"Ad tech has always lived in a world where money moves slower than the ads it sells. Everyone's floating - fronting payments to publishers while waiting weeks, sometimes months, for agencies and advertisers to settle up. The cost of doing so is only rising."
"Granted, this long tail of payments isn't new. It's how the machine has always worked. Advertisers push out payment terms. Agencies pass the delay downstream. From there, ad tech vendors draw on credit lines to keep publishers paid. Everyone finances everyone else. And as rates rise, the cost of keeping that wheel spinning climbs with it."
""It doesn't really matter what size you are," said Christopher Pettit, CEO of ad tech finance startup Revving. "You are still suffering because you're effectively having to use your own balance sheet - your own working capital - to front-run cash out of your business to pay people downstream while you're waiting to get paid by the brands at the very top of the supply chain.""
Ad tech companies routinely front cash to publishers while waiting weeks or months for agencies and advertisers to pay. Nearly 58% of invoices were paid late in the first half of the year, and almost 20% arrived more than two weeks past original 60, 90, or 120-day terms. Agencies extend payment terms and pass delays downstream, forcing vendors to rely on credit lines and working capital. Rising interest rates and slower payments increase financing costs and squeeze companies of all sizes, with smaller players facing existential risk. Sometimes that money never arrives and many contracts include sequential liability.
Read at Digiday
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