# How AI costs are quietly reshaping principal media deals > Source: > Published: 2026-07-27 04:01:00+00:00 The ad industry doesn’t have a price for AI yet. That doesn’t mean nobody’s paying for it. One CMO found that out mid-negotiation. Deep into a holdco renewal on a media account, they got an offer nobody put in front of them before. The holdco would eat the entire AI infrastructure bill provided 70% of the media budget ran through principal inventory. It wasn’t a clean swap. Service costs, discounts, and pricing terms were all folded into the same conversation. But principal media was one of the biggest chips on the table. “Principal media is absolutely a negotiation lever in more conversations like this now,” said an ad exec, who agreed to share their knowledge of the aforementioned deal on condition of anonymity. The lever works like this: the client doesn’t receive a separate token bill. Instead, they agree to run a fixed share of spend through principal inventory — inventory the holdco buys in bulk at a wholesale rate, then resells to the client bundled with its own targeting, data, and guaranteed placement, at a markup. That markup is what funds the AI commitment. The larger the allocation, the larger and more predictable that pool becomes, and the more AI costs the holdco can cover. Call it a new model or the same one wearing a different coat. Either way, expect more of it. The economics demand it. For two years, agencies have absorbed AI costs rather than charge for them. They had to since clients expected them to do more for less, and that assumption has only compounded as AI has become more widely used and total costs have soared. Agencies have had to get creative about where the cost actually lands. Principal media is where a lot of it has ended up. Not because AI made it valuable but because it already was. Agencies were investing in it well before AI became a cost worth worrying about for the simple reason that it’s the most profitable thing they do. AI is simply another thing those principal media deals are being asked to cover now. Two other ad execs confirmed deals like this are being discussed between CMOs and their holdcos. One framed AI as just the latest addition to a familiar playbook: Commercial deals at this level have always been built on “efficiencies” and the trade-offs needed to deliver them. Principal media is simply the newest mechanism in a line that already includes offshoring and contract length. The other exec recounted a similar anecdote, whereby a CMO offered a zero fee if they ran all their spend through principal media. The terms, they said, were eventually negotiated back toward something closer to the “middle.” These negotiations are really just another byproduct of a futures-market-style model holdcos have been running for years, albeit with a different commodity riding through it. And just like those other times, CMOs don’t always have a way to know whether the price they’re paying still reflects the risk the agency is actually carrying. Transparency in these deals is negotiated, not guaranteed, after all, and clients without the leverage to demand audit rights are layering new opacity onto a practice they already didn’t fully trust. “Agencies like to claim they have invested a lot but much of it is manufactured to justify exactly this — skimming money out of media,” said Robert Webster, former WPP exec and founder of AI marketing consultancy TAU. But there’s a version of this that’s less about bad faith and more about timing. Nobody, including the holdcos, actually knows what a fair price for tokens looks like yet, and building a durable, transparent billing model takes time the market doesn’t have. Compute costs are already showing up on P&Ls. Capex decisions are already being made. Clients want a number now, not in three years once the industry works out something cleaner. Routing AI through principal media is what happens when a real cost needs a home immediately, and the only infrastructure built to absorb pricing risk at scale is the one already sitting there. “Agencies have been quite good at operating as futures markets through principal-based media,” said Daniel Knapp, chief economist at IAB Europe. “They’re good at assessing risk on the media side, and they have the financial engineering and credit lines to do it. Applying that model to an AI or token world would sit within the natural DNA of the agency — if they can come up with a way to price the outcome.” That “if” is the quiet part said out loud. Outcome-based pricing has been the industry’s stated destination for years, and it’s still mostly that — a destination. Where it’s taking hold is in isolated pockets of the bigger brands with the budget and internal alignment to anchor spend to a revenue number, not the market broadly. AI was supposed to widen that aperture. So far, it hasn’t moved the needle as much as the framing suggests. Most conversations still come down to the same old ask — faster, cheaper, better. Until that changes, principal media will keep getting treated as the disease, when really it’s just the symptom. “Because we’re such a fast-moving industry, we end up with these evolutionary billing models,” said Ana Milicevic, co-founder of consultancy Sparrow Advisers. “By the time you’re five years in, few of them make sense — and that’s when you get the ‘this isn’t transparent’ kind of backlash.” ### More in Marketing #### [ Michaels claims Google-powered AI assistant doubles conversion rate of traditional search ](https://digiday.com/marketing/michaels-claims-google-powered-ai-assistant-doubles-conversion-rate-of-traditional-search/) Michaels shared early results of its new Google Gemini-powered AI assistant. #### [ Mythbusters: AI visibility’s biggest misconceptions ](https://digiday.com/marketing/mythbusters-ai-visibilitys-biggest-misconceptions/) AI visibility is evolving quickly, but many of the industry’s biggest assumptions don’t hold up. 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