Grey ad economy: Is ‘credit reselling’ the ad industry's dirty little secret?

New Delhi: Out of the Rs 1,64,137 crore that is expected to flow into the ad land in 2025, Rs 99,137 crore is being attributed to digital advertising, according to a GroupM report. 

Ad agencies in India are drooling over this huge capital and everybody wants the bigger piece of the pie. Some of these drooling devotees have turned to unconventional methods to bolster revenues beyond traditional creative and media-buying roles. 

One such practice that simmers under the shadows of the ad industry is ‘credit reselling’. This trade practice has gained quite a bit of traction and is gradually getting normalised. 

In fact, amid the turmoil of CCI raids on ad agencies and industry bodies over alleged anti-competitive practices, 'credit reselling' has emerged as another grey area under the competition regulator's scrutiny.

How does the mechanism work? 

A top executive of a renowned agency, who requested anonymity, explained how credit reselling actually works on Google and Meta. 

Advertising agencies often secure a robust credit line from Google Ads and Meta. These credit lines are linked to an account. The extent of these credit lines is based on the agency’s spending history, client portfolio, and relationship with the platforms, among other things. 

Ad agencies that have yet to gain that ‘repo’ with the ad platforms, or have defaulted on some grounds and got their account suspended, establish an understanding with the agencies with a prolific credit line and whitelisted account. 

Based on an agreement, the agency deemed trusted as per the platforms’ policies will create an account on behalf of the smaller or independent agency that is keen to advertise on the digital giants. So technically, they did not resell but outsourced their credit line to another agency.

Let’s put this in an X and Y analogy to have a better understanding: 

‘X’ represents a well-established advertising agency with a strong track record. This agency has cultivated a significant credit line from Google Ads and Meta, tied directly to its account. The size of this credit line reflects X’s extensive spending history, broad client portfolio, and longstanding relationship with the platforms, among other factors.

‘Y’ is an agency lacking that same level of credibility—either a newer player still building its reputation or one that has faced setbacks, such as account suspension due to payment defaults or running some questionable ads on the platform. As a result, Y cannot secure its own credit line from Google or Meta.

The mechanism operates as follows:

1. Y seeks access to advertising opportunities on Google and Meta but is hindered by its lack of a credit line or approved account.

2. X leverages its position as a trusted entity, recognized by the platforms’ policies, due to its robust credit line and whitelisted status.

3. An agreement is formed: X generates a new account under its name, utilising its credit line, and allows Y to advertise on the platform. The arrangement is done and the credit line is outsourced. X charges an interest on the amount Y is using on the campaign that is being run. 

In this structure, X serves as the conduit through which Y gains entry to the advertising ecosystem of Google and Meta. The process hinges on X’s credibility, while Y benefits from access it could not otherwise achieve independently. 

The black, the white, and the grey

Agencies outsourcing their credit line through fresh accounts on Google and Meta mimics a Pandora's box. While one might argue that this system is giving a chance to agencies that are small or working independently but are not getting whitelisted on the digital platforms, there is a huge grey area that lies there, too.

While the main agency, whose credibility is being used to run ads on Google and Meta, is only bothered about the huge amounts of commission they charge for this agreement, the agency that reaps benefits can run any ad (be it unethical or illegal) they like.

“Looking at it from a risk-to-reward ratio perspective, the reward is so big that the agencies with accounts are ready to risk their credibility,” the executive told BestMediaInfo.com. 

According to Google Ads, such a practice is a violation of the contract that the platform has with the agencies. “Advertiser may not resell, assign, or transfer any of its rights hereunder. Any attempt by the advertiser to resell, assign, or transfer such rights shall result in immediate and automatic termination of this agreement, without liability to Google,” the condition reads. 

The agency executive speaking on the matter claimed that Google and Meta are not completely oblivious to such a practice but since it is a win-win situation for all, not much is said and heard.

BestMediaInfo tried reaching the digital ad platforms but the requests were unanswered.

The legal lens

When the trade practice is weighed on the legal scale, it entails areas that may foster some very grave violations or illegal practices. 

Rajkumar Varier, an independent counsel associated with various media houses, said that this practice clearly violates the contract that the agencies have with Google and Meta. “There is no law that puts a structure to this but this is a clear contract breach. And it dangerously comes close to tax violations.”

Commenting on the subject matter, Sushant Chaturvedi, legal counsel in the media space, said, “It is imperative that these agencies have to have extremely clear and transparent contracts with the third parties that they entertain on their account. The grounds of the contract have to be clear on who owns the ad account, who is billed, whether markup (interest charged) is disclosed, how the ad performance data is shared and attributed, among other things.” 

The counsel also noted that such trade practices can easily be an instrument for tax evasions. “This can have serious tax implications and can lead to potential tax violation, if the contract does not disclose the commissions or the markups clearly,” Chaturvedi told BestMediaInfo.com. 

According to Chaturvedi, the parties involved in such a contract or trade arrangement can also be used for money laundering.

Two cents

As the digital ad pie grows fatter, it’s no surprise that some are cutting corners to claim a bigger slice. However, in the pursuit of short-term gains, the industry risks undermining its long-term credibility.

Credit reselling may seem like a clever workaround today, but its legal ambiguities, potential for tax violations, and breach of platform trust create a ticking time bomb. Agencies must ask themselves, is the commission worth the cost of integrity? 

If transparency isn’t baked into these arrangements, what looks like innovation could soon resemble malpractice. In an era where trust is currency, it’s time for the ad industry to come clean — on paper, in practice, and in principle.