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When Building Ad Tech, It’s All About the Costs

Replacing vendors isn’t so easy

Advertisers looking to take more control over their media buying have to make some tough choices. Do they pressure their vendors into making concessions? Or do they set out to build their own technology to replace the vendors altogether?

When determining whether it is worth it to build their own technology, cost is the most prominent criteria guiding ad buyers’ decisions. In June, Iponweb and ExchangeWire surveyed 129 media agency professionals worldwide, and about 70% of them said that cost of set up and maintenance is an important factor to consider when evaluating whether or not to build their own ad tech. The results indicate that other variables—like ease of installation, reach and reporting capabilities—were secondary to price.

The lack of trust within the digital ad industry has made tech building a hot subject. In March, Warc estimated that the “tech tax” accounted for 55% of all programmatic spend worldwide. In other words, many advertisers are seeing more of their ad dollars wind up in the hands of tech firms, rather than with the publishers they purchase inventory from.

Building tech sounds like a nice solution to these issues, but doing so is often expensive, time consuming and difficult to find adequate talent for. In an April survey of 119 US media decision-makers conducted by Advertiser Perceptions and the Interactive Advertising Bureau (IAB), about 30% of respondents preferred to build tech or do ad ops in-house. The other 70% or so said they either work with a partner or would prefer to work with a partner for these functions.

Want to learn more? Look for our report on Supply Chain Transparency, which comes out August 2.