Dear ad tech: it's just not working out. Signed, SMBs.

A walk down memory lane

On AdMonsters on Friday, Editorial Director Gavin Dunaway referenced my very first ad tech byline (which Gavin himself published on ADOTAS back in 2010) in the context of "Why the hell aren't there better ad buying solutions for SMBs?"

I must admit, I am far more jaded and cynical on this topic than I was in 2010 when I ranted about lack of digital ad tools and access for SMBs (and if you read the original ADOTAS piece, even back then I was pretty cynical...lighten up, Myles!).

Selling ad tech to SMBs is like a never-ending Groupon.

SMBs present several challenges which may simply prove insurmountable vis a vis ad tech (and for the purposes of this piece, "ad tech" mostly means DSPs and other buying tools). Ratko Vidakovic does a great job digging into some of these challenges in a recent AdExchanger piece. As someone who spent many years in the SMB Ad Tech Salt Mines (as co-founder of a self-serve Flash banner ad builder called Canned Banners that launched in 2010), I'm going to dig into some of these challenges myself.

But damn it, I'm not all doom and gloom. If you read to the end, I do actually point out some bright spots and areas of opportunity.

Why doesn't ad tech work for SMBs?

SMB per-advertiser spend is too low.

Low per-advertiser spend can be undone with scale (lots of advertisers) and automation (never having to talk to said advertisers), but thus far only AdWords and Facebook seem to have cracked this problem. And guess what's not a coincidence? SMB owners actually use Google and Facebook every day; they understand from a UX perspective what Google and Facebook are as actual users, so it's easy for SMB owners to put themselves in the shoes of their customers using Google or Facebook. SMB owners don't have that same visceral, experiential connection to the esoteric world of ad tech (ad exchanges, ad servers, premium publishers, ROAS, ad stacks, and so forth).

The customer acquisition cost is too damn high.

Any idiot can start up an SMB digital ad service (I should know, I was one of those idiots!). And despite the dismal track record of this niche, so, so, so many well-intentioned entrepreneurs continue to be willing to die on that same hill. Long-tail digital ad services is a crowded space, so get ready to pay out the nose for those keywords, lads and lasses.

This is compounded by the fact that SMBs aren't actively looking for digital ad services, so getting their attention requires some serious saturation bombing.

It's easy for SMB owners to put themselves in the shoes of their customers using Google or Facebook.

SMB customer churn is too high.

On-boarding friction soaks up too much potential profit and slows down the "velocity" of revenue. You're going to have to do a lot of explaining to the SMB advertiser as to what it is they've just signed on for. And just when you've closed out your thousandth "this is how online advertising works" support ticket, your new SMB client won't stick around nearly long enough to recoup all the up-front hassle. You get a lot of lookey-loo's and very little customer loyalty. Selling ad tech to SMBs is like a never-ending Groupon.

SMBs are not equipped to understand the ROI of their digital ad dollars.

Even most enterprise marketers barely have a grasp on their advertising ROI. For SMBs, digital advertising just feels like lighting money on fire.

Google has got things pretty dialed in with AdWords (soon to be renamed Google Ads), Google Maps, YouTube, and so forth. SMBs get to pay for clicks, they get to see their business listed on Google Maps (where it will be seen by, well, everyone who uses Google Maps), they get to hear their telephone ringing from their click-to-call ads, and they get to upload how-to videos to be viewed by very high-intent YouTube audiences ("how to fix a water heater"). Google is the Yellow Pages on fucking steroids. When you step outside that into the broader world of ad tech, SMBs' visibility into ROI falls apart very quickly.

SMB customer support is extremely burdensome.

In fairness, support for any digital ad client is really fucking burdensome. This is no one's fault. Digital advertising done well is not easy. So whoever you're providing support to better be spending beaucoup bucks, my friend. If they're not, it's unlikely you'll ever see a profit. This is not a wall you can just break through with patience and grit. That's not how digital advertising works.

Most SMBs rely on word of mouth (i.e., two humans talking to each other IRL)

Hate to say it, but unless I'm missing something, ad tech plays precisely zero role in me asking my neighbor if he knows a company that can re-shingle my roof. Talk to small business owners, and word-of-mouth will be how how they get most (or at least a large portion of) of their business. Yelp and a handful of other review sites are the only real play to capture the value that's locked inside word-of-mouth referrals. Ad tech has virtually nothing to offer here.

Digital advertising done well is not easy.

SMBs have less than zero time for ad tech

SMBs have virtually no time to dedicate to marketing, let alone specifically to digital advertising. A common solve for this has been for Very Smart Ad Tech People to build DSP-esque technology that is highly automated and absurdly simplified. Sounds great on paper, except (good) digital advertising is so nuanced and SMBs so heterogeneous that there is no lowest common denominator solution or tool that satisfies all (or at least most) cases and also results in happy SMBs clamoring to spend more because their lowest-common-denominator ads are performing so well.

And it is this myth of a "lowest common denominator" that leads me thence to my conclusion...

If there's opportunity in SMB ad tech, it's in the industry verticals

The topics above are broad-based. When you actually dive into a few SMB verticals, you see plenty of bright spots and opportunity. A lot of the on-boarding and UX friction points can be ironed away by having a well-defined scope of who your SMB advertiser is, how they're used to marketing their business, and what they need to achieve in order to see value in their marketing spend.

When you get into verticals, you can also begin to identify verticals where there is potential ROI for you, the ad tech platform. These would be verticals with high price points, tech-savvy owners, opportunities to accurately track conversion credit, and so forth.

SMB verticals that are "ad tech compatible" might include:

• Car dealerships
• Online stores
• Local events / venues
• Local retail (e.g., furniture store)

That's actually all I can think of right now. But then again, there are about a million different types of SMBs, so I'm sure there are many more examples.

Thanks for reading. Good to get all this off my chest. See you in another 8 years to post essentially the same rant again.