The marketing industry's truth-in-pricing problem (and why adland is to blame)

By Darren Woolley, Founder and Global CEO, TrinityP3

A staggering irony lies at the heart of the advertising industry. Just look at prestige and luxury brands. They are masterful at using marketing to command a premium price, one they absolutely refuse to discount. They ruthlessly defend their perceived value, and then - at the same time - they deploy some of the most aggressive procurement teams on earth to drive down their indirect costs - including marketing and advertising.

The supreme irony? The very agencies that build this untouchable premium brand equity let those same procurement teams treat them like wholesale gravel. We teach our clients how to be indispensable, yet we sell our own expertise by the tonne.

The marketing industry has a massive truth-in-pricing problem. This is not just a complaint about media rates. It is a fundamental, existential failure to assess and determine value across every promise and benefit the system delivers.

The flawed economics of "cost"

To understand the problem, you have to look at how we charge. In basic economics, a pricing strategy bridges the gap between production costs and customer demand. Price is the literal money changing hands; value is the worth the customer feels they receive. Get it right, and the buyer (marketers) feels they are winning.

But our industry has historically refused to charge for value. It charges for inputs.

We started with the media accreditation system - for those who don't remember, a commission and service fee applied to third-party costs. When that died, the industry pivoted to the current "cost-plus" model. Agencies built retainers based on headcount, timesheets, and overheads. 

In media, many held onto an effective commission rate disguised as a percentage of spend. Not once was the fee based on the actual commercial value delivered to the client's bottom line.

Now, generative AI is kicking the door in. AI is promising to make agencies exponentially more productive, drastically lowering the human resources required to do the work. If your entire commercial model relies on billing for human hours, and a machine just cut those hours in half, your model is not just flawed - it is financially suicidal.

The infinite inventory trap

This inability to price value is most glaring in how we buy media. Media used to be a premium product governed by imposed limits. There was scarcity, and margin was only compromised to secure volume.

Digital media destroyed that scarcity. It created a landscape that appears virtually unlimited and entirely commoditised. We shifted to buying "audiences" at a Cost Per Impression (CPM), operating under the delusion that all media is equal and can be traded on real-time market demand like pork bellies.

But what is human attention actually worth? We don't know. Instead of answering that hard question, the industry became infected with the disease of benchmarking. We benchmark marketing budgets as a flat percentage of revenue. We benchmark agency fees against industry averages without any like-for-like comparison. We benchmark the media by blindly chasing the lowest CPM.

When you benchmark everything to the average, you actively mandate mediocrity. You strip away context and treat strategic, business-critical investments as if they are bulk commodities. And you end up with agencies winning pitches based on impossible media prices. What is an agency's strategic service actually worth if its entire pitch depends on promising a CPM that cannot be delivered in reality?

The dark revenue ecosystem

This complete inability to articulate and price true value has created a toxic, ticket-clipping ecosystem. If you cannot confidently charge a fair, transparent fee for the value you provide at the front door, you have to find the margin out the back.

Without value-based pricing, the industry defaults to so-called 'dark revenue' sources: principal media trading, undisclosed rebates, kickbacks, and hidden commissions. Every time a new channel or service emerges, from programmatic trading to content creators, everyone in the supply chain scrambles to take a cut of the spend rather than charging an open and transparent fee that represents the value of the actual service.

It infects everything. What does "independent" advice actually mean when the platform, agency, or AI chatbot providing it is secretly carrying advertising or taking a clip of the transaction?

A looming reckoning

Which brings us back to the C-suite. Today, we see executives aggressively cutting brand budgets to manufacture short-term "efficiency." But does that brand equity actually belong to the executives currently slashing it, or is it inherited capital built by their predecessors? They are burning through the furniture to keep the house warm for one quarter.

Who ultimately pays when this promised efficiency fails? Who pays when the impossible media prices deliver cheap numbers but zero growth?

The brand pays. The business pays.

As an industry, we need to wake up and remember what we tell our best clients: price is what you pay, value is what you get. Until agencies, platforms, and media owners learn to assess, articulate, and charge for the actual value they create, they will continue to be squeezed by procurement, replaced by algorithms, and forced to survive on the scraps left behind by a procurement function that values savings over performance.

It is time to stop pricing the cost of the shovel, and start pricing the value of the hole we are digging for ourselves.