The practices highlighted by the ANA in 2016 never went away. In fact, non-disclosed media
is more prevalent than ever, and Marketing Procurement needs to act now.
The first signs of non-disclosed media appeared in ex-US markets in the early 2010s.
Spotting an opportunity to bolster declining margins, US-based agencies rapidly followed
suit. In June 2016, the K2 Intelligence Media Transparency Study, commissioned by the
ANA, brought the issue into the spotlight globally.
Agencies were found to be buying media in their own name, repackaging it, and selling it to
clients at markups of between 30% and 90%, without disclosing what the media had cost
them. Senior agency executives, the report found, were not just aware of these practices:
they mandated them.
Ten years on from K2, the practice is in rude health. Documents disclosed in the ongoing
GroupM whistleblower lawsuit allege that GroupM’s largest clients, generating nearly $1
billion in annual agency income, were benefitting from less than 10% of the proprietary
inventory deals that their volumes helped to secure.
Stephen Broderick, co-founder of Media Marketing Compliance (MMC), was a contributor to
the K2 study, and has been tracking the issue ever since. He’s seen a worrying uptick in
non-disclosed media over the last five years, and shared his guidance MPiQ:
1. Know What You’re Dealing With
Non-disclosed media goes by many names: principal media, proprietary media, inventory
media, agency-owned inventory, opt-in media, value-based solutions, non-transparent
services. Different terms appear in different markets and different agency groups, which
makes this practice trickier to pin down and challenge. The label changes; the mechanism
doesn’t.
At its core, non-disclosed media is media sold without associated audit rights, often in direct
contravention of the advertiser's own contract. The agency acts as both buyer and reseller,
without declaring the original cost. Broderick puts this is simple terms: agencies selling this
type of media will not tell you what it is, where it comes from, or what it cost them to buy.
That’s not a side effect of the model. It’s the point of it.
2. Understand How the Money Flows
The basic transaction works like this: the agency acquires media in its own name, with no
reference to a particular advertiser at the point of purchase. It builds inventory primarily
through free media rebate deals, supplemented by advance bulk buys, and business-as-
usual volume buying.
The agency will typically claim to be buying "at risk" with its own capital, but in practice client
funds underwrite the purchase. The agency then repackages that media and sells it to the
advertiser at a rate of its own choosing. The markup is unknown and un-auditable.
To add distance from the transaction, inventory is frequently routed through affiliated trading
desks: APEX (Publicis), OMnet (OMD), GroupM Flex and plista (WPP), Orion (IPG), and
Amnet (Dentsu) are among the best-known examples.
3. Don’t Be Seduced by the Pricing Pitch
The standard pitch for non-disclosed media is a discount of roughly 25% against open
market rates, at equivalent quality. Neither claim is easy to verify, which is problematic.
The inventory is often lower quality, sourced from sister companies through free media deals
and bulk rebate arrangements. And, because the original cost is undisclosed, there is no
way to assess whether the discount is genuine or the margin simply larger than usual. This
also creates a knock-on black box effect to market pricing, which impacts all advertisers.
There is a further problem with accepting the pricing pitch at face value. Because non-
disclosed buys limit access to campaign performance data, the ability to measure ROI is
compromised from the outset. Advertisers are unable to optimise what they can’t see.
4. Ask the Question Marketing Teams Won’t
Here is the key question that Broderick advises putting to your agency: “if you can acquire
this media more cheaply for yourselves than you can for us, why am I paying you your
agency fees?”
Most advertiser MSAs require the agency to act in the client’s best interests by acquiring
media at best price. Non-disclosed buying, where the margin is unknown and unverifiable, is
a straight up conflict of interest, and may be in direct breach of that fiduciary obligation.
Marketing procurement needs to be ready to challenge this conflict of interest.
There’s an associated governance risk too: what happens at the point of sign-off? Opt-in
language is routinely presented to marketing colleagues as a standard commercial term.
Without a clear understanding of why losing audit rights matters, a marketer can
unknowingly agree to undermine the entire commercial framework procurement has put in
place. Briefing marketing stakeholders before they sign SoWs isn’t a nice-to-have; it’s a
requirement.
5. Spot the Red Flags in Your Contract
As Broderick puts it, “the cost of buying this type of media is to give up transparency, in
contravention of your contractual audit rights” The entry point is almost always an opt-in
clause buried in the MSA or SoW. Here’s what to look for.
• Are specific non-disclosed buys clearly identified on each media plan and submitted
for pre-approval? They should be, so if they aren’t, ask why.
• Does your contract set a percentage cap on inventory spend? If so, is there any
mechanism to check whether it is being honoured?
• Does your audit rights clause explicitly cover access to original cost data for principal
media deals, or has that right been quietly signed away?
• Is the “other services” category in your SoW being used to bundle non-media items
into non-disclosed buys?
• Are you retaining access to and ownership of campaign performance data from non-
disclosed placements?
6. Know Your Mid-Contract Options
Many procurement teams come across this issue mid-contract, not at the point of
renegotiation. That limits what you can do, but it doesn’t mean you’re stuck.
• Review fees and rate cards every year. Don’t wait for renewal to find out what you’re
really paying.
• Require regular reconciliation of media spend against original invoices, including any
inventory or principal buys.
• Get to know your contract in real time. Find out what opt-in language has already
been agreed, by whom, and when.
• If your contract includes audit rights for principal media, exercise them. Many
advertisers have the right and never use it.
• If audit rights have already been signed away, document it and make restoring them
the first priority at the next renewal conversation.
• Brief marketing colleagues now, and put a clear internal approval process in place
for any future opt-in decisions.
7. Build the Protections Into Your Next Contract
Renegotiation is the moment to get this right. These are the provisions that should be non-
negotiable.
• Require all non-disclosed buys to be identified on the media plan and pre-approved
before they run.
• Set a percentage cap on inventory spend and build in enforcement mechanisms.
• Preserve explicit audit rights covering original cost data for all principal media deals.
• Extend those audit rights for three years beyond contract end.
• Include annual rate card review and reconciliation obligations as standard.
• Make sure opt-in language is reviewed by both procurement and legal before any
MSA or SoW goes out for signature, and brief marketing stakeholders accordingly.
Broderick’s parting advice is straightforward. Ask yourself the bigger question: does non-
disclosed media belong in your media plan at all? Consider following the lead of many top 20
advertisers, who have already phased out non-disclosed media. Transparent buying
alternatives for inventory media exist, but marketing procurement needs to push agencies
who aren’t forthcoming about offering them.