Join our Waitlist for Expert Advice!

4 Big Challenges That Startups Face Three CEOs of successful ad-tech companies share their biggest roadblocks as their businesses grew.

By Zach Cutler Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

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.

Related: 5 Common Pitfalls That Ruin Businesses -- and How to Avoid Them

"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."

Related: 9 Blind Spots That Sabotage Businesses, and How to Beat Them

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."

Related: How to Overcome 4 'Frightening' Milestones

Zach Cutler

Founder & CEO, Cutler PR

Zach Cutler is an entrepreneur and founder and CEO of Cutler PR, a tech PR agency in New York and Tel Aviv. An avid tech enthusiast and angel investor, Cutler specializes in crafting social and traditional PR campaigns to help tech startups thrive.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Starting a Business

She Started a Business With $300 After Getting Laid Off. It Made $300,000 in Year 1 and Became a Multimillion-Dollar Company.

Bobbie Racette wanted to revamp the virtual assistance space — and provide job opportunities for underrepresented communities at the same time.

Business News

Can Anyone Beat Microsoft at AI? The CEO of Salesforce Thinks His Company Can.

Salesforce CEO Marc Benioff calls Copilot "the new Microsoft Clippy."

Franchise

McDonald's Launched a Happy Meal for the 30th Anniversary of a Classic '90s Sitcom — But There's a Catch

The promotion is only available in one country, so fans elsewhere are turning to resale platforms like eBay to buy the collectible toys.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

'Not Yet Fully Autonomous': Tesla's Optimus Robots Stole the Show — But Were They Actually Controlled By Humans?

Musk said the $20,000 to $30,000 robot could perform household tasks like mowing lawns and putting away groceries.

Leadership

He Raced at 330 MPH Before Taking Over the Family Business — Here's What Being in the Driver's Seat Taught Him About Leadership

Morgan Lucas, former professional drag racer, talks about getting behind the wheel of Lucas Oil as its new CEO.