What is a working media ratio?
Your working media ratio is the share of your marketing budget that buys ads people actually see. The rest pays for everything around the ads: management fees, creative, software and reports.
Most small businesses have never seen this number, because most invoices don't show it. You can work it out yourself in about ten minutes with last month's invoice and your ad platform receipts. This post shows you how.
Working media vs non-working media
The terms come from the big-brand world, but they apply to a plumber in Gwinnett just as well as to a soda company.
Working media is money that buys a placement: a click on Google, an impression on Instagram, a 30-second spot on a streaming TV app. It is the only part of the budget a customer ever sees.
Non-working media is everything else you pay for to make the ads happen. None of it is waste by default. Some of it is what makes the working media perform. But none of it reaches a customer directly.
Where your ad budget goes before it reaches a customer
Here are the usual line items, in roughly the order they come out:
- Management fees. A flat retainer, a percentage of your ad spend, or both. This pays for the people who plan, build and adjust the campaigns, plus the account manager and the review layers you never see. We broke this down in What a retainer actually pays for.
- Creative production. Ad copy, images, video edits and landing pages. Sometimes this is bundled into the retainer and sometimes it is billed per project.
- Tooling. Call tracking, reporting dashboards, landing page builders and bid management software. Agencies often pass these through with a markup, or fold them into the fee.
- Reporting. The monthly deck and the call to walk through it. The analysis part is valuable. The formatting part is not something a customer ever sees.
- Middlemen inside the media itself. This one is hidden inside the "media" line, and it is covered below.
How to calculate your working media ratio
You need two numbers from the same month.
1. What the ad platforms actually charged. Log into Google Ads, Meta and any other platform you run, and look at the billing or payment history. Add up what they charged for that month. This is your working media. If your agency pays the platforms and bills you, ask them for the platform receipts, not their own summary.
2. Everything you spent on marketing that month. The full agency invoice, any separate creative bills, and any software subscriptions you pay for marketing.
Then divide the first number by the second.
Working media ratio = platform spend ÷ total marketing spend
If your agency invoice shows one bundled number, such as "Digital marketing package: $4,000", step one is the only way to find the split. That is not a sign anyone is hiding anything. It just means the invoice was not built to answer this question. See What your agency invoice is actually buying for how to read one line by line.
Working media ratio example
This is an illustration with made-up round numbers, not a real client.
A home services business pays $5,000 a month for marketing, split like this:
- Agency management fee: $1,500
- Creative refresh and landing page updates: $400
- Call tracking and reporting software: $300
- Paid to Google Ads and Meta: $2,800
Working media ratio: $2,800 ÷ $5,000 = 56%.
So 56 cents of every dollar buys ads a customer can see. The other 44 cents pays for the work around them.
Now say the owner wants to add streaming TV and display ads, and $600 of the $2,800 moves into programmatic buying. That $600 goes through a second set of middlemen before it reaches a website or app, so less of it turns into ads people see. The 56% on paper is now a bit lower in practice.
Programmatic fees: the hidden second layer
On Google search or Facebook, you pay the platform and the platform shows the ad. There are few hands in between.
Programmatic ads (display, most streaming TV, online video on websites) are different. The money passes through a demand-side platform, data sellers, verification tools, an ad exchange and a supply-side platform before a publisher shows the ad. Each one takes a cut.
Two large studies measured how much gets through:
- The ANA's Programmatic Media Supply Chain Transparency Study (full report December 2023) tracked $123 million of spend from 21 major brands. It found that only 36 cents of every dollar that went into a demand-side platform reached a consumer as a quality, viewable ad. It also found that paying more for media did not mean getting better quality.
- An earlier ISBA and PwC study in the UK (2020) found publishers received 51% of advertiser spend on average. It also found a 15% "unknown delta", money nobody in the chain could account for.
Those studies covered big brands with big budgets. Small businesses buying through an agency's platform seat face the same supply chain, often with less leverage.
This doesn't mean programmatic is a bad buy. Streaming TV and display can reach people search never will. It means you should ask how the media is bought, and whether anyone is checking where the ads ran.
How to improve your working media ratio
A few practical moves, whatever your ratio turns out to be:
- Ask for the media number in dollars. "How much of what I paid last month went to the ad platforms?" should have a plain answer.
- Ask for platform receipts, not summaries. The platforms' own billing pages are the source of truth.
- Ask how programmatic is bought. Which platform, which exchanges, and whether you can see a list of sites and apps where your ads ran.
- Check who owns the accounts. If the ad accounts aren't yours, you can't see the platform receipts yourself. Our ad account ownership checklist shows how to check.
- Watch the ratio as your budget changes. Fixed fees take a bigger share of small budgets. If you cut your ad spend but the fee stays the same, your ratio drops fast.
- Judge on results, not just the ratio. A ratio tells you where the money goes. Leads and sales tell you whether it worked.
Where DeepThought fits
DeepThought is a done-for-you advertising service. Our team runs the media across 22 advertising products, and the media is covered inside one all-inclusive price rather than billed on top of a management fee. It costs a fraction of a comparable agency retainer, month to month.
Whoever you work with, including us, ask for the working media number. For the full picture of what digital marketing should cost and include, read our guide to digital marketing for small business.
Sources
- ANA, Programmatic Media Supply Chain Transparency Study, complete report, December 2023. Summary in Adweek.
- ISBA and PwC, Programmatic Supply Chain Transparency Study, executive summary, 2020.
What is working media?
Working media is the part of your marketing budget that pays for ad placements people can see: the clicks, impressions and airtime on Google, Facebook, streaming TV and other channels. Non-working media is everything that supports the ads without being an ad, such as management fees, creative production, software and reporting.
What is a good working media ratio for a small business?
There is no official benchmark, and it depends on how much help you need. As a rule of thumb, the higher the better, as long as the campaigns are still managed well. If fees, tools and reporting take more than your media does, most of your budget is paying for the machine rather than the customers.
How do I calculate my working media ratio?
Add up what you paid the ad platforms themselves last month (Google, Meta and so on, from their own billing pages). Divide that by everything you spent on marketing that month, including agency fees, creative and tools. Multiply by 100 to get a percentage.
Why does programmatic advertising have a lower working media ratio?
Programmatic ads pass through several middlemen, such as a demand-side platform, data providers, verification tools and an exchange, before they reach a website. Each takes a cut. The ANA's 2023 study found only 36 cents of each dollar reached a consumer, and a 2020 ISBA and PwC study found publishers received 51% of advertiser spend on average.
Does a lower working media ratio always mean I'm overpaying?
No. Good strategy, creative and optimization can make each media dollar work much harder, so a slightly lower ratio with sharp management can beat a high ratio with nobody watching. The ratio tells you where the money goes. Results tell you whether it was worth it.