The only constant in the digital advertising industry is change.
Innovation that drives change means new companies continually entering the ecosystem, while others unable to keep up with the times invariably fade away, and others still seek spend consolidation as the most efficient path to the best inventory in this market.
With the advent of technologies and methods of bidding, supply optimization and auction efficiency, our industry shifts dynamically, with the winners and losers to show for it.
Unfortunately, this particular post is the story of one such casualty of this shifting landscape.
It brings us no joy to report that a company in our industry has failed to pay monies owed for ad impressions they’ve bought on Mediavine publishers’ websites.
For legal reasons, Mediavine won’t reveal the name of this company, but our relationship with said company was by and large very positive, until it wasn’t.
Back in August 2022, a payment from this company didn’t show up on time. Meanwhile, the company continued to buy Mediavine publishers’ ad inventory until we made the decision to pause their transactions pending a resolution.
Despite good faith efforts in the ensuing months, we’ve made little headway in collecting the amount owed, which is just shy of half a million dollars. We are considering all of our options for collection, but even with that said, there’s no guarantee that any amount will be paid.
We’ve seen this before, and the most unfortunate part is sadly familiar: Even as ad exchanges like this one begin to falter, they continue buying ad impressions on publisher sites, even if they don’t have the money to eventually pay publishers for them.
For most publishers, this typically means that owed money is not paid, or “clawed back” from your earnings by ad management providers. These business practices are unsustainable, especially in turbulent financial times like we are experiencing today.
What does this mean for Mediavine publishers?
Mediavine has always taken the stance that the relationships we maintain with our ad exchange partners are just that: ours.
The failure of this company will be treated no differently than when we weathered financial failures on behalf of Defy Media, Sizmek, IgnitionOne and Pocketmath. We never took a penny back from our publishers when those companies failed to pay Mediavine. This will be no different.
We’re able to keep this promise to you because we’ve planned for it all along.
Mediavine has rolled out many innovations over the years, but the one that gives us the security to remain the only privately-owned, independent internet giant is BidShield.
This proprietary technology is our proactive approach to these types of unexpected events.
We can’t control the financial situation of the partners that we choose to do business with, but we can calculate and apply a risk factor to those companies and their bids to protect our publishers.
How does it work?
In two ways. First, BidShield allows us to assign a risk factor to every ad exchange’s bid.
As a result, those with a lower risk factors are given a slight advantage in the bid stream, meaning ad dollars are shifted to those companies making it more difficult for “riskier” companies to win.
This reduces their overall contribution to the auction, and thus, our overall level of risk.
Second, the risk factors allow us to create a pool, akin to an insurance policy, to be used in the event of an ad exchange leaving the industry with unpaid bills.
An example using extremely round numbers to make the math easy:
Let’s say Risky Bidder bids $1.00 on an ad unit. Mediavine adjusts that bid to $0.95 due to its risk, as discussed earlier. That missing $0.05 goes into the BidShield pool. The real numbers are much, much smaller — think a fraction of a penny for every thousand impressions.
Please note that BidShield is only assessed if the bidder receives a risk score. Partners Mediavine considers to be “Safe Bidders” do not receive a risk assessment and do not contribute to the BidShield pool.
Once contractual payment periods have passed and all of Mediavine’s various payments have been collected (the overwhelming majority of the time), that $0.05 is typically passed back to Mediavine publishers via a credit that you see each month in your dashboard.
You probably never think about this or notice it, which is a good thing. Ideally this would never even come up. Unfortunately, we built BidShield because it does, and the issue we’re discussing today is precisely for what it was intended for.
As stated earlier, this company has left Mediavine on the hook for nearly $500,000. Absorbing this cost is simply not sustainable, and fortunately with BidShield, we will be able to cover this expense, continuing our commitment to paying our publishers their full earnings on time.
In the next few months, you will likely see a reduction in your BidShield credits.
After this has been completed, credits will resume as usual. And, in the event that we are paid back the money that is owed, that money will be passed back to the publisher where it belongs.
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