At the turn of the decade, newspapers remained a top source of news for Americans, Blockbuster was still keeping its doors open and Twitter hadn’t even been invented yet. The iPhone was years away, online video streaming remained a novel concept and the idea of skipping the commercials had only reached the hands of TiVo’s newest customers.
The media landscape in the last 10 years has changed quickly and dramatically, but it’s not only consumers driving and adjusting to this paradigm shift.
In the back office, financial management strategies are shifting for industry players as subscription services and advertising strategies evolve to keep up with the pace of change. According to FastPay President and COO Secil Baysal, any of these media industry shifts have opened up opportunities, particularly for advertisers and publishers. But the cash flow management strategies of yesteryear won’t cut it in today’s fast-paced digital landscape.
“In the past ten years, the media landscape has seen explosive growth and sophistication in the form of mobile, digital, video and OTT [over-the-top], with more advertisers trending away from traditional media like TV and print,” Baysal recently told PYMNTS for its latest Class of 2009: Innovator’s Club discussion. “With the availability of more media platforms for advertisers, the industry has seen greater ad spending year-over-year – and also a greater divide between media and finance.”
In response to this decade of change, innovators are stepping in to bridge that divide.
Perhaps the most poignant example of this is the rise of AdTech, with technology and communications giants like Google and Facebook quickly taking the lead in the digital advertising space. A 2017 report from Mary Meeker’s Internet Trends found a whopping 75 percent of new online advertising spend comes from either Google or Facebook.
Their market monetization has made it difficult, however, for industry newcomers to step in.
“For the media vertical in particular, they haven’t been able to keep up with the innovations of AdTech and digital,” Baysal said.
Cash Flow Bottlenecks
The gap between media and finance has resulted in lag time between consumer-facing technologies and services, and the back office financial management of the companies that offer them. While technology and innovation have quickly introduced new business models and platforms for users to consume media, cash flow management strategies haven’t digitized nearly as quickly, resulting in major pain points for finance teams struggling to cope with these new business models and revenue-generating strategies.
According to Baysal, the payments side of finances is particularly “lagging behind.”
“Media companies still make roughly a third of payments by check,” he said, “wasting valuable time and money on slow and error-prone payment processes.”
The industry dominance of large advertisers has also created an ecosystem of delayed and late payments, with some of the largest players “taking up to 150 days to pay, leaving suppliers frustrated with little resource,” he said.
Such was the point of friction FastPay targeted with the launch of the FastPay Network, which addresses inefficiencies on both the advertising agency and supplier side of a transaction.
The Value of a Click
Key to the FastPay Network is its ability to aggregate and facilitate the flow of data between parties. While data is an important part of managing finance and payments, the overhaul of the media sector in the last 10 years has also made data a tricky resource to monetize.
That’s because the data linked to the performance of an advertising campaign, for example, has also seen major changes in recent years.
“In the digital world, you’re talking about millions of views and clicks — a lot of data,” Baysal told PYMNTS in a 2016 interview. Assessing the quality of data — for example understanding whether a click is real or fraudulent, whether viewers watched an advertising campaign or simply clicked “Skip Ad,” and whether consumers actually spend time on a website they’ve visited — does not have a straightforward process. “The parties need quite a bit of time to work out those details to agree on the amount to be paid,” Baysal noted at the time.
Today, data continues to be a source of friction for media and advertising B2B payments, with the time it takes for negotiations to settle on the value of a click contributing to payment delays.
FastPay has witnessed firsthand the consequences of late payments and the frustrations between agencies and suppliers.
Disruption of the media industry over the last 10 years has undoubtedly complicated the financial strategies of industry players. But it’s also opened up opportunities for FinTech innovators, which, as Baysal put it, are influenced by this newfound “convergence of capital, payments and data.”
Looking ahead, that convergence will continue to place pressure on media players’ financials, as Baysal highlighted the broader evolution of B2B payments as a major source of potential improvement for the media sector’s supplier payments practices.
“Today, B2C payments are so much further ahead than B2B when it comes to digitization,” he said. “The future of B2B payments will continue to evolve and transform as technology, data and automation help bridge the gap and accelerate efficiency.”