In recent years, the advertising industry has witnessed a significant shift towards Principal Media, a practice that deviates from the traditional agent-based media buying model.
Principal media has been gathering increased attention, prompting the Association of National Advertisers (ANA) in the U.S. to publish a comprehensive report in May 2024 aimed at educating advertisers about this growing trend.
This article delves into the key findings of the ANA report, examines the potential drawbacks of principal media, and proposes a solution for advertisers to navigate this complex media buying landscape.
What is Principal Media?
- The agency or its affiliate is not an agent of the client. The agency is the reseller of the media or other service.
- Clients potentially don’t know where or how the agency acquired the inventory. • The principal media is often sourced by a different agency affiliate.
- The agency is delivering media where the actual price (if any) is not disclosed, and the agency markup is not known. • Principal media is usually positioned to clients based on cost savings and access to better or exclusive inventory.
- The model may include assets other than media, such as data or use of proprietary agency tools/platforms.
- Audit rights are limited. Notably, advertisers can’t have access to vendor invoices.
- Agencies ask marketers to opt in to these transactions, unless the marketer/agency contract does not require such an opt-in.
The Growth of Principal Media
The use of principal media has accelerated in recent times, with holding companies like WPP, Publicis and Omnicom increasingly adopting this model to drive profits.
The ANA report highlights that in 2023, Publicis Groupe's media operations grew by double digits, while Omnicom's Advertising & Media discipline experienced a 6.5% organic growth, outpacing the company's overall growth.
Agencies are turning to principal media as a response to changes in compensation models, pressure from marketers to reduce costs, and the need to meet shareholder expectations.
Key Findings from the Study
The ANA survey reveals valuable insights into advertisers' usage, knowledge, and perceptions of principal media:
- Only 48% of respondents are very familiar with principal media, while 39% are somewhat familiar, and 13% are not familiar at all.
- About 47% of respondents have used principal media in the past year, with television and digital open web being the most common media types.
- A staggering 18% of respondents don't know if principal media has been part of their company's media activity in the past year.
- While some advertisers cite benefits such as reduced costs (79%) and access to exclusive inventory (64%), many express concerns about the lack of transparency (76%) and uncertainty regarding whether principal media recommendations are truly in their best interests (79%).
Independent Expert Perspectives
The ANA report includes valuable insights from media auditors who provide independent perspectives on the challenges and considerations surrounding principal media.
As someone who has worked closely with both Manuel Reyes from Cortex Media and Stephen Broderick from Media Marketing Compliance in the past, I hold their opinions in high regard and respect their expertise in this field.
Manuel Reyes expresses concerns about the lack of transparency and potential conflicts of interest in the principal media model. He advises advertisers to learn how these transactions work and to follow best practices from approvals through auditing.
Similarly, Stephen Broderick emphasises the importance of advertisers being fully aware of what they are buying. He highlights instances where clients were not completely informed about the terms of principal-based deals or where agencies did not follow the terms of the Master Services Agreement (MSA).
Both experts advise advertisers to ask tough questions and verify the claimed benefits of principal media. They recommend that advertisers:
- Understand the true nature of the inventory being offered and whether it aligns with their media objectives.
- Require agencies to provide detailed justifications and cost-benefit analyses for principal media recommendations.
- Ensure that principal media purchases are auditable for quality, performance, and placement.
- Verify that the use of principal media complies with the terms of their agency contracts.
These independent expert perspectives underscore the importance of advertisers being vigilant and proactive in their approach to principal media.
By demanding transparency and verifying the claimed benefits, advertisers can make informed decisions and protect their interests in an increasingly complex media landscape.
Abintus Recommendations
To address the challenges posed by principal media, advertisers should consider adopting Holistic Media Auditing.
While financial media auditing of principal media is currently restricted due to specific clauses in media agency contracts, Holistic Media Auditing offers a comprehensive solution.
This unique approach enables advertisers to gain a complete understanding of the extent and impact of principal media practices in their campaigns.
In light of the findings presented in the ANA report and the potential pitfalls of principal media, I strongly believe that advertisers should exercise caution and avoid principal media altogether.
The lack of transparency, audit restrictions, prevalence of lower-value inventory, loss of AVBs, and compromised media neutrality far outweigh any perceived short-term benefits.
Advertisers must prioritise their long-term interests and adopt Holistic Media Auditing to gain a comprehensive understanding of principal media practices and safeguard their investments.
Next Steps
Next Steps If you're an advertiser looking to navigate the complexities of principal media and protect your interests, here are three steps you can take:
- Download and read the full ANA report to gain a comprehensive understanding of the principal media landscape.
- Learn more about Holistic Media Auditing by downloading our complimentary ebook, "Holistic Media Auditing: Ensuring Transparency and Accountability in Your Media Investments."
- Schedule a call with our team to discuss your specific concerns, answer your questions, and explore how Holistic Media Auditing can be tailored to your organisation's requirements.
By taking these steps, you'll be well-equipped to navigate the principal media landscape with confidence and safeguard your media investments. Don't hesitate to reach out if you need further assistance.
Additional resources related to this topic:
- Understanding Agent vs. Principal in Media Agencies
- Inventory Media - An Opaque Term that Leaves Advertisers Confused
- Decoding the Paradox of Proprietary Media
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About the Author
Philippe Dominois is co-founder and CEO of Abintus Consulting, and Head Coach at the Abintus Academy. He has over 25 years of international media experience, having worked on the media agency side, client side, and media auditing side throughout his career. Philippe has authored hundreds of articles over the years that focus on media management best practices.
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