Managing cash flow in digital media can be tough. Normal payment terms vary from 30 days to 120 days, and all our internal data suggests pay terms are getting longer. Many ad networks pay with a high degree of certainty, but always a few days late. Often times it takes a simple email follow-up to an ad network’s accounts payable department to get your money. They do pay, but it’s just a pain to collect. We’ve also recently seen payment terms being extended (sometimes unilaterally), completely beyond a publishers control. If you’re seeking a new demand partner, you have to be weary of the following:
Their ability to pay — are they a good credit?
The pay terms — how long are you willing to wait?
Their pay history – what’s their track record?
Their pay timing — are they consistently late?
Below is the best way to vet out a new demand partner.
1. Are they a good credit? Do your research.
What are people in the industry saying about them? Check industry threads like the Reddit AdOps thread. Also do a quick Google search, is there any news about late payments or lawsuits? It will be tough to find this information, but you can piece together anecdotal evidence – how many employees do they have? Is their C-Suite on LinkedIn, or obscure and hard to find? How many offices do they have? Are they well capitalized (i.e. publicly traded)? Have they raised any equity to support the business? Check Crunchbase. Who are their backers?
These are questions you have to ask. Use your gut, since you won’t have much direct evidence to go off of.
2. What are their pay terms?
Paying on 90+ terms is not unusual. But the question is, do you want to wait that long? Especially with seasonality, you could miss out on growth if you’re waiting to get paid. Take this into consideration. Typically, the sooner an ad network pays, the better (unless you’re willing to wait 90+ days for ridiculously high CPMs).
3. What is their pay history? Ask for credit references.
You may not have direct data into their payment history, but you can ask for credit references. Before you sign up and monetize your audience with an ad network, ask for credit references. You need to make sure they have happy customers. But this will only take you so far, because obviously a network is never going to put down someone they owe money to as a reference. But again, this is all anecdotal.
4. Are they ever late? Use Project Rank, our free payment data tool.
We see the uncertainty around payment in the industry as a major problem. To alleviate and engender goodwill, we’ve put together a free payment history tool. With it, you can find:
Stated terms of each ad network (30, 60, 90 etc.)
How long it actually has taken them to pay us historically
Payment History (Usually Early, On Time, Usually Late)
Payment Method (ACH vs. Wire vs. Payoneer or Other)
Headquarters / Place of Business
Ownership (Private v. Public)
If they aren’t in the database, or it says “not enough information”, that means one of 3 things – we never bought an invoice payable by that company, or they refused to disclose info to us, or they have some type of mark on their credit (i.e. a tax lien or bankruptcy) that disqualifies them from our system.
It’s imperative that you go through this process prior to on boarding new demand partners. The last thing you want is to ramp up with an ad network, only to find out they can’t pay you.
In a recent analysis of our clients’ growth patterns, we discovered one common thing: clients tend to grow 4-5x bigger, in a fraction of the time.
To illustrate this, we developed a calculator. This requires you to enter 4 inputs:
What is your starting capital?
What is your monthly margin on a campaign spend?
How long do you wait to get paid?
What is your time horizon for using OAREX?
This assumes an 80% advance of your invoice value and a 2.5% fee. In this example, if you start with a $10,000 to spend on traffic/user acquisition, and you generate 20% per month, wait 60 days to get paid and use OAREX for 6 months, you will grow revenue 496% and profits 420%.
With OAREX, the total campaign spend you can achieve — by reinvesting our funds into your growth channels — will be $220,567.
Without OAREX however, you’ll only be able to reinvest your money 2 times in a 6 month period (day 60 and day 120), for a total spend of $36,400.
The difference in profits? $37,836 with OAREX, vs. $7,280 without.
Please note these results are NOT guaranteed. This is all simply illustrating that if you use OAREX to scale your growth, it will occur much faster than if you didn’t.
OAREX funds businesses that earn money from digital advertising. We fund them by purchasing their advertising invoices payable by ad partners. OAREX then deals with collecting payment — in 30, 60 or 90+ days — from the ad networks.
We fund publishers, smart phone apps, supply-side platforms, demand side platforms, and advertising networks, exchanges and agencies. Established in 2013, we’ve purchased thousands of media invoices over the years, and 2 major things about getting paid have become very obvious.
