Ad Serving And Geo-political Uncertainties (Part 2)

Sanctions, especially economic sanctions, affect many companies directly and indirectly.

Sanctions, especially economic sanctions, affect many companies directly and indirectly. If your business serves sanctioned markets and/or sanctioned clients then you will feel the impact directly. However, there are additional issues that you should know and prepare for when countries use their influence to pressure the sanctioned country.

Changing regulations
Some businesses might be tempted to ignore sanctions and plow ahead, but that is something that may not sit well with those on the outside looking in. There are legal consequences and hefty fines for those businesses that fail to comply and follow new regulations. Even more challenging for businesses, these policies and regulations change based on developing events so they can be very unpredictable and sudden. The correct way to do business today might no longer work tomorrow. Compliance to these changing regulations is definitely expensive and time consuming. For advertising companies, many just choose to pause or stop ad serving in the sanctioned country to avoid known and potential troubles instead of trying to work around them.

Public backlash
Not all sanctions are the same. Some sanctions are very limited and only target specific industries, companies or even specific individuals. Some sanctions are basically recommendations and non-legal binding. In these cases, non-compliance does not lead to fines and legal trouble. However, it could still lead to a loss of business because of indirect causes. Some companies stop doing business in the sanctioned country not because of legal requirements but because it is not worth the trouble.

If a majority of your audience, clients or stakeholders boycott and do not want you to do business with the sanctioned country then that might be even stronger than any formal written regulation. When people look at the sanctioned country as the bad guy, it is guilty by association if your company continues to do business as usual. While some people may look at staying the course as brave, other people are not quite as likely to view it in a good light. For example, in the current Ukraine and Russian situation, one country is very much the aggressor and many companies stop doing business in Russia because of public backlash. Because it is a controversial decision to stay and go against the flow, it must not be considered lightly. Choosing the wrong side and going against public opinion could be business suicide so you must weight the costs and benefits carefully.

Problems with cross-country payments
Things can get especially tricky when trying to do business in an unsettled geo-political environment. There are a host of issues with payment infrastructure. People in affected countries might start pulling their money out of the banks. Making online transactions might become more difficult because there are only several global companies that dominate the payment processing industry. Volatile changes in monetary values and foreign exchange rates might have a significant negative impact on your business. In these situations, it is perhaps best to cease or slow down transactions with the affected nation or region until things become more stable.

For our advertising industry, advertisers might not be able to pay for their ad serving campaigns and publishers might not be able to receive payment for their ad sales if international cross-country transactions are blocked. Exchange rates might change drastically from one day to the next day, which makes pricing ad spaces risky. The chosen currency to settle typical ad orders might no longer be profitable. With so many uncertainties, the best and safest approach is often pausing or terminating all campaigns in your ad server until some clarity and stability is established.

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