Ad tech was born into a bull market. It mostly came about during the longest period of economic expansion in US history, starting in June 2009 and likely having just ended in March 2020. The job market was great, consumers had money to spend, investment capital was plentiful and the stock market was on an incredible tear. My own ad tech career more or less overlaps with that same timeline.
As we turn an economic corner for the worse, it matters greatly that many ad tech companies and products either came about or experienced most of their growth under relatively rosy economic conditions. The ad tech product features and value propositions that marketers prized in the Good Times likely need to be adapted to suit the Not-So-Good Times.
It’s Time for Ad Tech to Step Up
Overall, ad tech has been and will continue to be a success story, but marketers would be smart to scrutinize the parts of ad tech that may not hold up as well anymore, such as clunky products, questionable campaign measurement, and gold-plated prices. Marketers facing the pressures of even a brief recession (which still implies a multi-year recovery) need ad tech platforms that will help them navigate a more adverse, uncertain world where consumers spend less money, brands have fewer resources due to budget cuts, and “flat is the new growth.”
I’ve outlined three important ways ad tech can step up to the challenge. I could probably think of ten more. I’m curious what else you, dear reader, would add to this list.
One: Marketers Will Need Ad Tech That Works Out of the Box
In the world of enterprise software, expecting a platform to “just work” is probably asking too much. But when brands no longer have as much time and budget to expend configuring and fine-tuning temperamental ad tech platforms, marketing teams are naturally going to gravitate toward the products of least resistance.
This could take a number of forms inside ad tech stacks: fewer features or “lite” product versions, a culling of fragile “data pipes” and “data hops” that don’t actually add much value, or something as simple as better Help content and documentation.
Marketers should look for road-tested products with fewer things that might break, and more accessible help when something does.
Two: Marketers Will Need Airtight Attribution
A grim economic picture will inevitably lead to corporate budget cuts and difficulty justifying advertising campaign expenditures. Unless, of course, a team can demonstrate to their CFO that a particular campaign or tactic is genuinely contributing to the health and growth of the business by making money, lowering customer churn, building market share and so forth. However, much of ad tech still runs on so-called “proxy metrics” and “vanity metrics.” Basic click and conversion reports may not be enough anymore.
A dire need for genuine attribution measurement comes at an interesting juncture for ad tech, which was already suffering “death of the cookie” measurement challenges before COVID-19 hit. Other ID types (e.g., mobile) may be next on the chopping block. Ad tech will have its work cut out for it.
As with “Does it work out of the box?” the platforms that can best answer the question “Did it lead to actual sales?” will serve marketers in a recession better than solutions that look like money pits to CFOs.
Three: Marketers Will Need Risk-free SaaS Pricing
Ad tech has always touted “pay as you go” SaaS pricing, but CMOs and ad tech sales executives know this isn’t entirely true (often for perfectly good reasons). As marketing budgets fall, many of the pricing hurdles set by ad tech platforms will have to come down. Marketers will have smaller budgets and scant appetite for financial risk.
Pricing can be considered along many dimensions, including startup costs, recurring overhead costs, contract terms, and minimums. Outcome- or performance-based pricing is also going to start looking relatively more attractive too. I don’t think this begs a wholesale shift over to pay-per-click (PPC), but when outcomes can be natively baked into an ad tech offering, it really minimizes the risk marketers are taking with their spend.
Savvy, cost-conscious marketers should keep an eye out for ad tech pricing and performance models that better reflect the realities of a recession.
Cue the Bean-counters
The three ideas above basically serve as inputs to Return on Investment (ROI) and Total Cost of Ownership (TCO) models that marketers can use to get the resources they need in a recession (and that ad tech product managers can use to stay competitive). Financial models and cost justifications aren’t very exciting, but then again, as ad tech has matured into a form of enterprise software, it was already on a path to existing very much at the pleasure of CFOs.
With any luck, this period of both marketers and their ad tech partners groveling to bean-counters will be short-lived and we can all get back to enjoying more Good Times. Keeping my fingers crossed for everyone.