AI Agency Predictions 2026: Where The Real Money Is Moving

While everyone's screaming about the AI bubble popping, at Morningside AI, we are seeing the exact opposite. My team worked with NBA teams and Fortune 500 companies every day. And what we're seeing has me more excited about TW26 than ever before. The AI agency opportunity isn't shrinking. It's actually evolving and is getting a lot bigger for those who know where to look. But in order to crush it next year, you need to know where the puck is going. You know, you got to skate to where the puck is going, not where it's been. And in this video, I'm going to be breaking down the 11 key shifts and my predictions really for AI business in 2026 based off what we are seeing from boots on the ground and working with companies every day so that you as an AI business owner or maybe someone who's looking to start an AI business know what trends to bet on next year and how to make sure that you're on the winning side of 2026. First prediction is all

about ROI and that clients in 2026 are going to be expecting a much clearer and more specific ROI in any projects that they take on. And this is downstream of the MIT stuff where they're looking at 95% of projects fail and so on that created a lot of fear and skepticism around AI projects combined with if you're familiar with what I teach on the channel here the technology adoption life cycle. So we have strongly moved away from this early adopters phase which is largely what a lot of our clients have been for the past 2 3 years if you've been in the space. These early adopters with a very different mindset on the expectations they have for clear ROI and what they're going to get out of it. they are more willing to take a punt or to take a bit of a gamble and say, "Yeah, I'll throw 20 30 grand at this and just see what happens. " But because we're shifting into this early and late majority, they have a much different set of expectations. And that is combined with this MIT report of this high failure rate of custom development projects, particularly in enterprise, it's created a bit of a stew of skepticism for most clients. And we're definitely seeing this at Morningside. And this means when pitching projects, we've had to dig much further down into okay, what is the actual end of the day ROI going to be for the company if they choose to take on this initiative. So heading into 2026, you need to always have in the back of your mind, how can I make a case study out of this? How can I maybe start to niche down a bit more so that the previous work I've done? It gives me much more tangible examples of what can be the expected outcome for this project. So I definitely think 2026 will be the year that agencies with clear case studies are going to be able to really crack the market because when you can say, okay, this will lead to a 30% reduction in customer support costs, that's the kind of thing that businesses are ready to throw money at. So my

second prediction heading into 2026 is the general shift in model away from strictly an AI automation agency of just doing development or whe they're doing low code and low code development for them and automation to what I've been talking about for a while on the channel now which is an AI transformation partner where you're doing a much more full service for your clients. You're able to handle the education, the consulting, the development and then the partnership ongoing. And this shift is going to happen because companies want a more holistic partner who instead of just being able to automate one little thing here and they're like, "Oh, sorry. We're not really good at anything else. " There's so much general software development as we'll get into. There's AI development. There's kind of automation. There's so many things that need to be done including consulting and education. It's actually a much broader set of services that are needed to really get to the point of AI transformation and adoption than an organization. But that's one big macro prediction. And now I've heard a couple substeps inside that. My third

prediction within this kind of broad shift we've just talked about is going to be that the AI audit continues to surge in popularity and effectiveness for getting clients and setting up relationships that lead to development, education, and uh long-term partnerships. So we've seen this year as kind of we started talking about it midway through the year about the AI consulting and audits that we were doing at Morningside and from there you guys have really just run with that information and I've seen so many people start to offer them now and it really has proven itself to be the most effective foot in the door to starting a relationship with the client and I think the best way to explain how this audit fits into the kind of AI agency trend and AI service providers market is if you think back to when the web first came out the first step that a business took to move towards this new kind of being online is getting a website and that was like okay first service you need is you need to get a website online and I see AI order as like that first step in the process many businesses okay let's just figure out what you're doing and where we can help so I think that's the most versatile entry point to basically any business and there are millions of companies that still need this thing so it's definitely still untapped and there's so much more room to grow and I actually have the data to back up that this offer is really taken off right now and will continue to do well in 2026 and that's that in my accelerator program that the AI order is now the highest converting entry offer with an average deal size of 11,4 $400 within my program at least. So it might be different outside of it, but as to the ways that we teach it in there and the stuff that we do at Morningside, the audits you can offer are converting on average at $11,400 for people who are selling them. So there's a lot of money to be made in them. It is further away from development, so it's easier for people to start with. And I think that in 2026, we're only going to continue to see AI audits dominate and agencies who can offer them well and offer them quickly are going to really have a great advantage because as we're going to get into later, when you take the effort to do the audit, you could even offer it for free. But once you've built that relationship, shown how you work, identified all its opportunities for them, the transformation package you can sell after that is in the tens or hundreds of thousands of dollars in most cases. So there's really a ton of value to be created in building that relationship and getting a ton of dev deals off the back. And you often find a lot easier dev deals and a client asking you directly for what they think they want. The audit finds all the easiest ones that you can start with that makes your job a lot easier on the development side. Prediction number four is that

