AdTech From the Vendors' and Agencies' Perspective

While much of the discussion around advertising technology focuses on technical architecture and the advertiser-publisher relationship, it's equally important to understand how the ecosystem operates from a business standpoint — specifically for technology vendors and advertising agencies. This chapter covers AdTech business models, the core technical challenges vendors face, and the strategic decisions agencies and brands navigate when deciding how much to bring in-house.

AdTech from the Vendor's Perspective

Understanding the vendor side of AdTech breaks down into two areas: how these companies make money, and what technical problems they routinely wrestle with.

AdTech Business Models

The two most common business models employed by AdTech companies are fixed CPM and a percentage of media cost, though many vendors are also adopting — or layering in — the SaaS subscription model familiar from other software categories.

Here's an overview of the main pricing models in use today:

For a deeper look at these models, Beeswax co-founder and CEO Ari Paparo wrote a useful breakdown: The Entrepreneur's Guide To Ad Tech Business Models.

The Main Technical Challenges of Running an AdTech Company

While specific challenges vary by platform type and scale, most AdTech vendors encounter some version of the following problems:

Performance and scalability: Programmatic media buying is real-time by nature. Platforms like DSPs and SSPs have only 100 milliseconds to conduct an RTB auction, which means the underlying infrastructure must handle large volumes of bid requests per second without degradation. Beyond auction speed, analytics pipelines need to surface data quickly — the standard expectation is that impression-level data should be available in reporting within 15 minutes of display.

Keeping infrastructure and cloud computing costs under control: High traffic volumes — ad requests, responses, event logs — translate directly into cloud computing costs. Platforms that don't actively optimize their architecture, database choices, and data pipeline efficiency can find infrastructure expenses eating into margins quickly. Ongoing cost optimization is a continuous engineering concern, not a one-time project.

Finding developers with AdTech-specific experience: Building an ad server, DSP, or SSP is meaningfully different from building most other software categories. There's a steep learning curve, and it requires a working understanding of how the various players and platforms in the digital advertising ecosystem interact. That combination of general engineering skill and AdTech domain knowledge is relatively rare, and recruiting or developing that talent is a persistent challenge for vendors in this space.

AdTech from the Advertising Agency's Perspective

Brands have traditionally partnered with advertising agencies to handle most aspects of their advertising campaigns — from creative development to campaign execution across publishers. Advertising technology has changed that dynamic. Some brands are now taking portions of the digital media-buying process in-house, and some agencies are doing the same with the underlying technology itself.

In-House Programmatic vs. In-House AdTech

These two terms are often used interchangeably but describe distinct arrangements:

In-house programmatic: A brand uses its own AdOps team to run ad campaigns on external AdTech platforms. The technology is rented or licensed; the operational execution is internal.

In-house AdTech: A brand or advertising agency builds its own advertising technology platforms — such as ad servers, DSPs, SSPs, and DMPs. Both the operation and the technology itself are internal.

Below are the four main models that describe how brands and agencies arrange these responsibilities.

1. The Traditional Model: Agency Manages Everything

In the traditional arrangement, a brand works with an advertising agency for all aspects of its advertising. The agency's AdOps team uses external AdTech platforms to execute and manage campaigns on the brand's behalf.

This is still how the majority of brands and agencies operate. The primary advantage is that the brand can fully outsource its advertising activities — the agency handles creative design, campaign setup in platforms like ad servers and DSPs, launch, and ongoing optimization.

2. An Agency Takes Programmatic Buying and AdTech In-House

In this model, an agency operates its own in-house AdOps team and runs its own proprietary AdTech platforms rather than relying on third-party vendors.

The central advantage is control and ownership — of both the technology and the data flowing through it. This gives the agency transparent visibility into the true cost of its media spend and a clearer picture of audience data that might otherwise sit in a vendor's black box.

The main disadvantage is cost. Building AdTech platforms requires significant upfront capital investment, followed by ongoing expenditure to maintain and evolve the systems. As a result, this model is primarily viable for large agencies whose media revenues are substantial enough to justify — and eventually offset — those investments.

3. A Brand Takes Programmatic Buying In-House

Here, a brand bypasses the agency entirely and relies on an in-house AdOps team running campaigns through external AdTech platforms.

The primary benefits are cost savings (no agency fees) and greater control over data, ad placements, and publisher relationships. Brands can also develop more direct knowledge of what's actually performing.

The trade-off is that brands lose access to what agencies genuinely do well: brand strategy, advanced marketing tactics, and the creative depth that experienced agency teams bring. These aren't easily replicated by an internal team focused on operational execution.

4. A Brand Takes Both Programmatic Buying and AdTech In-House

In this arrangement, a brand builds or acquires its own AdTech platforms in addition to running its own AdOps team. The same creative trade-off from model 3 applies here — bypassing agencies means losing access to brand development expertise and creative resources.

The advantages are transparency, control, and long-term cost savings. With proprietary platforms, a brand has full visibility into which supply-side partners are delivering real value, what bids actually cost, and how data flows through the system. Over time, eliminating vendor fees and commissions can generate meaningful savings.

The important caveat: those savings only materialize after the initial technology investment has been recovered. If a brand's media spend isn't sufficiently large, it may never reach the break-even point where in-house AdTech pays off.

The Build vs. Rent Decision

Across the models above, agencies and brands face a recurring strategic question: build proprietary AdTech platforms, or rent access to existing ones? Here's how that trade-off looks from both a business and a technology standpoint.

From a Business Perspective

From a Technology Perspective

The right answer depends on scale, strategic priority, and internal capability. Building makes sense when a company's media volume is large enough to justify the investment, when data ownership is a competitive priority, and when there's a realistic path to recruiting or developing the necessary technical talent. Renting makes sense when speed-to-market matters, when budgets are constrained, or when the core business doesn't benefit from owning the underlying infrastructure.