The Real Danger Of 120-Day Payment Terms: Rising Interest Rates

Writing in Forbes, Avi Dan points out the real dangers to increasingly common 120-day payment terms: interest rates. Currently, short-term credit rates are near zero, minimizing the effect that longer terms have on agencies. But when markets turn and interest rates shoot back up to 5% or 6%, 120-day payment terms could be a death knell for some agencies. Agencies will need to borrow at higher interest rates just to stay afloat while waiting to be paid. Of this impending doom, Dan writes: "If the ad industry is not able to thwart this move toward extended payment terms, this could ultimately lead to the end of the agency business model, as we know it. If agencies cannot sustain themselves financially, marketers may have to resort to a new arrangement in which Madison Avenue’s role as an independent entity could give way to a system akin to in-house agency relationship, and where agency vendors are paid directly by the client."

Social media agency Movement Strategy has announced the addition of creative strategist, Stephen Para, as executive vice president and chief growth officer. An early proponent of digital marketing strategies, Para has helped build digital departments within agencies such as Catalyst/IMG and Tom, and Dick & Harry. He also developed a boutique design agency, The Conspiracy Project, and most recently, founded social media agency Kodiak/Samurai, contributing to his reputation as a brand communications expert. Of the hire, Movement Strategy Co-Founder Jason Mitchell said: “Over the past five years we have grown from a start-up to a highly respected agency. Bringing on Stephen marks the next step in our evolution as we focus on becoming a global social media agency. Stephen’s knowledge, creativity and relationships are helping us accomplish that.”

Advertising Age has a glowing piece on what it's touting as the new ad mecca: Austin, TX. Home to Omnicom's GSD&M, Dell, Whole Foods and SXSW, the town is indeed a happening place. But don't try to drive there. The place needs no less than three more Interstates to handle the growth. Sadly, that isn't coming anytime soon. What is coming is Ad Age's Small Agency Conference. And we have no problem mentioning that here at MediaPost. We've all got our conference series to keep the publishing side of things afloat. There's no secret there. But does one biggish ad agency and one big brand really make Austin a new ad mecca? Nothing is really going to unseat New York and San Francisco as Kings of Advertising. Think about it. What would Austin really have if it didn't have SXSW, which of course is the new love child of marketers and agencies?

Remember David Lipman? He was the guy whose agency, Lipman, tanked allegedly because of financial problems at parent company Revolate resulting in lawsuits filed for non-payment of vendor invoices. Well, he's back on his feet and has been tapped as chief creative officer for Town Creative. Of the hire, Town Creative President Wendy Maitland said: “By bringing David Lipman on board as chief creative officer, Town is revolutionizing branding and marketing in the worldwide real estate industry.”

Recommend (2) Print RSS
>> MAD Archives