Are Direct Supply Contracts And Quality KPIs The Real Fix For Programmatic Opacity?

In digital media, opacity pays. As marketers have squeezed agency fees over the past decade, agencies have built new profit centers in the parts of the supply chain advertisers cannot easily see. The clearest example is principal-based media, where an agency buys ad inventory in bulk for its own account and then resells it to clients at an undisclosed markup. The model can hide costs from buyers and push supply-side partners toward lower-quality, high-ad-density inventory to keep the margins working.

Adam Benaroya is a global media executive with more than 17 years of leadership experience at major enterprises, most recently as the Former Senior Director of Global Media Excellence at Kenvue, the consumer health company behind Tylenol, Neutrogena, and Listerine. He has helped build in-house media capabilities and guided teams through major corporate separations, with prior leadership roles at Johnson & Johnson and Hewlett Packard Enterprise. Benaroya started his career running analytics teams at Mindshare, and that data-first background shapes how he approaches media transparency today.

"It starts with an incentives problem. There has been no incentive for transparency because there is just too much money to be made with the complexity," Benaroya says. Each step of the supply chain has its own incentive to hold a piece of the margin, from advertiser to publisher, from agency to ad-tech vendor. That pressure has pushed principal-based buying well beyond the channels where it actually makes sense.

The biddable black box

Bad inventory does not show up by accident. The supply chain shapes it, and the clearest case is what happens when principal-based buying gets pushed into channels it was never designed for.

Benaroya draws a line between two kinds of media. Principal-based buying makes some sense in places like television, print, and out-of-home, where holding companies negotiate access to inventory that their clients cannot easily reach on their own. The trade-off is at least concrete. The model breaks down once it gets dropped into programmatic.

"Where I have a problem is specifically within the biddable channels, where there is no real value in having the investment go through the agency's margins versus us trying to access it directly. It is the exact same inventory; it is just margins that we are not seeing," Benaroya says.

The bigger problem shows up further down the chain. When agencies take a cut for themselves, the SSPs on the other side of the trade have their own margins to protect. The easiest way to protect those margins is to send cheaper, lower-quality inventory through the pipes.

"There is an even higher risk because agencies are forcing a lot of those margins onto the supply partners. Inherently, for the supply side to make a profit, they are going to have to force worse quality inventory through our programmatic buys," he says.

The result is a slow drop in quality that never shows up on an invoice. The recent public fights between major holding companies and DSPs come back to the same fundamental question. Who gets to keep the margin?

Set your own bar

Cost transparency is hard to get from agencies, and even when you have it, cost alone does not tell you whether the media is any good. The cleanest place for advertisers to push back is on quality, where the data sits closer to home, and the standards can be set internally.

"If you cannot get full clarity on cost when you are opted into principal-based buying, then you have to shift to a quality-type KPI. There is no perfect quality metric. Each advertiser has their own mix of metrics, whether that's brand safety, attention, or more outcomes-based metrics. The key is being clear on how you are going to define inventory quality for yourself," Benaroya says.

Standard brand safety tools catch the most obvious Made for Advertising sites, and basic viewability scores tell you whether an ad had the chance to be seen. Neither tells you whether the environment is actually worth buying. The harder work is finding sites that look fine on paper but quietly drag down performance. Before turning to any automated solution, Benaroya recommends starting with a manual gut-check. "One step we took was to start going through our URL list and seeing where we were advertising with our own eyes. It gives you a good sense," he says.

When his team did that work, the worst MFA offenders rarely showed up because existing brand safety controls were already filtering them out. What surfaced instead was a category of sites that were technically legitimate but built around maximizing ad load rather than reader experience. "Look at the URLs, the ad density, how often ads are refreshed. A lot of inventory is going to humans but is clearly built to maximize ad load for profit," he adds.

The manual phase is a starting point, not an ongoing strategy. Newer ad-tech tools now score inventory quality directly inside the auction itself, evaluating each impression before the bid clears rather than after the fact. Writing those scores into the agency contract, alongside shared incentives for hitting them, turns quality into something that gets measured rather than promised.

Cut out the middleman

The bigger lever advertisers have is the one most are slow to pull. The contract. Every dollar that flows through an agency's principal-based buy passes through a markup the advertiser does not see. The fix is mechanical. Sign directly with supply-side partners, and the agency markup disappears.

"An obvious route is to build direct contracts with supply partners. For us, starting with programmatic was a good start, although there is some risk on the social side as well. Building direct contracts with SSPs is a good start, but you must make sure you understand your agency contracts too and what you have opted into from a principal-based buying standpoint," Benaroya says.

The hesitation marketers tend to have is that they cannot prove what they are losing. Benaroya sees the case as more buildable than it looks. Even without the agency's invoice in hand, an advertiser can triangulate. SSP rate cards, programmatic benchmarks, and direct conversations with supply partners give enough signal to estimate the spread. That estimate, once it exists, becomes the basis for a real conversation with finance.

"Even if you do not see the exact markup, there is data you can get on principal-based buying. We were able to estimate benchmarks of what value was being lost or what margins the agency was taking from the supply side partners to estimate what the value was for us to move to a direct contract standpoint," Benaroya says. 

A new contract still does not change how the buy gets run day to day. Even after signing direct, advertisers need a heavier hand on how programmatic and social budgets get optimized, because the agency's incentive structure does not flip overnight. Standard safeguards apply. Audit rights written into the contract, waterfall reports that show the gross-to-net spread on every line item, and a finance partner who actually reads them.

Pay your agency

Direct contracts and quality KPIs only hold up if the agency on the other side has a reason to play it straight. That requires confronting an uncomfortable reality. Most agency relationships are funded at a level that makes principal-based revenue rational. If marketers want their agencies to walk away from opaque profit, they have to make the disclosed work worth doing. "Where I would like to see it go is toward an honest relationship. An honest relationship means knowing we need to make the agency profitable for this to be a long-term partnership, versus one that we are pushing down to low quality because we are forcing financial constraints," Benaroya says.

Outcomes-based compensation, where agencies get paid in part on performance rather than fees or headcount, has been gaining traction as one alternative. Benaroya is cautious about pushing it too far. "As long as those outcome metrics are defined well, then it can work. But there is a risk in going too far in that direction where the agency is fully funded by advertiser outcomes," he says.

The harder conversation is internal. Moving to a transparent model surfaces non-working agency costs that used to sit hidden inside the working-media line. On a marketing P&L without context, that shift looks like a cost going up. The same money that used to disappear into agency margins is now showing up on a line item that finance can actually see. "Marketers need to work with finance to understand. If we go this route, we are going to have more non-working costs that are visible, versus non-transparent costs we classify as working media but really are not," he says.

For Benaroya, the noise of 2026 is the easiest part of the story to misread. The public fights between holding companies and DSPs make for good trade-press copy, but they are not the fights that change anything for individual advertisers. The leverage is closer to home, sitting in the contracts marketers sign and the standards they enforce. "A lot of that dialogue is a complete distraction from the actual issues. To me, that is them fighting over who is going to have the better non-transparent model to extract value from advertisers," he says.