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Join Our Research Team at DMA 2014
Aug 09, 2001
How To

Eight Ways to Avoid Getting Burned Financially by Online Ad Brokers

SUMMARY: Although good online ad brokers have helped Web sites sell hundreds of millions in advertising, countless sites are carrying heavy loads of bad debt from deals with brokers who are either inept at managing accounting or outright dishonest. Click on the link below to learn what causes brokers to go bad, and the eight tactics you can use to protect yourself from them.
First things first -- online ad brokers have done publishers a great service, and many sites wouldn't be alive today without them. That said, countless sites are carrying heavy loads of bad debt from deals with brokers who are either inept at managing accounting or outright dishonest.

Problems are caused by: - Brokers being paid on a CPA basis by the advertiser, who then buy space on a CPM basis and hope they'll make enough in CPA to cover it. Many of the infamous X10 pop-ups have been sold this way, and broker non-payment is apparently common.

- Brokers who take advantage of sites that are close to going under, by placing lots of ads on them and hoping they'll flounder before bills are due.

- Brokers taking advantage of sites that are so eager to show some A/R that they'll grab deals without investigating first.

- Brokers who don't thoroughly research advertisers' ability to pay, or demand payment up front from anyone remotely shaky.

Pesach Lattin, President of Advertising Services for Spyretech published the following list of "8 Rules" for media sellers working with brokers. We thought it was so great, that we asked him for permission to reprint for you:

1) GET CLIENT CREDIT INFO. If you accept terms, always get the actual client's credit information. Many brokers claim to be "representing a client," as if they are media buyers. This is one of the main ways to help assure yourself that you are getting paid. If they cannot provide a credit check from the client, then they are pulling something that you don't want to be a part of. If this is a real deal, they will be able to provide this information.

2) ALWAYS FIND OUT WHO THE CLIENT IS. NEVER do business with brokers who ask about ad buys, but when you ask the client they say "I don't know." Brokers, if you are doing this - STOP IT. This is a method some brokers use in order to try to get prices on your site so they can then sell them in the market at lower costs than you want to publicize.

3) ASK BASIC BUSINESS QUESTIONS. Ask questions about the broker, where they live, where they used to work, etc. If they haven't worked in another "real" advertising company before, then walk away. In general people who don't have experience in this industry are site publishers who are trying to make a little extra money on the side.

4) GET REFERENCES (EVEN IF THE ORDER IS PREPAID) People never understand this - but it is simple and the best way to do business. First of all it assures you not only that they pay, but that they will not try to cheat you some other way (ie, changing creative midstream, putting double pops on your pop-ups, and so on). You also don't want your company to be associated with a broker who screws the client, and then comes back to you to get their money back.

5) NEVER USE A BROKER'S COUNTERS. If a broker comes to you with a deal, they pay you on your figures, no exceptions. This is a hard thing to say, but I think is important. You don't need to be caught in the "agency and client says this, brokers says that and you have no idea what the hell is going on" situation. This is completely impossible to deal with, because you are going through often 3 sources before it gets back to you, and when push comes to shove, you may never get paid.

6) DON'T PLAY THE MAKEGOOD GAME. If you run the advertisement, and the "client" isn't happy, don't run make goods. This is a technique that brokers use to get more impressions and get the client happier. They will bullshit with you about non-even delivery, poor conversions, etc. If they aren't happy, they don't have to book again - and they won't. So don't waste your time and money

7) CHEAP JUNK DOESN'T WORK. Generally, if someone brings you something so way below market price, it is never going to work and you'll get canceled. Almost all brokered deals are canceled. It's simple - advertisers pay a certain price to get results and go by that metrics. When a broker turns around and books an advertisement at half price, the site is usually half as effective and the quality is usually half. Thus, the results are often half what the advertiser expected.

8) KNOW THE ADVERTISERS TERMS & CONDITIONS. Brokers are notorious for blatantly ignoring the T&C and not telling sites about them until it's too late. When the advertiser calls up screaming to the broker asking why their Sesame Street ad campaign is poking through some girl's breasts on a porno site you won't get paid.
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