The first thing is that payment didn’t always occur on the expected payment date. Sometimes it paid early, sometimes it paid late. The second was that the payment wasn’t always the same amount as reported in each dashboard. As a participant in the digital media you can attest to the frustration and potential cash flow issues this can cause.
So let’s break down each factor one by one, but first, a little bit about our methodology:
We Studied Thousands of Digital Media Invoices
We studied thousands of invoices purchased from our digital media clients. The invoices were payable by the top 20 desktop / mobile ad networks in our portfolio. The nature of the study was to focus on the supply side, where payments usually hit last. The invoices were purchased primarily from publishers and smart phone apps, with appx. 20% from publisher networks and SSPs. Below are our findings:
We Found That 54% Of Invoices Paid Late
Of the invoices studied, here is a breakdown of key findings:
54% of all invoices were paid later than the expected payment date
Payments were, on average, 5.3 days late
80% of all ad networks paid late at least once
32% of all invoices were paid early
Only 3% paid exactly per terms
Here are some highlights:
Matomy paid early 63% of the time
Google paid early 72% of the time
Conversant paid early 67% of the time
Glispa paid early 67% of the time
Criteo, Rubicon, Pulsepoint and OpenX paid early 50% of the time
We Also Found That 33% of Ad Networks Underpaid
As for the amount of payment, here is the breakdown:
33% of all invoices were underpaid (lower then reported)
The average under payment was 3%
67% of all ad networks under paid at least once
30% of all invoices were overpaid (higher than reported)
17% paid the exact number they said they would
Advertise.com, Connatix, and Sovrn overpaid about 60% of the time, with Advertise.com leading the pack by paying early 67% of the time.
FIND OUT WHO PAYS LATE OR UNDERPAYS BY DOWNLOADING THE FULL REPORT:
Managing Cash Flow In Digital Media: Grow Quicker & Faster With OAREX
No doubt cash flow management is necessary to hitting scale and growth. Without properly managing your cash flow, you will have to constantly bridge the gap with credit cards or your own capital. With OAREX, you can sell your media invoices for immediate capital up front. This will allow you to reinvest into your winning traffic or user acquisition campaigns to grow quicker, faster.
Early this year, Facebook updated their branded content rules that limit the way a Facebook page owner can post content in exchange for money. This paid-promotion strategy was pivotal to the growth of companies like Render Media, Little Things and Diply. As a result of the change, Render Media and Little Things completely shut down, sending ripples through the industry. Now 3rd party advertisers like agencies, brands and publishers are scrambling for new avenues to promote products and content. We believe the reaction to this change is completely overblown with artificial media hype. Here’s why.
1. If you put all your eggs in one basket, you will lose.
Many publishers, most notoriously Render Media and Little things, built massive businesses promoting their content by paying Facebook page influencers. The strategy was successful because the cost of acquisition was sometimes as low as a penny, cheaper than Facebook’s floor. When the change occurred, Little Things, a business with over 50 employees, lost 75% of it’s traffic overnight. The lesson here is that many media companies put all their eggs in one basket: Facebook influencer traffic. Their strategy worked until it didn’t, and now many are reassessing where to go next. Don’t let the doom and gloom hype of big name demises freak you out.
2. Facebook isn’t the only sheriff in town.
This new update reminds us of the one Facebook did in August of 2016, when they changed their algorithm to bury promoted viral content for more organic, newsworthy content. Many publishers – whom we happen to deal with on a daily basis – were quick to abandon Facebook and find new avenues of content promotion. Content discovery platforms like Taboola and Outbrain benefitted tremendously after the change, providing new opportunities for 3rd party advertisers to promote content and products.
3. It’s the internet, don’t lose faith and never doubt it.
The internet is so dynamic and fluid that when one opportunity closes, another will arise. As long as there are eyeballs, there will be opportunity. Entrepreneurs are innovative and marketers will find (or create) new ways to market products and content. As many advertisers, brands, agencies and publishers “scramble” for new avenues to promote to garner visits and sales, opportunities will emerge.
4. Facbeook influencer traffic is still a valid avenue!
It may have gotten lost in all the hype, but I can’t scream this loudly enough: you can still pay Facebook page owners for sharing content. The new Branded Content guidelines don’t completely prohibit paying a Facebook page owner for sharing content; rather, the Facebook influencer must use the Branded Content Tool to tag 3rd party advertisers on both Instagram and Facebook. According to Gary Lipovetsky, CEO of Provdr.com, another publisher that build a huge business on cheap Facebook influencer traffic, 3rd party advertisers can easily satisfy Facebooks requirements by a paragraph length description or caption to each post. Lipovetsky also thinks it will bode well for publishers long-term, helping increase organic reach.
