‘Agency commissions on media bought have dropped to as low as 0.50-1%, talking about depleting agency margins is no more akin to crying wolf as we are at rock-bottom now’, says an advertising industry leader who didn’t wish to be named. Competition has made undercutting fashionable but business far from sustainable, leaving the media agency with little to brag about, despite an apparent win.
How then, does one stay afloat in the absence of a decent margin? A tip off by a media agency led to raids by CCI on various stakeholders like ISA, AAAI, IBDF and over 10 media agencies like GroupM, Dentsu, IPG, Havas etc. If the raids are anything to go by, the obvious answer to the above question could well be — price fixing, scraping incentives from broadcasters, cartelisation, lack of transparency in the buying and selling rates used to earn bigger profit, creating monopolies and even stifling the smaller players by restricting competition in the process.
IMPACT spoke to some leaders whose agencies are in the eye of the storm, relevant stakeholders and some experts too. While there has been no clear communication from the CCI, below are a host of scenarios plaguing the ad world on which the watchdog can possibly dig up dirt.
Scenario 1: A media agency may buy ad spots from the broadcaster in bulk at a lower cost say X and sell it to the advertiser at a higher rate (X+10) which has over time become an important revenue source for the agency, say sources. Some agencies, of course, share the price benefit with the advertisers but most don’t. And it is not technically a legal revenue source because the agency-client relationship does not allow the agency to buy and sell on its behalf at prices that are not transparent to the client. Also, in the process the media agency has made an earning over and above the agreed commission rate. But it barely stops there.
Scenario 2: It turns murkier when large media agency networks use their deeper pockets to dictate the prices offered by broadcasters as opposed to letting the market rates determine it. Using forward buying they control a large chunk of the ad spots offered by the media house for an in-demand property. And make sure that the remaining slots are sold by the broadcaster at a much higher rate to other media agencies in the game. This ensures that the media agency in question is able to give a better deal to its clients even after adding its own margins, creating a monopoly of sorts for that property.
Scenario 3: The agency which has buying capability not only gets the broadcaster to reduce rates but is further believed to arm twist them. For e.g., ‘I am giving you 15% of your total business but if I pull back at the end of the year, your targets will suffer, so give me an incentive to make sure I don’t take the clients’ business elsewhere’. Volume discount kickbacks/ rebates similarly have also led to the death of smaller players on digital where Google, Meta, Amazon, Flipkart have created a monopoly. Smaller agencies have told IMPACT, that large clients prefer the big 5 networks while buying in bulk because they get better rates, courtesy the discounts, “Even if we offer better service we suffer. In certain cases, they also add it in the contract that if sale is made at a rate which is lesser than the market rate, you can’t get our books audited,” an independent agency leader adds.
Scenario 4: Cartelisation— where networks come together to fix a minimum ad rate because for bulk buying big brands anyway don’t tap smaller agencies. The broadcaster is happy too because with forward buying a bulk of his inventory is getting sold at a price higher than usual and in one go. But the client clearly ends up paying more than the market rate.
Debate over rebates
While senior leaders from the top media agencies were grilled two days in a row, mobile data from the raided media agencies was cloned, documents and laptops seized to uncover relevant communication which could nail the unfair practices, it remains to be seen if conclusive evidence can possibly tip the scale against media agencies. Interestingly less than two years ago, Indian Society of Advertisers had tried to lay down some ground rules for better business practices, including the right to audit, a demand for Agency Volume Benefits (AVBs) and rebates to be passed back to the advertiser, and a host of dos and don’ts for digital media spends etc. Large advertisers with annual ad spend between Rs 1,000 crore and Rs 2,000 crore could see rebates of up to Rs 100-200 crore, making it a crucial financial factor, especially in challenging economic conditions.
In August 2018, the Indian Broadcasting Federation (IBF) advised agencies against extending discounts to clients without prior approval from broadcasters. Similarly, the Indian Newspaper Society (INS) raised this issue with the Advertising Agencies Association of India (AAAI). By December 2019, IBF issued a formal directive reinforcing this stance. While these measures were expected to curb the practice, the growing competition among media platforms for ad spending has kept rebates in play which could well be the bone of contention now.
