From Cost Center to Revenue Center: How Ad Tech Drives Sales
Author – Julian Baring
Marketers have long viewed advertising technology as a cost center—as necessary tools required to conduct business, but ultimately not contributors to the company bottom line and, thus, little more than necessary evils. This perception of ad tech, however, is deeply flawed and can lead to lost revenue opportunities.
At its core, ad tech is not a cost center but rather a revenue center. It’s ability to improve decision-making, and the sales that can result from those improved decisions, cannot be overstated. Here’s why marketers’ relationship with ad tech is in need of a reset.
Accepting Waste Is No Longer Acceptable
We’re all familiar with the famous (perhaps now infamous) John Wanamaker quote: “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” There are serious problems with this oft-cited witticism. For one, it’s more than 100 years old—and how many marketplace realities have really persisted for more than 100 years? Furthermore, this quote is often cited by marketers today in hopes of justifying their inability to fully understand their return on ad spend (ROAS). Unfortunately, that’s taking the lazy way out.
Marketers today are better able to understand their ROAS than ever before. We have the technology—the ad technology, that is. We have but to prioritize and implement it properly within our organizations.
That’s where the misperception of ad tech as a cost center becomes problematic. After all, cost centers are the first places that companies tend to look when they need to cut costs. On the ad tech side, that often means taking shortcuts and outsourcing key intelligence drivers and data management capabilities to platforms that lack the transparency needed to inform and optimize a company’s ad spend. Such sacrifice should be unacceptable to today’s marketing executives.
Reprioritizing Visibility to Drive Sales
If John Wanamaker’s quote reflected reality today, marketers would be unable to optimize their marketing efforts to improve results. But as we all know, this thankfully isn’t the case. The marketing world has moved beyond newspaper ads. The advent of digital advertising brought a massive influx of intelligence to the marketing equation, such that today’s practitioners are able to refine their spends on a real-time basis to improve their results. In other words, today’s ad tech isn’t just a piece of infrastructure. It’s a revenue driver. And the more you invest in your ad tech, the more revenue your company can drive.
The key, as with any piece of technology core to your revenue stream, is to invest wisely. For any company operating in the programmatic space today (and let’s face it—that’s most companies), transparency is a core requirement for improving advertising ROI. Advertisers can’t afford to pour hundreds of thousands of dollars into DSPs and just hope they hit their KPIs. Even if KPIs are hit, marketers must be able to examine the efficiency and effectiveness of each component of their media spends and determine where improvements can be made. This is possible only with the right ad tech.
There’s no doubt about it: Smart ad tech investments lead to sales. It’s time that we start thinking about these investments like the revenue drivers they are.