We believe the sign of a good business is one that responds to its customers and demand in the marketplace. While supply side economics once had it’s place in our economy (and arguably still does with some tech stuff), gone are the days of “build it and they will come”. So in response to the marketplace, we’ve raised our advance rate from 80% to 90%. This means more money faster for our clients.
The way OAREX works is that we simplify payment terms for pubs by paying ad revenue from all partners on the same day. Instead of getting paid on net 30, net 45, net 60, net 75 and net 90 from multiple ad networks, we will pay you 90% of it on net 1, weekly or monthly. We then collect payment from your ad partners. We used to cap the advance rate at 80% of the invoice value, and have since raised it to 90% for two main reasons.
First is that with an 90% advance rate, pubs can reinvest more proceeds into traffic and user acquisition campaigns. This is the obvious reason for bumping the advance rate to 90%, and what we heard most from the market. With a 90% advance rate, pubs can accelerate growth way faster than if they are receiving 80%. Every dollar matters.
Secondly, and perhaps not so obvious, is that with a 90% advance rate, pubs need a smaller margin to operate with net positive cash flow. At an 80% advance rate, pubs have to operate at 25%+ margins to make up for the 20% they are not receiving from OAREX. However with a 90% advance rate, pubs only have to operate at 12% margins to have net positive cash flow. At a 12% margin, pubs can deploy more of their capital and make up for the 10% they don’t receive from OAREX.
To illustrate, here is an example at an 80% advance, where clients can see profit growth of 420%. This assumes the following:
$10,000 in starting capital
Margins of 20% (conservative)
Average wait days to get paid is 60
OAREX rev share of 2.50% per month
Time horizon is 6 months
We hold back 20% of cash as invoices paid OAREX
Compare with an example at a 90% advance. With the same assumptions, you can see the growth differential when we give the clients the extra 10%. Clients can grow 2,042% with a 90% advance from OAREX, versus 420% with an 80% advance.
We’re glad we have the flexibility to provide the market with what it wants. We will continue to be flexible with clients and dynamic in our product offering, to assure the digital media ecosystem with the best product on the market. Inquire today to see if you qualify for 90%.
Last month, Google pushed an update to it’s Chrome browser that automatically blocks ad that are said to harm user experience. Ads that harm user experience are ads such as pop-ups, sound-on autoplay videos, and ads that stick to the viewable window regardless of scrolling. The standards used for blocking ads by Chrome have been agreed upon and set forth by the Coalition for Better Ads (CBA), whose board is made up of giants Facebook and Google, along with the IAB and other major advertisers. Many publishers feared this would result in loss revenue, but that doesn’t appear to be the case yet. Read on to see if your revenue is at risk and what you can do about Google Chrome’s ad block.
Google Chrome’s Ad Block Is Targeting Annoying Ads
The CBA is targeting 6 types of “annoying” ads that harm user experience, and variations of those ad types. These ads harm user experience because they cover content or trigger sounds via video without opting to view the video. These are the ads Google Chrome’s ad block is targeting:
Pop-up ads
Autoplay videos with sound
Prestitial ads with and without countdown clocks
Large sticky ads that lock when users scroll
Full-screen scroll-overs
Flashing animated ads
Ad density higher than 30% on mobile is also prohibited.
We’ve seen many clients with at least one of these types of ads within their header bidding or waterfall stack. Although we frequently see it, fortunately for most top-tier publishers these types of ads do not account for a significant amount of revenue. That said however, it is important that you understand how to comply with the CBA guidelines so as not to get banned.
The CBA Guidelines: Google Playing Nice
If a publisher is in violation, Google will get them a 30-day notice of violations, and a chance to rectify them before Chrome starts blocking their ads – and it will take multiple violations. The threshold for blocking is if 7.5% of page views have existing infringing ads for the first two months after Feb. 15th, and 5% for the following four months and 2.5% after that. For persistently bad sites, Google will block ads at the ad network level using EasyList, the same open source software used by AdBlock Plus.
