Why Outsourcing Programmatic Advertising is The Cost-Effective Choice
Any marketing strategist or planner knows that money matters. You have to keep your spending within the walls of your budget, and you need to monitor your ROI to ensure you are getting value out of your investments. It is imperative that you pay attention to the way your budget is spent and how your company is benefitting as a result. As ad tech is taking up a bigger and bigger piece of the pie as we move deeper into this technological revolution, marketers have to decide if they will attempt to run a programmatic department in-house or outsource it to the experts. In making such an important decision, which cost drivers hold the most weight? More specifically, which costs are most likely to lead brands towards hiring a technology vendor to run their ads programmatically on their behalf?
In a recent eMarketer article entitled, “When Building Ad tech, It’s All About the Costs: Replacing vendors isn’t so easy,” author Ross Benes reviewed data from Iponweb and ExchangeWire surveys conducted this past June among 129 media agency professionals worldwide. One such result showed that 70% of those surveys felt that “the cost of set up and maintenance is an important factor to consider when evaluating whether or not to build their own ad tech,” with other variables like “ease of installation, reach and reporting capabilities” – coming in subsequent positions. Here, we are seeing a common trend: It would be nice to keep services in-house, but money talks.
Recently, brands are realizing that the cost of hiring a technology vendor to run their ads programmatically is far lower and more beneficial than the cost of running them in-house. Ad tech vendors have the resources, capabilities, expertise, and dedication to run ads for you. If you think you can achieve the same success they’ve achieved after pouring their hearts into it for the past decade, you can try, but you will likely find that you can’t afford to dedicate your entire day to programmatic ads or hire full-time workers to do so. Finding the expertise in that area is difficult, since those people are likely working for the vendors themselves. Plus, your technology is likely not as powerful or reliable as companies whose sole product is their technology. Those vendors have dedicated their life’s work to creating the strongest technology to deliver the most accurate results at scale; chances are they are farther along the journey than you are. Why not hire the experts to do it for you? Another big advantage for ad tech vendors is their network of relationships. Companies like AdDaptive have data partners that supply some of the third-party data that fuels our technology and complements clients’ first-party data. Those relationships are being very carefully built over time and often cannot be substituted by a company trying to form them suddenly with the sole purpose of keeping programmatic advertising in-house.
A huge influence on companies aiming to keep programmatic in-house is the level of transparency that has not always been maintained at its highest potential throughout the years in the ad tech industry. While it is understandable for companies to be wary, they should not be tainted by past experiences. Companies like AdDaptive are carving out new paths by providing pre-campaign analytics and post-campaign insights that show a greater level of detail than ever before. Running a B2B campaign with AdDaptive, for example, means your ads are reaching specific individuals at key business accounts that will be most likely to engage with your ads. Before the campaign, you will receive information about which companies and which job titles will be targeted with your ads. After the campaign, you will obtain a report detailing how many impressions were served to each business. (Interested in reading more? Check out our related blog post, “Discover Transparency in B2B Ad Tech.”) That level of transparency is unheard-of in the industry right now, and is slowly changing the perception of the ad tech industry as it becomes more mainstream. Having access to this level of transparency will further justify a marketer’s budgetary decision to outsource programmatic advertising to an experienced tech vendor.
Companies are learning this the hard way, but sometimes, failure is the best teacher. Brands are finding that building tech and committing to a new undertaking of that caliber is simply too expensive, time-consuming, and difficult to hire for. Instead, approximately 70% of media decision-makers (in an April survey of 119 US media decision-makers conducted by Advertiser Perceptions and the IAB) do or would prefer to work with a partner (as opposed to building tech or performing ad ops in-house) (Source).
When evaluated from a different angle, programmatic tech vendors are able to save companies money through their expertise. They have spent years studying and building and learning, and now they commit their entire work day to perfecting this tool. Aren’t they more qualified to use it than perhaps a marketer who has only just heard of it? (Not that everyone will be amateurs in the ad tech space; experts and masters in their fields are by definition more qualified than non-experts.) Even if your day is split 50/50 between building an in-house programmatic ad deployment department and other marketing operations, you are still only working at it half as often as someone else. Time is a valuable resource, and it cannot be understated that programmatic ad tech vendors are committing their entire day to this cause, which is more than a marketer that does anything less than a full day’s work on it.
