Friday Commentary: Brands should consider customising their AdTech stack
Welcome to the Friday Commentary. In this series every Friday experts will shine a light on the digital industry. Where are we heading, what is going on and how should we approach this as decision makers? This Friday it’s the turn of Laurent Boninfante, he EMEA Senior Lead for Performance Marketing SAAS provider Acquisio.
Two months ago I spoke at the Reykjavik Internet Marketing Conference where James Harrower, Hilton International Search Marketing Manager, and I presented a Hilton case study. Through customisation of AdTech solutions and integration of their various partners, Hilton have assembled a bespoke PPC management suite that fits their exact needs.
Since then, I have had many conversations with various clients and industry peers and thought a lot about the place of custom solutions in AdTech. Are brands like Hilton, who customise their AdTech stack, rare isolated cases or could it be the beginning of a trend? Who should initiate customisation where it is required? Here are my conclusions.
The AdTech ecosystem is mind-bogglingly complex
Ad Technology (AdTech) is a loose term referring to all technology solutions and services enabling the buying, management, targeting or measurement of advertising. If you want to get a sense of the complexity of AdTech, look no further than the excellent Luma illustrations of the Marketing landscape such as the following one for Marketing Technology:
These days, a CMO of a big brand depends on many different AdTech solutions to deliver their Online Advertising program. Solutions would typically include an AdServer, a Web Analytic platform, a Tag Management solution, an SEO intelligence tool, a DSP, a Pay-per-Click management platform and a Social media management platform at the least. Additionally, a brand may also rely on a number of Business Intelligence tools and the use of a proprietary CRM solution, for example.
Each of these AdTech solutions are designed to serve a specific purpose initially but there is a large overlap in the feature set of those solutions. For example, most of these otherwise disparate tools offer conversion tracking. Duplication leads to feature wastage as most companies will want to use a single “authoritative” occurrence of each feature where there is an overlap. Yet, tool providers rarely offer “à la carte pricing,” inherently leading to an inflated cost.
An additional key challenge stems from the fact that each AdTech solution needs its own set of data to work, often relating to metrics specific to its own trade or having a different meaning or interpretation in its own context. Large data silos develop around specialties and may hinder the performance of the overall program as data sets end up disconnected.
In order to address this data disconnection, manual processes are often needed to collate data and analyse performance, for example across the different platforms. This has a significant impact on productivity and the ability to take immediate decisions.
Conclusion: Only through customisation and integration of the AdTech stack, can such challenges be overcome.
The standard SAAS model is imperfect
The majority of AdTech solutions are provided on a “Software As A Service” (SAAS) model. Wikipedia defines SAAS as “…a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted on the cloud by independent software vendors (ISVs) or application service providers (ASPs)”.
This model relies on high margins on a recurring revenue generated by delivering a single standard feature set to a large number of customers. This is a necessary model for those vendors to fund the high technology and R&D cost associated with the running of the business.
As a result, SAAS vendors’ aim is to retain customers for as long as possible to secure recurring revenues. This is typically achieved by providing a strong and varied feature set and customers may be locked in for example if their data is held in, making it difficult to move.
In addition, your typical SAAS vendor will be understandably reluctant to customise their offering for a single customer since this goes against the tried-and-tested high volume approach.
The current inflexible SAAS model for AdTech struggles with the challenges brought by the complex AdTech ecosystem reality that CMOs are facing.
The role of the agency
Ad agencies’ business models are still essentially based on a metered approach: on the actual managed media spend or on the time needed to manage it. It is rarely an agency’s primary objective to work towards an overall performance outcome for the brand or to increase the brand marketing productivity, although this outcome may be hoped for by all parties.
In addition, the relationship of agencies with AdTech vendors is generally quite simple: either they have a number of preferred vendors they try to do business with (and have stronger buying power) or they leave their clients to appoint their own vendors. Either way, most agencies do not have a vested interest in fitting the AdTech stack to the exact need of their client.
The need for customisation in AdTech and why it should be initiated by CMOs
Right now, no company provides a single integrated solution addressing all the AdTech needs of a big brand CMO, spanning the full spectrum of online ad buying and selling from advertiser to publisher. Adobe is trying, Google continues to acquire AdTech companies to strengthen their offering – all have their own approach but all come up short. None is likely to fit a big brand’s requirements and only through customisation of single technology and integration of the various pieces of the stack can a good fit be made.
With no single suitable integrated solution available and no vested interest by either a single AdTech vendor or Ad agency to go down the custom AdTech stack route, the brand needs to initiate, manage and orchestrate this change itself.
So can we call it a trend?
Hilton is not an isolated case. We are seeing an increasing numbers of brands and their CMOs recognising that the AdTech complexity and one-size-fits-all approach hinders their performance and productivity, prompting them to look at building their own AdTech or getting their vendors to customise their offering.
Back in 2012, Gartner predicted that by 2017, CMOs will spend more on IT than CIOs do. Last year, in the US, it was also reported that 70% of companies now have a Chief Marketing Technologist in house: One thing is certain: brands are taking AdTech seriously and are investing resources to manage it accordingly.
Will enough have the courage and vision to customise their AdTech stack to call it a trend? There are precedents: back 10 years ago, the norm was for ad agencies to charge a “trafficking cost” for AdTech to their clients, often making a nice margin along the way. The brand knew little or was little interested by AdTech solutions then. Then, brands moved towards procurement departments taking over the contractual relationship. Now, brands are always involved in the selection process. Is it now only a small leap to expect brands to orchestrate their AdTech vendors towards a custom AdTech stack.