• by Bill Duggan , May 16, 2024

Principal media has been getting lots of attention, and marketers need to be aware and knowledgeable. Increasingly, advertising agencies are now acting as principals rather than agents. That means they acquire media — therefore becoming the owner, or “principal,” of that media — and resell the media to their clients. A new ANA white paper, “The Acceleration of Principal Media,” is intended to increase awareness and help educate marketers — the background, benefits, challenges, and guidelines — so they can make an informed decision about the role of principal media for them. 

The paper is supported by a quantitative survey with ANA client-side marketers which generated 139 responses. Highlights from that survey: 

• Only about half (48 percent) of survey respondents are “very familiar” with principal media. Meanwhile, 39 percent are somewhat familiar, and 13 percent are not familiar. This overall lack of knowledge is concerning. 

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  “Principal media is ubiquitous,” according to one survey respondent. Television and the open web are the most common media types. But other media and non-media are also used: digital walled gardens, audio, search marketing, print, influencer marketing, and research. 

• About half (47 percent) of respondents have used principal media in the past year. Just over a third (35 percent) have not, and 18 percent — almost one-fifth — don’t know if principal media has been part of their company’s media activity in the past year. It is concerning that 18 percent of respondents don’t know. 

• Forty-one percent of respondents expect to use principal media over the next year. 

• The use of principal media is increasing for 24 percent of respondents and staying about the same for 55 percent. The key reasons that the use of principal media is increasing: (a) marketers are increasingly looking for efficiencies in their media buys and (b) agencies are more aggressively pushing principal media solutions, often as a result of reductions in traditional agency compensation. 

• The top benefit of principal media for marketers is reduced cost, followed by the benefits of better inventory and access to exclusive inventory not otherwise available. There was mixed feedback in our qualitative discussions regarding the benefits of better inventory and access to exclusive inventory actually being true.

• There are multiple challenges for marketers with principal media. The top challenge is uncertainty if the recommended media is in the client’s best interest. A number of qualitative interviewees had concerns about conflict of interest, and one specifically told us, “I don’t know if my agency is recommending principal media because it’s the best media for me, or the best media for them.”  Other challenges include loss of full audit rights, lack of visibility on agency profit, and loss of quality in media placements. 

Although principal media has been getting increased attention it has been around for some time — at least 10 years, according to both Cortex Media and Media Marketing Compliance. Both are well-respected media auditors. Per Cortex and MMC, principal media has historically been “heavily used” in Australia, Canada, Germany, and the U.K., and in the past 18 months, “it has been seen everywhere.”

The respective agency holding companies all have been active recommending principal media to their clients. According to Brian Wieser, a noted strategic financial analyst of global advertising, technology, and marketing services businesses and the founder of Madison and Wall, “Publicis and Omnicom have been the most aggressive in this field in the past year, while IPG and WPP have been the least aggressive, and each company’s organic growth trends mirror these orientations.”

Principal media does have its place for some marketers under the right circumstances. For example, it can be a solution when marketers are faced with unexpected savings requirements. But it is vital that marketers be educated. Start with the marketer/agency contract as it defines the relationship between the two parties. Ensure that the contract with your agency is up to date with clear language to address principal media. Refer to the ANA Master Media Buying Services Agreement Template Version 3.0. 

It is expected that agencies will increasingly recommend principal media to clients going forward. 

Changes in agency compensation models from marketers as well as pressure from marketers to extend payment terms and “drive media costs down” have led agencies and holding companies to accelerate the use of principal media. Marketers – you better get educated!

The ANA paper is available at www.ana.net/principalmedia.