A breakdown of the incentive structures that make agencies profitable when their clients aren't. This article is written for founders, CMOs, and operators who need a board-level answer — what is broken, why it is happening, and what to change next.
The strategic problem
A friend of ours — the marketing head of a mid-market D2C brand in Bangalore — ran a ₹40L campaign last quarter. Beautiful production, celebrity endorsement, out-of-home in three cities, full social wrap. His agency delivered a case study with a 4.2× ROAS. Then he opened his sales system: ₹3 lakh in incremental revenue. He called us to figure out what happened.
What happened is a series of quiet decisions each of which felt reasonable, and none of which held anyone accountable to revenue.
The first was media selection. The agency's media team gets rebate from certain publishers. Not a lot — 2 to 5 percent — but enough to bias buys toward those inventory pools. The pools optimise for impression volume, not intent. The campaign hit a lot of people who were never buying.
The operating choice
The second was measurement. The 4.2× ROAS was Meta-reported. Meta's reported ROAS overstates actual by 30 to 50% in most Indian D2C accounts we've audited. Nobody at the agency ran an incrementality test, because incrementality tests kill campaigns.
The third was creative. The film was gorgeous. It was also 60 seconds long, meant for TV, and shown on Meta with sound off. The hook happened at second 22, by which point 91% of viewers had scrolled past. This is a solved problem in 2026 and nobody solved it.
The fourth was targeting. 'Awareness' campaigns in Meta serve to whoever is cheapest, which correlates poorly with whoever might buy. The agency called this 'top-of-funnel' and reported it as a positive.
The better model
None of these decisions was corrupt. They were just decisions made by an agency whose compensation was decoupled from revenue. The client paid for the campaign; the agency profited on the campaign; the customer never saw it in a state that could produce a sale.
The fix isn't a new agency. It's a new contract. Compensation tied to incremental revenue. Media selection with rebate visibility. Creative production sized for the platform. Measurement done by a third party.
"The client paid for the campaign; the agency profited on the campaign; the customer never saw it in a state that could produce a sale."
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