Scott and I have both been creating Internet companies since 1997. As the industry grew, we noticed how the publisher world had divided into the “haves” and the “have nots.” Those “haves” were the publishers that could get equity financing and fund rapid traffic growth and the “have nots” were the publishers that couldn’t get financing and were unable to grow due to the lack of funding.
The entire adtech industry has been focused on yield optimization but has largely ignored the increasing issues around payment terms – and in particular how publishers get paid. There’s a simple reason for that, yield optimization is the product: its shiny, sellable, award winning, and fun to talk about. Payment terms aren’t important for anyone outside of finance, so the issues were ignored and payment speed has steadily decreased.
As publishers look to grow revenue and go further up market toward top brands, payment terms are extended even longer. Big brands with the most advertising dollars are mostly publicly traded companies which have savvy finance teams and stockholder pressures. These brands were able to extend payments terms to please the finance teams and stockholders, but at the expense of the smaller publishers. In a recent survey by Kingston Smith, 9 out of 10 creative agencies have been asked to extend payment terms, and two thirds of agencies are unhappy with payment term extensions. It’s been widely reported that Coty is asking its agencies for an astronomical 150-day payment term. That’s 5 months until the agency gets paid, and probably 6 months until the publisher is paid.
For those publishers that couldn’t get equity financing, they were not only relegated to slow audience growth, but were also faced with slow revenue growth as they were unable to do business with these top brands. Slow, interrupted cash flow to an already lean business means that the publisher can’t invest in their business. Sadly, Scott and I saw some of the highest quality content publishers go out of business due to the slow crawl of financing. They simply didn’t have the cash flow needed to keep their businesses afloat.
That’s why we decided to start Payability; to provide faster, more frequent payments to publishers and suppliers. Publishers of all sizes can use more working capital, but especially the small or new pubs. Payability provides publishers with an alternative method to access working capital that’s seamless, scalable, and faster.
Thanks for reading! I look forward to continuing the discussion right here on our blog. We’ll be sharing our thoughts and research on payment terms and alternate payment methods, our customer’s success stories, and some company news that didn’t make the press release.
If you’d like to leave feedback or potentially be a guest writer, please email Alison – asperling@payability.com
If you’re interested in learning more about Payability, check out the about page on our website or email us bizdev@payability.com
