- MediaMath’s sudden bankruptcy sent shockwaves through the advertising industry.
- The company owes more than $100 million to debtors who are rushing to get their payments.
- An adtech exec believes MediaMath’s bankruptcy is a sign of more trouble to come.
MediaMath’s filing for Chapter 11 bankruptcy protection sent shockwaves across the digital advertising industry.
Now, MediaMath’s creditors, who collectively owe over $100 million, are scrambling to consider their next moves. The biggest plaintiffs are so-called ad platforms, who are paid by MediaMath to buy ads on publisher websites. These 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 several other companies. Each of these companies must decide whether they can pay the publishers who rely on them to sell their ads.
Insiders reached out to these companies and they either did not respond to requests for comment or declined to send comment. MediaMath referred to a previous statement on its decision to file for bankruptcy, which said, among other things, “This decision does not reflect the performance of our team members, but rather is a result of an inability to access additional capital or complete a transaction.” at this point in time.”
It’s likely that the unsecured creditors to whom MediaMath owes money would only get pennies on the dollar once the bankruptcy proceedings were completed. Goldman Sachs, MediaMath’s largest secured creditor, is the first to receive its payments, ahead of others seeking to recover funds from the company.
In an email seen by Insider, PubMatic told its partners that it has suspended MediaMath’s ability to bid on publishers’ inventory and is trying to recover the money MediaMath owes. “We are working closely with MediaMath to understand their plans to pay the monies owed to publishers,” the email said. “Within the next 30 days we will confirm the amount of the outstanding balance due from MediaMath and explain how it will be managed.”
An adtech exec who spoke to Insider and asked to remain anonymous says he doesn’t expect to get any funds back from MediaMath.
“There is no scenario where that happens,” said this manager. “You don’t get any money. That’s how it works. That’s why they file for bankruptcy.”
Now it’s up to those SSPs to decide whether to pay the money back to the publishers they work with; This executive said her company would do this.
“Our top priority is to recognize our important partnerships with our publishers and make sure they are nurtured,” the chief executive said, adding that many adtech companies found themselves in this position when adtech companies Sizmek and Rocket Fuel went bankrupt in 2019.
“SSPs do this from a customer relationship retention perspective,” said Ana Milicevic, head of digital advertising consultancy Sparrow Advisers. “You don’t want your customers to have to bear the cost of a financial disaster when there is a way for you to absorb it.”
MediaMath’s closure isn’t as impactful as it would be if a company like The Trade Desk were to close, Milicevic said. It helps that MediaMath’s presence as an ad buyer has declined significantly in recent years, so publishers may not be as out there as they were during the company’s heyday, several people said.
“Over time, it’s become a smaller and smaller part of the ecosystem,” said Paul Bannister, chief strategy officer at Raptive, a company that manages ads for small and medium-sized publishers. “It was talked about a lot five years ago.”
Bannister said Raptive is in the process of figuring out how much money MediaMath owes him.
“It’s not zero dollars,” he said. “It’s relatively small and sucks, but it’s not catastrophic by any means.”
However, the amount publishers tie up with MediaMath varies. Scott Messer, who runs media consultancy Messer Media, said he has one large publishing client that generated $10 using MediaMath in the last six months and another that generated $80,000 last quarter.
Even as publishers and SSPs struggle over the Fourth of July holiday to estimate how much money they owe MediaMath, there’s a greater concern that the company’s bankruptcy is a portent of things to come, especially as interest rates rise. The digital advertising industry has come under increasing scrutiny as recent reports question whether advertisers like YouTube are placing digital ads in places where they are viewable.
“I get the impression that given the pressure for a quick buck – crappy video out-stream ads labeled as in-stream ads and websites specifically designed for advertising – thanks to the YouTube scandal and the ANA There’s a lot more to come as we report,” said Brian O’Kelley, whose adtech company AppNexus, once a close competitor to MediaMath, was sold to AT&T in 2018 for $1.6 billion.