There’s more bad news for publishers stemming from MediaMath’s bankruptcy.
Since payments from SSPs for DSP spend are typically delayed for months, any deals conducted through MediaMath that publishers haven’t already been paid for might not be honored by SSPs going forward.
Microsoft’s Xandr informed publishers in a memo sent Friday that it will not be making any further payments for unpaid MediaMath deals transacted between February and June. Instead, it will deduct the outstanding balances for those months from the publisher’s payouts.
The memo did not specify if Xandr intends to claw back revenue already paid to publishers resulting from MediaMath deals; it only referred to unpaid revenue. Xandr did not respond to a request to clarify whether it is pursuing clawbacks for revenue already paid for MediaMath deals.
“Xandr pays publishers based on contracted payment terms and remains committed to that,” a Xandr spokesperson told AdExchanger.
No payment
The memo implies that any revenue publishers have already received from Xandr is theirs to keep, said a consultant whose clients work with Xandr. So Xandr is not technically doing a clawback; it’s just refusing to honor any more payments related to MediaMath demand that haven’t already been disbursed to publishers.
But another source familiar with SSP repayments said that distinction comes down to semantics; Xandr’s refusal to make publishers whole for completed transactions should be considered a clawback, even if the payment hadn’t made its way to the publisher yet.
Whether the memo describes a clawback or not, it sends a clear message that publishers shouldn’t expect any more payments from Xandr for most of 2023’s MediaMath deals.
SSPs are almost always protected by sequential liability clauses in their contracts with publishers. These clauses state an SSP can withdraw or withhold payments made if the advertiser or DSP can’t pay for the ads they purchased.
A publishing executive whose company was affected by Xandr’s memo told AdExchanger they are concerned the SSP’s refusal to honor any further payments for most of this year could put many second- and third-tier publishers at risk.
Publishers’ inability to recoup revenue after a DSP bankruptcy exposes a flaw in ad-supported models. Open auction ad impressions are served on publisher sites immediately after an advertiser wins the auction, but before the advertiser actually pays for the impression.
Since publishers serve impressions before payment, their SSPs usually front the money for ad buys conducted on DSPs. The SSP then invoices the DSP for the revenue it advanced to publishers.
Typically, the SSP will give the DSP until the end of the month to reimburse the SSP for cash advances paid to publishers. But it’s not unusual for these repayments to be made months after the initial ad buy.
Five-month lag
According to the memo, some of Xandr’s publisher clients haven’t been paid for ads purchased on MediaMath’s DSP going as far back as February, about five months ago.
Xandr’s usual payment terms state that publishers can expect payment for DSP demand within 60 or 90 days of the last day of the month in which ad buys were transacted.
But the memo addresses unpaid MediaMath demand from between February and June. By now, any unpaid demand from February or March would fall outside a net-90 payment window. Xandr did not respond to a request to clarify whether some publishers are still owed money for MediaMath deals in February and March.
A source familiar with Xandr’s payment terms said it’s possible Xandr is eating much of the balance from MediaMath deals conducted between February and June, since it typically pays publishers within 90 days. If that’s the case, Xandr did “a lousy job” of making that clear in its memo, the source said.
But, while a five-month delay on payment would be on the long side for Xandr, it would not be unheard of, the source added.
Xandr is not an outlier when it comes to held-up publisher payments. It’s common for SSPs to pay between 30 and 90 days after an ad impression is served, said another source familiar with payment schedules. Depending on the DSP’s and SSP’s cash flow, publishers sometimes have to wait even longer.
The status quo of deferred payments illustrates publishers’ precarious position when it comes to generating reliable ad revenue.
And, as the MediaMath bankruptcy continues to prove, expected money can simply disappear if one of their partners goes under.
