Many advertisers are now looking to internalise their media buying processes, and numerous companies are being set up to offer advertisers a media buying service in the programmatic space. There are two possible routes here, as in any decision that involves using technology: buy or build your DSP. But firstly, let’s define what a DSP actually is.
Because DSP stands for “Demand Side Platform” it should be intrinsically associated with technology-based companies that allow media buyers to purchase ad placements via bids in ad exchanges' real-time auctions.
However, many of today’s so-called DSPs don’t own a proprietary platform - and in some cases, they don’t own any technology at all. This is particularly the case in the mobile space, where programmatic technology was established more recently.
This causes considerable confusion for the ad-tech ecosystem. Any company positioned on the demand side of the ecosystem can call itself a DSP, independently of whether it owns a platform or not. Advertisers therefore frequently assume they are going “direct” to the programmatic marketplace by using a “DSP” – but most would be very surprised if they realised how many players can be involved in the chain to providing marketplace access.
Don´t get me wrong: if you want to be a player on the demand side, providing a media buying service to advertisers and agencies, it probably doesn´t make sense today to build your own technology from scratch, and your tech stack can offer a lot of value without being 100 per cent proprietary.
All I am saying is let´s call a spade a spade. Many players are building valuable Media Buying Solutions, but the market is also full of examples that mirror the obscure world of traditional advertising, with never-ending chains of Ad Networks working with each other as simple intermediaries - and calling every single player on the demand side a DSP just contributes to the confusion that allows these intermediaries to survive.
For those looking to establish a Media Buying Solution, it’s clear the choice of approach is a complex one, and the pros of one approach are precisely the cons of the other.
The main advantage to building your own DSP from scratch is, of course, the fact that you gain full control over your offering. You own it, and as your needs change with time, your DSP will be able to adapt accordingly.
However, each of the components of the solution are fairly complex (in a constantly changing industry landscape), so if you decide to build entirely in-house you need to be ready to invest in managing this complexity and its corresponding high costs on an ongoing basis.
It’s not just a one-time development. These are only some examples of basic things your in-house team will need to stay on top of, just for pure maintenance:
- Each particular connection to a supply partner has its specific idiosyncrasies and is constantly changing, with changes often affecting different ad formats in different ways
- Ad exchanges and publishers may change the rules of the game (e.g. the recent introduction of first price auctions or header bidding).
- There are ongoing challenges around tackling Ad fraud
A DIY build may be your only option if you have a very specific need that no other technology out there can accommodate, of course. But make sure you do not underestimate what it takes. Building is rarely the challenge – it’s making it work effectively that’s the tricky part.
From a wider market perspective, the downside to building from scratch is that if we’re all reinventing the wheel, rather than innovating and refining demand offerings, no real progress can be made to develop the media buying ecosystem - We all end up competing against each other instead of standing on each other shoulders.
Now, you could say that the level of maturity in the market today should be enough for most companies to prefer building a Media Buying Solution through partnerships instead. Even in the mobile space, which poses its own set of technical challenges, it has been six years since the first mobile specialist DSPs were started.
Partnering means you can avoid dealing with low-level elements that don’t offer differentiating value to your customers, freeing up time to focus on what makes your service offering unique. There are enough partners out there with proprietary tech for this to be an option but you do, however, need to partner in a way that gives you enough control to provide that additional value.
Partner choice is key because any partner that is an alternative to an in-house development must offer robust and effective technology and advanced tools, whilst also offering you enough control to customise, differentiate yourself and add customer value. This additional value can often be achieved by delivering a solution specifically targeted to certain segments of buyers, that can be tailored for the specific needs of that vertical or offering enhanced value through innovative use of data.
Whilst working with a partner means you don’t have to deal with the details of the underlying elements that make effective programmatic media buying possible, those same granular elements might be crucial to differentiating your media buying solution from the many others out there - and this is the tricky part. You need partners who can understand and cater to your needs (ie. if your audience is mobile, choose a mobile specialist), provide absolute transparency and granularity in reports and also equip you with the necessary level of control to differentiate your business. They may be hard to find, but they are out there.
When adopting the partnership approach, it’s good practice to have two partners in place for the same element of your platform - firstly, as a ‘fail-safe’ mechanism and secondly to equip you with agility and the means to diversify.
In my view, as mobile DSP technology matures it will be those that partner well and build solutions in a way that differentiates themselves from the masses that will rise to the top.
By Noelia Amoedo, CEO at mediasmart
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