Power centre 
An interesting perspective comes from a former CEO of a news channel who says that India is an advertiser-based economy as opposed to a subscriber-based one, considering that people don’t like paying for content here, so the advertiser becomes the hand that feeds. He also believes that the owners, editors, anchors and the CEOs of media companies are less powerful than five of the top media agencies that deliver brand ads on screen. MK Anand, former CEO & MD of Times Network explains, “The assumption is that the right product finds the right buyer— with the media company as the intermediary which is putting out that message across the right channel through the best content that appeals to the audience or buyer. Right But what about the elephant in the room who can play god? The media buying specialists who about 20 years ago singularly became the most powerful entity in the Indian media industry who control the economics of the Indian Media industry and influence Content and Culture. Incidentally the top firms in the space are all foreign owned. While historically there has been stringent limits for FDI in media, there is no such thing for the media agencies.”
He goes on to narrate an incident where it became apparent that media agencies are tactfully holding the strings, “Seven years ago, a presentation by one of the topmost media agencies in the country got leaked which spoke about how they need to push advertisers to other news channels for the next two-three years in order to ‘control’ Aaj Tak which was on top of the charts for a long time. They had singled out some news channels which they wanted to prop up instead.”
Adding to that a veteran CEO of a popular brand says, “I was recently at an event where representatives from one of the TV channels which caters to a Tier 3 market proudly said that a premium automobile brand is advertising on their free-to-air channel. Someone in the audience asked why a premium car would be advertised on a channel whose audience doesn’t have that kind of purchasing power. The underlying message is that, there is hardly any media planning, ads are being sold by media agencies because they are getting a kickback from certain broadcasters. Even the broadcasters that are investing millions in their content are left at the mercy of media agencies who can threaten to replace them anytime. Fact of the matter is pitching and counter pitching has brought media agency commissions to zero and the only thing they’re left with now is incentives.”
Absence of a measurement yardstick
Some marketers that IMPACT spoke to blame it on the lack of a reliable yardstick or genuine ratings which determine reach. BARC’s highly skewed sample size of 55,000 is hardly ideal for understanding the behaviour of 200 million TV households in India. A marketer quoted the CEO of a media agency who nonchalantly said, “My job is to get them reach, not quality of reach.”
A marketing head of a brand in the construction sector adds, “Media planners today have been selling billions of dollars worth of media to clients. But after spending money based on the media plan if my sales don’t move then won’t I stop spending a fortune on advertising and look for other means. So, AdEx is not going down on TV because the economy is going down, AdEx is going down essentially because I’m not getting returns on my investment from media planners.”
Another marketer says digital media buying is as much of a rabbit hole; with so many people in the chain, walled gardens, lack of measurement being even more of a concern there; it is ripe for corruption if left unchecked.
MK Anand says, “Back in the day when Digital was trying to make its mark in India, Global Digital Majors allegedly had desks within big agencies, handholding them on how to advertise on digital. What kind of restrictive trade practice is that, where you are allowing certain companies inside and not the others? The initial years of money going from traditional media to digital media has been thickly lined by incentives to these agencies. And these incentives in most likelihood has not gone to clients. So, media agencies are impacting technological prioritization, economic prioritization, content prioritization and have unbridled power.”
The penalty
Interestingly, India was the second highest growth market for AdEx at 9% in 2024 (Rs 107980 cr) even if it comprised only 1.2% of Global AdEx as per PMAR 2025. The market is seeing some big mergers, namely Jio-Reliance and a possible Omnicom-IPG union. The current inquiry by CCI focuses on whether advertising agencies engaged in price-fixing or manipulated discounts, resulting in advertisers being overcharged, also disadvantaging smaller agencies in the process. Experts say that if found guilty, the agencies and advertising bodies being probed could face severe penalties, including fines amounting to three times their annual profits or 10% of yearly turnover.