These are the rules set forth by the CBA and Google has promised to strictly adhere to them. According to Google, as of the date of implementation, only 1% of publishers were not compliant based on audit of more than 100,000 sites. Google also noted that 42% of sites that were in violation fixed their issues by Feb. 12.
Google has made it clear that if a publisher does not comply, ALL ads will be blocked on that publishers site — including the plain vanilla display ads we’re so desensitized to seeing. That could significantly impair a publishers revenue stream given that Chrome has 62% of all mobile traffic and 59% of all desktop traffic. Fear not, as Google has also made it very clear that they will fair warning.
Ad tech company Adform recently released a deep analysis after uncovering a new fraud scheme dubbed “HyphBot.” HyphBot has scammed advertisers and pubs every single day since its launch. Thousands of fake domains and millions of fake URLs were created by fraudsters through a file known as sortedUnixWords.txt. Adform researchers believe the bot has been actively running since August, if not earlier.
The suspicious domain name patterns were noticed by Adform after raking through illegitimate site traffic detected by ads.txt. Notably, two specific patterns showed up so frequently, prompting Adform to monitor HyphBot activity. The first pattern is a domain name followed by several non related words, i.e. forbes.com/red-throated_mid-atlantic. The second HyphBot pattern with a domain followed by random numbers and letters i.e. forbes.com/4qr56. By developing highly advanced filters through their platform, Adform can quantify the amount of requests from these unusual URL patterns and determine which premium publishers are being affected. They are continuing to investigate where and who this Bot was created by and how to shut it down. Adform has kept the details of their findings secret until now. This is so the fraudsters aren’t able to hack into Adform’s filters designed to detect and reverse what Hyphbot is doing.
Many industry leaders – including ourselves – agree that making the digital advertising industry more transparent is necessary for the future of digital advertising. Adform took a step in the right direction by informing everyone of their findings so quickly. Adform hopes that by gathering this information and exposing this scam, a sense of urgency will buzz throughout the industry.
People should be actively seeking the next steps to combat fraud as an industry. We recently discussed domain spoofing and the power moves JPMorgan made to combat ad fraud. Ads.txt was rolled out just a week prior, and many were taking a deeper look at what ads.txt could do to protect companies from scams.
Adform is a supporter of ads.txt. By releasing this data on HyphBot, they hope more people will educate themselves on ads.txt and understand its capabilities. If major players such as eBay and Walmart follow Google’s lead and adopt ads.txt, many more companies will follow suit. It has to start somewhere. We hope that leaders do what they do best – step up and set the tone in an effort to make the digital advertising world stronger and more transparent.
Author note: this is part 2 in a series about how to get started with sponsored content campaigns in order to drive sales, eyeballs and clicks to your website. For part 1, check out Getting Started With Sponsored Content.
The best practices for structuring a sponsored content campaign on each network are slightly different; however, there are some key things to get right that work across the board from my experience over the past four years running sponsored content campaigns.
Each campaign should be set up following some guidelines:
One piece of content per campaign
One device per campaign
One country per campaign
Limit to 5 -15 ads per campaign
Test 3 headline angles (ie none of them use the same words)
Test 5 different images with each headline
A few extra tips for effective testing & tracking:
The image is more important than the title to grab attention
Track campaign name, source (ad network name), and the publisher site
Outbrain has publishers and sections, track both
Revcontent has Channels and widgets, track both
Taboola just has sites for tracking / blocking / bid modifying
Optimizing Sponsored Content Campaigns
This could be an article on it’s own so I will just give you the major items to check. The biggest mistake I see is people optimizing way too early. They cut off volume before even having enough data to make a proper decision.
Here is my testing approach:
Wait three days, if you don’t get clicks. Start over
Create a new campaign if no traction
Try new images & titles for the same piece of content
Do not add new ads to an unsuccessful campaign
Repeat this until you can get 50–100 clicks per day at a minimum
Once something takes off, wait a week before optimizing and blocking
Pause all ads except your top one. Two at most
Re-create other ads in a new campaign
A few extra tips for success:
Keep testing, sometimes it takes several tries, especially when you are starting
Continuously check competitive intelligence tools to see new advertisers & angles
Try out zip code targeting for local campaigns (Outbrain & Yahoo Gemini)
Use City or State names in your ad headlines using macros (Outbrain & Revcontent)
Use Brax.io to simplify creating ad variations, analyzing performance & optimizing campaigns
Now go out there and crush your traffic and sales goals using sponsored content. Right now, the price is cheap compared to Google and Facebook. That won’t last much longer as more advertisers jump on board to drive new customer acquisition.
