Pollen VC announces new financial tools to level the playing field among mobile ad networks With ad networks offering varying payment terms, they are not competing on a level playing field, and unit economics are being miscalculated by advertisers
San Francisco, US
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September 20, 2021 09:00 AM Eastern Daylight Time
Fintech lender Pollen VC, a leading provider of revolving credit facilities to app and game developers, today announced a new online calculator to compare CPMs (cost per thousand impressions of an advert) from different advertising networks on a level playing field based on their payment terms.
The payment terms of mobile ad networks differ vastly, with most networks offering terms between Net 15 and Net 60 days. In other words, depending on the network, app and game publishers receive payment between 15 and 60 days from the end of the month when the impression was served.
Publishers are rightly focused on achieving the highest CPMs for their ad inventory but are consistently overlooking the financial impact on their business caused by the lengthy and non-standard payment cycles. Specifically, the opportunity cost of not being able to reinvest proceeds from ad revenue into additional user acquisition. This can result in money being left on the table for publishers and missed revenues for advertising networks.
Martin Macmillan, CEO & Founder at Pollen VC commented: “Real time app bidding is a big step forward for the mobile app industry. The mobile ads market is evolving from one historically plagued by lack of transparency and manual operational overhead, to a new world order which moves towards a real-time bidding auction for ad impressions which squeezes out many of the inefficiencies out of the previous model.”
“But as the bidding model continues to evolve, savvy media buyers and ad monetization managers need to better understand their underlying financial dynamics, and how they can better optimize their growth opportunities. Many publishers are leaving money on the table by not taking the time to understand these underlying financial dynamics.”
Time value of money
A $10 CPM that pays out in 90 days is less valuable than a $10 CPM that pays out in 7 days. If a publisher has to wait an additional 83 days, they are missing out on the opportunity to reinvest that cash into customer/traffic acquisitions that could generate a positive ROI.
In order to compare ad CPMs on a level playing field, the actual days until payment needs to be taken into account. This is achieved by applying a discount factor based on days until funds will be received and a known cost of capital. The resulting number – the discounted CPM or dCPM - is the value to the company today, assuming it had to pay to borrow the money until the ad networks ultimately paid out.
Martin Macmillan added: “The dCPM calculator will allow publishers to compare ad networks on a level playing field and look beyond just the headline CPM, applying some financial discipline to look more rigorously at the true CPMs generated at a financial level.The most important factor to consider is the opportunity cost to the publishers. It may only be a few cents difference in headline CPM but could make a huge difference to the publisher who is kept waiting before reinvesting back into more user acquisition or traffic to their website.”
In the new world of real time bidding, publishers are focussed on achieving the highest CPMs but are often disconnected from their finance teams, they focus on the headline CPMs as opposed to considering when their “trade” will actually settle, thus not seeing the full picture. Understanding dCPM as a metric can help publishers make better informed choices about whose ads they prioritize when using dCPM as their primary metric.
Bridging the Gap
Financially savvy publishers often put in place revolving credit facilities which can effectively accelerate the payout terms of the advertising networks onto a weekly cycle, allowing them to increase their pace of customer acquisition without relying on external capital. This helps to effectively normalise the payment terms across networks and drastically reduce inertia caused by long payment delays, enabling faster reinvestment and capital efficient growth.
About Pollen VC
Pollen VC provides flexible credit facilities to app and game developers using a data-driven lending model which is designed from the ground up for the app economy. Based in San Francisco and London, we help developers all over the world to take control of their finances and grow their business in a capital efficient way. Our team includes structured credit, capital markets and performance marketing specialists with in-depth knowledge of the mobile app and gaming market and the growth challenges faced.
Pollen VC is backed by a group of leading private and institutional fintech investors, and has diverse sources of liquidity spanning private and institutional capital providers in Europe and North America.
Contact Details
www.pollen.vc
Bilal Mahmoood
+44 7714 007257
Company Website
