Principal-based media trading, when an agency buys ad inventory and flips it to the advertiser with a margin, catches flak for two main reasons: 

  1. Dodgy metrics
  2. Fake principals

The latter is mostly noise. Sometimes, what’s labeled principal-based trading doesn’t quite live up to the name; the agency may not actually take a position in the media but still operates within a non-disclosed structure that creates confusion—like calling instant noodles "gourmet pasta." But writing off the entire model because of misuse is like blaming the scalpel for a bad surgeon. Just because some executions are rubbish doesn't mean the format is broken.

The metrics complaint? That's where things get interesting.

Charlie Munger vs. Cost-Plus (Spoiler: Charlie Wins)

Before we dive deeper, let's hear from Warren Buffett’s sidekick, who turned blunt honesty into an art form, Charlie Munger:

"If you want to talk about the power of incentives and the power of rationalized, terrible behavior, after the Defense Department had had enough experience with cost-plus percentage of cost contracts, the reaction of our republic was to make it...a felony."

Among economists, cost-plus ranks somewhere between communism and barely above burning money for warmth on the all-time leaderboard of incentive disorders. The friction it creates is called the principal-agent dilemma—fancy speak for "when your interests and mine don't match, chaos ensues."

Principal-based trading flips this script. In cost-plus models, agencies make money by increasing your spend or cutting their costs—neither of which necessarily makes your campaigns better. In a principal model, they're incentivized to get good at buying media.

As IPG's CEO Philippe Krakowski noted, advertisers increasingly "accept and even embrace principal buying." Not because they've fallen in love with opacity but because when done right, it rewards performance.

Trading Up With Attention Metrics

Here's where things get exciting. Attention metrics have evolved from "viewability-plus" proxies to eye-tracking models to outcome-linked metrics that score placement quality. It's like going from flip phones to smartphones to whatever comes after smartphones (probably something that reads our minds and judges our ad choices).

This latest generation lets brands and agencies define media quality in advance, agreeing on minimum standards before spending a penny. It's creating a new currency for media trading based on actual value called AU. Developed by Adelaide, AU is an omnichannel metric proven to measure media quality more accurately than any existing metric. It predicts a placement’s probability of driving attention and subsequent impact. 

AU is used by brands like Coca-Cola, Jaguar Land Rover, and the NBA, as well as publishers like The New York Times and NPR. Adelaide’s 2025 Outcomes Guide gives you the BTS of how advertisers leverage AU to boost full-funnel outcomes. 

By year's end, over half the major holding companies will have non-disclosed guaranteed attention products in market. These models solve a longstanding problem: separating payment from performance. 

Principal deals reward agencies for delivering higher-quality media, not just cheaper media. By earning margin on value creation, agencies are motivated to negotiate bulk deals, optimize centrally, and develop proprietary media products backed by metrics that truly mean something.

The Path Forward 

Principal-based buying doesn't need to be the villain in this story. If underpinned by precise, thoughtfully designed metrics, it could become a force for transparency and performance.

Attention metrics create the common language buyers and sellers desperately need. They let media investment be evaluated not by what it costs but by what it is. In this model, margins aren't the enemy; they’re the reward for delivering value.

Agencies profit from smarter buying. Advertisers get campaigns that drive meaningful results. Publishers who deliver quality get compensated for it. Trust improves, the marketplace moves forward, and everyone goes home slightly less dead inside.

To borrow from Munger again, bad incentives don't just produce bad behavior; they rationalize it. The solution isn't to eliminate margins or create more opaque models. It's to anchor them to something that reflects real value.

Principal-based trading guided by credible metrics can align profit with purpose and build a marketplace that rewards quality. And unlike most things in advertising, it might actually work.