The ad tech industry was shaken by the news of MediaMath’s impending bankruptcy, which unfolded at the end of last week. In response, PubMatic quickly suspended bids from the struggling ad tech vendor, causing concern among publishers who rely on PubMatic’s services. PubMatic assured its customers in an email that it would work with MediaMath over the next month to determine the amount owed, but the reality is that the payment process is likely to take much longer.

Ad tech companies like PubMatic find themselves at the bottom of the payment queue, trailing behind secured lenders and primary creditors such as Goldman Sachs. Even after other debts are cleared, companies like PubMatic should not expect to receive their fair share any time soon. MediaMath owes a substantial $73 million to its top 30 creditors, including PubMatic, Magnite, Sonobi, Microsoft’s Xandr, and Adswizz.

Whether these companies will recover the full amount owed to them depends on the ability of MediaMath’s overseers to navigate debt restructuring and salvage what remains of the business. However, this outcome remains uncertain.

Estimating its assets to be worth between $100 million and $500 million, MediaMath’s filing revealed that its customer database could still be valuable. However, as ad campaigns swiftly migrated to competitors like Google’s DV 360, Adform, and The Trade Desk following the bankruptcy announcement, the value of these assets diminishes rapidly.

Alternative ad tech vendors have seized the opportunity created by MediaMath’s closure. Ad360 and Adform, for example, quickly onboarded advertisers who were previously associated with MediaMath. The transition away from MediaMath is gaining momentum, making it increasingly challenging for the company to regain its footing.

MediaMath had the option to continue operating under Chapter 11 bankruptcy protection while restructuring its debts. However, the departure of clients and potential platform shutdowns may leave little to operate on. Unpaid bills, delayed payments, contractual chaos, and shattered trust now characterize the aftermath of MediaMath’s collapse.

Some ad tech companies had the foresight to limit their exposure to MediaMath months ago. Recognizing the economic challenges faced by the industry, they took precautions to protect themselves and mitigate potential losses. However, for those directly involved, sorting through payment flows and managing the financial aftermath will be a messy process.

This episode underscores the harsh reality of the ad tech market, where companies must continually adapt, differentiate themselves, and secure sufficient resources to survive. MediaMath’s inability to meet revenue and liquidity commitments to its private equity backers ultimately led to its downfall. Despite the management team’s efforts to turn the business around and find new owners, the enormous debt burden made it difficult to escape the situation.

MediaMath’s bankruptcy serves as a stark reminder of the importance of cash flow management and credit monitoring in the ad tech industry, especially in the face of persistent inflation and the end of easily accessible funds. Ad tech businesses must showcase profitability, effectively manage risks, and embrace revenue diversification to ensure their continued success as they shift from relying on equity to debt financing.