example, renting out parts of their offices and monetizing new products with AI to supplement declining fees.

Standing up these sources of income requires investment. You have to promote, fund and invest in a team to manage them like you do with your main advertising business.

Ad Age compiled this guide to starting and managing new revenue streams based on conversations with eight agency leaders who have done this successfully.

Be your own landlord and rent your space

The COVID-related shutdowns caused many independent agencies to downsize after recognizing the need for more permanent hybrid work models. Many agencies bought their new spaces, helped by the pandemic driving the cost of purchasing office space down.

One such shop is Fuse Create. The Toronto agency rents out its 1,300-square-foot storefront on the first floor of its office to short-term tenants.

“We were happy to employ a hybrid model and we knew that we could go to a smaller space,” said Steve Miller. “We thought, ‘We can just pay a mortgage to ourselves.’”

After some time, the agency realized they could rent the unused first floor to companies, brands, and artists for production shoots or events.

“We started the business at a very entry-level square footage price, but it’s gained traction,” Miller said. “Now it is up there with many other top pop-up spaces.”

Six+One also rents out part of its New York office to production shops and companies that need offsite space.

Leigh Baker, managing director, said prices typically start between $1,000 and $1,500 a day, with add-ons for catering or extended use.

“We pitch it like an offsite,” Baker said. “It’s a cool space… We have almost six months of rent paid each year, which for a small business is huge.”

Agencies had to refine who they accept as tenants. Many found that production companies and tech platforms with remote teams were the best fit.

Fig, another agency renting space, now limits tenants to creative companies that share similar working styles to avoid cultural conflicts.

Leadership ownership also matters. Agencies assigned someone to manage tenants, bookings, and day-to-day logistics.

The payoff has been meaningful. Some agencies have used this additional revenue to invest in AI capabilities or reduce operating costs.

“Financially, it’s been positive,” said Fig’s CFO. “Our net rent is at least 50% lower than anywhere else comparable, and in some months it has effectively reduced to zero.”

Create your own products

Some agencies are building and monetizing products to generate additional revenue.

Known developed Skeptic, an optimization and automation platform powered by data science and AI. While all agency clients use it, some companies subscribe without using Known’s services.

Pricing is based on usage, similar to enterprise software models.

Skeptic required significant investment, including a team of about 40 people across development, security, and AI.

Despite the cost, leadership saw it as essential.

“Sometimes I wonder why we’re doing things that an Adobe or Salesforce aren’t doing,” said CEO Kern Schireson. “It’s because we have people executing campaigns every day.”

Broadhead launched multiple AI-driven platforms, including:

• Searchlight (search positioning)
• Kaleidoscope (analytics engine)
• Prism (audience and persona development)

Trade School developed:

• Mainspring, a content engine
• Mirror, a synthetic audience studio

Both are sold as managed services, moving beyond hourly billing into subscription and product-based pricing.

New services fuel new payment models

Agencies are also experimenting with different pricing structures.

Performance-based compensation is one approach, where a portion of fees is tied to outcomes.

Known has adopted this model with some clients, tying 10%–20% of fees to performance metrics.

“We want our fees to be at risk on the same metrics executives are measured on,” Schireson said.

Some agencies are also launching new service lines to open up different pricing models.

Allen & Gerritsen launched a full-service production studio offering everything from live-action content to podcasting.

The studio operates with tiered pricing, from full production management to simple rentals.

Trade School launched a retail media practice to help brands monetize first-party data and build ad offerings.

“In the end, we’re trying to create more value, and the revenue streams follow,” said CEO Genna Franconi.

Originally published in Ad Age.