2026 will become the year of education and training offers for agencies. As you may know, the AI transformation partner model has got the three stages. You've got education, training employees on how to use AI tools to do their work more efficiently. You have AI consulting, which we've just touched on, and then you have development. So, that's the whole suite. And the interesting part that we're starting to see at Mornings AI is that the education portion actually links into the development as well because when you build new systems for companies, there's no point, there's no actual value created if the people don't know how to use it. So, it's almost like you have to circle back to education and training, train the teams up on these new systems that you've built if they are ones that involve a human. Maybe not if they're completely automated. But the point is that when you finish this whole process, when you get to the end, there's no value created if you can't get through the people problem. So it's not just a technology problem and like use case identification, process mapping, and development. It's actually like getting the people to understand what you've just built for them and to apply it. And that may mean as an agency, how you create a new system or process to check back in with your clients after you've done the development to make sure that the adoption is really taking place and people are using it, there's not issues with it. Maybe you have to feed it back into the dev side and iterate back and forth. The point is that it is going to be very much a human problem, a people problem that needs to be solved and agencies are going to have to figure out how to not only do the development but also know how to get it and make it stick in the organization. So that's why I say 2024 was the year of automations and development, 2025 is the year of consulting and 2026 I believe will be the year that AI agencies have to figure out the education piece to ensure that their development sticks. So, so a simple strategy for your agency next year would be to figure out what this extra line item is on your proposals of, hey, there's going to be a $15$20,000 education and adoption package that goes on after the development of these

solutions. Prediction number five is that the development services that AI agencies offer is going to shift significantly away from just pure automations and AI development into primarily based on general software development. So, that might just be full stack development, building internal tools that have no AI at all. And this may seem like, oh, well, like, isn't that getting further away from what the whole point of this thing was? Well, no, not really. Because if you think about what's actually going on here for companies, is that AI is essentially the activation energy needed to say, hey, maybe we need to bring a team in to analyze our workflows and our processes to find where AI can help us and then to help us roll that out. And what happens as an agency, if you guys have run audits and been acting as a transformation partner like we have, you'll see that you go in, they're all like, "Yeah, AI this, AI that. " And you realize that these guys, they don't even know how the business runs. They have the most inefficient, clunky processes and everyone's using them differently. They have a super outdated tech stack and they are just nowhere near ready for AI. And so AI is kind of like the cherry on top and they've tried to go straight for the cherry. But what you as the AI agency do is you're able to essentially lure them in with, hey, AI is going to transform your business. And then after you do the full audit process, you realize that, okay, well, we need to kind of start way over here, way down at the bottom of the pyramid of like, let's just build a couple of these key custom softwares internally that are going to allow you to do XYZ. And then we can add AI features on top of that. Well, there might be small parts of AI in it, but it's not like full AI automation of the whole business initially. And this is actually really good news because general software development that building internal tools like dashboards or task management or like ticketing systems, but the success rate on them is so much higher than a AI development project. And so that's great news for you because it allows you to make a ton of money selling these systems that are not necessarily as risky or difficult to sell. And you can still get to obviously the AI stuff later and charge a lot more for that. But the real key in all of this is that this is only able to happen because AI has reduced the cost of engineering so greatly. Like at Morningside, by far the biggest return we're seeing is on our engineering where by using AI coding tools, we're able to get 5 10x the productivity out of a single developer that you could when we started 3 years ago. And what this basically means is that we are kind of doing the softwarization of a business because it now costs so little to do. So compared to 3, four, 5 years ago, all of these custom internal tools and softwares that were not able to be done because it would have cost 50, 100, 200 grand just to build this basic platform out. Now with AI coding tools, when it's just generic full stack development, it's so much easier and faster to do that we can go in and offer all these different tools, build them out, and then start to use AI to connect them in different ways, add AI features in here and there. But my prediction for 2026 is that we'll see a shift to sort of 80% general software development and 20% AI development for the most successful agencies who are charging the most money. And you might be like, "Oh, that sounds like we're getting further away from the whole point of doing this. " No, at the end of the day, we're trying to transform their businesses with AI. And if that means they have a ton of basic software development needs before you can add the AI on top, then that's just the way it has to be. Now, for

