Programmatic Advertising: The Original Sin of Big Advertisers 🍎🐍

By Max Legrand · GreyFox Ads · A French perspective on programmatic advertising

What if some of the problems advertisers complain about in programmatic advertising begin with the way they pay their own agencies? Here's an uncomfortable question worth asking. 😉

The original sin: demanding ever-lower agency fees 🍎

Here's a familiar scene in French and international media pitches: a major advertiser asks competing agencies to deliver increasingly ambitious services at an ever-lower fee. From the finance department's perspective, the logic is understandable. Lower procurement costs should improve margins.

But an agency isn't simply a piece of software that can be bought at a lower price without consequences. Its service depends on people, expertise, time and the ability to make informed decisions.

The problem starts when price becomes disconnected from the resources required to deliver the promised quality.

An agency's biggest cost is its talent 👩‍💻

In many agency remuneration models, fees are linked to the media budget managed. Those fees help pay media traders, strategists, analysts and account teams, while also supporting the agency's operating margin. (Actual contracts vary: some agencies use retainers, project fees or hybrid remuneration rather than a simple percentage of spend.)

If an agency cuts its fee dramatically to win a pitch, the lost revenue has to be absorbed somewhere. There are two broad options: spend less or earn money in other ways.

Option one: cut costs to protect margins

Reducing the cost of delivery can mean managing more media spend per employee, relying more heavily on junior profiles, offshoring certain operations or automating work with AI.

None of these choices is automatically bad. Automation can genuinely improve campaigns, and junior talent needs opportunities to learn. The risk emerges when cost reduction becomes a substitute for expertise rather than a way to support it.

Option two: develop alternative revenue streams 💰

Agencies may also expand their commercial offer: proprietary algorithms, reporting dashboards, data management platforms, audience data, technology and other services. The original post points to major agency groups' investment in data and technology businesses as an illustration of this broader strategy.

Another route is to find commercial opportunities elsewhere in the programmatic supply chain, including on the sell side. These activities can deliver genuine value. They can also raise questions about incentives when the same group influences both media selection and the remuneration attached to that selection.

The key distinction is not whether an agency earns money beyond its base fee. It's whether the advertiser understands what is being charged, why it is valuable and where potential conflicts of interest sit.

The irony: advertisers then pay to audit the consequences 🙃

Here's the part that makes me smile (a little painfully). A major advertiser squeezes agency remuneration during the pitch, then complains about declining quality, opaque fees, extra intermediaries or conflicts of interest. Eventually, it hires consultants to audit the very supply chain it helped make economically difficult to operate.

That doesn't mean advertisers cause every transparency problem, nor that an expensive agency is necessarily a good agency. But procurement decisions can influence the incentives that shape media execution. Ignoring that connection is a mistake.

For a practical starting point, see our guide to auditing programmatic media buying and our analysis of how value is shared across the supply chain.

What would a healthier relationship look like?

Perhaps the first question shouldn't be “How low can we get the agency fee?” but “What level of expertise, accountability and transparency are we buying?”

• Define the work: specify the expected trading, optimisation, reporting and quality-control workload.
• Pay for genuine expertise: recognise the time needed to investigate placements, supply paths and campaign outcomes.
• Make incentives visible: disclose material rebates, reselling arrangements and additional service fees where applicable.
• Measure outcomes: assess attention, suitability, incremental reach and business performance rather than relying only on the cheapest CPM.
• Audit intelligently: use independent checks as a governance tool, not as a substitute for properly funding execution.

Fair remuneration is not a blank cheque. It's a way to make the agency's economic model compatible with the advertiser's stated expectations.

Our view from the French Open Web 🦊

At GreyFox Ads, we believe programmatic advertising should reward players who add real value. Our Master Deal focuses on quality inventory, supply-path efficiency and fee transparency; our curation consultancy helps agencies, trading desks and publishers make better-informed choices.

For more on why cheap media can become expensive, read why very low CPMs can damage programmatic quality and the two real challenges of SPO.

Original LinkedIn post: Read the original post.

Article and analysis by Max Legrand, founder of GreyFox Ads in France.