Financing Digital Media Receivables

Author Team Coral Capital

Financing Digital Media Receivables

The surge in online advertising spend over recent years has been accompanied by an equivalent surge in the need for financing for digital media buys.

The explosion in the number of players in the digital publishing and advertising space – from publishers, ad networks, ad agencies, right down to CPC arbitrageurs has created an ecosystem where many of the younger, newer companies find their growth inhibited by the lack of funding to finance digital media receivables.

Accounts receivable financing or factoring of media receivables is often an attractive alternative for such companies.

Why Media Funding is Needed

Many digital publishers and CPC arbitrage companies rely on the ability to drive traffic to their properties in order to then display and sell advertising on their sites. The ultimate payer for the ads being sold on their site is often a large media/tech company (like Google and Facebook), an ad exchange (like OpenX), demand side platforms (like Criteo and AppNexus), or ad agencies that are managing media buys on behalf of their clients.

Most of these payers remit payments for ads served with 30 to 60 day delays from the time that the ads were served. In the case of ad agencies, the payment terms may be even longer because the agency is usually waiting for a payment to be received from its own client before remitting the portion owed to the publisher.

Have you read how alternative financing can address the problem of unpaid invoices?

Meanwhile, the publisher is often required to pay for ads that generate inbound traffic immediately or within a few days of ads being served or clicks initiated. This arrangement leaves an inherent structural funding gap in media buying.

Financing Media Receivables to Bridge Funding Gap

At Coral Capital Solutions, we help digital media publishers bridge the media funding gap by financing receivables waiting to get paid by exchanges or demand side customers. The financing generally takes the form of factoring of digital media sales.

We provide funding against clicks generated or ads served, often on a daily basis, to cover the 30 to 90 delay till the time remittances relating to the ads are received. The funding can then be used to cover media buying or other operating expenses.

Advantages of Media Funding

This type of financing offers publishers a way to scale their media buying, their traffic, and their business without needing large amounts of equity or venture funding. It also provides a mechanism to finance a ballooning balance sheet of receivables in peak seasons.

For instance, many digital media publishers have spikes in ad sales and, correspondingly, in ad buys and traffic during the busy holiday shopping season in the fourth quarter. This amount of funding needing during this short period may be vastly higher than what the business needs for its operations during the rest of the year. Our financing helps publishers get past this hump by providing financing that varies in size based on need.

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