This is a business of trust: Why advertisers aren’t panicking over CCI raids

The Competition Commission of India's (CCI) recent raids across top media agency offices in Mumbai, New Delhi and Gurugram have reignited an industry-wide conversation—one focused on the long-debated issue of non-transparent commission models and agency-client dynamics. After a long period of silence, advertisers are stepping forward to say: this may not be the crisis it’s being painted as.

Far from feeling blindsided, many advertisers believe they’ve maintained a fair degree of control over pricing, delivery, and contract audits. “Agency consolidation is an industry reality and that has its fair share of impact on pricing” several marketing heads told e4m, “but to suggest cartelization is rampant would be an exaggeration.”

As the investigation plays out, what emerges is not panic—but an opportunity: for greater transparency, better frameworks, and renewed trust across the media ecosystem, said stakeholders. 

The head of media at another leading FMCG brand, speaking on condition of anonymity, was candid about their view on the dynamics between agencies—firmly ruling out the possibility of any collusion among them.

“Agencies compete fiercely; in fact, many can’t even sit in the same room, let alone collude. What’s really happening is a misalignment—between big advertisers, big agencies, and rising platform costs. Clients demand delivery and value; agencies, in turn, may leverage volume for better deals. But as advertisers, our focus is on transparency of output, competitive commissions, and periodic contract resets—not on micromanaging backend negotiations. This is a business of trust, and the market eventually balances itself,” they said.

What is the lack of transparency in commission models all about?

At the heart of the debate is what some are calling a dual-revenue system.
Traditionally, media agencies operate on a commission-based revenue model. They charge advertisers a fee for planning and buying media space—this could be a fixed percentage of the media spend or a negotiated service fee. However, over the years, allegedly another significant revenue stream has quietly emerged: backend incentives or volume-based rebates from media owners such as broadcasters, publishers, or digital platforms.

These rebates are often linked to the total volume of business the agency places with a particular media partner. In essence, the more advertising money an agency channels to a platform, the more money it gets back in the form of commissions or bonuses.

While there is no clarity on CCI allegations, assumption around the core issue is the fact that advertisers are frequently not made aware of these backend arrangements. This could mean two things.

First, there is the question of agencies prioritising their own financial gains over what is truly optimal for the client and recommending media channels that offer better kickbacks.

Then there is also another aspect of leaving advertisers in the dark about how much of their spend actually goes into media buying versus how much the agency earns indirectly.

Do advertisers truly care about the discounts agencies secure from platforms?

“Not really,” said most.

“We’ve always believed that large agencies bring significant value to the table — not just in terms of rates or media buys, but also added value in various forms. The belief has been that bigger agencies, which underwrite substantial volumes with publishers, are able to negotiate better deals based on annual commitments. These benefits are then passed on to serious advertisers. In my experience, whenever I’ve gone directly to a publisher or through a smaller agency, the quoted rates have usually been higher,” said the head of media of one of the largest F&B brands in the country.

“So the general perception has been that bigger agencies can negotiate better, structure larger deals, and secure better outcomes — not just for large-scale advertisers like HUL, P&G, or Amazon, but also for mid-sized brands. At every organization I’ve worked with, I’ve seen this play out — not only in pricing but also in added value like bonus spots, extra inventory, or creative enhancements that smaller advertisers typically don’t get,” they added.

Some advertisers pointed out that their media budgets and agency commissions are pre-defined, along with clear deliverables. "Whether agencies receive additional incentives from platforms isn't our concern—everyone’s in the business of making money. As long as our KPIs are met and internal audits ensure transparency, we’re satisfied," one marketer said, adding that the allegations currently under discussion feel far-fetched from their vantage point.

Some advertisers said they also directly deal with broadcasters and platforms and are in the know in every step of the way of spending their ad dollars.

“This issue doesn’t really apply to us because, over the years, we’ve understood that leaving things open-ended can put us at serious risk. Hence, whatever we do with agencies is predefined and fixed,” said another FMCG marketing head,

“We’ve chosen to deal directly with broadcasters. Their KPIs are tight, and everything is tracked. We also work with audit agencies like EY and PwC, who strictly validate all the numbers. We conduct our own price discovery exercises from time to time to stay aligned with market rates and ensure that we’re aware of what broadcasters are actually offering,” they added.


Lack of transparency- a global concern

This model has come under increasing scrutiny both in India and globally, with watchdogs like the CCI in India and associations like the ANA (Association of National Advertisers) in the US calling for greater transparency in agency remuneration and media trading practices.
While the ANA doesn’t conduct raids, there have been similar investigations in the US a couple of years back.

From October 20, 2015 through May 31, 2016, K2 Intelligence conducted an independent study of media transparency issues in the U.S. advertising industry on behalf of the ANA. K2 was selected to lead the fact-finding portion of the study after a Request for Proposal process initiated by the ANA on June 17, 2015.

The study revealed that numerous non-transparent business practices, including cash rebates to media agencies, were found to be pervasive in a sample of the U.S. media ad buying ecosystem.

K2 interviewed more than 20 sources about their experience with contractual provisions regarding the advertiser-agency relationship and actually examined several relevant excerpts from advertiser-agency contracts. In practice, it appears that many advertiser-agency contracts allow for the agency to act as both agent and principal, depending upon the situation.