Build, Buy or Borrow: How to Evaluate Ad & MarTech Providers
November 13, 2017 | Contributed by: Donny Dye
My favorite coffee shop had been around for several years. The owner roasted his own beans, made his own syrups, and had no less than 6 pour over coffee stations. He built the business himself.
Then one day, out of nowhere, I walked in and someone I had never seen before was behind the counter. He explained the previous owner had decided to retire and the new owner wanted to get into the “coffee game.” So, he bought the shop. Gone were the pour over stations and the counter was littered with the standard syrups you see in every hotel coffee shop. The quality suffered. Same name, but totally different product.
I didn’t go back for several months. Finally, being in the neighborhood, I ventured back into the store to see if the new owner had made any changes back to how the previous owner had run things. Not surprisingly the new owner was nowhere to be found. The local vibe was gone as well and in its place, was a familiar chain logo. My once favorite coffee shop was now buying their beans and borrowing the weight of a big brand. I am sure it is comforting for some patrons to see a logo they know, but I have more local taste.
In the programmatic world, we often find a similar scenario. Some companies have built every capability down to the code. Others have acquired a technology, and the third approach has been to integrate parts or an entire platform to expand their capabilities. Each one of these approaches has advantages and drawbacks. I find it interesting to see a company’s approach and want to focus on basic signals to help a media buyer determine if a company Built, Bought or Borrowed their technology.
Did they build it?
Most platforms today claim to have built their own technology. This is a powerful story and can allow a company to set their own destiny. Innovation for these companies is the product of months and months of development work. Because they are building from the ground up, their solutions are rarely the first out of the gate, but they can be highly disruptive. The very best of these products can even appear impossible to their competition.
Below, I have listed a couple of sure-fire ways to uncover builders in ad tech:
- Does it appear to be iterative? Platforms built on their own tech will rarely release a perfect product. They often release an MVP (Minimal Viable Product) and subsequently release several versions back to back that include new features and insights. Because of this staged roll out, sales teams have time to become experts in each step. A well-trained sales team will be able to speak to the current state and nod to the future.
- Can they build a solution to fit? Working for a built platform, I’ve seen first-hand how platforms that build their own technology have the luxury of working with clients to develop custom work. Platforms that build their own tech can alter development schedules and product roadmaps based on the needs of their customers.
Did they buy it?
The programmatic space is crowded and maturing quickly. For companies wanting to enter the space, it is virtually impossible to build fast enough to catch up with the rest of the field. An acquisition can help these companies jump years of trial and error, and elevate a company’s offering overnight. Many acquiring companies are looking for an “Aladdin,” you know, a diamond in the rough. Some recent acquisitions appear to be incredibly interesting in terms of what the companies will build together.
If you hear about a new product from an old partner, here are a couple of questions to see if they have found their own Aladdin:
- Is the new offering exclusive to the provider? One of the primary reasons to purchase a tech platform is to gain exclusive access to data, inventory, or a unique approach to both. The purchasing company is making a significant investment and will want to match this tech to increase spending across their customer base. In most cases, acquisitions like this lead to some customers being resigned and other being expanded. The reasoning for this is to make the acquiring company a single source. In the words of Andrew Zimmern, “Don’t be the best, be the only.”
- What are the future plans for integrating this tech? Because the platform is acquired, there will definitely be an integration period. In short term, the platform will view the new owner as their newest, largest customer. The first product you will see will be the current one. It will take some time for both companies to pick a path to become a new kind of company. But be ready, truly spectacular things can be created when two innovative companies come together.
Are they borrowing it?
The final option for technology sellers is to simply borrow, or log into, best in class tech platforms. These types of arrangements can be just as strong as the other approaches depending on the power users within their organization and the type of integrations they have done to super charge the platform. They consider themselves the Top Guns of programmatic.
To determine if you are working with the Maverick of the industry. Here is my final set of questions to ask after speaking with them:
- Is their value proposition focused outside of the core technology? Even if a company does not own the tech they are leveraging, there are still compelling reasons to leverage the company. One of the most common approaches I see is to offer expertise that most DSP’s don’t, such as being vertically focused or building creatives. The burden of these companies to convince you that they can leverage the programmatic tool set in more effective ways. Which leads to our final question.
- How does their approach make programmatic campaigns perform better? This final question is really a question for all three, but when a company is borrowing a technology, it is the most critical. If a company claims to be power users on a platform, they must understand the tool set even better than the builder of the DSP. If a company has proprietary data, it must access an audience that has a clear line to the conversion you are seeking, and the data must be transparent beyond what you get in a standard audience segment. In short, leveraging a borrower should give you access to something beyond audience insights or nice reporting.
Simply put, if the seller cannot state definitively what they offer that is unique and why it makes the campaign perform better, buyer beware.
The programmatic space will continue to evolve, but starting with asking whether the company built it, bought it or borrowed it should serve you well just like knowing how your cup of coffee was made.