Payment duration for WFA's clients escalates to 60 days on average.
Marketing services agencies are grappling with extended payment terms from clients, according to a report by the World Federation of Advertisers.
The Global Agency Remuneration Trends Update report, based on an online survey of over 200 respondents in marketing procurement roles from 84 multinational clients, highlights the issue of delayed payments in the advertising industry.
The average payment terms now stand at 60 days, with a third of agencies having extended their terms in the past 18 months to secure contracts. Furthermore, a quarter of businesses are operating on terms of 90 days or more.
The report outlines the various challenges faced by marketing services agencies in receiving timely payment for their work. It is crucial to note that these issues might impact the sector as it deals with media inflation, declining profit margins, and the integration of new technologies.
Media price inflation is projected to increase significantly in 2025 and 2026 across multiple major markets, potentially affecting the budget management of agencies and their payment terms. Furthermore, agencies have been experiencing a decline in profit margins, with the need for recognition of their strategic, creative, and technological services beyond media placements.
Moreover, the advertising sector faces challenges such as digitalization, fragmentation, and the adoption of new technologies like AI, which demand substantial investment and complexity. Despite these difficulties, gaining timely payment remains a pressing concern for marketing services agencies.
Finance and business sectors are demonstrably impacted by the trends observed in the advertising industry, particularly the challenges faced by marketing services agencies in securing timely payments. For instance, the prolonged payment terms could potentially exacerbate issues like media inflation, declining profit margins, and the need for recognition of strategic, creative, and technological services, all of which are crucial aspects of the business.
