ANA’s latest report, “The Acceleration of Principal Media,” reveals a substantial knowledge gap among marketers regarding the use of principal media. The purpose of ANA’s report is to increase awareness and to help educate marketers on principal media, including its background, benefits, and challenges.
Principal-based media buying occurs when agencies buy inventory from media owners at bulk rates and then resell it to clients at a markup. Agencies become the owners or vendors of the media, rather than acting as independent agents for clients.
For some marketers, this practice can produce media cost savings of 10-15%. However, the report unveiled several notable findings, including:
In addition, the study found that 41% of respondents expect to use principal media over the next year. Of those respondents, the use of principal media is increasing for 24% and staying the same for 55%.
According to the report, agencies and holding companies have increased their use of principal media due to downward pressure on margins, deterioration of payment terms and an overall focus on “driving media costs down.”
Principal media may offer marketers reduced costs. However, there are multiple challenges marketers must navigate, including an overall determination as to whether such purchases are in their brand’s best interests. Multiple respondents confirmed they had concerns about agency conflicts of interest. Other issues cited include the loss of full audit rights, the quality of actual media inventory delivered and lack of visibility into agency profitability.
“Transparency and accountability are paramount in media transactions,” said Bob Liodice, CEO of the ANA. “This report gives marketers the insights they need to develop a deeper understanding of principal media, along with guidelines that protect their businesses.” A marketer on ANA’s board of directors recently remarked, “While principal media can indeed provide the benefit of cost savings, marketers pursue such deals with their eyes wide open.”
The new report lays out guidelines that marketers can use to assess the usefulness of principal media, including:
The report includes a quantitative survey of ANA client-side marketers fielded in February 2024, in addition to follow-up in-depth qualitative interviews. A copy of the full report can be accessed here.