Media Briefing: Some publishers say payment terms are up to half a year, causing cash flow issues
This week’s Media Briefing looks at how publishers’ cash flow is turning into a trickle, thanks to elongated payment windows that are reaching upwards of 180 days.
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The lack of advertising dollars being spent in the market is already taking its toll on media businesses this year, but now publishers are saying that the average payment terms for the deals they are able to close are getting longer and the time it takes to actually receive a payout is extending well beyond the contracted timeline.
The media industry has been built on “easy access to cash,” said Sylvain Le Borgne, chief partnerships officer and head of data and analytics at MediaMath, in which the supply chain of advertiser to consumer involves middlemen floating payments on an endless cycle as new deals are closed.
But now that the macroeconomic climate has advertisers tightening their purse strings and the collapse of financial institutions like Silicon Valley Bank has removed the amount of liquid funds that’s available, that flow of cash has turned into a trickle of nickels and dimes.
“Brands and agencies are paying slower than [the time frames] that the companies further down the supply chain have to pay the publisher. So you cannot collect money at 90 days or 120 days and then pay the supplier at [day] 45. It was possible in the past because money was easy to access and the cost of borrowing was lower,” said Le Borgne.
Publishers, at that end of that supply chain, are bearing the brunt of the burden, having been given little say in the matter though are ultimately still relying on any and all ad dollars that they can get in the door. But with fewer dollars coming in when they’re expected, operational costs become harder to cover and cost cutting measures like layoffs are considered.
“Cash is king and advertisers are taking a really long time to pay us. It sucks,” said a media executive at a midsize digital publication who spoke to Digiday on the condition of anonymity. It’s not just smaller brands or first-time partners either. They added that “major Fortune 100 companies” are taking upwards of 150 to 180 days before paying up for a completed ad campaign, making it “hard to manage cash flow” right now.
“Why does a massive top 10 advertiser in the world think it’s OK to take a year to pay a little publisher?” the first exec added. “It makes it very difficult to operate when you’re down as much as you’re down in Q1 to begin with, on top of [the] compounding issues with cash flow — it’s a stressful thing.”
In some cases, the media exec said, it’s a cash flow issue in which an agency waits to get paid and needs the money to cover their own expenses before writing any …read more
Source:: Digiday
