This week\u2019s Media Briefing looks at how publishers\u2019 cash flow is turning into a trickle, thanks to elongated payment windows that are reaching upwards of 180 days.<\/p>\n
The lack of advertising dollars<\/a> 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<\/a> are getting longer and the time it takes to actually receive a payout is extending well beyond the contracted timeline.<\/p>\n The media industry has been built on \u201ceasy access to cash,\u201d 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.<\/p>\n 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<\/a> of liquid funds that\u2019s available, that flow of cash has turned into a trickle of nickels and dimes.<\/p>\n \u201cBrands 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,\u201d said Le Borgne.<\/p>\n 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\u2019re expected, operational costs become harder to cover and cost cutting measures like layoffs are considered.<\/p>\n \u201cCash is king and advertisers are taking a really long time to pay us. It sucks,\u201d said a media executive at a midsize digital publication who spoke to Digiday on the condition of anonymity. It\u2019s not just smaller brands or first-time partners either. They added that \u201cmajor Fortune 100 companies\u201d are taking upwards of 150 to 180 days before paying up for a completed ad campaign, making it \u201chard to manage cash flow\u201d right now.<\/p>\n \u201cWhy does a massive top 10 advertiser in the world think it\u2019s OK to take a year to pay a little publisher?\u201d the first exec added. \u201cIt makes it very difficult to operate when you\u2019re down as much as you\u2019re down in Q1 to begin with, on top of [the] compounding issues with cash flow \u2014\u00a0it\u2019s a stressful thing.\u201d<\/p>\n In some cases, the media exec said, it\u2019s a cash flow issue in which an agency waits to get paid and needs the money to cover their own expenses before writing any other checks. Eventually that money makes its way to the publisher, but being at the end of the chain, they\u2019re at the mercy of the timelines from the advertiser, the agency and any other ad tech intermediaries.<\/p>\n \u201cPayment terms for the agency have become negotiable and so you have [clients] moving agencies and they\u2019re asking for 120-[day] payment to the agency. And so that has to be passed in sequentially down to the publishers,\u201d said David Spiegel, CRO of Betches Media. He added that one client who switched agencies midway through a campaign ended up not paying up for nearly a year between all of the changeover and the new agency having a net-120 payment policy.<\/p>\n A second media exec who spoke recently under Chatham House Rules during the Digiday Publishing Summit\u2019s town hall said that even if agencies weren\u2019t strapped for cash, they\u2019re \u201cso paralyzed by the fear of getting fired\u201d by their clients, who are already pulling back their budgets during the economic downturn, that they\u2019re afraid to push them on paying the bills when they\u2019re due. As a result, payouts are getting processed later than ever, on average 60 days beyond the agreed upon payment window.\u00a0<\/p>\n \u201cWhat we\u2019re finding a lot [is] you get to day net-80, and then honestly an agency is like, \u2018You put the wrong, one-digit-off number on your invoice. Please revise.\u2019 And then we start over,\u201d said another publisher during the town hall. \u201cBut I think that they\u2019re pushing it off, not wanting to ask for their payment, and then it\u2019s trickling down. I\u2019ve seen a lot more technicalities like that to draw out the process that just makes our [one] yard line look very huge when we\u2019re tracking who\u2019s paying when and how often.\u201d<\/p>\n Other publishers in the town hall said that at a minimum, they will not see payments for 60 days, regardless of what the contracts say.<\/p>\n \u201cNet-30 never worked because it was net-30 to the agency, and the agency has to get paid. So it was always going to be [net-]60 regardless. It\u2019s painful,\u201d said a third exec in the town hall.\u00a0<\/p>\n Another added that most clients are asking up front for net-90 and negotiating for net-60 has become part of publishers\u2019 dance.\u00a0<\/p>\n But at the end of the day, there is no penalty for late payments and publishers are simply at the liberty of how quickly cash exchanges hands higher up the chain.<\/p>\n Most of Betches\u2019 payments come in around the 90-day mark, despite the fact that net-30 is often the terms set by Spiegel\u2019s team when invoicing clients, he said. \u201cI\u2019m a little cynical about it. Net-30, net-45, net-90, net-120 \u2014\u00a0I don\u2019t fucking care, you\u2019re still not going to pay the bill on time.