Is there another way for businesses to buy media when inventory is tight?  Philip Jay LLeNoble, Ph.D.

COMMENTARY

A Call: Principal Media Case Studies

• by Bill Duggan , May 30, 2024

The Association of National Advertisers (ANA) recently released a study (“The Acceleration of Principal Media") revealing that when it comes to buying media, ad agencies are increasingly acting as principals rather than agents. That means they actually acquire the media — therefore becoming the owner, or “principal,” of that media — and resell the media to their clients.

The study 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.  It features four case studies highlighting how marketers have leveraged principal media. We welcome additional case studies. Those in the paper are from companies in these industries – financial services, alcoholic beverages, CPG, and pharma. 

• A financial services company: “Principal media can have a beneficial role in the overall mix to get high efficiencies on commodity media, especially when faced with unexpected savings requirements. We’ve successfully used it, mainly with linear TV, to help achieve marketing’s contribution to enterprise-wide efficiency goals, as well as to maintain optimal weight in response to ad hoc budget reductions. It’s a relatively turnkey lever for savings of 10 to 15 percent on pockets of standardized, ‘spots and dots,’ non-biddable media. You just need to do your homework and have the appropriate controls in place. That includes an agency contract stipulating it’s used only on an opt-in, case-by-case basis with prior written approval every time by a designated executive, as well as full post-buy deliverables. Principal media has perfectly valid applications for advertisers that manage it tightly, and I know several client-side media stewards that wouldn’t want it removed as one of the arrows in their quiver.”

• A marketer of alcoholic beverages: This company uses some television in its media plan, acquired via the traditional upfront. But it is not a major TV buyer. Given the need to support a new product, more television was required. The scatter market was tight at the time, so that inventory would carry a CPM premium. The agency suggested principal media as a solution.

• A CPG: The product portfolio for Company X is heavily dependent on a commodity whose price has increased significantly in the past two years. Price increases for the company’s core product have already been implemented, but margins continue to be squeezed. Company X is cutting back on overall advertising spending and is now using principal media for the first time in recent memory, given the cost savings. The agency guaranteed cost savings of approximately 15 percent. Company X is viewing this situation opportunistically. If principal media is able to meet the performance KPIs of its traditional, agent-based media buys, it could become a bigger part of the company’s overall spending going forward.

• A pharmaceutical company: This company uses principal media specifically for a division that has been challenged with declining sales and therefore also declining marketing budgets. Those declining budgets have meant that no funds are available for much-needed research support that could help optimize media investments. This company turned to principal media as a solution. The use of principal media has resulted in cost savings of approximately 15 percent, which has been reinvested in research focused on media effectiveness and marketing mix modeling. About 10 percent of the budget has been placed via principal media. For all principal media deals, the client requires that the agency provide a detailed cost/benefit analysis to support the recommendation, which includes an option without principal media. The marketer maintains that the principal media must be auditable for quality/performance and placement — including IVT, viewability, brand safety, and adherence to inclusion/exclusion lists. The client understands that costs cannot be audited but insists that quality/performance and placement are indeed auditable. Overall, principal media has been a good solution, given this company’s situation.