Pursue Partnerships & Accountability, Not Principal-Based Buying

August 30, 2024 | 4 min read

WHAT'S TRENDING

George Popstefanov, CEO & Founder

George is the CEO and Founder of PMG. He regularly shares his insights on the industry with major outlets, including The Wall Street Journal, CNBC, Bloomberg Businessweek, AdAge, Adweek, Inc. Magazine, Digiday, Campaign and Direct Marketing News. He’s also spoken at major conferences such as the Google Executive Travel Summit, Luxury Interactive, MarkLogic World, SMX, SES, and Search Insider Summit.

George is a graduate of the Harvard Business School OPM program and earned his bachelor’s degree from TCU.

When an advertiser or agency engages in principal-based buying, the process is quite simple. Ad inventory has been purchased ahead of time from partners and platforms, and the agency resells it to their clients, often with an added markup and other hidden fees attached. Many agencies often promise that principal-based buying is simply more effective and affords a greater volume of impressions or visibility for the brand. Lofty pursuits that are difficult to measure without being paired with an accountability model that enables 100% transparency into every dollar spent. The reality of what’s happening in principal-based buying behind the scenes is much easier to quantify. The agency is putting their interests ahead of the client’s. Full stop.

Principal-based buying obscures the true cost and value of media placements, undermining trust and effectiveness between brands, advertisers, and consumers. This approach leads to biased media choices driven by imbalanced financial incentives, poor-quality media hidden from view, excessive ad repetition, resistance to innovation, and a lack of transparency with self-serving performance metrics. If business performance is a priority, these issues are particularly concerning.

As every marketer knows, every brand and corporate business is just as unique as the end customer they serve. Media investments must be accountable to the goals and needs of myriad stakeholders, from marketing to finance, inventory management, and customer service, agile enough to meet the real-time cultural moment of today—and tomorrow—and led by insights and innovative thinking that breaks through the noise and competitive landscape in such a way that ultimately drives the business forward.

“Principal-based buying obscures the true cost and value of media placements, undermining trust and effectiveness between brands, advertisers, and consumers.”

Managing these objectives is about maintaining a balance between incentives and strategic goals. As such, advertising exists at the intersection of financial performance, cultural relevancy, and consumer engagement. When media investments are made ahead of time via principal-based buying, the incentives and strategy of the ad buy are woefully misaligned. The media plan doesn’t holistically serve the brand or its customers; it pads the agency’s bottom line with misappropriated media investments.

Leveraging Partnerships to Drive Accountability

But luckily, there’s another, much simpler way of doing business in our industry. Leading agencies understand this delicate balance between internal stakeholders and operate as true business partners to all of them, championing transparency, collaboration, and co-creation in the process. The preferred operating model for any media buy is one that’s effective and efficient, aligning brand messages and content in the right places and at the right moments to drive total business value. To implement this approach, collaborative, direct partnerships with partners and platforms are critical, as is operating with a transparent, data-driven, audience-first approach.

Leveraging real-time data to build media plans and buy media placements ensures investment strategies are agile and bespoke, giving an unparalleled ability to drive intra-day outcomes alongside long-term brand-building efforts. This can include media signals, direct customer sources of truth, and sentiment as the foundational element to ultimately fuel custom bidding and buying strategies that get us closer to end-supply, driving efficiencies and unique customer outcomes.

Operating in our privacy-centric, fragmented, yet addressable programmatic ecosystem requires agencies to prioritize platforms with proprietary relationships with consumers that drive unique access to data and activation, preserving the strength of the media investment and privacy-centric, addressable relationships with consumers. In other words, choosing to work with platforms as partners rather than operating through third-party intermediaries.

Working with platforms directly through joint business and technical plans influences innovation and secures cost-effective media placements strategically aligned with customer goals. This goes beyond access to alphas and betas to focus on solving business challenges and delivering true industry innovation. An added bonus is that these direct partnerships also allow advertisers to maintain a clearer line of sight into the pricing and placement of ads, helping to ensure there are no hidden fees or markups that could diminish the value of the investment. Media plans built with this approach drive outcomes and are accountable to company objectives across the business, leveraging quality inventory, with transparency and innovation endemic to the process.

In programmatic buying, this strategy is made possible through an audience-first approach across open and closed ecosystems, delivering campaigns that align customer goals with ultimate safety and suitability, avoiding MFA inventory and unsuitable content. For PMG’s programmatic practice, media efficiencies are found by staying as close to the end support as possible, mitigating waste on platforms’ margins and sub-premium inventory. In broadcast and CTV buying, agencies should pursue quality, transparent, and accountable partners that deliver maximum value, strong awareness, and ultimately deliver impact. PMG’s investment philosophy does this and more, as our negotiation strategy is centered on adding incremental value through innovation, optimal placements based on deep audience insights, and strong partnerships in the marketplace, opening opportunities for first-to-market and never-been-done-before moments.

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Effectiveness in media buying isn't just about reaching large audiences; it's about engaging the right audiences in the most impactful way. While principal-based media buying is said to offer short-term gains, PMG believes that a transparent, collaborative, and client-focused approach leads to better short- and long-term outcomes for our customers.

By eschewing the principal-based model and focusing on direct partnerships and strategic media placements, superior value and effectiveness are delivered. Marketing should inspire and engage, move culture, and drive impact. A commitment to transparency, collaboration, and client-centric strategies is what sets leading agency relationships apart, ensuring that we not only meet but exceed customer expectations with media programs as incomparable as the brands we exist to serve.