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Is your agency marking up your media? Four ways to check
I spent several years inside a network agency, and then several more at a platform selling into agencies. In neither role did I meet anyone twirling a moustache over a client's budget. What I met, repeatedly, was a set of arrangements that nobody had examined in years, which is a more boring problem and a more expensive one.
So before the four checks, a distinction that most coverage of this topic collapses.
Markup and arbitrage are not the same thing
Markup is your agency adding a disclosed margin to media it buys on your behalf. You know the rate, it's in the contract, and it's how the agency makes money. There's nothing wrong with it.
Principal media buying is your agency buying inventory for its own account, then reselling it to you at a price it sets. This is legal and increasingly common, and in some contracts it's disclosed clearly. The thing to understand is that when your agency acts as principal, it isn't your agent for that transaction. It's a vendor, and your interests are no longer automatically aligned.
Arbitrage is the undisclosed version: the gap between what was paid for the media and what you were billed, without you knowing there was a gap.
Only the third is a scandal. But you can't tell which you're dealing with from a monthly performance report, because none of the three show up there. They live in your contract and your invoices, which is why this is a procurement question dressed as a marketing one.
What the transparency studies actually found
Two pieces of real research, and I'd encourage you to read both rather than the headlines about them.
Read those together and the honest summary is not “agencies are stealing from you.” It's two things at once.
First, roughly half of programmatic spend reaches a publisher. That's the number worth sitting with, and it's consistent across two independent studies three years apart: 51% in the ISBA work, 47.1% in the ANA benchmark. The rest goes to intermediaries, most of them providing a real service, all of them taking a cut.
Second, and this cuts against the alarmist version of the argument: transparency is improving substantially. Unattributable spend falling from 17% to 3% is a large move in the right direction. Working-media share rising 11 points in two years is another. Made-for-advertising inventory at 0.39% of spend is a fraction of what it was. If you buy programmatic through a reputable chain in 2026, you're getting a materially better deal than you were in 2020.
“The supply chain got cleaner. That's a reason to check your own, not a reason to assume it's fine.”
One thing these studies do not tell you
Both are about programmatic display bought through DSPs and SSPs. Neither says anything about Google Ads or Meta Ads bought through a self-serve account, where you transact with the platform directly and there's no chain of intermediaries to leak into.
If most of your budget runs through Google and Meta self-serve, supply-chain leakage is largely not your problem, and anyone quoting a 50% figure at you about your search account is stretching evidence past where it goes. Your problems are more likely structural, and I've written about those in five numbers that reveal budget waste in any ad account.
Know which question applies to your setup before you spend money answering the wrong one.
The 10-point checklist covers account-level waste, which is the more common problem for self-serve buyers.
Four checks you can run this week
Find out whether your agency acts as agent or principal
Look for: “principal”, “inventory media”, “own account”Open your master services agreement and search for those terms. If your agency can buy as principal, that's a different commercial relationship from the one most marketing directors think they have, and it may apply to only part of your spend.
Ask directly: “For what share of our budget do you act as principal rather than as our agent?” A straight answer is a good sign regardless of the number. A vague one is the finding.
Where to look: master services agreement, media trading terms, any annex on inventory media.
Reconcile one month, platform invoice against agency invoice
Flag: any unexplained gap over 2%Pick a single month and a single channel. Ask for the platform-level invoice or billing export, then set it beside what the agency billed you for that channel in that month. Fees and disclosed margin should account for the difference exactly.
Where budget runs through a DSP, ask for the DSP's platform fee and any tech fees line by line. The ISBA work found a DSP core fee of 3%, so you have a public reference point for whether what you're being told is plausible.
Where to look: platform billing exports, agency invoice detail, DSP platform fee schedule.
Work out what your fee structure rewards
Flag: fee is a percentage of spend, with no efficiency componentPercentage-of-spend pricing is standard and openly published. One named agency lists management at 10% to 20% of ad spend, or roughly $1,000 to $3,000 a month, on its own pricing page.
The point isn't that the model is wrong. It's that under it, your agency's revenue rises when your budget rises, whether or not the extra budget worked. So when the recommendation every quarter is to increase spend, you can't tell from the recommendation alone whether it's the right call. Ask what share of their fee is tied to an efficiency or incrementality measure. For most contracts the answer is none.
Where to look: fee schedule in your contract, and last four quarterly budget recommendations.
Make sure you own the accounts
Flag: agency-owned ad account, pixel, or Business ManagerThis is the one that costs clients most and gets checked least. If your agency owns the Google Ads account, the Meta Business Manager, or the conversion pixel, then your historical performance data, your audiences, and your learning periods leave when the agency does. You cannot audit what you cannot see, and you cannot take with you what you do not own.
Check the ownership of each ad account, each pixel or conversion action, and each data source. Then check that you hold admin rights rather than the agency granting you access to something it controls. Fixing this costs nothing while the relationship is good and is close to impossible once it isn't.
Where to look: Google Ads account access settings, Meta Business Manager asset ownership, GA4 property admin.
What a good answer sounds like
A well-run agency will answer all four of these in a single email, because they already know the answers. The reply you're hoping for looks roughly like: we act as your agent on all of it, here's the fee schedule, here's the reconciliation for last month, and you own every account and pixel.
The reply worth worrying about isn't a bad number. It's a delay, a request to get on a call rather than put it in writing, or a reframing of your question into one that's easier to answer.
Keep the tone right. These are procurement questions, not accusations, and they're normal in every other category of supplier your business uses. Asking them is a sign you're a serious client, and a good agency reads them that way. In my experience, the agencies that resist the questions are rarely hiding arbitrage. They're usually just disorganised, which is its own finding.
If you buy programmatic at scale
One caveat on all of the above: a full supply-chain audit is a different discipline from a performance audit, needs contractual and financial review alongside media expertise, and is priced accordingly. If a large share of your budget runs through a DSP, that's specialist work worth commissioning properly. I've set out how the price bands compare in what a paid media audit should cost.
What I'd do first, though, is check the four items above. Three of them are free, all four take an afternoon, and the fourth one, account ownership, has saved clients more than any supply-chain finding I've ever made.
Want a second read on your setup?
Bring your last monthly report to a free 30 minute call and I'll tell you what's missing from it. I hold no media budget and take no platform commission, so there's nothing for me to sell you except the audit itself.
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