Sanjeev Shukla, Brand Consultant, says, “’Rate-Fixing’ in collision and/or by flexing muscles is neither new nor uncommon. With consolidation/acquisitions both at Media and Agency ends, it has only gone up. Moreover, there are no standards or benchmarks or a range to these rates and in a free market, such rates are driven by supply & demand. So overall, these dominant media houses and network agencies have all reasons & rationale to indulge in what they have been indulging in. But it is terrible for smaller & independent agencies and for clients. They are entirely at the mercy of the gang.”
Harshil Karia, Founder of Schbang, an independent agency says, “The only point of view that I have is that this makes a bigger case for power redistribution in the media ecosystem. We have been a duopoly / triopoly for too long and there is a case for clients to invest their media with Indian players that drive higher transparency standards.”
Another senior marketing leader says, “Most industries are turning into a market of 2 and a half, be it the Disney-Jio merger or Omnicom IPG merger, and that is good because it gives the players the scale to operate in. The problem according to me is not monopoly, it is transparency.”
Talking about transparency Sudhir Nair, CEO and Founder, 21N78E says, “I personally don’t believe that cartelisation is possible. It’s not a monopoly for one person to dictate terms. There are too many stakeholders and in a competitive environment, it is nearly impossible. Secondly, even the marketers are seasoned and are on top of the game. But in many cases the volume buying power defines the buying rates, which puts smaller agencies at a great disadvantage. In digital, biddable media is a great leveller. But in this case who is to blame? An agency that has a large client base or a broadcaster who has a large inventory to sell?”
Coming back to the raids, initial speculation suggested that the inquiry stemmed from alleged coordination between agencies and broadcasters to determine ad rates and possible cartelisation. However, by Wednesday, attention had shifted towards contentious undercutting of commission and media rebates/discounts. While some industry insiders believe the case could be linked to IPL ad rates and discounts due to the timing of raids coming a few days before IPL, these claims remain unverified. Also, experts say it is unlikely that it will impact IPL buying negatively considering that most of the deals are already in place and struck for a year. An expert says, “A client will do whatever it takes to be on the platform even if it through a direct deal. So, there’ll be no impact at all on the volume, in fact they may get some sort of a yield because of more transparency setting in post raids.”
For most marketers it is a question of ethics. Kedarswamy Ravangave, Executive Vice President - Marketing, Kotak Mahindra Bank says, “If the industry has been playing a rigged poker game, the dealer just flipped the table. For marketers, this isn’t just about compliance—it’s about credibility. Consumers already question ad pricing; now, trust in the entire ecosystem is at stake. Brands must decide—stay in the shadows of collusion or step into the light of transparency. The ad world’s black box just got pried open, and the only winners will be those who embrace radical honesty.”
Krishnarao Buddha, former Senior Category Head - Marketing at Parle Products says, “The smaller agencies may struggle to get a competitive price offering for their clients when a majority of the broadcasters’ revenue targets are being achieved with few large agencies. It may lead to losing accounts in certain cases. The CCI raids across large agencies will be a huge jolt for all the stakeholders including all media advertising agencies, broadcasters and the clients as well. There will be major trust issues for clients towards their agency partners and it could lead to several rejigs in the compensation structures. It may also lead to clients bypassing the agencies and entering into contracts directly with the broadcasters for certain large properties.”
But largely it boils down to the sorry state of affairs and agency commission going down from a healthy 15% a few decades ago to as low as 1% today. In addition to an overhaul by the regulators, is a rate correction also needed. Sudhir Nair concludes, “These raids are in some ways also indicative of what is plaguing the industry. You acquire a new client on the basis of the media rates as the clincher, beyond all the science an agency brings to the table. And in some cases, the following year you are expected to show further savings! Not to forget the consultants who have become the gatekeepers of media rates with little understanding of how brands and media operate. Consultants who believe rates for an Auto Sector and FMCG should be the same irrespective of the spends!”
