The news of MediaMath's bankruptcy shocked the digital advertising community... and left publishers to pick up the pieces. It serves as a wake-up call for publishers who may have underestimated the potential risks associated with their reliance on third-party SSPs. Publishers often engage with multiple SSPs to diversify their revenue streams and increase their chances of reaching a broader pool of advertisers. However, this strategy also exposes them to heightened risks, especially when working with smaller or less established SSPs.
When an SSP suddenly goes bankrupt or shuts down, publishers face significant financial losses, and the impacts can extend beyond the immediate financial implications. Rebuilding relationships with advertisers, establishing new SSP partnerships, and migrating ad campaigns to alternative platforms can be time-consuming and may lead to a temporary decline in revenue generation.
The Call for Increased Due Diligence
MediaMath's bankruptcy highlights the importance of publishers conducting thorough due diligence before entering into partnerships with SSPs. While programmatic advertising technology offers numerous advantages, publishers must be cautious about placing their trust in companies without a proven track record of financial stability and reliability.
Publishers should consider the following steps to mitigate risks:
Assessing Financial Health: Publishers should evaluate an SSP's financial health, including its revenue stability, profitability, and overall financial standing. Analyzing the company's financial reports, growth trends, and investment backing can provide valuable insights.
Client References and Case Studies: Requesting client references and studying case studies can offer an understanding of how the SSP has performed in real-world scenarios.
Contractual Safeguards: Publishers should incorporate specific contractual provisions that protect them in case of an SSP's bankruptcy or sudden shutdown, including clear payment terms and exit clauses.
MediaMath's bankruptcy serves as a cautionary tale for publishers in the ever-evolving landscape of programmatic advertising. The fallout from MediaMath's financial woes emphasizes the need for publishers to exercise increased due diligence when selecting and working with SSPs. By mitigating risks through careful evaluation and contractual safeguards, publishers can safeguard their businesses and navigate the uncertainties of the digital advertising industry more effectively.
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