Whenever a business goes bust in advertisement tech, the term consecutive liability tends to get bandied about.
The death of MediaMath is no exception. It reveals how consecutive liability hasactually endedupbeing a needed element for lotsof business in these difficult times. However, it likewise highlights the intrinsic unfairness in the advertisement tech market, where the susceptible entities are left to bear the impact of undesirable results, while economically morepowerful gamers escape reasonably unscathed.
What makes consecutive liability so controversial? Let’s delve muchdeeper to discover the factors behind its questionable nature.
WTF is consecutive liability?
It’s the term utilized to explain why some business are not needed to pay those they owe cash if they sanctuary’t got payment for their item or service. Let’s thinkabout a situation of a line of dominos, where each domino represents a business in the supply chain. When one business in the line stopsworking to pay its financialobligations, it sets off a chain response, triggering the other business in the series to be excused from paying their commitments evenmore down the line.
This procedure lookslike a videogame of hot potato in the marketing market, where the liability is continually passed along the supply chain till it reaches the end. In marketing, thinkabout how numerous gamers might feel the effect. In the case of MediaMath, the business it owed cash to at the time of insolvency are relieved of their commitment to pay the other business they owe cash to.
That doesn’t noise great for publishers
It isn’t. It puts publishers in an undesirable position, to the point where numerous argue that it is straight-out unjust. The effects endedupbeing obvious when a company like MediaMath dealswith monetary problems. When MediaMath is notable to pay the business it owes cash to for advertisements it purchased, these business are then absolved of their responsibility to pay their lenders who assisted them sell those advertisements on behalf of publishers. This pattern continues down the line, resulting in advertisement tech suppliers not paying publishers for the advertisements showed on their websites or apps, for which they sanctuary’t been totally compensated.
“Sequential liability [in ad tech] developed out of a need however it hasactually endedupbeing a police out of sorts for lotsof gamers in the system,” stated Nick Carrabbia, evp at OAREX, an billing factoring business. “There are so lotsof c