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Inventory Media – How do Advertisers ensure they receive their rightful value?

Inventory Media – How do Advertisers ensure they receive their rightful value?

June 25, 20245 min read

Inventory Media – How do Advertisers ensure they receive their rightful value?

Recently Fuel responded to the growing number of advertiser enquiries asking us to guide them as they manage their agency’s proposals to incorporate inventory media in their campaigns. Inventory media is the usual description of the ‘principal-based’ media trading model that agencies have adopted in recent years.

A number of our peers have also addressed this issue and concluded that the practice undermines the basis of trust that is so vital in business relationships. 

Fuel, while accepting that this business model does raise trust issues, has taken a more practical approach with advertiser advice. We addressed the issue in a previous blog which discussed a checklist of operational recommendations. These are outlined within an overall manifesto we have designed to help advertisers maximise the benefit of a principal-based media trading system offered by their agency.

Trading models have evolved over many years as media agencies have sought to rebuild the margins they had become used to under the original 15% agency commission system which had dominated the industry.

The ANA’s paper in 2018 Media Transparency: Prescriptions, Principles, and Processes for Marketers" proved to be pivotal in highlighting for advertisers just how far agencies had moved in the direction of margin enhancement.

Principle-based approaches to the way various media are traded have offered agencies routes back to potentially much improved margins.

Advertisers have realised that this all looks like a long-term trend; making it imperative for them to ensure their media value is clearly managed.  

In our earlier article on this subject we established that advertisers should incorporate the following checklist into their media planning process

#1 Ensure that the implied media placements’ audience deliveries are consistent with your overall strategies.

#2 Don’t expect full transparency, and for a good reason. Of course, whatever the wholesale price of the inventory media units, and despite calls for greater insight into the agency’s margins, clients will undoubtedly have agreed to their own personalised media value position guaranteed by the agency. That must lead the advertisers' perceptions of how they might approach the inventory media offerings. We suggest this key fact should be born in mind when calls for that greater insight into operating margins are looming. Even the seemingly reasoned request for more equitable distribution of the inventory component that includes volume bonuses/value pots [the free part of the inventory] generated via the overall agency volume and to which all clients contribute, needs careful handling.

Clearly deeper insight to the wholesale price and indeed the volume derived aspect would be revealing, but the client trust factor is best focused, initially, on delivery of each advertiser’s own personalised value agreement. 

#3 The agency needs to cooperate to demonstrate the market competitiveness of the Inventory price. In order to do this you are likely to require an independent third party expert. 

 #4 Be absolutely clear that non-conforming media placements have no value, even as make-goods.

For advertisers that have declined participation in the core Inventory Media offer – Fuel Media & Marketing suggests a question to your media agency:

“Where is my extra value considering the agency has aggregated its overall volume for advantage and sold it all on to participating clients to my exclusion?”

We have received more feedback from advertisers to this blog than almost any other in recent years. A common request has been for Fuel to develop its advice across a number of these key points and go deeper. How can the advertiser ensure?

  1. The source inventory within the package remains absolutely consistent with our specific agreed strategy and that the campaign targets remain sacrosanct and achievable? How do we ensure the campaign output is not undermined by the addition of significant levels of low level (cheap) audience transmitted at the wrong time in the schedule? 

  1. As part of the process of value distribution other advertisers are not favoured in preference to our campaigns and to the detriment of our strategic aims. In other words, two advertisers cannot both lead into the same key commercial break, or both command the same homepage take over, online. 

Our initial recommendations are as follows, though much more emerges as we work with each individual advertiser:

  • Specifically discourage distressed space in the mix

  • Set minimum rating per spot levels 

  • Penalise, by exclusion, any airtime that does not deliver the agreed strategy, and write that into your contract

  • As well as the specific focus above covering audience demographics and rating level thresholds, it must similarly be agreed that activity must appear strictly within the designated activity period timescale  

  • All promised premium placements must appear as agreed 

    1. No substitute can be accepted

    2. Test the entire market appearance data to ensure that no competitive advertiser has received value in preference to your own guarantees, contractual precision is essential   

We conclude by highlighting the issue of ‘Fair Value Share’. Agencies employ some of the best negotiation minds in the commercial world. That is a very good reason to work with them. However, advertisers know that part of the Principal-based media trading model creates value through a volume leveraged play. Of course, to maximise this the agency will have likely leveraged its full aggregated agency volume. Inevitably this must prompt all advertisers to insist, even if not participating in the core principle-based trading model, that as their expenditure is generating some of the extra value, there must be an appropriate shared benefit. A key question to ask the agency must be: “Please explain how my company will be able to identify that value, within my overall result?”

One final piece of advice to advertisers. Play it straight with your agency. When briefing volume levels to agencies be clear. If your eventual commitment levels do decline from brief, be prepared to expect that your value enhancement share may experience a significant downgrade.  

Fuel Media and Marketing is a leading specialist communications consulting company. Our teams advise clients in the field of media communications. To find out more on how Fuel can help, contact Oli on +44(0) 7534 129 097 or email [email protected] 

principal-based media trading, media buying, media agency, media audits,
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