OAREX’s Q3 Payment Study: Ad Networks Are Paying Later Than Ever

OAREX’s latest study of ad tech payments across the digital media ecosystem reveals that ad networks are paying later than ever.

One alarming statistic is that payment delays increased by an average of 12% in Q4 2017, when media companies need money the most. The broad conclusion is that late payments (beyond stated terms) are endemic to the industry, and ad tech companies are paying later and later.

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Here are some key findings:

  • 55% of Demand Partners pay late, 31% pay early, consistent with earlier findings.
  • 20% of Demand Partners are always late and 27% pay late more than half of the time.
  • 80% of Demand Partners have paid late at least once in the last 12 months.
  • 61% of all payments were late during Q4 2017.
  • Late payments are getting later. The average late payment was 7.7 days vs. 6.5 historically.
  • Apple and Google Play pay well before their stated terms and are paying earlier than ever
  • Connatix pays 9 days early on average (see Exhibit A for more details).

You can download our ad tech payment report here, which includes a breakdown of the data by ad network.

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OAREX ad tech

OAREX vs. Them: How Our Funding Compares

With Q4 upon us, it’s imperative that you have a funding solution in place to make the most of 2018 ad budgets. Having a partner like OAREX can be the difference between 400% ad revenue growth and the same old story of no growth. In fact I would argue that having a cash-flow solution in place is a necessary component to your overall growth plan. Given another solution in the marketplace is available we thought we’d provide a direct comparison of “us vs. them”.

fast pay partners llc
Unlike others, OAREX does not have the right to open your mail if customers don’t pay.

How OAREX Is Different & Why We’re Better

So how are we different: well the main difference is that we are who we say we are (more on this later), but here is a breakdown.

1. We are not a lender, so you will not be subject to the lender-borrow dynamic.

Our competitor offers loans and holds themselves out as a lender, so you will be subject to the superior-inferior relationship.

OAREX is a true factoring firm, meaning we take collection risk that your customers don’t pay. We do not lend money to your business, and expect repayment from your company. We expect payment from your customers, who become our “debtors” after we buy your invoices. Our funding solution mechanically works like a line of credit, but legally it does not: you are not liable if customers don’t pay, and therefore not subject to a “crackdown” on your business the way a lender would. With OAREX, you will be free of that uncomfortable lender-borrower dynamic.

2. We do not cap your credit, so OAREX will grow with you as you need it.

Our competitor limits the funds made available to you when you need them the most, hindering your growth.

Since OAREX is not a lender, we do not take credit risk in your business (we only take credit risk in your customers’ businesses). You could have a 450 FICO with zero credit history on your business and we’ll still fund you. And since we don’t care about your credit, we will not limit the amount of money made available to your business. The only limit is the “advance amount”, which is the % of money you can receive for each invoice. Currently, the max advance limit is 90% of your invoice value.

3. We do not require a personal guarantee, so if things go South we won’t take your personal assets.

Our competitor requires a personal guarantee, despite having claims against your business and business assets.

If things go South for you and your business, rest assured OAREX will not come after you personally*. Our competitor has a different philosophy about that.

4. If your customer doesn’t pay, you are not liable to make good with OAREX.

Our competitor offers recourse factoring products, so if your customers don’t pay, you are still liable.

As mentioned OAREX is a true factoring firm. If you’ve been shopping for an invoice or cash-flow financing solution, you’ve probably come across the terms “recourse” and “non-recourse”. We offer a non-recourse product. What does this mean? In the funding world, recourse means “the legal right to demand compensation or payment”. Non-recourse means “no legal right to demand compensation or payment“. So if your customer does not pay us, you are not liable to make good on the payment*

5. We are who we say we are.

Many “factoring” companies hold themselves out as factoring companies. This means that they claim to buy invoices. If a company buys an invoice from another company, they should be taking all collection risk (in theory). However many don’t (see point #4 above). The fact that some factoring companies — including our competitor — offer “recourse factoring” turns the true factoring product into a loan.

Think of it this way: if we claim to “buy” your invoices, then we should be stepping into your shoes in the way of risk, collection, etc. Right? That is what factors do. However, if we hold ourselves out as a factor, but we’re not willing to assume the risks that come with owning the invoices — because we can come after  you in the event of non-payment — then what are we offering? We are offering a line of credit against your basket of invoices, which is a loan. This is deceptive.

Many people sign up with factoring firms thinking they are receiving factoring, but they’re really becoming a borrower (oftentimes against their own knowing, for lack of legal knowledge). This is deceptive and calls into question the legal theory of “substance over form” — it doesn’t matter what you call it: if it looks like a duck, walks like a duck and talks like a duck, then it is a duck. It doesn’t matter if you call a loan factoring: if you are liable for non-payment, then you are a borrower, and all the ramifications of being a borrower follow.

