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Principal-based Media: A Hot Topic at ANA FM Conference

Updated: May 11



The MMC team has just returned from a great few days at the ANA Financial Management Conference in Orlando, where there was a great deal of insightful content in the formal sessions and then discussed over coffee.  The sessions covered AI in creative, agency remuneration, revamping your agency contracts and relationships, and the hot topic of principal non-disclosed media.

 

The panel of industry experts on principal media agreed that there is a lot of different terminology used in this space which makes it confusing for advertisers. Principal-based media can also cover multiple items including free inventory, or other value the agency receives in lieu of monetary rebates. It might not even be free media, but could be media bundled with data, technology, content or other services and benefits.

 

Keri Bruce, Media and Entertainment Lawyer at Reed Smith LLP, said: “It’s all in this sort of bucket of non-transparent services where you don’t get to see the mark-up.” She recalled a flash poll she conducted at the ANA's Media conference in March which revealed that many in the audience didn’t know whether their agency uses principal deals. 

 

MMC’s Stephen Broderick, Senior Partner (Global) said on the panel: “MMC are seeing this as a rising trend in our client audits. The lack of transparency means that advertisers are often unaware - until it's too late. It’s therefore vital that advertisers keep asking questions of their agencies to get under the skin of this issue.”

 

The concern about the lack of media transparency in the industry has been highlighted by trade publication Ad Age, who reported from the ANA FM conference.  Its article “When Agencies become Media Sellers – Inside the industry’s controversial growth engine,” takes a detailed look at this issue, stating that: “Principal based buying is increasingly a fact of life in the ad industry.” Ad Age invited the four largest global agency holding groups to contribute to the article. However, they declined to comment. Ad Age subscribers can read the article in full here.

 

Client-agency relationships need to be moved to a more open footing, rather than the current situation where media agencies earn undisclosed revenues, says MMC in the new Playbook for Advertisers.  Download the Managing Media Playbook for more on this topic and recommendations on how to  achieve maximum media effectiveness, accountability and transparency.

 

MMC is hoping to hear more about principal ad-buying from the ANA soon, with a new report slated for release next week.


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