ISBA, the representative body for some of the UK’s largest advertisers, has set out guidance on how brands can approach transparency, governance and effectiveness when using proprietary media.

Proprietary media – also known as principal-based, inventory or outcome-based media – involves media agencies buying media inventory, often in bulk, and reselling it to clients at a higher rate.

There is often no disclosure of the price paid for the media by the agency or the markup applied. It is increasingly common for agencies to sell bundled proprietary solutions that include media, technology, data, and other services, and many of these solutions may result in advertisers unknowingly agreeing to reduced audit rights and transparency.

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ISBA director of agency services Nick Louisson says advertiser awareness and appetite differs widely.

“There are some advertisers who absolutely love it and want to maximise their opportunities for it, to those who refuse to touch it, and everything in between,” he explains.

“[The guidance] is a set of questions and insights to help an advertiser think about how they want to approach it and what strategy they want to have so they can manage it effectively.”

Through conversations with ISBA’s media leaders, procurement groups and industry consultancies, Louisson says a common theme was a better understanding of how to govern effectively.

A survey conducted by ISBA in September last year found advertiser views vary significantly, leading to different approaches. Of the 29 members surveyed, two reported a positive view of proprietary media, 15 were neutral and 12 held a negative view.

A growing practice

Proprietary media is most commonly used by the large agency holding companies and is available across most media channels, with varying levels of transparency, risks and prevalence.

It is highly prevalent in linear TV, radio and print and can even appear in paid social, influencer marketing and digital display, although this is less common, according to findings from ISBA.

“This guidance is trying to demonstrate that it is a lot broader than what people normally talk about. It differs across different channels,” adds Louisson.

“There are varying degrees of prevalence, and what we’d like to see is more transparency. We need to continue pushing and digging for greater transparency.”

A key concern is proprietary media’s potential impact on media neutrality. When holding companies incentivise agency teams to recommend proprietary media, planning decisions may no longer be neutral. This can undermine effectiveness if media partners are selected for commercial reasons rather than alignment with advertiser objectives.

ISBA says agencies point to downward pressure from advertisers on agency fees as a key driver of their expansion of proprietary solutions, arguing that it enables them to invest in the technology and capabilities advertisers require while achieving profitable agency business models.

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In response to ISBA’s proprietary media guide, Richard Lindsay, director of legal and public affairs at the IPA, which acts on behalf of agencies, says proprietary media is a “complex area” of the market and ISBA’s guide “rightly explains” that each media agency operates its provision of proprietary media differently.

“And, of course, advertisers have differing requirements too. It follows that there can’t be a one-size-fits-all programme for offering proprietary media. Again, as the guide rightly points out, agencies have developed proprietary media solutions to respond to advertiser needs,” he says.

“It is important to note that proprietary media can deliver value right across the entire supply chain, whereby media owners secure payment upfront and guaranteed income, advertisers benefit from improved pricing and certainty, and agencies, although assuming the commercial risk, benefit too. In the current economic climate, proprietary media can be an important part of the media mix for all.”

ISBA’s guidance also outlines a number of benefits to advertisers, including improved media pricing, improved or guaranteed outcomes, access to exclusive media placements and access to additional capabilities, such as data and tech.

Lindsay adds that readers of the guidance should be clear that proprietary media, when offered by agencies “which take the time to explain their offering to their clients, form a highly successful and efficient part of their clients’ media spend”.

The guidance follows a Forrester report published on 15 January, which argues that proprietary media is now a “business mainstay”.

The report suggests that, whether advertisers embrace it or not, principal media can deliver lower costs, shift inventory risk to agencies and offer predictability and performance. Locking in inventory and discounts in advance, for example, can provide planning certainty and shield advertisers from market volatility.

However, Forrester also highlights concerns including a lack of transparency due to limited visibility into media costs and agency margins, potential conflicts of interest arising from biased recommendations and quality risks where lower-value inventory is positioned as premium.

Steps to take

ISBA’s guidance outlines steps advertisers can take to improve transparency around proprietary media.

“The first thing to do is to talk with your internal teams – finance, procurement, media and marketing – about it and just go and brush up on it and discuss whether or not it’s something that you are aware is happening, understand how you feel about it, and investigate it so you can build a strategy,” Louisson explains.

ISBA recommends reviewing approval processes, clearly defining proprietary media within media plans, securing granular data, assessing alignment with business objectives and considering spend limits.

Proprietary media should be excluded from media pitch guarantees, and advertisers may also need to update contracts.

“Everyone should have contractual governance and transparency and control,” adds Louisson.

“But what you do with that transparency and control differs. The recommendation we make is be aware of it, understand it, and then think about how you want to manage it for your benefit.”