Principal media: Saviour or false messiah?
Don’t worry about if principal media is good or evil. The real question is whether it’s a saviour or false messiah, and who really benefits.
Principal media has been a rising topic of conversation among clients, agencies and media owners and has captured headlines across the trades this week. TrinityP3’s Stephen Wright breaks down the questions marketers should be asking.
The discussions around principal media have grown steadily over the past 12 months.
It was less than a year ago I was penning explainers for Mumbrella in the wake of the ANA report on the evolution of principal-based media. As I noted, at the time, the evolution of the rebate into a new form was raising serious questions for marketers, but many were unaware that the rebates and value banks of old had evolved.
Now barely a day goes by when a client or agency doesn’t raise it. It’s become one of the most written-about topics in recent months both globally and increasingly locally. Then this week, at the Future of TV conference, the topic broke through in a way it hasn’t in years, when senior agency leaders Mark Coad, Amy Buchanan and Chris O’Keefe were asked about it on stage.
In a world where media agencies get squeezed into laughable retainers. malus clauses, and global commission structures (who can run a team on 1.5% commission in this market!!??) this hand has been forced by the brands themselves. Agencies need new ways to pay for all the intellectual property and senior staff who drive innovation and business outcomes for clients. Brands (and especially their procurement teams) only have themselves to blame.
Pay peanuts, get monkeys. OR
Allow agencies to make money, get smart resource and innovation.
HenryT
The problem with Principal based trading isn’t the mechanism itself.
The issues arise with non disclosure and agencies taking advantage. TrinityP3 has seen first hand instances where ‘non disclosed’ pricing of inventory through the trading division has been at rates significantly above those achievable.
In one instance an account moved and the new agency was able to buy identical inventory at 60% of the ‘great rates’ achieved by the former agency.
Poor agency behaviours have given principal based trading a bad name.
The cloak of secrecy has been abused – rather than being used to maintain confidentiality around great deals achieved for the client , secrecy has been used to hide substanbtial mark ups to which agencies have helped themselves.
Trading divisions have recently been championed within the Holdco for delivering record profits.
It’s simple maths.
Advertisers fund the activity in it’s entirety.
The activity has 2 components – cost of inventory and agency commission.
If Hold co’s are reporting record profits then clients are likely paying more commission than they should be and receiving a reduced level of inventory
Overcharging by agencies for digital inventory has been the catalyst for advertisers taking digital in house.
TriinityP3 has seen a significant growth in ‘in housing’
Trade desk have reported a massive increase in support provided to clients with new ‘in house’ operations.
Poor behaviours in the trading area are leaving agencies looking after non digital activity alone for a growing proportion of their client base.
Given that in 72% of global Ad revenue is now in digital it leaves them in an increasingly precarious position.
In TrinityP3’s view the short term ‘sugar hit’ from trading division profits severely undermines longer term viability of their media agency operations.
Stephen, there is a bit more to this to fix it. There are many clients who are so far down the line of having reduced agency fees over many years, that for the proposed solution to remove principal media, the client would need to double (or more) their fees paid to agency. And this is exactly where client procurement get stuck – they can’t show a doubling of agency fees as any sort of win internally, and so on and on the merry go round we go.
We recently worked on a consultant led (not Trinity) review of major client, who consultant convinced to go fully transparent, resulting in increased media pricing as well as higher fees paid to agency.
I shook my head: client pays more for both media and fees, agency earns fair profit to cover resources, and consultant walks away with a nice fat fee, for having delivered higher clients costs on the holy grail of “being transparent”.
Argument on disclosed vs. undisclosed valid. Put it in the context of products that a consumer buys. Does any CPG company disclose its manufacturing cost to the the consumer? Come to think of it – a global apparel brand procuring fabric from cheaper markets, having sticthing units in countries where the labour cost is the cheapest. Getting it ready for $30 including freight and selling it for $110. eventually end up reporting massive profits. Maybe that brand could be a big advertiser questioning Principal based trading model – quite interesting. Super funds being invested with a caveat – subject to market risks. Do we know how much margin they make on contributors investment?
Advertisers aren’t the winners with a small “w”. They are the ones pushing the pricing down YoY. So, if an audit firm has the knoweldge of the margins that holdcos are making then they must also have the knowledge of how much the firms and procurement departments have pushed the pricing down YoY.
