Social Rocket
Horizon Media is openly questioning traditional billing based on FTEs, i.e. allocated full-time equivalent capacity. Bob Lord, President of Horizon Media, said at Smartly's ADVANCE event that in his view brands will increasingly stop paying for classic headcount models over the next five years.
Why the FTE model is coming under pressure
According to Adweek, Lord described FTE-based models and principal-based buying as part of the "old system". His argument: agencies have invested heavily in technology, yet a large share of their compensation still depends on how many people are assigned to a client.
With AI and automation, this logic becomes harder to sustain. When technology speeds up parts of the work, the question increasingly becomes whether clients should pay for time, technology or measurable value.
Srocket has already described how agencies audit token and tool costs and test new compensation models.
Results-based pay is not automatically simpler
A more value- or outcome-based approach can align incentives better, but it requires clear metrics, baselines and responsibilities.
In media buying this gets complicated, because platforms are themselves automating more and more operational work. Our article on AI in media buying and controlling platform automation shows why efficiency does not automatically mean transparency.
This also makes choosing agencies more important. With its new Premier Agency Partner Badge, TikTok is building out its own quality logic for agencies.
What marketers can take away
Lord is making a forecast, not describing an industry standard that has already taken hold. FTE models remain widespread. However, economic pressure grows the more agencies sell automation as an efficiency advantage.
For advertisers, it therefore becomes more important to separate clearly: which work is delivered by people, which by platforms or AI, and how much of the compensation actually depends on business results?