The thing is, these agencies do not come at user experience from an honest place.
When criticizing ad agencies, you have to begin at the core — advertising, as it is widely practiced, is an inherently unethical and, frankly, poisonous endeavor that sees people as sheep to be manipulated, that vaunts style over substance, and deems success to be winning awards.
This is a remarkable essay (not your typical post). The main point is: UX from ad or interactive agencies can't be great, because the organizations themselves are not great, the business of advertising is (morally, ethically) wrong.
Merholz' argument is really with the business and work of advertising and how that industry ruins it's people. But, agency problems aside, i'd really like to dig deeper into the idea that better work comes when the organization's soul is well aligned with the work. Can you separate the work from the workers?
If you care deeply about good user experience and you've had experience working in or with ad agencies or interactive agencies, i'd suggest you read this and the follow-up.