It’s typical in advertising for agencies not to pay media owners for 60 to 120 business days. That’s incredibly difficult on minority-owned media companies, which are often small businesses that rely on steady and timely cash flow to stay afloat.
To ease that strain, Dentsu said Thursday it will limit payment terms to minority-owned media businesses to up to 30 days in the U.S.
The idea came together after Dentsu launched an economic empowerment group in May, which has been speaking with minority-owned businesses in the market to create more investment opportunities. One of the top concerns among media owners was extremely long payment terms, which keeps them from running operations and investing in their companies and talent for growth, said Mike Law, president at Amplifi USA, Dentsu’s investment arm.
“They have voiced that payment terms for a lot of these businesses, which tend to be on the smaller side, can really hurt them and create a challenge with cash flow,” he explained.
Dentsu was inspired to amend its payment terms by its client General Motors, which drew a similar line in the sand on payment windows for minority-owned suppliers. GM, recently called out by Black media mogul Byron Allen for lackluster investment in Black-owned media, has pledged to boost its spend with such companies by 5% to 8% by 2025.
The initiative, which will launch on October 1, is Dentsu-led, and the agency will work closely with clients to ensure their contractual terms with media owners align with the program.
“From the start of our journey to create equity, we said we will not mistake activity for progress and this initiative shows the conviction of our commitment to achieve meaningful progress,” said Jacki Kelley, CEO of Dentsu Americas, in a statement. “General Motors was our inspiration after it pioneered this concept earlier this spring. Updating our payment terms for minority-owned business partners will enable them to more easily access capital, create more content, offer more programming opportunities and propel the cycle of growth. Lifting the burden of having to carry production costs is a key enabler to create equity in media.”
Minority media owners can apply for eligibility to the program through an online form. Led by Mark Prince, SVP and head of economic empowerment at Dentsu, the economic empowerment team will vet applicants and ensure they are receiving timely payments.
Black media owners have voiced support for the program, including Byron Allen, founder and chairman of Allen Media Group; Raúl Alarcón, Jr., CEO and chairman of the Spanish Broadcasting System; Don Jackson, chairman and CEO of Central City Productions and founder and chairman of Steller TV Network; Chesley Maddox-Dorsey, CEO of A Wonder Media, which owns American Urban Networks Radio and Superadio; and James Winston, president of the National Association of Black Owned Broadcasters (NABOB).
"I commend Dentsu for agreeing to pay Black-owned media in net 30 days,” Allen said in a statement. “One of the greatest obstacles for African-American entrepreneurs is access to capital that is not predatory, and this level of support will help immensely. We are vigorously campaigning for other agencies and clients to do the same."
“The idea for us to underwrite receivables for 120-plus days for companies that are billions in size is just putting strain, and it limits our ability to grow,” Maddox-Dorsey told Campaign US in an interview. “We have to reinvest our capital in underwriting receivables instead of investing in our product. This frees up some capital so we can expand and grow.”
The program is especially critical for smaller media owners in smaller markets that often have trouble securing access to capital or credit, said NABOB’s Winston.
“This announcement by Dentsu is huge,” he said. “If we can get other agencies and advertisers on board, it can be a real game changer for minority businesses across the country.”
The program, shaped by Dentsu’s finance, media operations and global executive teams, is part of the holding company’s overall DE&I efforts. More broadly, Dentsu is working to give diverse media owners more access to advertisers as well as readjusting historical parameters for media buying and measurement to be more inclusive.
“[Parameters] need to be adjusted and reimagined to work better for these partners, whether that’s different measurement or brand frameworks,” Dentsu’s Prince said. “Part of it is training [teams to] look at different KPIs.”
NABOB’s Winston added that big agencies often measure success in media by reach and scale, and issues with Nielsen’s sample size of minority audiences often bar minority media owners access to investment. Maddox-Dorsey called current tools in the market to measure diverse audiences “inefficient and inaccurate.”
While both Winston and Maddox-Dorsey are happy to see that the industry is paying attention to the issue of equity in minority-owned media, they’re hoping to see more action than announcements moving forward.
“It speaks to intentionality,” Maddox-Dorsey said. “It’s not what you say, it's what you do. We hope that other companies that say they want to have DE&I initiatives will just do it.”