Paramount Skydance's remarks show principal-based media unease isn't going anywhere

"He told analysts that the holdcos were "not just buyers of advertisers, but represent all of our sales clients", a line that landed with more weight than he intended. It was offered as context for the scramble earlier this summer when both Publicis and IPG chased Paramount's business. Shell went on to say the company had secured "significant revenue commitments over three years" from both groups."

"After the remarks ricocheted across the trades, Paramount stepped in to clean them up. The company clarified that Shell was referring to savings guarantees on Paramount's own media buying handled through the holdcos, not any kind of revenue guarantees tied to its ad sales. A Publicis source backed that version of events, saying the group passed on making revenue commitments when approached, and that its spending with Paramount isn't expected to move this year."

"The whiplash reflects how fraught principal-based trading has become. The model isn't new or inherently improper, but the opacity around it changes the dynamic, shifting agencies from representing advertisers interests to managing their own commercial position. Imagine a mid-sized streamer eager to firm up demand. An agency holdco steps in with a principal-based proposal. Instead of simply representing the streamer in a buy, the holdco commits to purchasing a defined volume of impressions as a principal and reselling that media to clients."

Paramount executive remarks suggesting holdcos represented its sales clients caused confusion and swift clarification that references were to savings guarantees on Paramount's own media buys, not revenue guarantees on ad sales. Publicis confirmed it declined revenue commitments and does not expect its Paramount spending to change this year, while IPG deferred to Paramount's clarification. Principal-based trading involves agency holdcos buying inventory as principals and reselling it to clients, offering predictability to sellers but introducing opacity and potential conflicts by aligning agencies with their own commercial interests rather than solely advertisers' interests.

Read at Digiday