In the rapidly evolving world of media technology, businesses often face the difficult decision of whether to insource by developing their own in-house platforms or outsource by adopting existing third-party solutions. The idea of complete control and customization of media technology features can be enticing, but these in-house platforms can often lead to hidden costs that have long-lasting impacts on operational efficiency and future business growth.
From initial concepting through development, deployment, maintenance, and business scale, there are countless areas where resourcing, project scope, integration planning, and business considerations can cause direct and indirect costs to skyrocket. It is critical that media company leaders evaluate these hidden costs when deciding between insourcing and outsourcing their software needs.
Key Takeaways
Development
Okay, so the initial development cost may not seem like a hidden cost. You know the scope of the project, the resources required, and the timeline needed to deliver. But when you dive into the details, there are clearly tradeoffs at play.
Building a scalable ad tech platform requires a considerable investment of time, talent, and financial resources. Enterprise IT teams may have the technical skills to plan what to build, develop a timeline, and get to work on it. But to make the platform truly deliver value, organizations need to allocate a dedicated cross-functional team of product managers, developers, QA engineers, project managers, and UX designers, along with the necessary engineering teams required to run the platform.
What happens if some of those resources need to be reallocated to fix an issue in a different part of the company? Or what happens if the primary solution engineer leaves the company? Consider that it could take several months to hire a replacement, and it typically takes an average of eight months for an employee to reach full productivity. Seemingly minor issues – often unrelated to the development project – can dramatically impact the delivery timeline of an insource development project.
Beyond that, project teams need to understand evolving markets, ensuring that what gets built today will satisfy the needs of tomorrow. For mature markets where there isn’t much change from year to year (a rarity in today’s business climate), in-house can often make sense. However, for rapidly-changing markets such as media, an insourced software solution may not be designed or continually resourced to meet business needs several years down the road.
Key questions to consider with respect to technology development:
Implementation
Ad tech platforms have historically been difficult to implement. The massive “rip & replace” platform shifts of the past typically led to extended implementation cycles. Nowadays, solutions built natively in the cloud have the opportunity to take a more modular approach to implementation. Instead of massive change, media companies are able to implement new technologies on a specific solution by solution basis. This is an important consideration when evaluating new tools and technologies, and allows businesses to roll out new solutions with less disruption and risk than in the past. While internal teams can certainly develop cloud-native applications, cloud development and deployment with outsourced platforms can offer increased benefits that could be difficult for internal teams to match, such as rapid development cycles, new product features, security patches, and the like.
Key questions with respect to implementation:
Companies that don’t allocate the full complement of resources for maintenance often experience decreased platform performance, security vulnerabilities, missing features – all of which could lead to loss of ad revenue.
Maintenance
Once an in-house platform is deployed, ongoing maintenance becomes a critical aspect of ensuring its smooth operation. This involves monitoring for (and quickly fixing) bugs, continuously monitoring security threats, applying security patches, and updating the platform to adapt to evolving industry standards. Maintenance costs can be substantial and often require a dedicated team to address issues promptly.
Companies that don’t allocate the full complement of resources for maintenance often experience decreased platform performance, security vulnerabilities, missing features – all of which could lead to loss of ad revenue. Over time, bugs accumulate, causing frequent disruptions in ad delivery and negatively impacting user experience. Companies can fall into the “break-fix trap”, only providing additional resources for emergency fixes. If they aren’t fully invested in continually evolving the platform, those companies often need to divert valuable time and money away from other strategic initiatives in order to keep the platform running.
Key questions regarding maintenance:
Integration Challenges
Ad tech is a complex ecosystem with numerous interconnected systems and data streams. Integrating an in-house platform with other technologies, such as demand-side platforms (DSPs) and data management platforms (DMPs), can be a daunting task. The absence of standardized interfaces and protocols can lead to compatibility issues, necessitating custom 1:1 integrations and prolonged development cycles. The tech stack can quickly turn into a spaghetti stack.
These integration challenges often result in unexpected expenses and delays, impeding the platform’s overall effectiveness. And when one piece of the technology stack is updated, the connections between systems can become broken – meaning the IT teams need to then update all of the existing 1:1 connections.
Key questions to consider about integrations:
In the media industry, in just the last 10 years, we’ve seen programmatic, programmatic guaranteed, private marketplaces, and various other selling methods – all used to support new business models (OTT, CTV, FAST, Retail Media, etc.). The one constant is change.
Scalability
As business needs evolve and ad volumes increase, scalability becomes a crucial consideration.
Scalability should be considered from a technical sense and a business sense. On the technical side, in-house platforms may struggle to accommodate sudden spikes in orders, change orders, or content being managed. Scaling a custom-built solution often requires extensive modifications to the existing infrastructure and significant investments in hardware, cloud services, or data centers. Failure to scale effectively can result in performance bottlenecks, slow response times, and missed opportunities.
On the business side, it’s critical that your Order Management System be flexible and scalable enough to support evolving trends and workflows. In the media industry, in just the last 10 years, we’ve seen programmatic, programmatic guaranteed, private marketplaces, and various other selling methods – all used to support new business models (OTT, CTV, FAST, Retail Media, etc.). The one constant is change. Tools and platforms need to be able to react quickly to those changes.
Key questions regarding scalability:
While the initial allure of owning and controlling a custom-built media tech platform is undeniable, businesses need to consider the associated hidden costs. The development costs, ongoing maintenance, integration challenges, and scalability limitations can have a significant impact on both financial resources and operational efficiency.
Be sure to assess your situation fairly and honestly. Is your in-house solution going to power your business for the long haul, or is it a short-term stopgap? Think through where you want your business to be in 2, 3, or 5 years. Can you insource the platform development, or will it cause limitations as well as increased costs as your business evolves and scales? Evaluating the associated costs and tradeoffs throughout the entire technology cycle will help you make a more informed business decision – and hopefully avoid unpleasant surprises down the road.
Explore the full advantages of outsourcing your adtech needs with Operative and see how AOS can help power your media workflows. Contact sales for a free demo and learn more.
