Build v borrow v buy: should advertisers actually own their adtech?
Wayne Blodwell, founder and chief exec of TPA Digital, thinks aloud about what could be if brands could take more hands-on control of their adtech stacks.
Is it possible for advertisers to own their adtech?
The ‘build versus borrow versus buy’ framework is long-established and is a very common framework used across industries, yet, I could probably count on one hand the number of advertisers who have built or bought something unique for advertising purposes (on the demand side). Why? It’s a $650bn global industry with expectations to reach $1tn by 2030, surely it’s an industry that is ripe to drive home competitive leverage?
I’m going to stop for a second though and caveat my bias here. Ever since I got into technology-based buying in 2010, I’ve hated the fact that I must use similar technologies/platforms as everyone else.
Let’s assume I’m an above-average digital advertising professional [Editor’s note. You are.], it’s so frustrating that I’m competing with others who are not. What gains can I really make on a platform by being above average versus the masses? They’re reasonably small (i.e. sub-20% more optimal than the baseline). Yes, platforms are getting a little more open in terms of custom integrations, but in general big tech platforms cater to the most common use cases and the least edge cases.
Maybe it’s because digital advertising has so much terrible practice already within it that large gains can be made from borrowing (i.e. licensing technologies) relative to the cost of building or buying. As markets mature, this should change as a single-digit percent gain can have more of a significant impact.
Interestingly, AWS launched a guide recently for a company to build a bidder and Snowflake launched a framework to build a multiparty data clean room – infrastructure companies are looking to remove barriers to building out owned platforms as you read this. We’re also seeing companies on the sell side (like ITVX, Ozone Project, Disney, etc. all building out owned tech platforms).
However, is an advertiser really going to build adtech?
The general takeouts from a heated Twitter chat I recently had were that brands shouldn’t build adtech, agencies shouldn’t build adtech, it’s expensive to build adtech (and hard to hire for some roles) and the primary reasons for building adtech are data integrations and monetization (i.e. from a sell-side perspective).
Suggested newsletters for you
I felt like this was doing advertisers a disservice.
In my career, there have been numerous use cases where existing adtech simply couldn’t fit the needs of an advertiser – from budget pacing by best creative message (think hotel chains with 100s of merchants), frequency capping by user across multi-brand advertisers based on propensity to convert (think big FMCG advertisers) and prioritization of media and/or data deals within over-arching campaign budgets (think PMP-heavy advertisers). The pre-existing hierarchies within tech platforms don’t allow for much flexibility, and although custom algorithms go some way to overcoming these, it’s mainly on the media buying side.
Of course, these use cases (which existing adtech can’t fulfill) are definitely few and far between and existing adtech doesn’t have to lose too much sleep over this emerging category. It’s a bit like when you see people who knock down a house and rebuild from scratch – there aren’t many of these people, but for whatever reason, they just can’t find something existing which fits their needs, but property developers still do exceptionally well.
Will it ever make financial sense?
When you map out a build, borrow or buy decision tree one of the earliest nodes is ‘can it make commercial sense?’. A lot of businesses will not pass go. They either don’t spend enough, can’t find a way to make enough or don’t understand how to calculate ROI. However, there are somewhere it could make financial sense.
I would love to see more advertisers be more open-minded with customized adtech. You don’t have to be constrained by best fit because it’s the easiest option, as now, more than ever before, you can conduct feasibility studies and work out whether there’s a better approach. In fact, there might even be a company that’s solved for your use cases (side note – always start with the use cases) that you can go out and buy.
Either way, there are exciting times in adtech for the open-minded advertiser.