FastPay Network: Beyond 60

In 2017, Digiday released an article claiming that media suppliers were being treated like banks by media agencies. The article went on to say that, “Lately, hard-hit publishers have had enough with agencies extending payment terms even well after they’ve been paid by their clients.” Three years later nothing has changed. In fact, the problem has grown worse with major brands extending their payment terms beyond 120+ days. Furthermore, in March 2020, the ANA compiled their own analysis derived from a group of marketers and brands to reveal, “payment term changes, notably extended terms, are reflective of a broader trend. And that, “the majority of respondents who have extended their payment terms have done so to derive better cash flow.” 

To understand how extended payment terms have affected suppliers, FastPay partnered with Prodege, an independent research firm, and surveyed 155 US-based media suppliers. 

 

The State of the Problem 

The sheer volume of ad buys creates a very complex world of payments. US media spend reached $560 billion in 2019, according to eMarketer. Less than 13% of 2019’s total ad spend moved through programmatic pipes leaving billions to sift through tedious reconciliation processes. With the 2020 election and Tokyo Olympic Games expected to yield increased media budgets, we will likely see more dollars moving through old pipes. 

In addition to clunky backend operations, media suppliers are also falling prey to delinquent payments. As articulated by FastPay CTO Mark Baran, “Gone are the days where media agencies pay suppliers for an ad product. Today, they’re paying for performance.” Part of the problem is that measuring performance is complex (using third party ad servers) and it conflicts based on who is doing the analysis (e.g. supplier, agency or advertiser). Oftentimes, the advertiser or agency data is what is considered truth. What results is an unfortunate cycle where suppliers are paid late and then forced to begin a difficult reconciliation process requiring numerous calls and back to back emails. While this is fairly specific to digital,  traditional media still encounters tremendous delays due to complexity in reconciliation (sorting through makegoods, incorrect billing, etc.)

 

A Need for More Automation (with Transparency)

One of the biggest challenges suppliers encounter is the need to process paper checks. As mentioned in our recent  Forrester Report, “the media industry has been at the forefront of digital transformation, adopting programmatic, data-driven, and multichannel capabilities to increase targeting and efficiency. Even so, the payment process itself — the final stretch of ad purchasing— is still mired in complex, extended payment terms and legacy payment methods.” Our most recent study found that 50% of media suppliers surveyed receive manual checks to pay for placed media. When you think about how many ads are placed on a wide variety of mediums, that starts adding up to an extraordinary amount of checks. 

Checks lack automation and transparency. They are slow and error-prone and provide limited information when it comes to resolving discrepancies. They also restrict communication between agencies and suppliers. You can’t talk to a check. However, a platform with integrations like chat boxes and access to increased remittance data, allows you to seamlessly talk through discrepancies and delays. Solutions like these are being developed. In 2019, FastPay launched FastPay Network, the only solution giving suppliers greater transparency and predictability into payments. Through the Network, suppliers get access to a portal with rich data on invoice status and remittance details and can elect to receive payment at Net 60.

 

Suppliers Seek a Resolution 

As we enter a new quarter full of tough decisions to make, media suppliers will be required to unlock their cash flow quickly. When we initiated this study, 76% of decision makers aimed to improve efficiency in the invoicing process within the next 12 months. They will now likely move quicker, as changes resulting from COVID-19 take shape in the media ecosystem. In fact, we’ve already seen a shift to more automation in payments. Motivated by the increase of political ad spending, some suppliers have put new payment solutions in place. Earlier this year, one of the largest broadcasting companies in the US partnered with FastPay and processed over $1 million in political payments through FastPay Network in the month of January alone. 

While suppliers’ main goal is to help agencies meet campaign goals for the brands they represent, they also have a dedication to their internal teams, now more than ever. By adding more predictability to payments, suppliers are guaranteeing the future of their company and the people who work for them. 

FastPay understands the importance of predictable payments, which is why we launched FastPay Network. Unlike factoring partners or even major banks, FastPay Network is designed for media suppliers by media experts. For more information on how you can receive faster payments, contact Larry Shiels, VP of Supplier Development at larry.shiels@gofastpay.com.