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4 Big Challenges That Startups Face

Advertising technology is a growing industry, full of exciting changes and new opportunities for startups. But with the potential for success comes challenges burgeoning ad-tech companies will need to overcome to make a name for themselves in the field.

Three CEOs of super successful ad-tech startups shared with me their challenges to success. Here are the barriers they felt were the most difficult for ad-tech startups to overcome:

1. Competition

One of the biggest challenges ad-tech startups face is competition.

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“The competition is fierce, because the barriers to entry are relatively low, and there is plenty of access to [venture capital] money,” says Scott Knoll, CEO of Integral Ad Science, a leading ad-tech company that assesses and reports value of each ad opportunity to help media buyers and sellers maximize return on investment.

But if startups can find a niche market and differentiate themselves from their competitors, the reward is great.

“So much opportunity exists for entrepreneurs because switching costs for most customers are low and many are willing to try new, relatively untested technologies,” Knoll says.

Tim Cadogan, CEO of OpenX, a global leader in ad-tech that uses a monetization platform to deliver the highest revenue across all digital outlets, suggests looking for ways to enhance the products and services of other companies rather than compete with them.

“Find ways to complement existing products and companies so you don’t take on unnecessary battles but embrace and extend everywhere and everyone except for you core area,” he says.

Despite the success of a startup, there will always be new companies who will “try to do what you do better and cheaper,” Knoll says. Ad-tech startups will always face tough competition, no matter how big they become.

2. Rapid growth

When an ad-tech startup does find their niche market, demand for its products and services will skyrocket, and the company will need to grow and adapt to fill the needs of its growing client base. Expanding at this fast rate is a challenge for small and sometimes unexpecting startups.

“Predicting when we would move out of startup mode into scale-up mode and what talent and organizational changes that this shift would require was our biggest challenge,” Cadogan says. “Any successful startup will go through this transformation as it becomes a fast growing 'emerging company' and the transition is a profound one. Knowing when it will happen and preparing for what’s required are both vital to success.”

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3. Adding talent

Another side effect of rapid expansion is the need to find and hire new talent to help tackle the startup’s growing needs.

“We have had to focus a lot on becoming a constant recruiter of top talent, and this doesn’t happen overnight,” Knoll says. “This is especially critical in a market where everyone is looking for the same type of technology skills. Recruiting for us quickly went from a luxury to a key priority for people throughout the organization.”

When Knoll began working at the company, Integral Ad Science had a total of 18 employees working from one office. Just three and a half years later, the company has more than 175 employees in eight locations around the world.

Adding such a large volume of employees in a short period of time can place a serious strain on a startup, and organizations need to adapt to avoid harmful growing pains.

“My goal has always been to give everyone at Sharethrough as much information, context and room to care as much as I do as a founder,” says Dan Greenberg, CEO of Sharethrough, an ad-tech company that creates software for publishers and brands and is considered a trailblazer in the native-advertising movement. “As a now 130-person software company with plans to hire 100 more in the next year, our hardest challenge will be to keep the same level of shared purpose and context across everyone in the company.”

4. Fast-paced market

Technology moves at an incredible speed, and keeping up with the changes can be a challenge for startups.

“Anticipate the next wave of major opportunities the digital advertising sector will create for your clients,” Cadogan says. “Build into that future with new products that deliver truly new value.”

Although companies should strive for innovation, they can easily become distracted by new projects, markets and technology, losing sight of their niche market that makes them valuable.

To survive, Cadogan says, “stay ultra focused on that core.”

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