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Navigating the path to building a successful ad business with the right flexible technology partner

Nikhil Raj

March 4, 2024

Online retailers and marketplaces with commerce media business are now considering how to take control of their tech stack. The decision to integrate advertising — whether by building technology in-house or outsourcing — significantly impacts profitability and market positioning. This shift recognizes the potential to drive traffic and generate significant profits by mirroring online retailers' and marketplaces' adoption of in-house advertising.

Building an advertising business enables companies to create a substantial profit pool and greatly benefits users, sellers, merchants, and brands, enhancing the overall marketplace. As companies look to build or expand their ad business, they typically face four primary options, each offering a distinct mix of technology development and advertiser recruitment.

  • Do-it-yourself (DIY) in-house solution: Best for companies with robust technical or engineering resources, such as internal AI/ML engineers with ad tech experience and a strong pool of endemic advertisers, offering better control and alignment with business goals. Things to consider if going down this route is that time to value is slowest with this approach, and there are challenges if not properly prioritized and resourced against other internal efforts.

  • Hybrid approach: Similar to the DIY in-house solution, this strategy is well-suited for companies with robust technical or engineering resources with AI/ML and adtech experience. However, it diverges by catering to businesses expecting to attract most advertisers from outside their existing brand and seller base. This approach provides a customized solution by combining internal development with external partnerships, such as third-party integrations, API collaborations, or working with Retail Media Networks (RMNs). It leverages internal strengths while extending reach to new advertisers, making it easier for those seeking to expand their advertiser relationships beyond endemic ones and preferring the support of RMNs for broader demand generation.

  • Hire Retail Media Networks (RMNs): Companies seeking minimal internal management and quick advertising deployment may find outsourcing the technology and ad operations to RMNs fitting. This approach often results in a fast time to value, making it an appealing choice for those looking to capitalize on advertising opportunities swiftly. It's important to remember that this may come at the expense of your long-term independence, flexibility, and customization.

  • Partner to build in-house ad business with expertise: Companies that can tap into existing relationships with brands or third-party (3P) sellers but have limited technical bandwidth for expertise in machine learning (ML) and ad tech can greatly benefit from partnering with a technology platform while building out their own ad operations in-house. This partnership enables them to maintain close and meaningful advertiser relationships while harnessing advanced technology solutions. Tailored advertising solutions lead to better performance, fostering stronger partnerships, increasing trust and confidence, and encouraging advertisers to spend more, creating a positive flywheel effect.

Given the prevalent nature of existing strong relationships among most retailers and marketplaces, the strongest alignment is with the "partnership" category to build an in-house ad business. Retailers and marketplaces stand to gain significantly in the long term from a technology partner specializing in ad tech, combining their robust connections with cutting-edge advertising technology solutions.

The strategic advantage of building an ad business with a flexible technology partner

The decision to build or grow a commerce media platform is crucial, and opting to do so with a flexible technology partner emerges as the most strategic choice, providing immediate benefits and setting the stage for sustained success. Here are five benefits when it comes to choosing and building with the right flexible technology partner:

1. Empower advertisers and deepen relationships

Teaming up with a tech partner and bringing ad operations in-house can revolutionize how advertisers are empowered, and relationships are strengthened. By leveraging tech expertise, campaigns become more precise and effective, while internal operations reduce reliance on middlemen and bolster direct connections with sellers and brands. This dual strategy fosters trust, flexibility, and innovation, driving sustained growth with your advertisers.

2. Greater flexibility and customization ensure long-term value and superior product quality

A flexible technology partner ensures your platform is crafted for durability and excellence. Unlike standard solutions that don't change, a collaborative partner will customize the platform to your business goals and enable it to be flexible enough to adapt to market changes, providing a reliable product fit for future challenges. This also ensures you maintain control over the quality of your shopping experience.

3. Professional consulting services for holistic ads business growth and innovation

A flexible technology partner can provide more than just technical support; it can offer comprehensive ads business consulting centered on insights, innovation, and impact. These services leverage deep expertise in the advertising domain, offering strategic guidance vital for successfully launching and managing your ad business. This partnership becomes essential in navigating the complexities of the commerce media landscape.

4. Quicker time to market with tech partners' core competency in cutting-edge technology

In e-commerce, launching quickly is key to staying competitive. Partnering with a flexible technology provider may initially have a longer time to value than hiring an RMN, but it's less time-consuming than a DIY approach. This strategy ultimately leads to a bespoke solution built to last and is more strategically advantageous in the long run. A technology partner brings you the latest innovations in advertising, and their core competency lies in the technology itself. They are up to date with the latest advancements in advertising technology and offerings in machine learning (ML) and artificial intelligence (AI). By leveraging the partner's expertise in these fields, retailers, and marketplaces gain a competitive edge, staying ahead of the curve in delivering innovative and effective commerce media solutions.

5. Cost efficiency, risk mitigation, and scalability

Investing in a customized tech platform designed by a flexible partner ensures cost efficiency, scalability, and risk mitigation. This approach avoids the hidden costs often associated with generic solutions and allows for early risk identification and management. The scalability inherent in such a tailored design ensures your platform can grow with your business. 

Exploring alternatives: DIY or hiring a technology and ad network

When considering building a commerce media platform, companies often face the dilemma of going DIY or hiring a technology and ad network. While offering complete control, the DIY approach can be resource-intensive, requiring significant investment in time, technology, and talent. It poses the risk of diverting focus from core business activities and may lead to longer development times. On the other hand, hiring a technology and ad network offers ease and speed. Still, it can come with drawbacks, such as less control over the advertising process, potential dilution of the company's unique brand identity, and possibly weaker relationships with key advertisers due to the involvement of third parties.

Choosing a partnership with a technology partner is a strategic middle ground. This choice can transform a company's presence in the competitive commerce media landscape, offering swift market entry, continuous innovation, and sustainable growth. By leveraging a flexible technology partner's resources and expertise, companies can ensure a competitive edge in commerce media advertising while maintaining strong brand identity and advertiser relationships.

Nikhil Raj

VP of Business, Retail Media, Moloco

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