More than 7,000 ad tech startups launched in 2022 globally, with over 2,000 in the United States alone, according to a report by Tracxn.
However, beneath this remarkable growth are complexities that hinder the progress and innovation of these startups. The industry’s fragmented nature, with each platform operating under its own set of rules, integration methods and specifications, poses formidable challenges.
To overcome these hurdles and enable startups to seamlessly integrate with demand-side platforms (DSPs), ad servers, ad exchanges, measurement platforms and supply-side platforms (SSPs), a centralized ecosystem and industrywide support are urgently needed.
Integration standardization
Integrating with multiple DSPs, SSPs and ad exchanges often entails grappling with a profusion of APIs, protocols and technical requirements, consuming precious time and resources.
The obfuscation of integration documentation and processes by DSPs, SSPs and ad exchanges further compounds the challenges faced by startups in achieving the right integrations. Addressing these issues calls for standardization.
Despite the efforts from the Interactive Advertising Bureau (IAB), IAB Tech Lab, Trustworthy Accountability Group (TAG) and Prebid to democratize the advertising ecosystem through educational material, they currently fall short in providing the necessary guidance and methodologies. A standardized approach outlining integration processes across partners would significantly streamline operations.
Incubators and accelerators
Accelerator programs are common across the wider tech industry. These programs could break down some barriers to entry in the ad tech industry by facilitating connections with established partners and providing guidance for integration.
But, surprisingly, there is currently no ad-tech-specific accelerator program within the IAB, TAG or the general ecosystem.
A successful model to follow is MACH37, a cybersecurity-specific accelerator program. MACH37 offers distinct programs tailored to different developmental stages (pre-seed, seed and growth), providing mentorship, education, funding and networking opportunities to facilitate the launch of innovative cybersecurity products. Other incubators and accelerators include CyLon and Techstars Cybersecurity.
Moreover, an accelerator program provides startups with specialized sales, technical and management support right from the outset, setting them on the path to success.
By participating in these programs, established companies can also take a stake in startups and foster disruptive product development.
Suppose giants like Hulu were to invest in an ad-tech-specific accelerator program, in which different companies are building technologies to disrupt the CTV industry. This strategic move would position Hulu at the forefront of its competitors by actively participating in the development of cutting-edge technology.
Meanwhile, ad tech startups could use lessons learned from working with Hulu to craft well-defined sales approaches for other companies, equipping them with the knowledge and insight to approach key decision-makers effectively.
Government support
The cybersecurity industry also receives government support that ad tech startups can only dream of.
Entities like the National Security Agency (NSA) and the Department of Homeland Security (DHS) offer funding, resources and mentorship to boost startups through initiatives like the NSA’s Small Business Innovation Research (SBIR) program. Meanwhile, the DHS’s Cybersecurity for Small Business (CSBS) program aids small businesses in enhancing their cybersecurity posture.
Similarly, in the ad tech industry, government agencies like the NSA and DHS also have an opportunity to support startups, especially ones focusing on brand safety and brand suitability initiatives. By participating in projects that directly impact consumers’ lives, not just their purchasing decisions, these startups can gain a significant advantage.
Additionally, ad tech startups aiming to bring transparency to the ecosystem deserve support from programs like the SBIR to drive innovation and growth in the ad tech sector. But it’s up to ad tech industry groups to lobby for this level of government support.
While ad tech startups face numerous challenges, solutions exist to simplify the landscape and support their growth. By addressing gaps in industry support, standardizing integration processes and providing comprehensive educational resources, the ad tech industry can empower startups to succeed.
It is high time to revolutionize the ad tech environment and create an inclusive, efficient and accessible ecosystem for startups to flourish. With the right support, these startups can overcome obstacles and pave the way for a dynamic and transformative future in the world of advertising technology.
“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
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