Advertising Networks Reap Gains through Arbitrage, with Some Brands Unknowingly Gaining Profit too, according to ANA Study
Media agencies are up to some shady business, quite literally cashing in on a practice known as "principal buying." This sketchy scheme involves these agencies snatching up media from vendors and selling it back to their clients for a higher price. Yep, you read that right – they buy low and resell high, pocketing the difference.
It's not just a small-time game, either. According to the latest research by The Association of National Advertisers (ANA), this profitable practice is fairly widespread and still growing strong. The report, based on a quantitative survey of 128 client-side marketers who are ANA members, along with supplemental qualitative interviews and input from legal professionals and media auditors, paints a concerning picture.
Back in 2016, the ANA already had a hunch that something fishy was going on with agencies, as they published a report in collaboration with K2 Intelligence suggesting that agencies were accepting undisclosed rebates from media suppliers.
While the ANA doesn't exclusively focus on principal buying, discussions around this contentious practice have been a hot topic in the advertising industry. It's a situation where agencies pick up media inventory in bulk and sell it to clients or third parties for a higher price, which can create clear conflicts of interest. Agencies might prioritize their profits over their clients' interests, which is definitely not kosher.
Despite this, a specific report from the ANA addressing the extent and impact of principal buying has yet to be published. Nevertheless, the ANA provides valuable insights into media buying practices and the dynamics of client-agency relationships through various reports and publications. Interestingly, a recent report highlighted that longer, more established relationships between clients and agencies tend to lead to better outcomes for both parties.
In the midst of all this, Jared Belsky, the CEO and co-founder of digital marketing agency Acadia, has weighed in on principal media buying in the context of ANA events, suggesting its significance in current advertising discussions. However, specific research on the extent and impact of principal buying from the ANA remains a mystery for now. Keep your eyes peeled for updates on this curious case of media manipulation!
- The quantitative survey conducted by The Association of National Advertisers (ANA) revealed that the practice of principal buying, where media agencies buy media inventory in bulk and resell it for a higher price, is fairly widespread and still growing.
- The latest report by the ANA, which includes qualitative interviews, input from legal professionals, and media auditors, portrays concerns about principal buying and its potential impacts on the business relationship between clients and media agencies.
- In 2016, the ANA, in collaboration with K2 Intelligence, published a report suggesting that media agencies were accepting undisclosed rebates from suppliers, which is another troubling aspect of their business practices.
- Jared Belsky, the CEO of digital marketing agency Acadia, has highlighted principal media buying as a significant discussion point in ANA events, indicating its relevance to the current advertising landscape.