Furthermore, the return speaks for itself. AdDaptive has the power and expertise to deploy the most effective ad campaigns. If you invest a large sum of money (which it often costs) in developing an in-house programmatic advertising department without having adequate knowledge, your chances of succeeding are probably relatively low (or at least congruent to your knowledge level). If you want to hire a single expert, you need to invest time and money into finding him and securing the right person for the job. More often, though, implementing a successful programmatic in-house program would require hiring a full team, which takes more time and money and can cause changes in your organizational chart or structure. If you want to develop your technology to protect data and promote transparency, as you should – more time and money. So on and so forth. The expenses grow and grow before you see any return, and at the end of the day, you may not be well equipped enough to do it right. Companies are learning to spare themselves the expenses and outsource their programmatic advertising needs. Tech vendors are capable of deploying ads for a much lower cost than brands would spend on in-house tech development. Tech vendors such as AdDaptive can ensure that the impressions are higher quality than your in-house team may be capable of achieving at such an early stage (or perhaps ever), so even if you commit to spending a certain amount of money on your campaign regardless of who does it, the amount you spend with AdDaptive will deliver higher quality impressions (which leads to higher engagement and perhaps more conversions) than lesser technologies. Here is an example of the costs for each requirement of in-house implementation, as opposed to a vendor such as AdDaptive:
Clearly, the difference is staggering.
Lastly, scale is quite possibly the biggest challenge for in-house advertising teams. They may be able to build a strong technology and access reliable data, but can their technology analyze billions of data points each second? Can it scour thousands and thousands of companies in an instant in order to find the right one to target? Can it digest millions of IP addresses in order to find the right ones that align with your key business influencers? Most likely, the answer to those three questions are “no” if you are running programmatic in-house as part of a larger company mission. If you are a brand that needs to focus time on product development, process improvement, inventory management, branding and promotions, and other necessary operations, you likely won’t be able to focus 100% of your company’s efforts on programmatic advertising. Luckily for you, tech vendors can. And they do. Every day. For those ad tech vendors, their programmatic advertising is their product. Companies like AdDaptive live and breathe programmatic ad tech for their clients, and they work hard each and every day to improve the technology, data, and account management so as to optimize campaigns for companies like yours. It would be nice to have an entire company like AdDaptive under your roof, but that isn’t very cost-effective for brands in other industries, so outsourcing those needs to AdDaptive is the smartest route to take.
Strategic partnerships allow the companies involved to focus on their strengths and pool their resources. If your company develops incredible creatives but may not be able to handle taking programmatic in-house, it would behoove you (and your bottom line) to partner with a vendor who has spent years perfecting their technology and gaining the experience to deliver higher quality impressions at scale for less money.
While it is best to know your brand as well as possible and do what is best for your company’s future, you need to consider the costs and risks of taking programmatic in-house, and think of the strengths you will be sacrificing or pulling away from your focus. To keep your brand engaged in the area where it excels, perhaps committing one or two members of your marketing team to liaising with a programmatic vendor is the best route to give you the best of both worlds. Hiring a media planner or media planning team to complement your marketing department will allow you to have a presence on your staff that is able to manage the relationship with the vendor and optimize your ads in conjunction with their accounts team. The vendor can be trusted to leverage their strengths – reliable data, transparency, expertise, focus, and cost-effectiveness – to support your strategy.
Ultimately, outsourcing programmatic advertising to an experienced ad tech vendor such as AdDaptive allows brands to reap the following benefits:
- Greater scale
- More developed expertise
- Greater transparency with insights/reporting
- More powerful technology
- More reliable data
- More strategic focus
- Less time
- More cost-effective
- Higher return
Get started with AdDaptive today. Receive a free demo to experience the power of our proprietary technology and see firsthand how our superior solution can greatly benefit your brand.