Transparency shift: CMOs navigate new norms in agency profit models

When CMOs suspect agencies are profiting off of their ad spend, they often become uneasy. Typically, this leads to audits, hiring consultants and publicly expressing frustrations about agencies covertly earning margins on their ad dollars. So, when a recent ANA report highlighted how major agency holding companies profit from media sales to clients, there was an expectation of a significant uproar.

However, that hasn’t happened — at least based on conversations Digiday has had with ad executives following the report. Instead, there’s an acceptance. Many CMOs seem to be OK with their agencies finding new ways to increase margins, as long as the process is transparent, or at least openly acknowledges a lack of transparency.

“As far as cost, I am OK with my agency adding their margin if they are doing all the heavy lifting and proving their ROI,” said Raj Nijjer, head of marketing at growth platform Edge. “As media buying becomes commoditized and channels are increasingly fragmented, I expect my agency to offer the service so I don’t need to spend on a full-time staff cost.”

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