A markup in advertising is the amount an intermediary adds to its own cost before billing the client. An agency that pays $20,000 for impressions and invoices $24,000 has applied a 20 per cent markup, and the $4,000 difference is its revenue for buying, managing and reporting on the campaign. Markups exist because someone has to be paid for the labour and risk between the money an advertiser sets aside and the inventory a publisher sells. The term becomes contested when the markup is buried inside the media price itself, as it is when an agency buys inventory for its own account and resells it, a practice known as principal media.

How a markup is calculated

The arithmetic starts with a cost base. In Display & Video 360 (DV360), Google's demand-side platform (DSP), agencies choose a revenue model for each partner or line item that determines what the client is charged. Under the total media cost markup model, revenue equals total media cost plus a fixed percentage of it. Total media cost is not just the price of impressions: it includes media cost plus platform, data and other partner fees, according to Google's help documentation. Google's own example uses a 20 per cent markup on $20,000 of total media cost, which already includes the DV360 fee, producing $4,000 for the agency and $24,000 of billed revenue.

The alternative, the CPM value model, charges the client a fixed price per thousand impressions regardless of what the impressions cost. Google's documentation describes this as risky because revenue is not tied to purchase cost, and says most users will want the markup model instead.

Markup and margin are often confused, and the gap is material. A 20 per cent markup on cost becomes a 16.7 per cent margin on the invoice, because $4,000 is one-fifth of $20,000 but one-sixth of $24,000. Contracts that cap "agency margin" at a figure without saying whether it is measured against cost or billings can therefore be read two ways.

Markups compound. Because the DV360 model marks up total media cost rather than the raw media cost, the agency earns a percentage of the fees as well as of the inventory. The Association of National Advertisers (ANA) found in its May 2017 programmatic study that demand-side fees added 45 per cent to the cost of display inventory, taking a $3.30 CPM to $4.80 all-in.

Other platforms expose fees differently. Amazon DSP lists a technology fee, charged as a percentage of media cost and "disclosed at the time of campaign setup", and a managed services fee "added to the media cost, and invoiced as a separate fee", according to its pricing transparency guide. PPC Land has reported Amazon's managed service at a 15% service fee plus a 10% platform fee.

Who adds it

On the buy side, three types of operator apply markups. Agency trading desks, the programmatic units inside holding companies, mark up platform costs as their fee for operating campaigns. Resellers and managed service providers buy access to platforms at one rate and resell it at another.

On the sell side, the equivalent is less often called a markup. Supply-side platforms take a percentage of the clearing price, and curators that package inventory into deals add their own charge. Jounce Media's April 2025 benchmarks found that about 34 per cent of curated deal IDs carried a percentage markup with a median of 14 per cent, while about half carried no extra fee, according to Jounce.

From commission to principal trading

Markup is older than programmatic. The commission system, under which media owners allowed recognised agencies to keep a share of the price, set the early pattern: an agency billed a client the full gross rate, paid the media owner the net rate, and kept the difference. A 15 per cent commission on gross, the long-standing United States standard, is the same thing as a markup of about 17.6 per cent on net.

Digital trading reopened the gap. On June 7, 2016, the ANA published an investigation by K2 Intelligence that found undisclosed rebates were "pervasive" at US media agencies and described principal mark-ups of 30% to 90%, in practices that senior executives knew about.

The industry did not abandon principal trading; it grew. An agency acting as principal takes title to inventory, carries the risk of not reselling it, and is paid by the spread between its buying and selling prices rather than by a disclosed fee. Buying at $4 per thousand and selling at $6 yields a spread equal to 50 per cent of cost and 33 per cent of the sale price. Forrester analysts Jay Pattisall and Kelsey Chickering, writing on January 15, 2026, defined principal media as inventory bought at an undisclosed discount and resold "with a price markup that's below standard publisher rates", and forecast that it would reach one-third of total media billings in 2026.

Why it matters to marketers

Markup decides how much of a budget reaches a publisher. When the markup is disclosed, an advertiser can compare it across agencies, negotiate it down and audit it. When it sits inside the price of media, the advertiser sees only a cost per thousand that may still look competitive, and cannot tell what share went to the agency.

Usage figures show how far the second model has spread. The ANA reported on March 19, 2026 that 58 per cent of surveyed marketers had used principal media in the previous year, up from 47 per cent in its 2024 study, and 56 per cent expected to use it in the coming year. Some 76 per cent named lower costs as the main benefit, yet 90 per cent were concerned about whether principal media recommended by their agency served their interests, up from 79 per cent. Only 63 per cent said agency contracts addressed it. "Marketers should always understand whether their agency is acting as an agent or a principal in any media transaction," Bob Liodice, the ANA's chief executive, said.

Platform economics also turn on markups. PPC Land reported that Amazon's DSP fee was about 1 per cent on the open web against 12% to 15% at The Trade Desk, figures attributed to Needham & Co, and that a global car brand moved about $80 million a year of spending to Amazon in 2025.