It also effects the media owners directly in multiple ways. A. The holcos push the prices down to deliver KPIs impacting a media owners margins and yield B. it leads to lesser spending but at higher discounts. So, are the media owners willing to participate in the principal trading program because if they don’t – they will be left out or is it because that’s perhaps one of the ways to keep the revenue secured.
I don’t think its about undermining the trust in the agency model. Clients are aware when they agree to participate in the principal based trading programs, so it isn’t something that is a hidden. If the argument is about why are the holdcos making money? It is the same reason advertisers are in the business for – to make money.
& talking about transparent fee and charges – a little more work to be done – Assesment of how much the fee and commissions have been reduced over the years could be one of reasons point#2 is looking equivalent or bigger than point#1 in the agency model
Asking if principal trading is a “saviour or false messiah” certainly provides a catchy headline, but like many of the arguments that follow, it misses the point. The model isn’t about worship—it’s about commercial reality. And while critics continue to romanticise the past, principal media trading reflects where the market has already gone—driven by performance, efficiency, and client demand for outcomes over theory.
Let’s cut through the moral posturing. Principal trading didn’t emerge in a vacuum. It was born out of a race to the bottom—years of procurement-led squeezes, price-driven pitches, and an industry that demanded “more for less.” Agencies responded by evolving. Yes, that included building trading models that protected margins. But to claim that these exist purely for agency benefit is wilfully reductive.
The suggestion that clients are hoodwinked into principal trading under a “cloak of secrecy” underestimates the intelligence of CMOs and procurement leads. Many are not only aware but actively choosing principal deals because they deliver more competitive pricing and outcomes than traditional methods. If the margins were so unjustifiable, the model would collapse under scrutiny. But it hasn’t—it’s expanded. Why? Because when executed well, principal trading offers clients real commercial value: scaled buying, sharper rates, and guaranteed delivery.
This entire “transparency” debate often comes from those with vested interests in undermining competing models. It’s no coincidence that the loudest voices against principal trading are those with consulting practices or independent agency groups that benefit from painting holdcos as villains. Accusations about secrecy and coercion often act as convenient positioning tools—not objective assessments of client value.
THE INCONVENIENT TRUTH:
And let’s not forget: it was under the leadership of many ex-holdco CEOs now crying foul that the original versions of principal trading took root. They built the bones of the system—only now, watching it evolve without them, they want to disown it. Today’s principal trading isn’t the wild west they presided over. It’s more sophisticated, more governed, and increasingly aligned with commercial goals—especially for clients who value outcomes over ideological purity.
The idea that media owners are helpless participants, “strapped to the horse,” is laughable. These are billion-pound businesses making strategic decisions about inventory and revenue. They enter principal deals for the same reason agencies and clients do: certainty and efficiency. Could some structures be better balanced? Sure. But let’s not pretend they don’t have agency.
Principal trading isn’t a messiah or a monster—it’s a modern response to a fragmented, margin-squeezed landscape. Is it perfect? No model is. But it’s disingenuous to paint it as a scam when so many clients willingly participate, understanding the trade-offs and reaping the benefits.
The “transparency crusade” would have more credibility if it didn’t so often feel like a strategy to discredit the competition and win business. If you’re going to throw stones, at least acknowledge the glass house you once helped build.
In the end, marketers are smart. They know how to interrogate value. And increasingly, they see principal trading not as a deception—but as a tool. One that, when used responsibly, delivers sharper outcomes than the over-romanticised agency models of the past.
Let’s stop pretending this is a moral issue. It’s a business one.
May I suggest that if you operate as a principal media agency, you stop calling yourself a media agency and instead refer to yourself as a media shop? A shop buys products wholesale and sets the retail price, just like principal media does. I don’t have an issue with that; just don’t pretend to be an agency.
To Don Drapeless
You say towards the end of your article that marketers are smart and know how to interrogate value.
Given the record profits reports and significant additional monies the agency groups are helping themselves to, how exactly are clients supposed to determine the value they are receiving in the trading area from their appointed agency.
Value can only be determined when the cost of the service is known.
Agencies are keeping that to themselves, the only thing we know is that it’s delivering records profits and they are doubling down on what they do now.
You end your comment stating that this is a business rather than a moral issue.
Agencies endless go on about treating clients as partners.
In business partners are legally obliged to fully disclose everything to each other.
Hiding the fee to which you are helping yourself isn’t the act of a business partner.
When you choose to conceal the price you are charging that is a conscious business decision in the agency’s interest alone.
If it is such a great deal for the client why would you be hiding it?