What you need to know

• MediaMath’s sudden jolt into bankruptcy is causing significant media buying disruption for major brands such as Dan Murphy’s, Flybuys and REA Group. Unwinding out of a DSP is a complicated business for big brands and publishers that often invest heavily in integrations.
• Mi3 has learned that investment firm Searchlight’s decision to no longer back the business’s debt several weeks ago signalled the death knell after three potential buyers for the DSP evaporated.
• The top 30 creditors are owed approximately US$73m. Magnite, Pubmatic and Xandr are among the biggest unsecured creditors, and all moved quickly to pull the plug on their connections to MediaMath.
• The platform was still available Tuesday (to the surprise on some sacked staff who said it was supposed to shut on Saturday) however its performance degraded throughout the day, something its customers believe was caused by SSPs cutting technical connections.
• Ironically the Australian MediaMath business was growing strongly, with over $50m going through the platform annually, and it was profitable according to insiders. In NZ MediaMath signed a deal with a global charity just hours before the bankruptcy filing.
• Agencies believe an aversion to Google is likely to see clients shift to The Trade Desk – seen as a safe bet after the disruption of the last week.

Number’s up

Australian customers of failed demand side platform MediaMath including REA, Dan Murphy’s and Flybuys, and APAC customers like IBM are set for ongoing disruptions to their media buying in the coming few days and weeks as the DSP grinds to a halt.

Meanwhile supply side platforms like Magnite and Pubmatic – the two largest unsecured MediaMath creditors according to the bankruptcy filing have already written to their customers stating they are cutting the cord to the DSP, Mi3 has confirmed. Xandr is believed to have done the same.

When the company filed for Chapter 11 bankruptcy on June 30 (Saturday July 1 in Australia) all three SSPs were left carrying significant liabilities. Magnite (US$12.6m) Pubmatic (US$10.5m) and Xandr (US$4m) are three of the four biggest creditors. Sonobi is the fourth, and is in the hole to the tune of $5m.

Industry insiders say The Trade Desk is well placed to benefit from the fallout given MediaMath’s bluechip client base and their aversion to Google.

Meanwhile customers, some of whom have invested heavily both in the relationship and in technical integrations,  are in the dark, and increasingly angry at the lack of communications.

Mi3 has learned that MediaMath failed after Searchlight Capital, the private investment firm backing its debt (which is believed to be north of US$150m) said it would no longer support the business, and three potential buyers evaporated.

Catastrophe theory

After that, things moved so quickly according to insiders the directors were left with no choice but to shutter the business. Mi3 was told MediaMath didn’t have time to corral the internal resources needed to administer an elegant shut the business down.

Insiders say the notices went out to senior executives around the world late on Friday evening.

But it is a mark of how rapidly the situation deteriorated and how shambolic the process was, say former employees, that access to the platform was supposed to have been cut off on 1 July (US time), however customers and partners still had access on Monday morning when they got to work.

Some former APAC staff also claimed they could still access some internal MediaMath messaging systems even after they had been let go.

Contrast the speed at which the MediaMath situation unravelled with what happened when Yahoo closed both its SSP and DSP on New Zealand. That process was telegraphed more than a month in advance giving customers the opportunity to manage their transition.

It is believed that 300 staff globally were fired with just a handful of people still on hand to support what’s left of the administrative requirements supporting the bankruptcy filing.

The problem for ANZ users was compounded by the fact that the pin was pulled on Saturday Australian time, as the US was heading into what was in practical terms a four day Fourth of July long weekend.

Customers we spoke with Tuesday said they were operating in the dark. Some said they were still able to access the platform but said it was degrading throughout the day, which they attributed to Supply Side Platforms breaking the technical connections.

Australia starred

Ironically, the Australian business was growing strongly, was profitable, with $50m going through the platform, and with a set of bluechip brands, publishers and partners such as Dan Murphy’s, REA and Flybuys.

In fact it was still signing deals with customers as late as last Friday, just hours before the hammer dropped, when it closed on a piece of business in NZ with a large global charity.

MediaMath’s search for a buyer has been known for some time – Unruly was said to have crunched the numbers in the last 18 months but it was not believed to be one of the three most recent and ultimately reluctant suitors. However, the collapse appears to have caught many people off guard, not least its own staff, especially after members of its executive leadership team jetted off to Cannes Lion 2023 (IAB even sent out a tweet thanking them for their sponsorship on 3 July, three days after the bankruptcy filing.)

In a LinkedIn post, Australian country manager Shane Hanby wrote: “As most of you would have heard MediaMath shut down global operations today after failed last minute takeover / debt consolidation efforts fell short.”

