Jason Pratt, general manager at Koddi
Online marketplace operators are waking up to the potential that native sponsored listing ad programs offer for their overall profitability. Consequently, many have launched or are launching their own programs, so they are involved in making the classic “make vs. buy” dilemma that technology companies must always confront.
On the surface, it seems running your own sponsored listing programs is an easy decision, but there are so many factors that go into making a program successful.
Behind the scenes of a sponsored listings program
To run a successful sponsored listings program, you will need several capabilities and assets, all of which must come together to reach a profitable scale. Any one of these failing or even being subpar will prevent your program from scaling, which is why you see so few successful, large, self-serve ads programs in the world.
Outside of the big three (Google, Facebook, and Amazon), there are just a handful of large marketplace ad programs—even though there are thousands of successful online marketplaces worldwide.
Here’s what your program will need at a minimum:
- An ad-serving and campaign management technology (which includes a very low-latency auction system, real-time impression and click tracking at a large scale, bid and bid modifier technology, and much more).
- Technical support teams, tools, and processes.
- Ad operations teams to support your larger advertisers and the program.
- A solid financial ledger system completes with audit, credit, and attribution tools.
- Program management and design teams that understand ad systems and can create features that advertisers will benefit from and use.
- Marketing and sales plans and teams to sell the program to potential advertisers.
The most common mistake I see is companies focusing only on the first item: the ad stack. Engineers love to build things, which is why we all love engineers. They sometimes can convince management that they can build an ad stack capable of driving a huge volume of ad dollars at a low cost.
The first part is true. It’s possible to build an ad stack (though it is not as easy as it looks) – the second part isn’t even close to true. The most successful ad programs in the world, Google, Facebook and Amazon, have teams of people whose sole focus is not just building the technology but maintaining it and subsequently improving upon it and keeping up with tech improvements.
Without the support of the company in providing for the rest of the functions needed (especially support, sales, marketing, and program design), it’s likely that, while the stack may work, the program will fail to attract any serious interest or ad spend and will sit lonely on the shelf.
Much like your marketplace itself, the technology that runs the program is only one sliver of what you must get right to be successful.
Treat the ad program likes it’s a standalone company
Remember, ads are a 24×7, real-time cost-incurring and tracking operation. Your program will generate traffic and spend advertisers’ money from the first minute of every New Year’s Day to midnight on New Year’s Eve. That means you need a stack with world-class uptime, monitoring, failover, replication, and backup. Since you’ll be the one taking ad dollars, you need to track them and show what results they generated conclusively. You also need tools for doing things like makegoods and credits when those inevitably arise.
That’s the ad serving backend in a nutshell, but there’s more. You also need a user-friendly interface for registering and managing accounts, setting up new campaigns, managing bids and budgets, reporting on, and optimizing performance, adjusting parameters such as bid modifiers, campaign start and end dates, targeting options, and so forth.
The more robust your platform UI is, the more users will like and trust it, and the better your program will scale. The number of details you must solve for can be significant; do you allow multi-user access to one ad account, and if so, who’s allowed to do what is just one of the many, many design decisions you’ll need to make. Do you need one UI or two (one for basic users, one for agencies and advanced/large advertisers, for example?) Does your industry benefit from co-op marketing and will you somehow allow for it in your program?
Increasingly, application programming interfaces (APIs) are a must-have in ads programs. Buyers use demand-side platforms, reporting/BI tools, and other technologies to buy media in 2020, and the larger they get, the more likely this is. You’ll want to offer them APIs for pulling data into their BI, for pushing campaign and bid updates, and the like. This all needs to be very dependable, universally available, and reliable. APIs tend to get hit daily or repeatedly throughout every day and need always to respond quickly and accurately. Even the largest tech companies sometimes struggle here.
But that’s just a high-level summary of the basic stack you’ll need to get an ads program off the ground. Of course, the devil is always in the details, and once you get live, you’ll find that there is always a high-priority list of things your advertisers are telling you they need to invest more in your ads. Welcome to the adtech world! There are thousands of companies focusing every single day on ways to improve and enable adtech, and once you build your own tech, you’ve just become one of the competitors in the space.
Don’t rush into anything
Ensure that as you’re embarking on the decision to launch an ads program, you’re giving it the total organizational commitment necessary not just to make it technically “live” but to build and support something that will attract advertiser dollars. When you launched your marketplace, you didn’t set out to overtake Amazon’s opening day, so don’t try to replicate their ads program overnight.
Think about the whole picture of what you’re going to need to have to succeed in ads, not just the technology. Build your plans for marketing, support, operations, finance, and sales alongside your tech plans. Only if all of those align can you be successful.
Koddi is an advertising technology company. It offers marketing management software and services used by brands to create advertising programs.
Favorite