For years, ad agencies have done what was expected of them—and it worked. You optimized campaigns within platforms and hit solid ROAS targets. Clients were happy, platforms offered clear signals, and the performance marketing system worked.
But the rules have changed, and the advertising industry challenges are piling up.
Agencies everywhere are feeling the pressure. Even those doing everything “right” are finding it harder to show impact, justify their value, and retain long-term client trust.
If that sounds familiar, you’re not alone. These are the top challenges of an advertising agency today.
Key highlights:
- The challenges of advertising agencies are compounding. AI-powered platforms are taking over media buying, leaving agencies with less control and visibility.
- Chasing short-term KPIs leads to over-investment in search and retargeting, hurting long-term growth.
- Budgeting across channels is slow and siloed, making it hard to move spend where it matters most.
- Proving ROI and driving change is tough, which hurts client trust and slows agency growth.
- Winning agencies overcome the issues in advertising with cross-channel strategy, budget allocation, and driving real business outcomes, not just ROAS.
Ad agency challenge #1: AI optimization is replacing media buying
Google, Meta, TikTok, and retail media networks are all pushing AI-driven ad buying tools that automate nearly every step in a campaign. These platforms ask for basic inputs like budget and goals, then run the campaign autonomously. Agencies (and advertisers) often can’t see where ads run, who they target, or how they appear.
The Wall Street Journal reports that AI tools will control 80% of digital media buying by 2030, yet many marketers are uneasy. It sounds convenient… until your clients ask:
- Why did performance drop last week?
- What did you do to fix it?
Agencies are increasingly forced to trust what many now call “black box algorithms.” They deliver efficiency and scale but strip away control and transparency—two things agencies have fought hard to offer clients.
Why losing control over ad platform optimization threatens agency relevance
This is one of the biggest ad agency challenges today: proving value to brands when AI-powered marketing tools are driving execution. Agencies that once differentiated through tactical excellence are finding that ad platforms have automated their key services.
Agencies that are thriving focus on:
- Cross-channel optimization to balance spend across platforms to maximize total ROI, rather than optimizing in silos.
- Marketing channel mix to guide clients on where to invest for long-term growth, not just short-term performance.
- Macro-optimization to reallocate budgets at a higher level to improve profitability instead of tweaking bids within a single channel
Instead of tweaking bids, they’re guiding clients on where to spend, how much to spend, and why.
Read more: Are retail media networks killing your brand’s profitability?
Ad agency challenge #2: In-platform optimization prioritizes short-term media performance
Ad platforms, including retail media networks, optimize for their own KPIs. Google cares about conversions and ROAS. Whether or not those conversions drive incremental revenue is secondary.
The issue in advertising lies in the black-box nature of these algorithms. Media buyers often have little visibility into how decisions are made or how audiences are targeted. The result is a self-reinforcing loop where campaigns focus on retargeting the same warm audiences and harvesting low-hanging fruit.
Why short-term ad performance KPIs limit long-term brand growth
When media strategies are built around short-term KPIs, brands prioritize immediate wins over sustainable growth. Conversions, clicks, and ROAS may offer quick gratification, but they rarely tell the whole story.
Over time, this approach exhausts existing demand rather than creating new opportunities. And when brands let their awareness decay, sales tend to decline at a 1:1 ratio, as shown by Nielsen research. It’s a direct trade-off: neglect your brand, and you sacrifice future revenue.
Solution: Lead with cross-channel media strategies that balance performance marketing with brand-building.
Read more: The best marketing channel performance metrics
Ad agency challenge #3: Cross-channel media budgeting is manual, slow, and siloed
One of the challenges faced by advertising agencies is that budget allocation hasn’t caught up to the complexity of modern media:
- Many agencies still manage media planning in spreadsheets.
- Decisions are made in silos: the search team fights for search dollars, the social media team defends their piece of the pie, and no one moves budget fast enough.
Why faster, integrated media budgeting drives better ad ROI
In a fragmented digital marketing landscape, speed matters. Agencies need to leverage agile marketing principles and reallocate budgets dynamically in real-time, not once a quarter after endless debates.
Advertising agencies that solve this problem through macro-optimization and cross-channel measurement are seeing faster decision cycles, better results, and happier clients.
Case in point: A seasonal brand reallocated its budget based on Keen’s data-driven marketing insights.
The result? Increase in its profit ROI by 49%:
Ad agency challenge #4: Media buyers over-invest in search and retargeting
Paid search and retargeting ads are safe. They’re measurable and efficient. But they only capture existing demand. They don’t create new demand. As Jesse Math from Keen puts it:
“Virtually every agency is over-invested in search because that’s where the ROAS is.”
Ad agencies are stuck over-investing in these channels because they deliver predictable ROAS, a metric that seems to show results. But in reality, ROAS fails to capture any long-term results. It’s one of the advertising industry challenges holding back growth.
Why full-funnel media strategies are key to new customer acquisition
To scale, agencies need to invest in full-funnel optimization and upper-funnel channels like video, OTT, and programmatic display. These channels build awareness and drive future demand.
But upper-funnel channels are harder to measure unless you track causality in marketing to prove your incremental impact on customer acquisition and revenue.
Ad agency challenge #5: Proving marketing ROI to CFOs is a struggle
You’re reporting ROAS. You’re showing impressions and clicks. But the CFO is asking, “How did this impact revenue? Profit? Margin?”
This disconnect is one of the core challenges faced by the advertising industry. Marketing and finance speak different languages.
Why proving advertising profitability wins executive trust
Agencies need to tie media performance directly to business outcomes. That means proving marketing incrementality, profitability, and long-term customer value.
Agencies that close this gap are becoming true strategic partners at the executive level earning larger, longer-term budgets in the process.
Read more: Forecast revenue and demonstrate marketing ROI
Ad agency challenge #6: Weekly performance reports without strategic insight hurt client trust
Marketing budgets are often the largest expense line on a client’s P&L. That makes them the first target when results don’t appear immediately. No wonder clients obsess over weekly dashboards, short-term ROAS, and conversion metrics.
Agencies get trapped in delivering short-term wins rather than long-term value. However, with cookies disappearing and broken media attribution, this short-term thinking remains one of the persistent challenges in the advertising industry.
Why shifting focus to long-term marketing KPIs builds sustainable growth for clients
You need clear, actionable insights, not just data dumps. Causal measurement provides advertising agencies with the tools to explain why something is working, not just what is happening.
This builds client confidence and secures long-term relationships. With a platform like Keen for agencies, you get the ability to balance the client’s need for seeing reports and connecting your media planning strategy with outcomes:
Ad agency challenge #7: Change management slows agency growth and evolution
Even when firms want to change, siloed teams, legacy processes, and client resistance make change management one of the toughest challenges affecting advertising agencies.
How outdated workflows block advertising agency transformation
Ad agencies that align leadership, data teams, and client services around shared goals are evolving faster. They’re embracing the latest AI-powered marketing tools, measurement frameworks, and roles as strategic growth partners.
Overcome the biggest advertising challenges with Keen
The challenges of advertising agencies aren’t going away. But agencies that are adopting media mix modeling (MMM) are breaking through.
Many of them are doing it with Keen’s MMM platform, designed for challenger advertising agencies ready to lead. They are:
- Moving beyond last-click attribution
- Implementing causal measurement and incrementality testing
- Reallocating budgets cross-channel in real-time
- Aligning media spend with revenue and profitability
- Winning bigger, longer-term client engagements
Request a demo to see how you can overcome the challenges of your advertising agency with Keen.
