Advertisers Slow Payments To Agencies; Digital Media Profitability Slips Away

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The Buck Stops Here

Brands are delaying agency payments as they manage cash crunches due to the coronavirus pandemic. The trend “threatens the collapse of the entire supply chain,” Ad Age reports. Hard-hit brands are asking to extend payment terms, which can already run up to 120 days. Equinox, for example, said it will halt all vendor payments until further notice. Some agencies are OK delaying payments for clients with reasonable terms, but won’t budge on accounts with terms of 90 days or more. Others are offering to reduce fees instead. But agencies also have to pay their vendors, which have to pay sell-side vendors and so on down the supply chain. “It’s not that we don’t have empathy,” a senior agency exec said. “But we are a business, too.”

Profits Of Woe

This was going to be the year that star digital media startups flipped to profitability. Business Insider, Vice, Vox, BuzzFeed and Politico were among the publishers that became profitable last year or expected to be profitable in 2020. But that was way, way back in January. Now investors are “triaging sick companies in their portfolios” with checks for the startups most likely to weather the crisis, said Jeff Richards, managing partner at the VC firm GGV Capital. Even with traffic growing, advertising demand has dropped like a rock. Survival for some of the best-known digital brands will depend on relationships with investors, The Wall Street Journal reports. And that could mean raising money at very disadvantageous terms for the news startups, which will soon be short on cash.

Return Of The Aggregators

CNN will acquire Canopy, maker of the news-reader app Tonic, to repurpose for its own news aggregation service. Terms of the deal weren’t disclosed, and CNN hasn’t fixed a launch date or a brand for the news aggregation business, dubbed “NewsCo,” TechCrunch reports. Canopy co-founder and CEO Brian Whitman previously led Echo Nest, which sold to Spotify and became its recommendation engine. CNN has whiffed on digital deals in the past. (Remember Zite? Or Beme? Me neither.) But Canopy is an acqui-hire. “This acquisition enables us to light up in a single transaction a proven, best-in-class team whose deep knowledge and skill sets would’ve taken many months or even years to assemble,” said CNN Chief Digital Officer Andrew Morse.

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