Is credit dependency of ad agencies turning craft into cash-driven business?

New Delhi: The Competition Commission of India (CCI) jarred India’s advertising ecosystem with raids on the who’s who of the industry. Media planning and buying became the eye of the storm. The bedrock of the entire CCI case is the alleged anti-competitive practices that agencies resorted to to cut competition. 

As India's digital ad economy matures, a deepening dependency on credit is raising tough questions about the ethics and priorities in agency-client relationships. Operating on thin margins, agencies are increasingly offering extended credit terms to lure and retain clients—especially as digital giants like Google and Meta enforce strict 60-day payment policies. 

Meanwhile, many legacy advertisers continue to expect long credit cycles, putting agencies in a tight spot. This credit-driven model, industry insiders argue, is shifting focus away from creative and strategic value, raising tough questions about ethics, sustainability, and the future of media buying in India.

Credit dependency in the digital era

Digital now drives the ad economy, and in that digital advertising space, Google and Meta control more than 60%. Naturally, all advertisers who pour money into digital advertising allocate a large chunk of their spending towards these publishers. 

Google and Meta have strict policies on credit periods, which cannot extend beyond 60 days. However, advertisers are used to extensive credit periods. The credit dependency that advertisers have makes credit lines a service, rather than just an aspect of an agreement.

In the digital era, advertisers who are seeking extensive credit periods eye agencies that can offer them a robust credit line. This makes the credit line an instrument for agencies to win over big clients, rather than onboarding them based on talent. This also goes vice versa, where advertisers may prioritise agencies that are privileged enough to give the credit period that advertisers seek, undermining healthy competition. 

Making sense of the matter, Lloyd Mathias, business strategist, said, “At the core, agencies are in the business of creating advertisements and building brands. The moment you start acting like a credit agency, you are moving away from your primary purpose. This type of arrangement reflects poorly on both the agency and advertiser.” 

Agencies acting like middlemen

This credit dependency that advertisers have is the core reason why they do not have a direct credit line with Google and Meta. In the space of digital advertising, advertisers go to agencies and run their campaigns on their account. 

Rajiv Dhingra, Founder and CEO, ReBid, argued that Google and Meta are not just advertising channels anymore – they are business generation engines.” “For many sectors, nearly 80% of lead generation comes from these platforms,” stated Dhingra. 

Based on this premise, Dhingra advocated advertisers having a direct credit line with these platforms instead of placing an agency as the middleman.

“If you, as a client, have a direct contract with them, your legal terms can govern that relationship—including any credit line you negotiate,” Dhingra said. 

He continued saying, “It makes perfect sense. After all, these platforms aren’t just advertising channels anymore—they’re business generation engines. So why should your agency own your account—especially when it’s a third-party vendor that you might want to terminate at any point? The relationship should not be locked in just because the agency owns your account history or manages your credit line.”

According to him, the value of the agency “lies in its analytics, insights, and strategy – not in account ownership or credit facilitation.” 

The commission circus

Commissions, the part and parcel of advertising agencies, form the foundation of this issue. Explaining the scenario, Vijay Shenoy, who looks at strategy and consulting at Langoor, said, “ If you look at the agency business—especially when comparing media and creative services—there’s a stark difference in margins. 

Creative services typically offer healthier margins because ideas inherently carry a higher value. Media services, on the other hand, tend to be low-margin businesses.”

Lending credit to advertisers, according to Shenoy, is more of a survival necessity than a strategic move. “Thin margins directly impact how agencies function depending on their stage of growth. For emerging or smaller agencies, which may not have a strong media buying infrastructure or a robust client roster, offering extended credit periods can become a tactic to attract or retain clients.” 

This puts the agencies in a tussle. Shenoy explained, “Without offering credit, agencies risk losing business. But offering credit puts a strain on their cash flow, especially since they're media volume-driven. Clients, knowing they have options, can easily switch to another agency willing to offer better terms.

This makes younger or smaller agencies particularly vulnerable if they don’t have a diversified offering or a strong financial base. That’s where extending credit becomes part of the negotiation.” 

Are advertisers too spoiled? 

While new-age brands do prefer direct credit lines with Google and Meta, established advertisers feel entitled to long credit periods and hence prefer agencies to facilitate credit lines for their digital campaigns on these platforms.   