So to my first and most important point of how we are different: we are who we say we are. OAREX is a factoring firm, and we’re not going to disguise a loan to customers by calling it factoring.

This article was written by Hanna Kassis, the Founder & CEO of OAREX Capital Markets. Hanna can be reached at hanna [at] oarex [dot] com.

*OAREX clients are always liable in the event of fraud.

OAREX’s Accelerated Weekly Payments: How It Works

The most important factor to success for a publisher or app is cash flow. Most have their cash cycle down to a science. The only factor to growth that many of them are missing is readily available capital. With access to capital, they know that for every dollar spent it returns a dollar + a margin (also known as return on ad spend or ROAS). Without access to capital, they know growth will be hindered or delayed. Who has time for that?

So in response to the market place, OAREX now offers up to 90% of ad revenue paid weekly. During a 60 day period (the average wait time to get paid), publishers can invest every $1 one time. However with our weekly payments, they can invest the same dollar 8 times. Naturally this will lead to exponential growth, provided the margins are there.

Here is how it works:

  1. Choose your weekly convention (7 day period), ending any day on Sunday through Thursday.
  2. Receive funds for the prior 7 days, on any business day, direct deposited into your bank account.
  3. Control how much funding you need – just let us know.
  4. After we get paid from the platform, we will deposit the remainder into your bank account, minus our fee.
  5. Our fees average $250 per $10,000 in ad revenue, per month.

Advancing ad revenue and accelerating the receipt of your revenues is almost necessary for a high potential publisher or app. Just imagine reinvesting $8 into your business for every $1 you have.

No dilution of equity, no personal guarantees, no brainer.

OAREX Raises Maximum Advance Rate To 90%

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%.

OAREX Secures $10M in Funding, Strengthens Digital Media Presence

CLEVELAND, OH – OAREX Capital Markets, Inc. (“OAREX”), a leading non-bank financing institution providing financing for digital media companies, today announced that it has closed on a $10,000,000 line of credit from a group of lenders, led by Arena Investors, LP, a New York-based global investment firm.

OAREX accelerates programmatic advertising revenue for digital publishers such as websites, app developers, ad networks and supply-side platforms. Accelerated cash flow allows media companies to scale their content promotion and user acquisition campaigns, and pay supply side partners and vendors sooner.

“This transaction significantly improves our ability to fund publishers,” Hanna Kassis, founder & CEO said. “It will allow us to continue to provide liquidity in a timely and efficient manner, allowing clients to better match their income with expenses to scale rapidly,” said Kassis.

Since inception, OAREX has helped accelerate programmatic advertising revenue for hundreds of websites and apps, and has purchased millions of dollars in outstanding receivables. “We tailor our service to our clients’ individual needs, making sure they’re positioned for growth,” Kassis said.

Capital & Credit as a Service

OAREX offers a non-loan product, making it appealing to many new digital media companies that are not interested in assuming debt and providing personal guarantees. OAREX accomplishes this by financing publishers’ advertising receivables, providing immediate liquidity for growth. Clients can sign up for one-time funding, or a monthly facility between 6 and 12 months. OAREX funds clients on a weekly or monthly basis, depending on their needs and cash flow.

“We are not a lender,” Kassis said, “we are a capital partner with the aim of helping clients grow.” OAREX takes a hands-on approach to servicing its clients, despite newly developed back-end technology that allows OAREX to verify receivables instantly. “We believe human interaction is critical to our providing the best service, even in the digital age,” said Kassis. As a value-add, OAREX offers a database to clients of all payment, collection and credit data on ad networks, ad exchanges and other intermediaries in the digital media ecosystem. “If this information can help our clients, then it can only help us by sharing it with them,” said Kassis.

About OAREX Capital Markets, Inc.

OAREX Capital Markets, Inc. (www.oarex.com) provides fast, flexible funding for companies in the digital media ecosystem earning revenue from advertising, affiliates and marketplaces such as the App Store. Established in 2013, OAREX is an acronym for the “Online Advertising Revenue Exchange”, and is located in the heart of Cleveland’s historical Tremont neighborhood. For more information, please contact Hanna Kassis or Taylor Haddix at (855) 466-2739.

About Arena Investors, LP

Arena Investors, LP (www.arenaco.com) is a global investment firm and merchant capital provider that invests across the entire credit spectrum in areas where conventional sources of capital are scarce. Arena focuses on corporate private credit, real estate private credit, commercial & industrial assets, structured finance, consumer assets as well as structured private investments in public securities.