CCI raids shake up ad industry: Will IPL ad rates take a hit?

That the media-buying arms of advertising big daddies exercise undue influence on ad rates on television and more recently on digital platforms is well-known. Inflating ad rates on the pretext of doing bulk deals (with the promise of ensuring better efficiency) and not giving the advertiser an option is not new either. The Competition Commission of India’s (CCI) surprise raids on top advertising agencies and a broadcasters' industry group over alleged price collusion, has simply brought the cartelisation happening in the industry out in the open. 

The raids, which started on Tuesday morning and continued until Wednesday, spanned multiple locations in Tier-1 cities like Gurugram, Delhi, and Mumbai. Around 10 locations were searched, including the offices of GroupM, Publicis, Dentsu, Interpublic Group and the Indian Broadcasting & Digital Foundation (IBDF). Advertising executives were made to stay overnight at the offices during the search, with limited contact with the outside world. The CCI seized data, including emails and mobile phone records, focusing on advertising pricing and dealings involving major media houses. 

What is the issue? 

While specifics on the alleged evidence remain unclear, the focus of the CCI investigation appears to be price collusion among broadcasters, which has led to inflated advertising costs. Reports suggest that certain broadcasters engaged in "collective action" to avoid offering discounts on ad rates. The core issue is price-fixing, where companies collude to set prices rather than letting market competition determine them. In advertising, this could involve collusion between media buying agencies, broadcasters, and smaller advertising firms. 

One way price-fixing occurs is through secret agreements between media buying agencies and broadcasters to maintain high ad rates. Instead of negotiating freely, these agencies may set a minimum price for ad slots, forcing advertisers to pay more. Another common tactic is discount manipulation, where agencies coordinate to limit the discounts they offer, preventing competitive pricing that would benefit advertisers. 

For advertisers, this results in higher costs, fewer choices, and reduced bargaining power. 

“They're conning the advertiser, because that advertiser is being sold high rates,” says Prathap Suthan, Managing Partner/Chief Creative Officer, BangInTheMiddle. 

One of the former industry executives said that the client who is the most marginalised is a client who has put in the highest amount of money because for them, they would have gotten that deal irrespective of that agency being there or not. 

Large agencies and industry associations may also use their influence to exclude smaller players, further restricting market competition. These practices not only harm advertisers but also make it difficult for newer agencies to compete. 

Price-fixing in media buying is, however, not unique to India. 

“When there is a lot of money at stake, there will be a lot of creativity that will come in, I'm talking about collusion between client, broadcaster, and media agency. This has been going on for years, if you look at, all the large agencies and the large media agencies,” says Suthan 

Similar cases have surfaced globally, with regulators closely monitoring the practices of dominant ad agencies. As the industry becomes increasingly concentrated, ensuring fair competition remains a challenge. 

“Agencies are squeezed, especially media agencies for onboarding a client. (In that context) what agencies are doing is suppose there is a big event that's coming up, what they were doing is pool all the client resources, and push (the broadcasters) towards the fact that the numbers speak for themselves and thus, they will get a volume discount.” 

Media agencies, especially those handling large advertising budgets, often leverage collective client spending to negotiate better deals with broadcasters. When a major event like the IPL approaches, agencies pool their clients’ budgets to increase their total spending commitment. For instance, instead of an individual advertiser committing ₹50 crore, the agency aggregates multiple clients’ budgets to pledge ₹75 crore.   

By doing so, agencies can negotiate volume discounts from broadcasters. These discounts can take the form of cashback or additional advertising inventory. For example, if an agency buys 100 seconds of ad time, they might receive an extra 20 seconds at no additional cost. The agency can then resell this extra inventory at a profit, effectively recouping money while maintaining competitive pricing for clients. 

“If broadcasters and many agencies kind of come together, the advertiser will have to shell out money,” says Suthan. 

While this practice raises ethical and regulatory concerns, individual advertisers may not always secure better deals on their own. Agencies, by negotiating collectively, can often obtain more favourable terms than a single advertiser striking a direct deal with broadcasters. 

“Today, what has happened is Group M holds about 50% of client base in India, now they're so aggressive that smaller agencies are absolutely cornered, because the bulk deals are happening. Broadcasters yield into Group M because they have the capacity to say 50% of the clients in the country will not buy your content, and advertisers will anyways yield because they would have the best deals with the broadcasters,” says one of the industry executives. 

“The challenge is the disclosure. Did GroupM tell the clients that it is involved in bulk buying? Whatever benefits are being accrued from pooled resources, whether or not those are getting passed on is dubious. There is no transparency in that sense. Group M thus, becomes a monopolist,” the executive adds. 

