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Jun 19 2020 News

Opinion: COVID-19 is exposing ad industry weaknesses. Let’s start by fixing payment terms

“We’re four months into the COVID-19 pandemic, and the ad industry is facing serious challenges. Digital ad spend has dipped 33 percent as buyers across industries reel from the impact of the pandemic. As a result, leading agencies have announced layoffs and cutbacks—business closures and reduced consumer spending are blamed as the primary culprits. But we also need to consider how payment arrangements are exacerbating our problems.

The crux of the issue involves the payment terms that agencies and ad tech companies have agreed to. Although publishers, ad exchanges and sell-side platforms request payment for advertising within 30 days, most agencies and ad tech companies give their clients 60, 90 or even 180 days to pay invoices. In this arrangement, agencies and ad tech companies play the role of the bank, carrying the balance for campaigns that already ran, while waiting to receive payment themselves. In the meantime, they must also pay salaries, rent and other expenses.”

Read more from Centro’s Tyler Kelly in Advertising Age.