prediction number six, that 20% of development as a transformation partner that you'll be doing that is AI development, there are going to be some significant shifts going on in there as well. And that's largely due to what I kind of call Vibe automation where you've seen maybe NA and different platforms with a text to workflow ability. So, it's basically like Vive coding, but Vive automating. And this is going to continue to bring the initial development cost and timelines down for us, which is great news for us and our clients. Less time manually setting things up and debugging it ourselves. We can going to continue to have better and better tools like NA 10's thing is going to improve a lot. I'm sure we may honestly start to see a shift towards scrapping automation platforms entirely and just building the automations in custom code within something like cursor. And I mean I also expect the stuff to come to voice agents as well and any kind of AI development that you may think of. we're going to be able to use vibe coding techniques and prompting to get our way to something that's less an initial like V1 a lot faster and that's quick and great news for us. The value that your agency provides is going to largely come from the testing and the optimization of the system that you build. So take for example an AI appointment setter that's there is a lot of optimization and testing that needs to be done on that in order for it to really get into production and do a really good job. Same things for voice agents as you have seen on a podcast I did recently with Brendan Jawat. his development process for AI voice agents is literally like 2 weeks of actual development and then 6 weeks of testing in various different ways of testing whether that's testing internally with the team testing with an AI automated tool and so the agencies who have the best testing and optimization systems and processes internally are going to be the ones who are able to get their clients to the ROI or to the real unlock for some of these key systems that they need for them to see some sort of positive return on it. As you guys may know with things like appointment setters or AI receptionists and these really key systems that you plug into a business, it's not a small function of the business. It's a really massive component and there's going to be a lot of feedback and back and forth with clients in order to get it performing as needed. And then even beyond that, an optimization process of okay, how can we split test? What are we optimizing for? Building out systems internally that allow you to do this more easily and compress those timelines down are going to be where the agencies really win. And this ties directly into that MIT study that found that 95% of these enterprise pilots are failing. And that's because the companies that were trying to set them up were one avoiding these kind of tough and actually transformative use cases because they had a lot of friction and there's a lot of difficulty in actually getting like pushing through that gnarly like optimization and testing period to actually replacing a significant part. So there's a lot of things that you can apply AI to in a business. But the core ones, the most sort of transformative ones are going to be a lot more difficult than like the oh just a little like email writer or a little like copywriter or something like very basic tools. the real transformative things that provide a positive ROI are going to be kind of gnarly. And the agencies who tackle those gnarly problems, but have great systems on how to test it and get feedback from clients and incorporate that and get them to production at a state that they're happy with and is providing the desired outcome are going to really be the winners when it comes to AI development next year. Production number seven is that IP is going to be

the endgame for agencies in 2026. And what I mean by this is that building like a seven figureure agency is a great business, don't get me wrong, but at the end of the day, it kind of still feels like a job. It's not the most highly leveraged business model. You're having to work with clients all the time. And while we do love our clients, you do sometimes feel like you're at their well wrapped around their finger, right? So, and the thing is with an agency, you're not really building like a huge asset that's going to be able to sell for life-changing amounts of money. And don't get me wrong, there will be some agencies who do that where billionaire wants to gobble up a whole AI consulting and development team for sure, but it is not going to be the same as selling some kind of SAS product. So my prediction for 2026 is that the smartest agencies are going to be using their service-based business as an R& D lab to find software and larger opportunities that they can take and really roll out of the agency into something that they can sell for life-changing amounts of money. So this is essentially like your client is paying you to solve a problem for them and you get to see that in many cases you will still own the IP and in the contract talks that I've done on this channel before you want to be keeping the IP off these projects and if you're going to give it away you better be getting paid a lot more. So in most cases, your agency is actually going to own the IP for everything you build there. And if you find a great use case that your client has literally paid you to build, then you have an opportunity to take that and turn it into a different business where it's like, hey, we're going to go license this. We're going to build a SAS platform around it. And I think we'll start to see the divergence between the ones that will stay small and go on to become $und00 million companies. So I've been pretty clear with you guys for a long time that this is our model at Morningside. And just always keep your eyes out when you are either looking through your leads that have come in are like, "Oh, hey, that could actually set up an interesting play there. " or of course the projects that you actually finish. Is there anything here that you could go on to sell more of like a really big opportunity that you could take this and take a lot bigger? Prediction number eight is all about the

