Andrew Foxwell (Foxwell Founders / Scalability School) sits down with Andrew Faris (AJF Growth / The Andrew Faris Podcast) for a joint co-release episode to break down the findings from the Foxwell Founders x Motion 2026 State of Agencies Report. A data-rich survey of hundreds of agency owners and in-house operators across 30 countries. The conversation covers AI's dual role as the #1 growth opportunity and the #1 threat for agencies, why only 11% of agencies have produced clear top-performing AI-generated ad winners, the reality behind agency margins (42% running net margins above 30% while many founders still struggle), why in-housing is the #1 reason agencies lose clients — and why it usually backfires — and the uncomfortable truth that many agency founders grow for ego rather than strategy.
Along the way, Faris offers a sharp framework on how brands should think about paying their agencies, and Foxwell shares candid coaching insights on what separates agencies that thrive from those that stall out.
Key Takeaways:
- Why 26% of agencies say AI-powered services are their biggest growth opportunity — yet privately admit they're terrified of it?
- Is AI actually working for creatives or is just generating slop? (Only 11% of agencies have produced a clear top-performing AI-generated ad winner.)
- 42% of agencies report net margins above 30%. So why are so many agency founders telling Andrew Foxwell they're broke?
- Is in-housing the worst move most brands make?
- The gross margin range your agency should be sitting between.
- Are agency founders growing because they have a strategy or because they want to sit at the big [kid] agency table?
- When the average tenure of an in-house growth director might only be ~18 months, is there a fundamental misalignment between founders and the people they hire?
- If AI amplifies slop just as well as it amplifies great ideas, why do so many agencies think volume is the play?
- Should more brands be firing their CRO agency and building more with Claude Code?
This episode of the Scalability School podcast is sponsored by NorthBeam and they just launched Northbeam Incrementality. Northbeam Incrementality gives you easy, automated, self-service incrementality tests, while protecting you from the major mistakes so many people make while running incrementality tests. Your MTA handles the daily tactics, your MMM guides the long-term planning, and Incrementality provides the causal truth. It's a closed loop that allows you to scale what works and cut what doesn't. Right now when you head over to www.northbeam.io/incrementality, they're offering Scalability School listeners 50% off unlimited tests for a year when you join. Just tell them we sent you!
To learn more about Andrew Faris, The Andrew Faris Podcast and AJF Growth you can follow him on
X: https://x.com/andrewjfaris
Youtube: https://www.youtube.com/@andrewfarispodcast
Email: podcast@ajfgrowth.com
Work With AJF Growth: https://ajfgrowth.com
To connect with Andrew Foxwell send an email Andrew@foxwelldigital.com
To connect with Brad Ploch send him a DM at https://x.com/brad_ploch
To connect with Zach Stuck send him a DM at https://x.com/zachmstuck
Learn More about the Foxwell Founders Community at https://foxwellfounders.com/
Learn More about the The Hive Haus Creators Community at http://HiveHausUGC.com
Scalability School