- MediaMath’s sudden bankruptcy sent shock waves through the ad industry.
- The company owes more than $100M to debtors, who are rushing to get paid.
- One adtech executive believes MediaMath’s bankruptcy is a sign of more pain to come.
MediaMath’s filing for Chapter 11 bankruptcy protection has sent shock waves throughout the digital-ad industry.
Now MediaMath’s creditors, who are cumulatively owed more than $100 million, are scrambling to figure out their next moves. Its biggest claimants are so-called supply-side platforms, which get paid by MediaMath to buy ads on publisher websites. Those SSPs then pay the publishers.
MediaMath owes $12.6 million to Magnite, $10.5 million to PubMatic, $5 million to Sonobi, and $4 million to Microsoft’s Xandr, among multiple other companies. Each of those companies must decide whether they can pay the publishers that rely on them to sell their ads.
Insider reached out to those companies, and they either didn’t respond to requests for comment or declined to send a statement. MediaMath pointed to a previous statement it had issued around its decision to file for bankruptcy that said in part, “This decision is not a reflection of our team members’ performance, but rather a consequence of an inability to access additional capital or execute a transaction at this time.”
It’s likely that the unsecured creditors owed money by MediaMath would receive just pennies on the dollar once the bankruptcy proceedings are resolved. Goldman Sachs, MediaMath’s largest secured creditor, is first in line to be paid, ahead of others looking to recoup funds from the company.
In an email seen by Insider, PubMatic told partners it has suspended MediaMath’s ability to bid on publishers’ inventory and that it is trying to recover the money owed by MediaMath. “We are working closely with MediaMath to understand their plans for paying the monies owed to publishers,” the email said. “Over the next 30 days we will confirm any amount of outstanding receivables owed to you by MediaMath and how it will be managed.”
One adtech executive who spoke with Insider and asked to remain anonymous doesn’t expect to recover any funds from MediaMath.
“There is no scenario where that happens,” this executive said. “You don’t get paid. That’s how this works. That’s why they file for bankruptcy.”
Now it’s up to these SSPs to decide whether they will pay back the money to the publishers they work with; this executive said their company would.
“Our No. 1 priority is honoring our important partnerships with our publishers and making sure that they’re taken care of,” the executive said, adding that many adtech companies were put in this position when the adtech companies Sizmek and Rocket Fuel went bankrupt in 2019.
“SSPs are doing this from a client relationship preservation perspective,” said Ana Milicevic, a principal at the digital-ad consultancy Sparrow Advisers. “You don’t want to have your clients left bearing financial disaster costs if there’s a way for you to absorb it.”
MediaMath shutting down isn’t as impactful as it would be if a company like The Trade Desk were to shutter, Milicevic said. It helps that MediaMath’s presence as an ad buyer had dwindled considerably in recent years, so publishers aren’t potentially out as much as they would have been when the company was at its prime, multiple people said.
“It’s become a smaller and smaller part of the ecosystem over time,” said Paul Bannister, the chief strategy officer at Raptive, a firm that manages ads for small and midsize publishers. “Five years ago, people talked about it a lot.”
Bannister said Raptive was in the process of seeing how much money MediaMath owed it.
“It’s not zero dollars,” he said. “It’s relatively small and it sucks, but it’s not catastrophic by any means.”
But the amount publishers have tied up with MediaMath varies. Scott Messer, who runs the media consultancy Messer Media, said he’s got one big publisher client that generated $10 from MediaMath over the past six months and another that did $80,000 over the last quarter.
Even as publishers and SSPs scramble over the Fourth of July holiday to evaluate how much money they’re owed by MediaMath, there’s a greater concern that the company’s bankruptcy is a sign of things to come, especially as interest rates rise. There’s increased scrutiny on the digital-ad industry, thanks to recent reports calling into question whether advertising companies like YouTube are placing digital ads in places where they can be seen.
“My sense is that with the pressure on easy money — crappy video outstream ads labeled as in-stream ads and made-for-advertising websites, thanks to the YouTube scandal and ANA report, there are a lot more of these to come,” said Brian O’Kelley, whose adtech company AppNexus, once a close competitor of MediaMath’s, was sold to AT&T for $1.6 billion in 2018.
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