The advertising industry has long prided itself on the delicious alien brains and, at times, preternatural imagination of its creative talent. But it now confronts a more prosaic problem: Arithmetic. The maths simply ain't mathemagical anymore for a sector built on billable hours, steady headcounts and quarterly targets. In response, holdcos and indies alike are attempting to graft themselves onto an emerging technology that refuses to conform to comfortable past certainties. Artificial intelligence scales erratically, consumes capital upfront and (hopefully) rewards those willing to wait, although the jury is still out on that last point. For an industry trained to optimise for the next quarter, it is an awkward tilt. R/GA, which sees itself as a creative studio more than an agency, has chosen to play a different game, according to APAC chief and global AI product lead, Michael Titshall. A year ago, the firm extricated itself from its holding-company parent IPG after 23 years and set about rebuilding its business for what he calls the “intelligence age”. The move was framed as a management buyout, but in practice it was an admission that the old agency model, which might fairly be described as disciplined, efficient, and relentlessly incremental, cannot accommodate the efflorescence of a technology that demands both patience and risk. “The market obviously [is] going through disruption,” Titshall says. “For us, we needed to make sure that we could move really quickly into this new technology … Within a holding group structure, that is really challenging.” The problem, he suggests, is not incompetence but incentives. A business optimised for “monthly, quarterly … cycles of having to perform” cannot easily justify investments that may take years to pay off. "From a commercial perspective, it just means you can't have that longer-term horizon for growth." That tension between a model designed for efficiency and a technology that rewards exploration runs through every part of R/GA’s experiment. The agency is attempting to rewire not just its tools but its economics, talent base, relationship with clients and, perhaps most delicately, its clients' relationship with consumers. Most of its competitors are tackling one or two of these shifts. R/GA is attempting all five at once. The next 12 months will likely determine if it is the middle of a bold strategic bet or an elaborate overextension. Breaking the clock The most visible change is the least glamorous. Leaving a holding company means disentangling the plumbing - finance systems, HR platforms, and reporting structures essential for sustaining and enhancing scale. Titshall admits this has been harder than expected. “Carving ourselves out … from an operational systems perspective, everything from HR to finance” proved more complicated than anticipated, he acknowledges.  The reward for that effort, he argues, is freedom from the tyranny of the quarter. Under private-equity ownership (Truelink Capital is the majority shareholder), the agency can think in multi-year horizons. It can invest in capabilities that do not immediately translate into billable hours. It can, in short, behave more like a technology company, though he may not frame it that way. Early results are encouraging. In the second half of last year, R/GA’s revenues grew by 30 per cent compared with the first half – that’s a sharp departure from the usual 5 per cent seasonal uptick. Growth has continued into the current year, with “well over double-digit” increases, while he describes the past 12 months as “year zero”, a period of laying foundations; the current year is about exploiting them. Yet the source of that growth is revealing: Clients are grappling with a liminal moment in which the rules of digital marketing are being rewritten by AI answer engines, synthesising information before users click through to a brand website. “A lot of our clients [will say] I’m getting 40 per cent less traffic to my website,” Titshall notes.  In such a world, the website ceases to be a discovery tool and becomes something closer to a checkout. “I know I want this brand,” as Titshall puts it. “Just reassure me and help me buy quickly”. While this might be disorienting for clients, for agencies that can interpret the change, it is an opportunity. R/GA’s growth, Titshall suggests, reflects not only its capabilities but its positioning. It is selling not just creative work but comprehension. From hours to systems If the market context explains R/GA’s demand, its supply is being reshaped by a significant commercial shift: The collapse of the billable-hour model. “There are a couple of things going on,” Titshall says. “Staff costs are going to be coming down, but software costs are going up … that whole head-hour-based model is going to be … breaking pretty quickly”. In other words, the primary cost driver is moving from people to compute. The unit of production is no longer an hour but a model call. The comment echoes the sentiment of executives like David Hyman, former Lendi CEO and now founder of monō ai, who told Mi3 recently that senior executives are making a category error by comparing the cost of AI to