Decoding the Paradox of 'Proprietary Media': The Hidden Costs and Lack of Transparency

Media Transparency

May 01, 2023 | Philippe Dominois

Decoding the Paradox of 'Proprietary Media': The Hidden Costs and Lack of Transparency

Proprietary media, also known as inventory media, has become a controversial topic in the advertising world. Despite its apparent financial drawbacks for brands, many marketers continue to purchase it.

This article delves into the reasons behind this perplexing trend and examines potential alternatives.

The Murky World of Proprietary Media

Over recent years, a lack of transparency has plagued the relationship between advertisers and media agencies. Reports from both the UK and the US have frequently cited proprietary media as a significant contributor to this problem.

This lack of clarity has made it challenging for advertisers to make informed decisions and ensure they're getting the best value for their investment.

Understanding Proprietary Media

Proprietary media refers to the media inventory that a media agency acquires using its own funds, acting as a principal in the transaction. The agency then becomes the owner of the media, making it unnecessary to disclose real prices, AVBs, and discounts.

Furthermore, the agency can refuse audits, leading to a substantial lack of transparency.

This model allows agencies to significantly increase their profit margins. Ultimately, the final cost is passed on to the advertiser, leaving the agency in a win-win situation.

Exploring Traditional Media Buying

In contrast, traditional media buying operates on a more transparent basis. When an advertiser sends a media buying request, the agency purchases media from a vendor and transfers it to the client, disclosing all financial details. Clients can also employ auditors to scrutinize any aspect of the transaction.

This model fosters trust between the advertiser and the media agency, ensuring that the former can make informed decisions about their media investments. Additionally, it helps advertisers hold media agencies accountable for their actions and recommendations.

Why Agencies Choose Proprietary Media

Agencies opt for proprietary media because it exempts them from transparency practices. By buying media at any price and selling it to clients with a substantial markup, they can make significant profits without disclosing any information. Additionally, cash rebates and AVBs can be retained, further increasing their profits.

The proprietary media model also offers agencies flexibility in acquiring media across different channels, such as TV, radio, print, and digital, enabling them to tailor their offerings to various clients.

The Unwitting Advertiser

Many advertisers unknowingly purchase proprietary media due to the inherent lack of transparency in such transactions. In some cases, media agencies may argue that proprietary media offers cheaper options or that it is the only option when clients make late decisions.

However, little to no evidence is provided to support these claims.

Empowering Advertisers

In theory, clients can refuse proprietary media. In reality, their options depend on their media agency contract. Robust contracts include sections on proprietary media, requiring the agency to clearly identify it within the media plan and stipulating that it can only be used with the client's pre-approval.

Unfortunately, many media agencies do not comply with these clauses, leaving advertisers at a disadvantage. To counter this, clients must be proactive in understanding the terms of their contracts and demanding transparency from their media agencies.

Moreover, advertisers should consider developing strong relationships with media vendors directly, which can help them gain insights into market pricing and trends. Establishing an in-house team of experts can also provide an additional layer of control over media buying decisions.

In Conclusion

To ensure that your brand is not falling victim to the pitfalls of proprietary media, it is essential to take control of your advertising decisions and demand transparency from your media agency. If you find that navigating the complexities of media buying is overwhelming or you require expert guidance, we are here to help.

If you would like to discuss this topic further, please feel free to contact us or schedule an appointment with us, and together, let's work towards a transparent and cost-effective advertising strategy that benefits your brand.

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