With Principal Media on The Rise, ANA Report Seeks To Educate Marketers On Best Practices | About the ANA | ANA

With Principal Media on The Rise, ANA Report Seeks To Educate Marketers On Best Practices

Tactic Can Produce Cost Savings but Elevates Potential Conflicts of Interest between Marketers and Agencies

NEW YORK (May 14, 2024) – 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:

  • Only half of the survey respondents (48%) are very familiar with principal media. 39% are somewhat familiar and 13% are not familiar.
  • About half (47%) of respondents have used principal media in the past year. Just over a third (35%) have not.
  • Almost one-fifth (18%) don’t know if principal media has been part of their company’s media activity in the past year.
  • About one-quarter (27%) of respondents noted principal media was part of an agency pitch.

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: 

  • Keep agency contracts up to date, with clear language that addresses principal media.
  • Agencies should be required to provide a clear business case detailing why principal media is recommended and to ensure consistency with the marketer’s media strategy and buying guidelines.
  • Ask for options that do not include the use of principal media.
  • Develop a clear internal approval process for the use of principal media.
  • Require that principal media be clearly identified on media flowcharts.
  • Request the same proof of performance metrics and access to transaction data for both principal and agent-based media buys.

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 at https://ana.net/principalmedia.

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MEDIA CONTACT

Marielena Santana
marielena.santana@digennaro-usa.com

ABOUT THE ANA

The mission of the ANA (Association of National Advertisers) is to drive growth for marketing professionals, brands and businesses, the industry, and humanity. The ANA serves the marketing needs of 20,000 brands by leveraging the 12-point ANA Growth Agenda, which has been endorsed by the Global CMO Growth Council. The ANA’s membership consists of U.S. and international companies, including client-side marketers, nonprofits, fundraisers, and marketing solutions providers (data science and technology companies, ad agencies, publishers, media companies, suppliers, and vendors). The ANA creates Marketing Growth Champions by serving, educating, and advocating for more than 50,000 industry members that collectively invest more than $400 billion in marketing and advertising annually.