S4 Capital’s Sir Martin Sorrell is talking less about whether the billable hour declines, and more about what replaces it. The answer, at least for S4, is subscriptions.
On the company’s latest earnings call, Sorrell described a model built around fixed annual fees that bundle senior talent with agentic workflows, brand-specific knowledge bases, and periodic “software-style” updates. One enterprise client has already restructured its agency relationship around this setup, with three more in discussions. S4 now includes the model in every new business pitch and is aiming to get 25% of its revenue from subscriptions by year-end.
The obstacle isn’t the idea so much as the transition. As Sorrell put it, the constraint is adoption speed: companies are moving slower than consumers, and the blocker is less about tooling than change management.
Making the model work at scale requires a few things to line up: contracts need to be reopened, procurement teams need to price outputs instead of hours, and rising AI inference costs need to stay contained within a fixed fee. None of those are moving especially quickly.
There are pockets where momentum is less optional. Automotive and financial services are moving faster, pushed by competition from Chinese EV makers and fintech. FMCG is starting to follow. Sorrell also suggested that if inflation and interest rates stay elevated, that pressure could accelerate AI adoption more broadly.
The internal economics are still unresolved. The pitch to clients is straightforward: more output for the same price. But as compute costs rise—particularly with video and always-on usage—that margin becomes harder to hold. If those costs can’t be absorbed, pricing may drift back toward variable models.
All of this sits against S4’s recent performance: 2025 revenue of £754.8m (down 11%) and net revenue of £673m (down 10.8%). Spend from major tech clients has been flat since 2022, while those same companies have increased AI infrastructure investment by more than 133%.
Read more at Digiday.