partner race being on now. And what I mean by this is that what we are seeing from the AI transformation work we with our clients is that it's very sticky if you do it right. Like we've been out doing in-person audits in the States recently. We've also gone out to a client in Sydney and Australia. And when we get in person and we start to build these relationships with our clients and they're like they really like us not only as people but as for the work that we do. We start to build this really tight relationship with them and that gets even deeper and deeper as you go and do audits of their companies. You talk to all these staff like you become friends with a lot of the staff. You understanding the workflows and the challenges and the opportunities of the whole business very very deeply. And once you have that depth and understanding of a company you have a lot of leverage over them basically because they don't want to go and do all that with someone else. And if they really like you, they're like, "Man, we want to keep working with these people. " So when I say the partner race is on, what I mean is that you basically have the luxury right now before everyone gets onto it to go and cherrypick your dream clients. Who do you want to work with? Can you try to like make a very targeted effort to get a sort of midsize company, maybe 2, 3, 4, 500 people or more and say, "Look, I want to be the AI transformation partner for that company. " like go out on a limb, offer a free freaking audit, go and do 2 weeks, go in person, make an effort because once you have built that relationship and they see that you are the people that really care, that you're a team that's capable and that they want to work with, you can have their business for the next 5 10 years if you want to run it that long, you know. So, so the partner race is well and truly on in 2026. And I can tell you wholeheartedly that it is much better to have a few awesome partners that you love working with that you can continue to do more work for and charge more for rather than having to go and sign like 10 new clients a month just to try to make the same amount of money. So, and so what I'm kind of saying is like, yeah, get off your laptop, go and take make the effort to fly out if you need to go and have a coffee, go meet people, go do an in-person audit, whatever you need to do, but those who can get out from behind the screen and go out and build these relationships with people are going to really crush next year. And you can be sure at Morningside, we're going to keep doing it, too. Prediction number nine is all

about the rise of the Ford deployed engineer. So, this is a very unique role that is emerging in the AI transformation space right now. And it's essentially like it's not a pure developer. consultant. It's kind of like a hybrid that can do both. So you're able to do the consulting portion. And by Ford deployed, it means say I can send out say I get a new client in Indonesia. I can send out one of my forward deployed engineers that I've trained on my consulting process. They're also technical enough to be dangerous. They can go out there, they can do an in-person audit with them, interview the whole team, really understand the business problems that they're facing, build rapport. They're also good communicators and represent the company well. And from there, they're able to use things like Claude Code or Lovable or whatever tool you want to use. And they're able to right there in front of the clients mock up what these tools and dashboards or systems that you can create for them will look like. And this is literally the process that we've applied recently at Morningside. Our team was out with our MBA client doing this in front of them. And she was able to show within the space of 2 weeks. Not only do all of the consulting process and figure out what the problems were, but then present to them a bunch of kind of working prototypes of what the system would look like. You get to show them and allow them to click around and use it. And that's the blend of this consulting skill set with the engineering skill set into this forward deployed engineer. And there's going to be an explosion in demand for these. So if you're an agency owner who maybe is struggling with the agency, would rather just kind of focus on the doing and you can kind of look between the AI automation and the development and also the consulting and you like the thought of that. You can get paid a ton of money by coming and working at places like Morningside cuz we're definitely hiring more of them. Or if you're an agency, you need to be able to train them up within your organization. When someone comes in, maybe they've got a good development skill set or a good consulting skill set. You need to be able to train them up to turn them into this for deployed engineers. You can send them out because it's a really good way of building those relationships and getting a client locked in for much larger transformation projects afterwards. And in fact, my head of consulting, Nick, is actually saying that the Ford deployed engineer will be the highest paying job of all time. So, he's pretty bullish on the value that these Ford deployed engineers are able to create. And if you've been watching my channel for a while, you're in the perfect position to either hire them as an agency or to become one yourself. But this is a new opportunity popping up for next year. So protection

number 10 is about a specific kind of offer that at Morningside we really think is going to explode next year and you can call it an AI executive. And this is where you're able to create an AI assistant for leadership within a company that is able to understand the current things going on in the business, the data, pulling in data from say YouTube analytics or the marketing data or the website traffic and so on. And also bringing in information around like the context on the business, what initiatives you've started recently, what the progress on those are, what you've done over the past 6 to 12 months. When you have an AI assistant that has full context, all of these things, you can use them as a very impartial assistant or adviser on what's going on in the company and take some of the emotion out of it. And we're so bullish on this because we have literally made it for ourselves in claude code and as kind of like a prototype. And it's been incredible for me and my leadership team to be able to upload our business data query across it and ask questions on what we should do and maybe areas to look out for or how to plan the next quarter. And this is really just scratching the surface, but I can see how incredibly valuable this will be moving forward. And I think if you can get a good offer around it to provide to your clients next year, you'll be able to make a lot of money around it, especially if you systemize because you could essentially just set them up code and put a bunch of data in it and give them an incredibly valuable thing. or you could wrap a skin around it, make a little product for it. Either way, it's valuable and you can start selling it next year. Okay, now to wrap things up