The advertising industry is rife with practices like kickbacks, rebates, budget inflation, data misuse, political influence, and bid rigging. There’s no telling what the investigation will uncover, but if it exposes more wrongdoing and holds agencies accountable, it would be a welcome step. 

“It's a vicious circle with multiple things playing out. One is the fact that there is a monopoly or duopoly in the entire system. Especially in the media front, that is definitely to blame. There is lack of transparency. Third is you are squeezing the agencies,” they add. 

The market is dominated by large agencies, making it nearly impossible for smaller firms to compete fairly. Secret payments, rigged bidding, and inflated budgets give major players an unfair advantage, allowing them to manipulate the industry as they please. Ultimately, wherever big money is involved, people will find creative ways to exploit the system. 

Former industry insiders also argue that the CCI investigation could reveal the personal profits amassed by media agency CEOs, with many speculating that some have funded lavish lifestyles through earnings beyond their official salaries. 

But what will be the impact of these raids? 

While the raids may push the industry toward greater compliance and transparency, most believe there will be no immediate material impact until the CCI investigation results are public. 

Anita Nayyar, former head of India and Southeast Asia at Havas Media Group and longtime ZEE5 executive, has confirmed that the main sponsorship deals have already been finalised. 

"However, I was told that this week, there were some shorter deals which were not for the entire IPL, those might be impacted to some extent because people will probably wait and watch to see how the situation unfolds. Smaller advertisers, who do not spend too much money across the entire IPL, will be affected to some extent,” Nayyar says. 

Although some foresee a trust deficit, agencies told Fortune India. Businesses rely heavily on relationships, meaning ongoing deals are unlikely to be disrupted—though delays could affect business continuity. 

In terms of advertiser costs, some brands may choose to negotiate directly with broadcasters, potentially reducing agencies’ bargaining power. This shift may not necessarily push prices higher but could weaken agencies’ ability to secure favourable deals. 

Advertisers will also have the option to bypass agencies and negotiate directly with broadcasters. 

“A lot of advertisers would now want to play it safe,” says Suthan. 

As for the IPL season, while around 60% of ad inventory is typically sold in advance, the remaining 30-40% is sold in the final days leading up to an event. Like airline seats, ad inventory loses value once the opportunity passes, often leading to higher prices as the deadline approaches. 

The crackdown highlights the vulnerabilities of an industry built on deep-rooted relationships and opaque dealings. 

How are smaller agencies responding to the issue? 

While smaller agencies were hesitant to comment, executives told Fortune India that agency discounts or commissions have never been their primary revenue source, as their focus is on acquiring and retaining clients. With IPL season approaching, they hope new advertisers will turn to them instead of larger firms. However, their priority remains securing even a small share of the advertising market, rather than challenging the dominance of major agencies. 

The Ecosystem 

The timing of these raids has raised questions, coming just days before the IPL season, when overall advertising spending during IPL 2025 is projected to reach ₹7,000 crore ($807 million), according to WARC. 

These raids come at a time when the media and entertainment landscape is undergoing a major transformation following the recent $8.5 billion merger between Walt Disney’s Indian and Reliance’s media assets. Industry analysts predict the combined entity will control 30-40% of the ad market across TV and streaming platforms. 

Adding to this shake-up, Omnicom Group announced a $13.25 billion all-stock acquisition of Interpublic Group (IPG) in December 2024. Expected to close in the latter half of 2025, this deal will create the world’s largest advertising agency, with combined revenue surpassing $25 billion. 

India, the world’s eighth-largest advertising market, saw ad revenues of $18.5 billion in 2024, with projections for 9.4% growth in 2025, according to GroupM. The firm also highlights India as a key growth market, where digital advertising now accounts for 60% of total ad spending. 

The investigation falls under Section 3(3) of the Competition Act, 2002, which prohibits agreements between industry players that directly or indirectly fix prices or restrict competition.  

If found guilty, the media agencies could face penalties of up to three times their profit for each year the collusion took place or 10% of their annual turnover for the duration of the violation, whichever is higher. 

The IPL begins tomorrow and JioStar is supposed to have set a digital ad rate of ₹8.5 lakh for a 10-second slot on Connected TV (CTV) and ₹250 per cost per impression (CPM) for mobile video advertising. This means big money is involved in the game and if the details of the current investigation are made public during this ad season, ad revenue from cricket will see a significant impact. Are we going to see a softening of ads rates? Let’s wait and watch.