The worlds of ad tech and martech are experiencing significant changes. Whether a forced or natural evolution, viewpoints exist that there is a fight for survival; and tech platforms are having to differentiate, converge, acquire, to stay current. ExchangeWire speak with Maciej Zawadziński (pictured below), CEO, Clearcode, about whether these views hold weight and how the industry can continue to prosper.
ExchangeWire: There are certain views that ad tech and martech are no longer the burgeoning industries they once were – is this fair to say about the current state of the industry?
Maciej Zawadziński: To a certain extent, yes, especially if you look at some of the business numbers going around (i.e. there were fewer investments in advertising technology last year than there were the previous year, and most ad tech and martech companies are experiencing a drop in their share price). Everyone in the ad tech and martech space knows about Rocket Fuel’s massive share price drop. These stories just weren’t around two or three years ago.
On the other hand, we saw a lot of new players enter the game, especially from the martech side. This growth is reflected in chiefmartec.com’s Marketing Technology Landscape Supergraphic (2016), which suggests that there was an 80% growth in the number of martech companies from 2014 to 2015. It will be very interesting to see how these new companies perform and what they bring to the ad tech and martech industry.
What has happened in the industry to give these views momentum?
A lot of ad tech and martech companies have over-promised and under-delivered. I’m sure a lot of clients have been told by ad tech and martech companies that their solutions can do XYZ and deliver an XXX% increase in whatever – but, in reality, a lot of them don’t deliver what they promise. Everyone knows that for a business to succeed, they need to make sure their clients get the results they need and want, which isn’t happening in most cases, hence the lack of investments and a drop in share prices. Moving forward as an industry, we need to cut out the fluff and deliver what we promise.
A lack of transparency into the actual cost of each media purchase is an issue that also fuels these views. A lack of transparency is caused by fragmentation within the industry. With the large number of ad tech and martech companies, there could be as many as 10 intermediaries and technology platforms involved in the media buying and selling process between advertisers and publishers.
All these middlemen charge their own fees and commissions, which could be anywhere from 5-50% of the total cost of the media purchase price. This means if an advertiser pays a price of USD$5 (£3.48) CPM, they are really only receiving an ad spot worth USD$1.25 (£0.87) CPM – and this information is not passed onto the advertiser. It goes without saying that this difference greatly affects the performance of the ad and makes advertisers skeptical of the effectiveness and benefits of programmatic media buying – which is essentially the future of online advertising.
As a business that develops software for the ad tech and martech industries, how are you taking advantage of the opportunities that exist?
Clearcode sit in a pretty unique position in that we are able to look at the industry challenges and work with companies to build solutions that will solve them.
The biggest opportunity I see as a CEO of a software development company is the increase in the number of companies entering the market. We are able to help companies enter the market sooner by rapidly designing and building software that can be launched to early adopters in a matter of months, rather than years. Our approach to building software focuses on rapid prototyping, minimum viable product (MVP) development, and agile development. This incremental and agile approach enables us to release a working product to the market sooner, and then build upon it based on user feedback.
We also recently launched 7suite, which is a fully customisable data management stack. 7suite consists of a data management platform (DMP), tag manager, and content personalisation engine, which can all be customised to suit the needs of our clients and can be integrated with their existing systems. Clearcode’s development of 7suite allows us to not only provide our clients with custom development services, but also the technology components they need to speed up time-to-market and maintain fast-paced development.
What challenges still exist in the development and success of ad tech and martech; and how can the industry overcome them?
There are three challenges that the industry needs to address in order to prosper.
The first challenge relates to integrating ad tech and martech platforms with inventory and data sources. The amount of inventory and data being generated grows every day; but companies struggle to maintain the required number of integrations that allow them to maximise their advertising and marketing efforts – mainly because integrating with different platforms can be expensive. There are, however, a couple of ways to get around this. First, companies can assign more resources (i.e. people) to their data and inventory integration processes to ensure they are always up to date. Second, they can use traffic aggregators that maintain the relevant connects (e.g. BidSwitch and Beeswax). Third, with regard to data integration, companies can maintain integrations they have with partners that integrate with multiple data sources.
The second challenge relates to user privacy. The advertising industry is often on the receiving end of bad press when it comes to how companies collect and use data. This results in privacy regulations being introduced across many different countries, but especially within the European Union where privacy laws are strict. In order to overcome this issue, all companies that collect user data need to ensure they comply with the various user privacy and data regulations.
The third challenge is for ad tech and martech companies to build software with an incremental and agile approach in order to validate ideas and achieve early success. Due to the sheer complexity of advertising and marketing technology, it can take months, even years, before a platform or application is released to the end user. This often means that by the time the software is released, the industry will have changed and could mean the solution is somewhat redundant or primitive. By focusing on fast and frequent release cycles, companies can get their products out to users sooner – allowing them to gain valuable feedback and make necessary iterations. Another issue is the ease-of-use of many of the current market solutions. Many platforms and tools are hard to use, especially for non-tech savvy users. As someone who helps companies design and build software, and has done so for over 10 years, I understand the challenges ad tech and martech companies face in providing user-friendly software for a highly complex industry; but companies need to put a bigger focus on software usability, not just the mechanics of it.
How is the convergence of ad tech and martech affecting the industry overall?
Do technology platforms need to diversify their offering to survive?
Ad tech and martech companies do need to diversify their client offering in order to survive. We’ve already started to see a number of companies acquire other companies or integrate with them to grow their client offering, and I believe we’ll see more of this in the near future. The consolidation of companies and the merging of the ad tech and martech industries will allow companies to offer their clients more services and provide them with more tools and platforms.