This post was written by Mark Simon, co-founder of of Brax.io, a platform that helps performance marketers scale, automate and simplify native advertising.
With digital advertising passing tv advertising sales for the first time ever in 2016, it really makes you think just how many ads digital viewers are consuming, and where exactly they are being placed on the web. A single ad can make it onto hundreds of thousands of websites, which typically leads to advertising platforms placing them on sites that companies would prefer the ads not appear on.
Perfect example: JPMorgan Chase and the infamous ad placement on the “Hillary 4 Prison” website. Seeing a Chase ad on a website like this naturally allows viewers to draw conclusions. This may read as Chase being a supporter of the website, something Chase was clearly not. Chase drastically decreased the number of sites that their ads would be placed on moving forward; from 400,000 down to a shocking 7,000. By carefully selecting the sites they want to advertise on, Chase figured they could reach their target audience in a much more tactful and efficient way. This proved to be true when they saw that ad viewability increased by 5%. The overall goal was to reduce fraud, which they did by an impressive 49%.
The actions Chase has taken in the last 8 months have stirred up much conversation in the ad tech and advertising industries. As one of the biggest players in the game, they are speaking up about legitimacy and transparency in the often dark and fraudulent digital advertising industry. Many other companies are planning to take actions of their own, reducing the overall amount of inventory being purchased. For many sites that rely on advertising revenues to operate, companies purchasing less inventory could be a huge cash flow / revenue problem. Despite actions taken by Chase, it’s still an uphill battle.
Chase still faces issues with domain spoofing, where poser sites act as if they are high-quality sites. Domain spoofing can also be called inventory spoofing, where fraudsters illicitly list inventory belonging to a top-tier publisher, syphoning ad dollars from publishers. Although the IAB’s ads.txt initiative could potentially solve these issues, it remains yet to be seen. The Authorized Digital Sellers List was just rolled out last week, and Chase isn’t interested in using ads.txt until its major ad publishers begin to use it as well. Here’s looking at you, eBay, WalMart, Yahoo…
Today the Interactive Advertising Bureau is finally launching their anti-domain spoofing initiative, ads.txt. The Authorized Digital Sellers list, known as ads.txt, is an inventory verification system that assure advertisers they are purchasing real inventory from the claimed publisher. This initiative has been launched in response to domain-spoofing, where fraudsters list inventory belonging to top-tier publishers, stealing advertising dollars from those publishers.
Ad-spoofing has become a huge problem in the digital media ecosystem for both advertisers and publishers. For advertisers, they end up purchasing fake inventory, and for publishers, they miss out on advertiser dollars because fraudsters syphoned money from ad budgets that should have been spent on inventory on their own site. Ad-spoofing is big in video ads because of the limited inventory for video and the higher CPMs. The extent of ad spoofing damage was reported by the Wall Street Journal last December, which is likely the single event that triggered the brainstorm that created ads.txt.
The blueprint for ads.txt was made public end of May. The way it works is almost like a verification technology, enabling content owners to declare who is and is not authorized to sell their inventory (sounds a lot like block-chain technology, doesn’t it?). As the IAB explains it:
‘This new tool, known as ads.txt, is a pre-formatted index of authorized sellers that publishers can post to their domains. Programmatic buyers can then use these publisher ads.txt files to screen for fake or misrepresented inventory.’
Sounds cool, right? The Authorized Digital Sellers list has received both criticism and support since the blueprint came out. However, Google has thrown its weight behind ads.txt, by recently stating it will only allocate advertiser dollars to publishers that have implemented ads.txt. Supply side partners such as AppNexus, IndexExchange and Teads are also on board, and claim to have initiated verification technologies prior to ads.txt. As of now, 13% of the world’s top-tier publishers are signed on with the Authorized Digital Sellers list, but that number will likely go up if they want to receive ad dollars.
The net effect of ads.txt, remains to be seen. Proponents claim publisher revenues should go up because fraudsters will no longer be able to syphon ad budget money from them. Opponents say it’s not enough, and that the fraudsters will find a way around it. We will be watching it closely and advise publishers to employ ads.txt, because, why not?
