Publishers around the web have been left in the dark about their revenues after independent AdTech service Sizmek files for Chapter 11 protection with the U.S. Bankruptcy Court for the Southern District of New York. Sizmek are major buyers across exchanges and owed a reported $172 million to the ecosystem when they filed for protection. That is a sizeable sum that is currently not flowing towards the publishers who ultimately generated that revenue.
It’s no understatement to say that the announcement, which comes after the company failed to secure additional investment, has rocked the publishing and AdTech industries.
Why do publishers end up paying when buyers collapse?
The AdTech industry has long been built on the shaky foundations of extended credit and slim margins. AdTech firms give credit to when campaigns are booked, taking a revenue share before paying the remainder along the chain. The model presents challenges to cash-flow and when things go wrong they can go wrong quickly. Publishers getting paid relies on the money flowing through numerous steps in the chain. If the company at any step in that payment chain doesn’t get paid they will either stop payments, or “claw back” funds from those further down the chain.
I’ve never heard of Sizmek. Am I affected?
Publishers can be reliant on Sizmek for part of their revenue without even knowing. Sizmek buy through the exchanges that publishers and their monetization partners utilise. Sizmek are reported to owe money to Index Exchange, OpenX, Pubmatic, AppNexus, Rubicon Project, Integral Ad Science, LiveRamp, Google and others. Even publishers who don’t traffic those key players directly will be utilising their demand through smaller networks and platforms.
What happens now?
Several of the Exchanges that are owed money by Sizmek have already announced deductions. Where their are Sizmek earnings unpaid by those exchanges they will not be paid. Where they have already been paid they will be clawed back from publishers and their partners as a deductions against subsequent months. Should those funds be recovered later then the payments will be issued at that time. Other exchanges (Such as Index Exchange and DistrictM) have announced that they will not be withholding or clawing back Sizmek related funds, which is great news for publishers and shows real commitment from these companies. Others, unfortunately, are yet to make announcements either way.
What it means for OKO publishers
OKO publishers who work with us just on Google products are not expected to be affected. Google carries the collection liability on Ad Exchange so deductions and clawbacks are unexpected.
Because Sizmek buy through so many platforms, publishers running Header Bidding and/or Exchange Bidding are likely to be affected in some way. We have already seen deductions made by Rubicon and Pubmatic and expect others to follow. We’re working hard on our publishers behalf to minimise impact and ensure fairness and transparency. Because we encourage a diverse stack we expect the overall impact to be small, but do expect to have to pass some level of deductions on to publishers as per our standard terms. These will be clearly reported in publisher dashboards.
