Cut Out the Fluff & Deliver What's Promised: An AdTech CEO's Take on Industry Challenges

The worlds of ad tech and martech are experiencing significant change. Whether a forced or natural evolution, there's a growing sense that some players are in a fight for survival — differentiating, converging, and acquiring just to stay current.

ExchangeWire sat down with the CEO of an ad tech and martech software development firm to discuss whether those concerns hold weight and what the industry needs to do to keep prospering.

ExchangeWire: There are views that ad tech and martech are no longer the burgeoning industries they once were — is that a fair read of where things stand?

CEO: To a certain extent, yes — especially when you look at the business numbers. Investment funding in advertising technology declined year-over-year, and most ad tech and martech companies have seen their share prices fall. Rocket Fuel's massive share price drop is the example everyone in the industry knows. Stories like that simply weren't happening two or three years ago.

That said, a lot of new players entered the game — particularly from the martech side. chiefmartec.com's Marketing Technology Landscape Supergraphic (2016) put the number of martech companies at 80% higher in 2015 than in 2014. It will be telling to see how those newer entrants perform and what they actually contribute to the space.

EW: What drove these views to gain momentum?

CEO: A lot of ad tech and martech companies have over-promised and under-delivered. Clients have been told that a given solution can do XYZ and produce an XXX% lift in whatever metric matters — and in many cases, those promises simply don't hold up. For a business to succeed, clients need to see results. That's not happening consistently enough, and the funding slowdown and share price declines reflect it. The industry needs to cut out the fluff and actually deliver what it promises.

Media cost transparency is the other major driver. The problem stems from fragmentation: with so many ad tech and martech companies in the ecosystem, a single ad transaction can pass through as many as 10 intermediaries and technology platforms between advertiser and publisher. Each of those middlemen charges their own fees and commissions — anywhere from 5% to 50% of the total media purchase price. So an advertiser paying USD$5 CPM may actually be receiving ad inventory worth only USD$1.25 CPM, and that information is rarely surfaced to the buyer. That gap has a direct impact on campaign performance and feeds advertiser skepticism about the real effectiveness of programmatic media buying — which, despite all of this, remains the future of online advertising.

EW: How can companies in this space take advantage of the opportunities that still exist?

CEO: The biggest opportunity right now is the sheer number of companies trying to enter the market. Vendors who can help those companies move fast — rapidly designing and building software that reaches early adopters in months rather than years — are well-positioned. Approaches centred on rapid prototyping, minimum viable product (MVP) development, and agile methodology let teams get a working product in front of users sooner, then iterate based on real feedback rather than speculation.

On the product side, modular data management stacks are a strong example of this kind of thinking in practice. A platform combining a data management platform (DMP), tag manager, and content personalization engine — built to be customizable and integrable with existing systems — can give clients the technology components they need to accelerate time-to-market without starting from scratch.

EW: What challenges still stand in the way of ad tech and martech development?

CEO: There are three that the industry needs to address seriously.

The first is integration with inventory and data sources. The volume of inventory and data grows constantly, but companies struggle to maintain the integrations needed to maximize their advertising and marketing efforts — largely because those integrations are expensive. There are a few ways around it: dedicating more internal resources to data and inventory integration; using traffic aggregators like BidSwitch and Beeswax that maintain the relevant connections; and, for data specifically, maintaining partnerships with vendors that already connect to multiple data sources.

The second challenge is user privacy. The advertising industry regularly draws criticism for how it collects and uses data, which in turn drives privacy regulations across multiple jurisdictions — particularly within the European Union, where privacy laws are strict. Every company that collects user data needs to ensure it complies with the applicable regulations.

The third challenge is software development discipline. Due to the sheer complexity of advertising and marketing technology, it can take months or even years before a platform reaches end users. By the time it does, the industry may have moved on, leaving the product feeling redundant or outdated on arrival. Faster, more frequent release cycles fix this — getting products into users' hands sooner and enabling meaningful iteration. Related to this is usability: many current market solutions are genuinely hard to use, especially for non-technical users. Platforms in this space tend to prioritize technical functionality over user experience. That balance needs to shift.

EW: How is the convergence of ad tech and martech affecting the industry overall?

CEO: As ad tech and martech integrate more deeply, the pressure to address privacy challenges and regulatory compliance only grows. Companies can't freely use collected personal data for advertising and marketing without clear consent from the user. And that consent can't be buried in point 10 on page 18 of a Terms of Use document that nobody reads — it needs to be explicit, such as asking a user to actively interact with an opt-in prompt.

EW: Do platforms need to diversify their offerings to survive?

CEO: Yes. Ad tech and martech companies need to broaden what they offer clients in order to remain viable. The consolidation trend — companies acquiring or integrating with others to expand their service offering — is already underway, and there's every reason to expect more of it. As the ad tech and martech industries continue to merge, companies that can offer a wider range of tools and services to clients will be the ones best positioned to come out the other side.