\u201d\u00a0<\/p>\n Knowing that\u2019s the case, however, he said he balances P&L on a 90-day average on the balance sheet to ensure that cash flow doesn\u2019t dip into the red. Even still \u2014 there are no penalties for late payments in the form of late fees or added interest that\u2019s upheld as an industry standard, he said.\u00a0<\/p>\n \u201cThat\u2019s sort of the problem. The industry has not embraced that [but] the banks aren\u2019t giving 0% interest loans. So why do media partners?\u201d said Spiegel.\u00a0<\/p>\n Not all publishers are running into this issue, however. Blair Tapper, svp of The Independent U.S. said that her sales team has been able to maintain the typically asked for 30- to 60-day payment terms for the most part and in the odd cases where a client is late, the Independent\u2019s U.K. office handles it.<\/p>\n A lot of the regularity in payments comes down to the credit checks performed up front for new clients. \u201cWe\u2019re cognizant right now of companies\u2019 financial history and working together, because the truth is, if they\u2019re not in good financial standing, a lot of times it\u2019s a non-starter,\u201d said Tapper.<\/p>\n Even with her mission of growing the U.K.-based publication\u2019s business in the U.S. \u2014 and especially at a time when ad dollars are a hot commodity and news publishers are often the least likely<\/a> to win deals \u2014 signing a new client on laxed financial terms or in good faith that they\u2019ll follow through is a \u201crisky business,\u201d Tapper said.\u00a0<\/p>\n \u201cYou could sell something and never get paid. And then is that actually revenue? Arguably not,\u201d she said.<\/p>\n Seb Joseph contributed reporting to this story.<\/em><\/p>\n \u201cI\u2019m on this Snapchat mid-roll [ad] program, which I\u2019ve been part of since last May. I\u2019ve made over a million dollars from Snapchat mid-roll. Snapchat changed my life entirely.\u201d<\/p>\n \u2014 <\/em>Alyssa McKay during the <\/em>second episode<\/em><\/a> of the Digiday Podcast\u2019s four-part Creator Series on short-form vertical video creators<\/em><\/cite><\/p><\/blockquote>\n Earlier this month, Saveur\u2019s executive editor Kat Craddock announced she was acquiring the food and travel title from private-equity backed Recurrent Ventures, following in the footsteps of other editors (like Quartz\u2019s management<\/a>) who acquired the publications they oversaw to run them independently.\u00a0<\/p>\n Craddock declined to share how much she paid for the publication, but said she approached Recurrent first about the deal. The acquisition was backed by one other independent investor, she added. <\/em><\/strong>Craddock declined to share in detail which business functions she now has to handle on her own but she said that three new hires will join the team soon, including two director-level managers who will work with her to manage the business. Craddock has not had a role on the business side of Saveur until now, but working across departments as part of a small team of now just seven people made Craddock feel she was \u201cin a unique position\u201d to lead the company, she said.<\/p>\n Craddock said she wants Saveur\u2019s editors to be \u201cmore involved\u201d in the business decisions behind Saveur, which currently earns its revenue from licensing and programmatic and affiliate advertising. \u2013 Sara Guaglione<\/em><\/p>\n This conversation has been edited and condensed.\u00a0<\/em><\/p>\n Why did you want to acquire Saveur from Recurrent Ventures?<\/strong><\/p>\n We really got a lot out of being owned by them for a while. They put us [on] a really solid footing. They built us a brand new, beautiful website\u2026 That said, it was kind of a weird fit for everything else that Recurrent is doing. It wasn\u2019t quite [in the home category], even though it was in this home vertical. It\u2019s more of a lifestyle, global publication, and food is a big part of that.<\/p>\n Being in a position to spin a few plates \u2014\u00a0whether it\u2019s focusing on blowing out a travel vertical or on recipes, or working a little bit more closely with our licensing partners and cookbook projects \u2014\u00a0I think that there\u2019s a lot we can do if we\u2019re fielding that ourselves, rather than relying on shared services that are working on very different types of brands.<\/p>\n What previously shared resources will you now have to build out on your own?