Principal media in the spotlight as WPP faces US lawsuit
A US lawsuit against WPP has thrust the controversial industry practice known as principal media into the spotlight.
Richard Foster, a former senior executive at the holding company’s media arm, is suing WPP, alleging he was fired in retaliation for raising concerns that the division was running an improper kickback scheme, according to a Business Insider report.
Foster spent 17 years at WPP and previously served as global CEO of Motion Content Group, WPP’s division that produces and co-finances shows such as Love Island, and manages entertainment partnerships.
According to court filings cited by Business Insider, Foster became disenchanted with a practice within GroupM — now WPP Media — known as “volume-based discounts” or principal media, whereby the agency allegedly leveraged billions of dollars in client ad spend to secure incentives from media owners. These came in the form of cash rebates or discounted inventory, which were not always disclosed or passed back to clients, the lawsuit alleges.
WPP Media ANZ has been contacted by Mumbrella for comment.
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A WPP US spokesperson told Mumbrella: “The company is aware of a lawsuit in the New York State Court filed by a former employee who was let go in a recent organisational restructuring. The court has not yet made any findings in relation to the allegations, and we will defend them vigorously.”
The case has brought renewed attention to principal media — the practice whereby agencies buy advertising inventory on their own account and resell it to clients.
Critics argue it can undermine the agency-client relationship, as agencies acting as resellers may no longer be incentivised to secure the best deals for clients.
The Media Federation of Australia (MFA) has had transparency guidelines since 2015, updated in 2021, which essentially require agencies to disclose any rebates or commissions they receive, ensure clients are aware when agencies act as principals, and maintain clear audit rights and contractual safeguards to protect client interests.
At the Future of TV Advertising conference in Sydney in April, local media leaders sought to downplay the extent of the issue. Aimee Buchanan, CEO of WPP Media ANZ, told moderator Justin Lebbon that the practice was not widespread in Australia.
Asked, “Is principal media trading as evil as the press makes out?” she said:
“I think the problem with the whole conversation is you’re speaking in generalisations. But if I were to generalise, I think Australian clients still put trust and transparency as paramount.”
Co-panellist Mark Coad, CEO of IPG Mediabrands Australia, said:
“There’s an assumption that [principal media trading] exists at scale. It doesn’t exist at scale at all. Working for a global company, do I have awareness of some global arrangements? Of course. Do I have a local principal media arrangement in this country? No, I do not.”
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