Unpacking the situation, Mathias said, “Established categories like FMCG, auto, and real estate still resist shorter credit terms and prefer the old model. Traditionally, advertisers have been accustomed to very long credit terms from media platforms—sometimes extending to three, six, or even nine months, especially in formats like radio.” 

Venke Sharma, former Global Product Strategy Head, Sprinklr, asserted, “Today, any advertiser—even the smallest one—can set up their own ad accounts on Google and Meta, run campaigns, track performance, and access data using their own credit card. I’ve personally done it—it’s simple, and there’s no barrier to entry.” 

Sharma argued that the only reason why advertisers do not have direct accounts is because of credit. “When you go direct, you need to preload funds. However, agencies offer credit lines, which allow campaigns to run without upfront payment. That’s the single biggest differentiator. Otherwise, any digital marketer today can run campaigns on their own. It’s no longer about access or expertise—it’s about credit,” he said. 

Advertisers making direct accounts: Boon or bane?

According to ReBid’s Dhingra, having a direct credit line with Google or Meta gives advertisers more control over their campaigns and the data associated with those campaigns. 

“Google and Meta ad accounts are a goldmine of customer intelligence. They reveal which creatives resonate, what drives clicks, and—most importantly—what converts. That data isn’t just about marketing; it’s central to your business strategy, no matter what business you're in,” Dhingra said, setting the premise for his argument. The biggest advantage, according to Dhingra, is first-party data control. 

This was echoed by Shenoy, who said, “The value of ad accounts on platforms like Google and Meta goes far beyond consented contact information. What’s truly invaluable is the first-party behavioural data these campaigns generate. Every campaign interaction—clicks, conversions, engagement with different copies and creatives—feeds the platform’s learning and helps optimise future campaigns.” 

Shenoy explained that, unlike print or TV, digital advertising evolves in real-time, and platforms mature campaign performance based on historical behaviour. Whether it’s Amazon, Google, Meta, or third-party retail media, the more consistently one runs campaigns from a single account, the more intelligent and efficient the ad delivery becomes.

“For any brand thinking long-term, it's a no-brainer: ad accounts must sit with the brand, not the agency. That’s where the data resides. That’s where the compounding advantage is,” Shenoy told BestMediaInfo.com.

Engagements and agreements become quite clear and transparent when instruments like credit do not exist. Advertisers then deal with agencies just based on their expertise. Adityan Kayalakal, Head - Marketing | Founding Team Member, Veera elaborated on this with his own example. 

“We work with agency partners strictly for the expertise they bring. Even in cases where third-party billing happens through them, we typically clear payments within the same month. It’s not about leveraging a 60- or 90-day credit cycle—we’re not hiring agencies for credit.

In fact, when we started spending on Google and Meta, we didn’t even have an agency. We ran our own campaigns using company credit cards. The credit line was never a concern.

Of course, needs vary by the stage and size of the company. Large conglomerates, for example, benefit financially by pushing payments out—30, 60, or even 90 days can mean significant interest savings. That makes sense for them. But for smaller, fast-growing tech startups, agility and results matter more than managing cash flow through extended credit cycles,” Kayalakal said. 

A need for change

Credit has become so ingrained in the advertising industry that its pervasive role raises few eyebrows. For advertisers, it fuels steady cash flow; for agencies, it secures clients; and for tech giants like Google and Meta, it drives robust business.

Once a craft defined by sharp acumen, creative strategy, and skilful execution, advertising has increasingly prioritised cash and profits over ingenuity. Industry insiders point to a collective shift among advertisers, agencies, and platforms, rather than any single culprit, as the catalyst for this transformation.

Veterans recall an era when agencies commanded a standard 15% commission, a fee that rewarded their creative and strategic contributions. Today, many agencies subsist on modest retainers, a change Sharma attributes to pressure from advertisers. “The push originates with advertisers,” he said, noting that intensifying competition has further reshaped the landscape.

Sharma emphasised that agencies can regain stability by focusing on value. “If agencies deliver measurable results, advertisers will stay loyal, and financial models can become more transparent,” he said.

Meanwhile, Mathias highlighted the growing influence of tech giants. “Advertisers may still wield some leverage with smaller digital platforms, but they must ultimately align with the policies of Google and Meta,” he stated.