The past few years have been difficult for agency relationships. Budgets tightened during the pandemic, then again with inflation. Agencies lost senior talent to in-house roles. Clients demanded more for less. And somewhere in the middle, a lot of retainer relationships drifted into dysfunction.
This isn’t because agencies became worse at their jobs. It’s because the conditions that let agency relationships thrive, clear objectives, mutual accountability, aligned incentives, have become harder to maintain.
I’ve sat on both sides of this. I ran a CRO agency for years and sold it. I’ve also been the client, hiring agencies and trying to work out whether I was getting value or theatre. Most retainer relationships fail for structural reasons, not because anyone is acting in bad faith.
Three types of misalignment
When I audit an agency relationship, I’m looking for misalignment, and it typically falls into three categories.
Incentive misalignment
The agency wants to bill hours or retain scope. The client wants commercial outcomes. These goals aren’t just different; they often pull in opposite directions.
Capability misalignment
The agency pitched with senior strategic thinkers. Delivery is handled by capable but inexperienced people who’ve never sat in a board meeting or felt the pressure of a quarter that isn’t landing.
Communication misalignment
The agency reports on activity because that’s what it can measure. The client wants to know about impact but doesn’t know how to ask for it. Both sides end up talking past each other.
The activity trap, and the other red flags
Within those three categories, certain patterns appear again and again.
The activity trap
Every two weeks, you get sprint reports. Tickets closed. Velocity charts. Features shipped. What they rarely mention is whether any of it moved anything commercially. The agency looks busy. The metrics go up. Revenue stays flat.
The disappearing pitch team
You remember the senior people who understood your business within an hour. Then the contract was signed and they gradually vanished. This isn’t deception. It’s economics. Senior salaries are high, and the only way to make the numbers work is to push delivery down the ladder.
The scope that never shrinks
When an agency identifies a genuine efficiency, a third-party tool that could replace a custom build, say, it faces a choice. Tell you and risk reducing its scope, or keep things complicated, because complexity justifies the retainer.
The metrics you can’t trust
GA4 says one thing. The platform says another. The agency report says something else entirely. Which number is the business actually running on? Usually whichever supports the narrative in that particular meeting.
The opportunity cost of stasis
The problem isn’t just the £50k you’re spending on the retainer. The real cost is the growth you aren’t capturing while your agency files reports on activity metrics. In a £50M business, six months of flat growth from agency inertia costs far more than the fees. It hits your run rate, your valuation and your market share.
When I audit these relationships, I don’t just look at the hours logged. I look at commercial velocity. If the agency isn’t increasing the speed of your execution, it is an expensive bottleneck.
The principal-agent problem, in a lanyard
This dynamic isn’t unique to digital agencies. It’s a version of what economists call the principal-agent problem: one party is supposed to act in another’s interests but has incentives pulling a different way. Law firms face it. Accounting firms face it. The difference with digital agencies is that the information asymmetry is acute. Few clients have the expertise to evaluate whether the work is good, so the agency ends up marking its own homework.
The retainers that work
Not every agency relationship is broken. In my experience, healthy retainers share three characteristics.
- No long-term lock-in. When either side can walk away with reasonable notice, everyone stays sharp.
- Reciprocal accountability. Good agencies push back. They write into the contract what they need from you.
- Regular reviews tied to business goals. Not “here’s what we shipped” but “here’s what moved”.
The audit isn’t about creating drama or undermining a relationship. It’s a clear-eyed view of what you’re paying for, what you’re getting, and whether the two are aligned, so the decision that follows, stay, renegotiate or leave, rests on structure rather than mood. Retainers rarely fail through bad faith. They fail through structure, and structure can be audited.