- March 26, 2018
- Posted by: Hanna Kassis
- Category: Company News
We believe the sign of a good business is one that responds to its customers and demand in the marketplace. While supply side economics once had it’s place in our economy (and arguably still does with some tech stuff), gone are the days of “build it and they will come”. So in response to the marketplace, we’ve raised our advance rate from 80% to 90%. This means more money faster for our clients.
The way OAREX works is that we simplify payment terms for pubs by paying ad revenue from all partners on the same day. Instead of getting paid on net 30, net 45, net 60, net 75 and net 90 from multiple ad networks, we will pay you 90% of it on net 1, weekly or monthly. We then collect payment from your ad partners. We used to cap the advance rate at 80% of the invoice value, and have since raised it to 90% for two main reasons.
First is that with an 90% advance rate, pubs can reinvest more proceeds into traffic and user acquisition campaigns. This is the obvious reason for bumping the advance rate to 90%, and what we heard most from the market. With a 90% advance rate, pubs can accelerate growth way faster than if they are receiving 80%. Every dollar matters.
Secondly, and perhaps not so obvious, is that with a 90% advance rate, pubs need a smaller margin to operate with net positive cash flow. At an 80% advance rate, pubs have to operate at 25%+ margins to make up for the 20% they are not receiving from OAREX. However with a 90% advance rate, pubs only have to operate at 12% margins to have net positive cash flow. At a 12% margin, pubs can deploy more of their capital and make up for the 10% they don’t receive from OAREX.
To illustrate, here is an example at an 80% advance, where clients can see profit growth of 420%. This assumes the following:
- $10,000 in starting capital
- Margins of 20% (conservative)
- Average wait days to get paid is 60
- OAREX rev share of 2.50% per month
- Time horizon is 6 months
- We hold back 20% of cash as invoices paid OAREX
Compare with an example at a 90% advance. With the same assumptions, you can see the growth differential when we give the clients the extra 10%. Clients can grow 2,042% with a 90% advance from OAREX, versus 420% with an 80% advance.
We’re glad we have the flexibility to provide the market with what it wants. We will continue to be flexible with clients and dynamic in our product offering, to assure the digital media ecosystem with the best product on the market. Inquire today to see if you qualify for 90%.