It’s no secret that the rise in technology-driven processes, such as real-time bidding (RTB), has changed the landscape of the online advertising ecosystem. Advertising-technology companies have created a range of innovative technologies and complex algorithms that now make it possible for brands to bypass the advertising agency and enjoy lower costs, higher returns on investments, and more direct audience targeting than what is currently on offer from ad agencies.
This change has meant that ad agencies now need to incorporate their talents, creativity, and experience with the technology in order to remain a relevant part of the media buying & selling process.
Even though programmatic buying is already being offered by advertising agencies to their clients, the day will come when the agency will need to ask themselves the question:
Should we continue utilizing our existing technology (via renting a DSP) or is it time we took the technology in-house (invest in building a DSP)?
While there are a number of deciding factors involved, the main decision will come down to which option presents the biggest financial advantage for the agency.
In order to determine which option offers the most economical value, a number of areas need to be analyzed, such as:
- The agency’s media budget
- The ongoing costs associated with running a DSP
- The technical skills needed to maintain the platform
To get a comprehensive breakdown on the main financial aspects associated with renting or building a DSP, continue reading my ExchangeWire article – Should Agencies Acquire or Build a Technology Stack to Remain Competitive?
The Main Reasons Why Ad Agencies Should Build Their Own DSP
There can be a number of reasons why an advertising agency would consider building their own DSP, but here are the main ones:
- Save on ad markup, fees, and commissions: Many DSP vendors charge a markup on the price of media, which is anywhere between 10% and 30%. Building your own DSP will allow you to save on ad markup, which can equal quite a cost-saving if your media spend is high.
- Control over the technology: Most DSPs on the market offers a number of features, but the tradeoff for ad agencies is that they’re unable to add in features that they need. By building your own DSP, you can build the features you really need and leave out the ones you don’t. You’ll also have full control over the product roadmap and be able to incorporate your own optimization algorithms.
- Ownership or the intellectual property: Although this is more of a business benefit, it’s still a reason why many ad agencies choose to build their own DSP. Building your own tech will often increase the value of your company and can give you a competitive advantage.