Where it fails or is disputed

The first criticism is opacity. A disclosed markup is a price; an undisclosed one is an information asymmetry. The agency recommending a media plan may also be the seller of the inventory in it, a conflict the ANA's 2026 figures quantify. ISBA, the trade body for British advertisers, published guidance on February 18, 2026, under the title "Proprietary Media: Transparency, Governance and Effectiveness", which calls for data that distinguishes proprietary from other media and for contracts designed to improve oversight.

Defenders argue that the markup buys something. Forrester's analysts said many marketers find that guarantees, risk mitigation and predictability outweigh full disclosure, and that agencies operate on thin margins. In this view the principal price is a product, comparable to buying from a wholesaler, and the relevant test is whether the final price beats what the advertiser could secure alone.

Measurement is a further problem. Because markups compound, a headline agency fee can understate what intermediaries take, and audits rarely see inside principal transactions.

Allegations have reached the courts. Richard Foster, a former GroupM executive dismissed in July 2025, sued WPP and GroupM in November 2025 seeking at least $100 million, alleging that inventory was reclassified as proprietary media and the spread booked as income, according to Digiday. The allegations are untested. WPP has moved to dismiss and says Foster threatened to go public unless paid a large severance.

Not the same as

Margin. The same cash difference expressed as a share of the selling price rather than the cost. A 25 per cent markup is a 20 per cent margin.

Commission. A share of the media price paid by, or deducted from, the media owner, traditionally 15 per cent of gross. It is a markup in effect but is calculated on the sale price.

Spread. The gap between an intermediary's buying and selling prices when trading as principal. Every spread is a markup; a disclosed agency fee is a markup but not a spread.

Ad markup. In OpenRTB, the HTML, JavaScript or VAST code a bidder returns in the adm field to render the creative. Schema or structured data markup in search is also unrelated to pricing.

Recent developments

Markups have moved from media to technology. On August 3, 2026, PPC Land reported that holding companies were bundling AI token costs into principal media commitments with wholesale token rates resold at a markup. Ruben Schreurs, chief executive of Ebiquity, said agencies "can't afford to continue to subsidize all those costs."

Platform fees have become a negotiating weapon. Publicis told clients in March 2026 to stop transacting on The Trade Desk after an audit dispute over fees, as PPC Land's explainer on spread recorded, before the two companies ended the feud on June 12, 2026. On November 9, 2026, The Trade Desk reported its first year-on-year revenue decline since its 2016 listing, with third-quarter revenue of $736 million against $739 million; chief executive Jeff Green said buying decisions were moving to "senior agency leaders, procurement teams and chief executives".

Timeline

  • 1917: The American Association of Advertising Agencies is founded, and the 15 per cent commission becomes the US reference rate for agency compensation
  • June 7, 2016: The ANA publishes the K2 Intelligence report on rebates and principal mark-ups of 30 to 90 per cent
  • May 18, 2017: The ANA's programmatic study finds demand-side fees add 45 per cent to display inventory costs
  • April 2025: Jounce Media finds about a third of curated deal IDs carry a percentage markup, median 14 per cent
  • July 10, 2025: Richard Foster is dismissed from GroupM
  • August 2025: Amazon's DSP fee of about 1 per cent is set against 12 to 15 per cent at The Trade Desk in reporting on an $80 million budget move
  • November 2025: Foster sues WPP and GroupM, seeking at least $100 million
  • January 15, 2026: Forrester forecasts principal media will reach one-third of media billings in 2026
  • February 18, 2026: ISBA publishes guidance on proprietary media
  • March 2026: Publicis advises clients to stop using The Trade Desk after an audit dispute
  • March 19, 2026: The ANA reports 58 per cent of marketers used principal media in the past year
  • June 12, 2026: Publicis and The Trade Desk issue a joint resolution
  • August 3, 2026: Holding companies are reported to be bundling AI token costs into principal media commitments
  • November 9, 2026: The Trade Desk reports its first year-on-year revenue decline

Summary

Who. Agencies, agency trading desks, resellers and curators add markups; advertisers and their procurement teams negotiate and audit them; the ANA, ISBA and Forrester have measured and debated principal media; DSPs such as DV360 and Amazon DSP set the fee structures on which markups are calculated.

What. The amount an intermediary adds to its cost before billing a client, expressed as a percentage of cost. It may be a disclosed fee on top of media or an undisclosed spread inside the media price when the agency trades as principal.

When. The commission system set the pattern in the early 20th century; the ANA's K2 report in June 2016 exposed undisclosed principal mark-ups; principal media usage rose to 58 per cent of surveyed marketers by March 2026.

Where. Across television, digital and programmatic buying, inside DSP revenue settings and agency contracts, with the main disputes in the United States and Britain.

Why. Markups pay for the labour and risk between advertiser and publisher. Whether they are visible decides whether an advertiser can compare, negotiate or audit what intermediaries take from a budget.