Advertising Age: Your marketing machine: what you need to know about ad tech ‘stacks’
Weigh Convenience of One-Stop Shopping Against Your Biz's Need for Innovation and Agility
When you go shopping for groceries, do you prefer an array of local specialty stores (the butcher, the baker, the greengrocer and the fishmonger)? Or would you rather visit a full-service market for one-stop shopping? If so, are we talking a megastore such as Costco or Walmart, or something more focused, like your basic A&P?
Advertisers shopping for digital-marketing solutions face the same kind of choice. They can shop literally hundreds of individual specialty vendors, or they can go big -- to companies that offer a variety of marketing services. Whatever you call these latter players -- some use "stacks," others refer to them as an operating system or a "digital-marketing provider." Regardless of the name, more and more of these large, software-based providers are emerging.
Who are the players in this space? Some you know: IBM, Adobe, Google, AppNexus. Others are newer on the scene: Operative, IgnitionOne and MediaOcean. None of them do exactly the same thing, but in the broadest possible terms, stacks aim to consolidate the many steps of ad buying, selling, optimization, reporting, measurement, inventory management and billing into one big, integrated software suite. Depending on the package you choose, retargeting, social media, search, even offline media can become part of the service offering.
It's not hard to see the appeal of one-stop shopping, considering that the alternative is a dizzying snarl of options. The prospect of evaluating hundreds of individual vendors on their merits, then assessing their ability to play together nicely, can be daunting -- particularly for a busy CMO. And even if you could find the perfect a-la-carte combination of technologies, getting them to work together can be a daunting technical challenge requiring dedicated developers and IT support.
With stacks, on the other hand, you can select (and pay for) only those services you need today. The other offerings will be there when you need them next month, or next year.
Then there's the obvious Big Boy argument, as in, "nobody ever got fired for buying IBM."
But there are considerable downsides to stacks, too. Efficiency often comes at the expense of innovation and agility. At one vendor's recent client event, grumbling was heard in the hallways that Vendor X didn't add features until Vendor Y forced its hand. And stacks are frequently the product of roll-ups and acquisitions -- meaning that vendors are contending with their own software-integration issues, which ultimately affect customers.
A key to addressing integration is to anticipate needs. What do you need a stack to handle, now and in the near future? Buying? Selling? Reporting? Publishing? Will social matter? What about offline media? Do you need help building websites, or enabling or optimizing ecommerce? Mobile? Email? CRM? Channels you don't know about because they don't exist yet? Digital changes fast. This isn't news, but it will drive future needs.
Perhaps the most important criterion when selecting a stack solution is learning whether it's an open or a closed system. Open is preferable, paramount even, if there's the slightest chance you'll want to use other software systems, packages or solutions with the stack. Many of these solutions have APIs that allow integration. But even open ones may not remain so as the industry evolves and consolidates.
Mike Leo, who runs Operative, points out that Oracle was an open ERP system when it began, integrating information internally and externally, which seems inconceivable now.
Leo offers three other questions for advertisers and publishers to ask themselves before selecting a stack system: Does the vendor compete with me? Does it want to replace me? Does it want to commoditize me?
So what will the stacks industry, or the palette of digital advertising buying, selling and management offerings look like two years from now? We don't and cannot know. Keep your options, and your stack provider open -- or risk being held hostage and unable to adapt to change, which is the one certainty.