Rules and ethics
What the CMA online advertising market study means for PPC agencies
PPC agency transparency now turns on the CMA online advertising market study: spend reporting, commission disclosure and substantiating performance claims.
What to take away
- The CMA online advertising market study sets expectations, not new law; the binding duties come from consumer law and the Digital Markets, Competition and Consumers Act 2024.
- Report platform media spend separately from agency fees, so clients see what reached Google Ads or Microsoft Advertising.
- Put commission, markup, rebates and volume discounts in the contract, in writing.
- Substantiate performance claims with a defined period, spend and metric, and keep the source data.
What the study requires, and what it does not
The CMA's online advertising market study, published in 2020, examined how search and display advertising are bought and sold in the UK. It found Google took more than 90 per cent of UK search advertising revenue, leaving advertisers with little bargaining power.
It did not create a disclosure statute. It recommended a regulator able to impose codes of conduct on the largest platforms, which the Digital Markets, Competition and Consumers Act 2024 delivered.
The duties that bind a PPC agency come from the agency contract, consumer protection law and the CMA's enforcement powers.
Separating media spend from agency fees
A client should open a monthly report and answer one question: how much of my budget reached the ad platform?
Reporting platform metrics beside client ledger figures sets out a monthly reconciliation that answers that question directly.
Keep these lines apart in every report:
| Report line | What it shows | Source |
|---|---|---|
| Platform media spend | Cost recorded in Google Ads or Microsoft Advertising | Platform billing or API |
| Agency management fee | Strategy, build and optimisation | Agency invoice |
| Rebates and credits | Money returned by a platform | Platform statement |
One combined marketing budget line hides the fee and invites a dispute at renewal. Split lines let a finance team reconcile the invoice against platform billing.
Bundled vs Separate Spend Reporting
Bundled report
- Platform spend
- Hidden in total
- Agency fees
- Not visible
- Hidden margin
- Client cannot see
- Client question
- Unanswered
Separate report
- Platform spend
- Shown exactly
- Agency fees
- Listed separately
- Hidden margin
- Disclosed
- Client question
- Did budget reach platform?
Example: substantiating a performance claim
Suppose an agency pitches that it halved cost per acquisition for a retailer. To substantiate that:
Substantiating a performance claim
- Name the client, sector and months covered.
- Give the starting and ending cost per acquisition in pounds.
- State the media spend behind each figure.
- Say whether the metric came from the platform or the client's analytics.
- Note what else changed, such as a site rebuild or a promotion.
If platform data and the client's records disagree, say so and explain why; when to question a PPC agency's measurement and reporting sets out the questions to expect.
The Consumer Protection from Unfair Trading Regulations 2008 prohibit misleading actions, so keep source data for every headline claim.
Commission, rebates and markups in the contract
Commission disclosure is the study's clearest demand. A client should never have to work out how the agency is paid.
- State the fee model and the rate.
- Say whether media is bought at cost or marked up.
- Disclose rebates, credits and volume discounts, and whether they are passed back.
- Name who owns the Google Ads account, the data and the creative.
- Set out how fees change and the notice required.
The study flagged a conflict: when income rises with client spend, the agency gains from spending more. A spend cap or a fixed fee lets the client manage it.
A contract that hides commission can also breach the unfair commercial practices rules in the CMA consumer enforcement guidance.
Before renewal, put commercial contracts under legal review, because ownership and fee-change clauses cause most disputes, and those clauses also carry the disclosure terms above.
Enforcement under the Digital Markets, Competition and Consumers Act 2024
The Digital Markets, Competition and Consumers Act 2024 lets the CMA decide consumer law breaches itself. Fines can reach 10 per cent of global turnover.
The Act also creates a digital markets regime, allowing the CMA to designate firms with strategic market status and impose conduct requirements on them.
The study and the Act cover the whole UK, so agencies in Cardiff, Glasgow or Belfast work to the same disclosure standard. Public sector frameworks in Wales and Scotland can add stricter terms.
Common questions
Does the study create new legal duties for PPC agencies?
No. It sets expectations rather than statute. Binding duties come from the contract, consumer protection law and the Digital Markets, Competition and Consumers Act 2024.
What must an agency disclose about commission and rebates?
The fee model and rate, whether media is bought at cost or marked up, any rebate or volume discount and whether it is passed back, plus who owns the ad account. All of it belongs in the contract.
How do we report misleading search advertising practices?
Use the CMA's route for reporting a competition or market problem, which is open to businesses as well as consumers. If a practice affects many advertisers, a report can lead to market-wide action.
