How AI Is Collapsing Marketing for Contractors

AI is going to revolutionize and upend digital marketing for contractors in the next 12 months. I’m going to show you what’s going to happen, why it’s going to happen, and what you need to do to be prepared. I’m Dennis Yu, and every week I walk through marketing principles as the Marketing Mechanic so you can understand what’s coming ahead and get in front of this game.

The current state: too many middlemen

Here’s how digital marketing typically works for contractors today. You give money to an agency or freelancer, and that agency does a number of things inside a secret black box.

The agency has a salesperson, usually the founder, who passes work off to analysts. Those analysts pass it to VAs or white-label subcontractors, who pass it off yet again. It’s like a drug cartel with many layers between you and the eventual worker, usually someone in Pakistan or the Philippines.

Of every dollar you spend, roughly 90 to 95 cents goes to overhead. You might pay $5,000 a month, but the underlying work being done costs about $300. You’re hoping all of this eventually produces calls, which turn into appointments, which turn into revenue in your ServiceTitan or QuickBooks. But the inefficiency is staggering.

Why the collapse is happening

The pressure is coming from two directions.

Google, Meta, and the major AI platforms are actively eliminating friction. Through AI Max and other tools, they’re making it easier to run ads, easier to rank on Google Business Profile, and they’re eliminating spam. A lot of the things that were done by these agencies are just going away. That’s why if you hang out in agency groups, you see them freaking out about all the latest changes, saying “Google’s eliminating all of our techniques.”

Google and Facebook aren’t doing this because they hate agencies. They’re doing it because there are too many parasites in the middle, and they want more of every advertising dollar to actually reach their platforms.

At the same time, contractors themselves are starting to take over. I’ve seen people like Brad Strawbridge fire their agency and use Claude, ChatGPT, Grok, and Gemini to do the work themselves.

Meanwhile, I’ve talked to my agency friends and they’re telling me they’re getting 10x on their labor. Every A-player on their team, including ours, is now worth 10 times more. That means B-players and below don’t really have a job anymore. That’s why you see the VAs, the Fiverr and Upwork folks doing mechanical things, struggling with layoffs.

The role of agents and orchestration

Right now, AI agents are handling individual tasks: repurposing content, collecting reviews, tuning websites, fixing Google Business Profiles. Each agent uses a particular tool. But most agents are single-tool use, and what’s happening now is that this is being replaced by an orchestration layer.

You may have seen last week that ChatGPT and Claude came out with managed agents, creating a management layer on top of everything. Sam Altman, co-founder of OpenAI, said on the Stratechery podcast (my favorite podcast for strategy, tech, and AI) that what needs to happen is this: you as the contractor should be able to specify your goal as clearly as possible. “I want to drive more residential roofing jobs in Akron, Ohio at under $100 a call.” Then if you can put in the content, meaning your team’s collecting it from your CRM or field service management tool or CompanyCam, and your team can answer the phone, then all you need to do is speak that goal and put money in the machine. The machine only runs when you put tokens in, literally tokens.

The timeline

Dario Amodei, founder of Claude, says 24 months. Other guys are saying 18. I think we all agree 24 months is the outside. At 12 months is where most of the impact you’re going to start to see. For digital marketing specifically, almost everything in the middleman chain will be collapsed within 24 months.

The frontier models, Google, OpenAI, Anthropic, Grok, will absorb the work. Everyone else in between is either going out of business or getting acquired. We’re in what I call the teenage years of AI, going from child to adult. Give it another 18 months. Agents can do work, but they’re not being governed by a harness yet. The engine doesn’t have a transmission. There are a bunch of engines and car parts, but they’re not tied together in a way that makes sense. That tying together? Maximum 24 months.

What you should actually focus on

I see some contractors jumping heavily into different tools. They play with the latest model release. “Did you see 5.5 has a 1 million token context window?” They’re setting up MD files in Obsidian and deploying on Vercel. You know what? All of that stuff is just noise.

Anything in between what the AI can’t do, which is you as the contractor with what you want to accomplish, and the actual doing of the work, your crews out spraying and fixing air conditioners, everything electronic in between is about to be automated.

Stop wasting time messing around with configuration. Focus on where you have clear, differentiable signal value. When your team does great work, that feeds all the way back into the machine. That’s the loop. Your team does great work, that work shows up in the Content Factory process, which runs through skill files you give to your favorite AI. And how your work is being done should be independent of any particular model, so when Claude 4.6 moves to 4.7, you don’t have to worry about the noise of tools and agents and configuration layers.

Start asking your agency three questions. One: are there white-label firms involved? They’ll say no, but they usually are. Two: of every dollar I give you, how much actually goes to ads? They’ll bundle in charges for SEO or content strategy or account management, but really, how much goes to actual ads? That tells you something about the inefficiency. Three: can I see the output of the work being done? If they can show you, you can trace the path all the way through. You can use AI to audit their work. Go to your favorite AI and say “Hey, grade this work.” It will tell you how it fits into the process.

I predict, and you can hold me to it, 12 to 24 months from now most of these players will be out of business or absorbed by a couple major players. I’m making these videos because I want you to see the path that’s coming. Every time changes happen in the market, you can be rationally ignorant and say “I knew this was going to happen. I knew logically this was the path we were going down.” And you don’t have to worry about all these guys trying to scare you about AI.

If you do great work, take care of your customers, and care about reputation, AI is going to be a magnifier of what you have. And if you’re one of those young money bros just trying to collect money out of plumbers and HVAC guys because you believe you know more than they do, you don’t have very long. Contractors are watching. They’re going to start asking these questions.