Late payments have become a growing issue in the advertising industry, according to a new report released by online ad-revenue exchange OAREX. The data, which tracks digital media payments made both manually and programmatically, indicates that all forms of media-buying payments have been slowing down for digital media, especially for manual payments. In fact, the percentage of late payments has grown to more than 40% of all digital ad buys tracked by OAREX in its report.
The report shows a significant difference between manual and programmatic payments, indicating that programmatic buys are more efficient in paying the media during times of economic volatility. The gap between manual and programmatic payments peaked at 13 points in June 2021 and has hovered between 8 and 10 points through the end of 2022. The difference can be attributed to the fact that programmatic payments are processed by programmatic middlemen, while manual payments are processed by ad agencies or clients themselves.
While the belief of many advertisers and agencies is that more of their ad budgets go into “working media” when they buy manually, there is a bottom-line impact for their suppliers, which are seeing slower payments. The trend is not delineated by specific agencies or clients but by major exchanges, DSPs, and SSPs tracked by OAREX.
Late payments are a problem for the advertising industry, as they impact not only the media but also the entire supply chain. Advertisers and agencies benefit from a faster payment system, as it helps build trust and relationships with their suppliers. In contrast, late payments strain those relationships and can hurt the supplier’s ability to deliver quality work on time.
Late payments can also affect cash flow and liquidity, which can be especially problematic for smaller suppliers. A delay in payment may force them to delay or even cancel their own payments, which can have a ripple effect throughout the industry.
The rise of programmatic advertising has brought some benefits to the industry, including greater efficiency and transparency. However, the issue of late payments highlights the need for a more standardized payment system. A standard payment system can help reduce friction and ensure that all parties are paid on time.