in my 11th and final prediction. This one is going to be a little bit more of a moonshot, but this is definitely where I see the industry going and it's sort of the continuation of these vibe coding trends out to their greatest extent. So in my opinion, when you look at just how good things like Gemini 3 are at vibe coding and building software, you can create incredibly beautiful websites. You can build any kind of internal tools you need like CRM and project management and ticketing systems and all of the things that AI coding platforms can now kind of just build in 5 minutes. If you really think through this a few iterations, you see where the opportunity for a company like Google is. And I think Warren Buffett just dumped a whole lot of money into Google. And I think for good reason because people around him must be saying like a company like Google who has control basically they have vertical integration throughout the whole thing. They have TPUs so they have their own hardware. They have the best models and writing and coding and also image and video generation. They have an incredible vibe coding platform. And they have Google Workspace that's like everything you need as a small business like docs, slides, email providers and things like that. And of course they have Google Cloud as well. So for hosting any applications or storing data, Google literally has everything. And so if you look at maybe whether it's next year in 2026 or further down the line, they are getting to a point where they can have a basically business setup wizard and you could take one of your clients and say, "Okay, we want to strip everything off and you're using clunky tools on this. You're paying for like 15 different SAS subscriptions. We're going to be able to scrap all of that and we're going to rebuild your tech from the ground up. " And so okay, what do you need? And we have all these kind of primitives, right? You have like a CRM and you have project management and you have maybe a calendar and booking system. Maybe you need a website and a funnel. Google will be able to vi build all of these and connect them together via things like Google Workspace and Google Cloud. And so for us as an agency, sure you could say like businesses maybe will try to do this themselves, but they just don't do not know enough about it. So our opportunity whether it's next year or beyond could be becoming more of a facilitator or an integrator on top of these where our consulting skill set of being able to like understand the business and really feed that into this business in a box kit by Google or whatever platform it ends up being. our value can really shift into this understanding the business and their problems and translating that onto this new version of the business that is built from the ground up to be a fast softer rise from the ground up all the internal tools and dashboards they need and to have AI integrations throughout and then also that value of the education piece as I talked about previously. If your agency has good education, training, and adoption processes, then you can use the power of this new platform from Google, which is going to basically do all of the hard stuff for you, but you get to do the fun bit of talking to clients, going out in person, hopping on a flight and going to freaking, I don't know, Hong Kong and working with a company there, or you get to build a much cooler business around this because it becomes inerson connections, relationships, consulting, understanding the business, and then feeding that all into this Google business in a box, and then rolling out through the education piece, the adoption and training needed to actually see this succeed. So instead of having this gnarly migration of like us manually taking a business off the current tech stack over onto something new and building it from scratch, this new kind of vibe business stack can have agents that can manage all the migration and set everything up correctly for us and get to the point where businesses are fully rebuilt from the ground up. So I think this is just like an awesome thought. I thought I'd throw it in here for you guys. But calling it right now where it's next year or the year after, that's definitely the direction things are heading in. And not financial advice, but Google stock may be looking like a good buy even though it's up so far right now. So guys, that is it for the video. I hope you guys enjoyed that. There are some really, really juicy things happening in the space right now and we are all so well positioned to benefit from it. If you're watching this channel, we're not fighting each other here. Like this seriously is we're just a small little drop in the ocean. Even though your whole YouTube feed might be stuff like this, the rest of the world doesn't know anything about this. And we are in the position where these tools are getting so much better and better for us to do the really hard stuff around the development that we can start to focus on okay how can we create a great consulting process and to probably understand what we've built for them and then to adopt it and really see a change in the organization and manage the culture around AI within the company. So there's just such a bunch of cool freaking problems we get to solve and that is the privilege of working in the space and being alive in this day and age guys. So as you can tell I'm super excited for 2026 and I'm so grateful to be on this journey with you all. whatever small role I've played, I hope I can play another little bit of it with these predictions because if you can just get one or two of these things right, then 2026 will be a freaking awesome year for you guys. So, I've got another video coming out that's going to be predictions more so on the consumer side. But that's all for the video, guys. Thank you so much for watching. I have a video on the AI bubble, breaking it down if you want to see that, explaining what the AI bubble actually is and what the real risks and opportunity for us are as AI agencies there. Thank you so much for watching and I'll see you in the next