Agencies don’t have a hiring problem. They have the (EBITDA) multiple problem

The wire material presents a discussion about the challenges faced by agencies in the current market, focusing on the EBITDA multiple problem rather than a shortage of hiring. Publicis' recent announcement of an AI Development Hub in Singapore, aimed at creating roles instead of removing them, highlights this issue. The article explains that agencies traditionally price based on capacity, with revenue following people and margin measured as EBITDA.

When clients cut back on media budgets, agencies need to find new revenue streams, which is where AI-native martech comes in. Private AI companies are valued at a much higher EBITDA multiple (27.1x) compared to public SaaS (4.3x) and traditional martech (8-12x). The article suggests that agencies should transition from hourly pricing to product-based pricing, with revenue that doesn't rise with hours, retention measured by cohorts, and a margin story that survives automation.

The Singapore hub's success depends on whether its output is licensed as software or absorbed into fees. The research shows that 73% of Southeast Asian companies are piloting or scaling AI, indicating a shift in the market, which agencies need to adapt to in order to remain competitive.