Creative Accounting: It's Time to Join the Dots

Creative agencies are rapidly becoming the least transparent partner in the marketing supply chain — and most advertisers don’t yet appreciate the scale of the risk this creates.

Through our work auditing creative agencies around the world, we see a picture that is increasingly hard to ignore. Money is leaking away, controls are inconsistent and advertisers often don’t have enough visibility to spot where issues begin, let alone how to stop them.

At a time when the industry is under pressure, it is more important than ever for brands to “join the dots” and build a clear, structured approach to creative agency governance. Only then will advertisers understand how their budgets are actually being used and where value is being lost.

A challenging landscape for creative agencies

A review of 2025 financial results from the major holding companies shows that creative agencies are struggling, with most reporting flat or declining revenues. Economic uncertainty continues to limit client budgets, while the rapid rise of AI enabled content production has encouraged many brands to bring more work in house.

At the same time, the shift towards data driven channels and programmatic media is pulling investment away from traditional creative services.

Competition has intensified too. Consulting firms and nimble independents are increasingly attractive alternatives to the classic network model, offering new types of capability, different commercial arrangements and sometimes a perception of greater agility.

Against this backdrop, it is hardly surprising that creative agencies are focused on stabilising income and finding efficiencies. The concern for advertisers is how these pressures translate into behaviour — especially where it affects the transparency and stewardship of their budgets.

A wave of consolidation — and its consequences
The last three years have seen around ten major creative agency brands retired, merged or absorbed into parent groups. WPP, Omnicom (now with IPG), Publicis Groupe and Dentsu have all restructured their portfolios, while Havas stands out as the only major group not to make any major brand retirements in the same period.

Some of the industry’s most iconic names — Wunderman Thompson, VMLY&R, DDB, FCB, MullenLowe, Leo Burnett, McGarryBowen and others — have been folded into larger entities or repositioned as part of broader offerings.

This level of consolidation is not simply symbolic. It reflects deeper financial pressures and cultural shifts within holding companies, where priorities are evolving and the traditional creative agency model is being reshaped. In practice, it also creates operational disruption, puts strain on internal teams and often leads to new ways of managing budgets and workflows — not all of them beneficial for advertisers.

What we see in audits today
Across audits conducted in recent years, a series of common behaviours has emerged across both network and independent creative agencies. These behaviours have clear commercial motivations, which frequently disadvantage clients and almost always reduce financial transparency.

While procurement teams are quite rightly working to modernise remuneration models and understand the implications of AI on pricing and scope, these strategic projects often distract from a more immediate issue: a lack of day to day governance is already allowing money to leak.

And because creative budgets are typically smaller than media — and perceived as less complex — they don’t always receive the scrutiny they should.

This is a mistake. The risks are real and they are growing.

Why creative budgets are exposed
Creative agency finances operate very differently to media. Media, by its nature, requires sophisticated systems, tightly controlled processes and well resourced finance teams. These teams tend to have influence at a senior level and investment behind them.

Creative agency finance teams, by contrast, often struggle with:

• outdated financial systems
• limited staffing
• inconsistent levels of commercial skill
• a lack of influence at leadership level

Combine these challenges with the fact that creative budgets are primarily based on estimates — usually with built in contingencies — and the need for prompt reconciliation becomes critical. Delays or inaccuracies in this area are not simply administrative oversights: they represent a tangible financial risk to advertisers.

Where the money goes missing
When the operational realities of creative agencies intersect with the commercial pressures facing the industry, a clear pattern emerges. Without structured governance, advertisers face increased exposure in areas such as:

• Budget approvals that lack transparency around how funds are allocated or reallocated
• Third party supplier management where commercial decisions do not always align with client interests
• Slow or inaccurate job reconciliations, often leaving client money in agency bank accounts for long periods
• Undisclosed use of group companies and joint ventures, sometimes affecting cost competitiveness
• Non disclosed or disguised mark ups on third party costs

Individually, any one of these issues might look minor. Collectively, they can represent significant leakage and, at times, practices that would not stand up to scrutiny if clients had full visibility.

A muted advertiser response — and the cost of inaction
Despite these risks, most advertisers do not have a creative agency governance programme in place. Even fewer conduct regular financial reviews, whether quarterly, annually or bi annually.

This lack of structure means that many brands simply don’t know how their creative budgets are being spent. They rely heavily on trust — and while trust is important, it is not a substitute for oversight.

The analogy to media governance is useful here. Few brands would dream of operating without rigorous financial controls for media spend. Yet creative budgets, which face many of the same risks, are often left unmanaged.

This needs to change.

Why 2026 must be the year advertisers act

At Financial Progression, we believe that 2026 is the year the industry must reset its approach to creative governance. The pressures on agencies are too great, the financial systems too inconsistent and the risk to advertisers too significant to continue with the status quo.

If more advertisers saw what we see through audits, creative governance would become a priority overnight. Regular reporting of open and closed job balances would become standard. Contracts would be tightened. Financial processes would be improved. And relationships with agencies would become stronger and more transparent as a result.

So, what should advertisers do?

Step 1: Audit at least one creative agency
Carve out a small percentage of the marketing budget — typically between 0.1% and 0.5% — to audit one or more creative agencies over the last two financial or contract years.
The investment is modest. The insights are powerful.

Creative agency audits frequently pay for themselves. We have seen returns ranging from 1x to 35x the audit cost. More importantly, audits provide a foundation for stronger controls, clearer contracts and better visibility going forward.

Step 2: Build regular financial oversight into agency governance
Whether it takes the form of quarterly light touch reviews within existing QBRs or periodic full audits, ongoing oversight is essential.

A growing number of brands are shifting to quarterly reviews after realising that most financial leakage stems from slow, inconsistent job reconciliation. These delays often mean large amounts of client money sit in agency bank accounts, effectively providing interest free working capital.
If inefficiency becomes a financing strategy, both sides ultimately lose — but the advertiser loses first.

Step 3: Connect the insights and take action
Once advertisers have visibility, they can design governance programmes that protect budgets, strengthen transparency and align agency incentives with their own. The result is not just reduced financial risk, but stronger, more constructive agency relationships built on clarity rather than assumptions.

If you would like to have a conversation about auditing your creative agencies or anything else related to marketing contract compliance, please get in touch.