<\/strong><\/p>\n We\u2019re a small business now, so a lot of the things that were supported by corporate, we don\u2019t have\u2026 We\u2019re sorting it out as we go. We\u2019re getting a lot of support from Recurrent in figuring out what we need \u2014\u00a0whether [we need to hire] a full-time position, or we can replace [the role] with an app, like payroll \u2014 and [other] systems we need to implement to operate as a business.<\/p>\n The company that supports our CMS and our ad platform is [called] Organic [and] we have a separate relationship with them [now]. That will continue\u2026 [But] we\u2019re gradually off-boarding from a lot of the different systems. We\u2019ve been integrated into every single little piece of software along the way that we use every day. They\u2019re not just turning the lights off overnight.<\/p>\n Quartz\u2019s editor Zach Seward did something similar to this and then ended up selling the publication to G\/O Media last year. Were you looking at prior examples of editors buying their publications when you made this decision?<\/strong><\/p>\n I\u2019m such a lifer with this brand. That\u2019s not to say decades down the line \u2014 I\u2019m not going to speculate on what might happen. But that\u2019s not part of my plan. I haven\u2019t seen a sale like this happen with a legacy publication. I know other editors have done it in other fields and areas. And that was certainly inspiring and impetus to think that it could be possible. But I think each business is so wildly different. I\u2019m not really relying on somebody else\u2019s playbook, necessarily.<\/p>\n 250+<\/strong><\/a>:<\/strong> The number of Insider employees who walked out on Monday in protest of the company\u2019s plan to lay off 10% of its staff, 60% of whom were union members.\u00a0\u00a0<\/p>\n 23%<\/strong><\/a>:<\/strong> The number of publishers pros in a survey of 200-plus brand, agency and publisher professionals who said they are \u201cvery prepared\u201d to move beyond the third-party cookie, per Digiday+ Research.\u00a0<\/p>\n 515 million<\/strong><\/a>:<\/strong> The number of Spotify\u2019s monthly active global users in the first quarter of 2023, a 22% increase year over year.\u00a0\u00a0<\/p>\n 2.5%<\/strong><\/a>:<\/strong> The new pricing model of Amazon Publisher Services\u2019 Transparent Ad Marketplace, which will replace the current $0.01 CPM fee on paid impressions with the 2.5% fee on net revenue delivered to publishers.<\/p>\n How SPO is driving ad tech\u2019s decarbonization push:<\/strong><\/p>\n Learn more about the role of sustainability in the programmatic market <\/em>here<\/em><\/a>.<\/em><\/p>\n How the social traffic that gave life to BuzzFeed News ultimately led to its demise:<\/strong><\/p>\n Read more about the downfall of BuzzFeed News <\/em>here<\/em><\/a>.\u00a0<\/em><\/p>\n Time, The FT, Vox and other publishers see ad dollars flow to sustainability content after increasing climate coverage:<\/strong><\/p>\n Learn more about the growth of sustainability-oriented ad dollars <\/em>here<\/em><\/a>.\u00a0\u00a0\u00a0<\/em><\/p>\n Large publishers hedge their bets on subscriptions while small publishers back away:\u00a0<\/strong><\/p>\n Read Digiday+ Research\u2019s latest deep dive <\/em>here<\/em><\/a>.\u00a0<\/em><\/p>\n The Guardian will be paid for permitting the collection of contextual data on its site:<\/strong><\/p>\n Learn more about the partnership between The Guardian and Illuma <\/em>here<\/em><\/a>.<\/em><\/p>\n How digital news publishers are practicing retention strategies:<\/strong><\/a><\/p>\n Canceling digital newspaper subscriptions can be notoriously difficult, but after The Lenfest Institute canceled 22 subscriptions, it reported that about two-thirds of them took five minutes or less to cancel.\u00a0\u00a0<\/p>\n FiveThirtyEight gets slashed during Disney layoffs:<\/strong><\/a><\/p>\n More than half of the 35-person staff at data-driven news site FiveThirtyEight were laid off during the Disney layoffs this week, and founder Nate Silver is reportedly expected to depart the company as a result, according to The New York Times.\u00a0<\/p>\n The future of Fox News without Tucker Carlson:<\/strong><\/a><\/p>\n After parting ways with Carlson and following the $787 million settlement with Dominion Voting Systems, Fox stands to win back some of the advertisers who blocklisted Carlson\u2019s show, The Wall Street Journal reported.<\/p>\nWhat we\u2019ve heard<\/h2>\n
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3 questions with Saveur\u2019s Kat Craddock<\/h2>\n
Numbers to know<\/h2>\n
What we\u2019ve covered<\/h2>\n
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What we\u2019re reading<\/h2>\n