software budgets rather than to the cost of human intelligence. For two decades, the software industry has been trying to turn products into services, but R/GA's approach flips that, by becoming, in part, a product company. Its work for clients  such as generative films, personalised video systems, adaptive interfaces, often produces internal tools that can be reused and refined. These are then deployed again, sometimes with a separate “product fee” layered on top of traditional service charges. In Titshall’s telling, a system such as its “story engine” strings together multiple AI models to generate scripts, visuals and compositions in a coordinated process. Agencies have long spoken of capabilities, but while capabilities reside in people, system persists. They can be scaled, priced and, crucially, improved over time. The creative output becomes a palimpsest, each iteration layered on the last, informed by both human judgement and machine feedback. The danger, as Titshall readily admits, is that clients may mistake the tool for the work. “The tool by itself is useless,” he says. “You need the creativity … people who know how to tell stories, connect with people”. Several clients who attempted to generate assets themselves returned when the results proved underwhelming - technology, it transpires, can amplify talent, but it cannot substitute for it. The interaction between tools and creative judgment is reshaping how agencies define creative work, Titshall says. Rather than relying on distinct roles such as copywriters or art directors, the model is shifting toward hybrid practitioners who combine technical capability, storytelling, and broad intellectual curiosity - effectively, full-stack creatives.  Trust in the machine If economics is one axis of the R/GA transformation, then trust is another. AI promises efficiency, but it also provokes unease. Consumers, studies suggest, are wary of content they perceive as machine-generated. Even the suspicion of AI involvement can erode brand trust. Clients, accordingly, are cautious. They tend to begin with narrow use cases often involving internal tools and low-risk outputs, and they are inclined to maintain a “human in the loop” approach. In Australia, Titshall notes, this conservatism is pronounced. In other markets, particularly the United States, firms are more willing to move to a “human on the loop” model, supervising rather than directly intervening. This divergence reflects not just cultural differences but structural ones he suggests. American firms often have larger budgets and greater exposure to competitive threats. Australian subsidiaries may prefer to wait for global headquarters to act.  R/GA finds itself mediating these tensions, according to Titshell. It has developed an internal framework around “craftability, respect, authenticity, fairness and transparency” to evaluate AI applications. Of these, authenticity is perhaps the most fraught. “Does the AI preserve the human creativity and brand truth?” Titshall asks. The stakes are high because in sectors where trust is paramount, such as finance or healthcare, for instance, missteps can be costly. In others, such as fashion or entertainment, audiences may be more forgiving, even curious. Risk appetite varies accordingly, he suggests. “The ones that are investing more are the ones whose business is at greater risk immediately,” he argues. There is, however, a deeper paradox. AI systems are designed to optimise, but in doing so, they can strip away the very imperfections that make interactions feel human. Research in customer experience suggests that excessive optimisation can produce sterile, uncanny results. Forrester's VP, Research Director - Customer Experience at Forrester, Martin Gill, calls the phenomenon "efficiency without empathy" and says its corrosive impact is visible in recent years in the CX Index scores of local banks and insurance companies. "Our data shows that out of the three drivers of customer experience quality – effectiveness, ease and emotion – emotion is most correlated with customer loyalty outcomes like retention, enrichment and advocacy." The client grows closer One of the more persistent anxieties in advertising is that AI will commoditise creative work, allowing clients to bypass agencies altogether. Yet the early evidence from R/GA points in the opposite direction. As technology becomes more complex, clients require more guidance, not less, he argues. "It's really important to understand that we drive growth for our clients by connecting with human beings - their customers. It is not just the story you tell and connect with people on, but the way you use the technology is creative in itself as well. So I think that's absolutely critical, that we don't lose sight of that." There is, nonetheless, a risk that agencies overcorrect, becoming indistinguishable from systems integrators. Titshall is alert to the danger “If you’re just thinking about the tech component…you lose sight of…storytelling, differentiation,” he says. The industry’s comparative advantage lies precisely in its ability to connect with people. That’s a quality that pure technology providers often lack.