“This came as a complete shock to the wider MediaMath business, none more so than my Australian colleagues and I. I want to take the opportunity to thank the Australian team for their professionalism, dedication, grit, and phenomenal business smarts.”

He said their efforts allowed the company locally to grow and compete against the industry heavyweights despite challenging economic uncertainties.

However in a nod to the longer term concerns about the platform he also noted: “Big thanks also to our clients and partners that backed us when a lot of the industry had written us off.”

SSPs bail

SSPs were sent scrambling in the US on Saturday as MediaMath’s demise became apparent. Australian customers have confirmed they received emails from their SSPs confirming they had frozen out the DSP.

Pubmatic’s email to partners and customers, obtained by Mi3, noted: 

“We want to inform you that on June 30, 2023, it was reported that MediaMath, a media buyer of publisher inventory, will be filing for bankruptcy. We have suspended MediaMath’s ability to bid on any publisher inventory. We are working closely with MediaMath to understand their plans for paying monies owed to publishers. Over the next 30 days we will confirm any amount of outstanding receivables owed to you by MediaMath and how it will be managed.

“We are working hard to recover publisher media revenue from MediaMath. However, please be patient as this process requires court oversight and approval during the bankruptcy process, prior to any funds being made available.”

Asked about the impact on the local market, a spokesperson for Pubmatic provided a written statement:

“As has been reported, MediaMath has faced challenges in the past year. We have worked with MediaMath and other DSPs to help foster a strong, competitive programmatic marketplace and ultimately want them all to succeed.”

The spokesperson also said Pubmatic anticipated no material impact on the financial health of the company: “Pubmatic has a strong balance sheet and our corporate focus on efficiency and profitability has ensured that we are in a position to weather any potential financial impact.”

Magnite told Mi3 the company would not comment as the situation remained unclear, however, they confirmed clients had been contacted via email. The company declined to share the contents of that email.

Xandr, which is now owned by Microsoft and sits under its search and advertising business, likewise declined to comment.

Complexity, disruption

Customers and agencies say the process of shifting to a new DSP is not straightforward.

“Advertisers who had campaigns live using MediaMath exclusively will be experiencing significant disruption to their campaigns as they need to select and set up a new DSP and then there will be a couple of weeks of slower performance in the new campaign as the algorithm ‘learns’ and generates efficiencies,” according to Claire Fenner, CEO of Atomic 212.

While confirming that Atomic does not work with MediaMath, Fenner noted that, “In instances where an agency exclusively uses MediaMath it could be a lengthier process as they will need to enter into a commercial agreement with a new platform, unless they have a legacy agreement in place with another provider”.

Josh Slighting, head of product – media, REA Group said the collapse is “very disruptive – but not anymore or any less than anyone else using any other function. It just focuses us on the effort around this and not around other things that are on the roadmap like growing and building new products.

“It’s any external shock, anything that happens externally beyond your control, when you have done it for so long, is very, very disruptive.”

He said the suddenness of the change was also challenging.  “It’s very unclear as to why things happen, you’re left with a lot of questions and there’s no one to really ask, so you just have to find the answers. You’ve just got to work within the unknown.”

Local heroes

The local MediaMath team was well regarded, a point Slighting emphasised, saying it punched above its weight.

“They were exceptionally good relationships. They were responsive and proactive, and they were very attentive to what we needed to do.

“We have been going through cookie changes as we were trying to navigate privacy changes in the market, and with any kind of hygiene factors within their products they were right on to it.

“If you compare them to a Google or a Trade Desk, it is a very small team punching well above their weight competing with these very big businesses.”

Counting creditors

When it finally filed for bankruptcy protection, the company had liabilities of between US$100m and US$500m according to the filing, with at least 200 creditors according to some US media reports.

A review of the bankruptcy filing reveals that the top 30 creditors are owed approximately US$73m.

Trouble has been brewing for years, and the business was looking for a buyer in 2020. At the time, a sales deck which leaked to the media reported funds of US$592m flowing through the platform, of which the bulk – almost three quarters – was in the US. 

According Digiday, MediaMath had been trying to arrange a fire-sale since May with Viant (another DSP) or Verve Group, an ad tech business owned by Media Games Invest, for a purchase price of US$60m.

Founder and original CEO Joe Zawadski left the business in early 2022, after the value of his holding was diluted away to almost nothing.

It had all looked very different just a few years earlier, when the business was looking at a trade sale to Singapore Telecom at a valuation of around $700 million, according to Business Insider. It pegged the failure of the deal on Zawadski’s insistence on a unicorn scale valuation over US$1 billion. 

Now it’s possible that the main characteristic MediaMath will share with unicorns in future is that it won’t exist.