If this industry has taught us anything, it’s that history repeats itself. We’re great at rebranding yesterday’s practices as tomorrow’s innovations.
So when principal-based buying started being pitched as the next big thing, I couldn’t help but think: Haven’t we been here before?
The old game in a new wrapper
Principal-based buying is when agencies, trading desks or intermediaries purchase media inventory in bulk and then resell it to clients at a markup, acting as the principal rather than the agent.
In other words, it’s media arbitrage dressed up with better PowerPoint decks.
This isn’t new. Barter trading has been around since 1984, when Orion Capital and Active International helped agencies offload low-value assets for discounted TV and radio inventory.
Having run investment for GroupM, I saw firsthand how these arrangements worked: handshake deals, bulk buys, inflated “fair market” rates. Agencies promised volume, secured discounts and pocketed the spread.
That playbook hasn’t disappeared; it’s simply been updated for the programmatic era.
When it works and when it doesn’t
Principal-based buying isn’t inherently bad. When incentives are aligned, clients get more precision and speed than traditional agency models often allow:
- Scale: Enterprise clients with $10M+ budgets gain access to custom solutions and dedicated resources.
- Expertise: Specialized arbitrage strategies can unlock better targeting and inventory access.
- Alignment: For performance-driven sectors like DTC, ecommerce and financial services, principal models can sharpen ROI measurement when structured correctly.
The issue isn’t the mechanism; it’s the incentives. If your agency profits from undisclosed markups, then they’re optimizing for their margin, not your performance.
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Opacity has always been the industry’s Achilles’ heel. Without proper disclosure from agencies, advertisers end up overpaying and underperforming.
BENCH Your Agency
You don’t have to avoid principal buying. You just need to control it.
Here’s the “BENCH” framework for how to make principal media work for you:
(B)enchmark alternatives
Programmatic is biddable, so prices will vary. Without competitive quotes, you’ll never see if your agency is pocketing spread.
Action steps:
- Create an RFP. Draft a one-pager describing the same campaign (budget, KPIs, inventory type, region). Send it to multiple agencies (large network + independent) and DSP providers directly (The Trade Desk, DV360, Amazon, etc.).
- Compare expected CPMs. Even though programmatic is auction-based, ask each partner for their expected CPM range for the same inventory. Large variances = hidden margin.
- Ask for PMP pricing. Request private marketplace (PMP) rates that include the same inventory sources across respondents. Then ask about these curated marketplaces. Ask directly: “Do you use curated marketplaces where demand is routed directly to the SSP in exchange for reduced tech fees?”
- If yes, compare your in-platform CPM and spend against your invoice to confirm that the savings are passed through rather than pocketed.
- If no, ask: “Why would I pay SSP tech fees on legacy PMPs when SWYM.ai can eliminate them through demand barter?”
Quick win: Put your partners’ responses side by side in an Excel table (for example, Agency 1 vs. Agency 2 vs. DSP). Highlight CPM ranges and tech fees. Any gap over 10%-15% leaves room to renegotiate.
(E)stablish Tracking
Agency dashboards are built to tell their story, not necessarily yours. Independent verification can help to establish an impartial source of truth.
Action steps:
- Secure platform access. At a minimum, make sure you have full access to the ad server, DSP and SSPs before campaign launch.
- Use AI utilities. Consider tools like RootIQ.ai, designed to cut through noise, unify signals and streamline fragmented workflows into one chat interface (think ChatGPT for analytics).
- Check log-level data. Ask your DSP for impression-level logs (CSV or BigQuery export). Compare impressions and spend against what your agency dashboard shows.
Quick win: Connect all data into a single reporting layer or chat interface so you can ask: “What was my CPM last week?” and get an instant, auditable answer.
(N)egotiate Transparency
Without contractual language, agencies are under no obligation to disclose markups, rebates or kickbacks.
Action steps:
- Add a transparency clause. Insertion Orders (IOs) and MSAs should explicitly state: “Agency must disclose all markups, fees and rebates. Advertiser reserves the right to audit.” (Use the ANA MSA Template as a starting point.)
- Ask for a waterfall report. Request one report showing: Gross Cost → Agency Margin → Net Client Cost. This exposes hidden spreads.
Quick win: In your next quarterly business review (QBR), ask: “Can you show us the actual supply cost vs. what we’re billed?” How your partners respond tells you everything.
(C)onduct Audits
Numbers don’t lie, but they can be manipulated. In a profit-driven system, trust is never enough.
Action steps:
- Pick a 30-45-day window. Run a contained test period to model costs internally.
- Run two test buys.
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- Agency-led open-market buy: The agency manages the DSP relationship, but you direct them to buy via a trusted SSP.
- Controlled PMP buy: You dictate the inventory, DSP and SSP (e.g., NBC via a PMP deal with trusted partners).
- Compare delivery. Call your Inventory Owner, DSP and SSP contacts directly. Ask: “Of the $X we spent, how much reached you? What fees were applied along the way?” Compare their answers to agency invoices.
Quick win: Any discrepancy in what your tech partners and your agency tell you is a red flag. If you have concerns, trigger a deeper audit and reference step (N).
(H)old Accountable
Proper governance ensures more of your budget reaches working media instead of being lost to hidden fees or undisclosed markups.
Action steps:
- Request cost breakdowns monthly. Demand a file that shows Gross Media Cost, Agency Markup and Final Billed Cost. Insist on direct platform access or a raw Excel export (not just a polished PDF).
- Bake it into QBRs. Add “rate check” as a standing agenda item every quarter. Make transparency routine.
Quick win: At your next check-in, ask: “What percentage of our media spend goes to your margin vs. actual delivery?”
Transparency is nonnegotiable
Principal-based buying is a tool. Like any tool, its value depends on how it’s used and how clearly you can see what’s under the hood.
The industry thrives on perception. But you don’t have to settle for someone else’s version of reality. Benchmark, audit, demand transparency and hold partners accountable.
Your media budget is too important to manage on trust alone.
“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
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