The Hidden Costs of Your Third Party Services
April 25, 2018
by Sharon Solomon
Third party services are everywhere today. Conversion tracking, web analytics, journey personalization and ad yield optimization tools are just a few MarTech Stack essentials. Managing all of this can be difficult, which explains the popularity of tag management systems like Google Tag Manager or Tealium.
How much traction has the third party service phenomenon gained recently? According to Chiefmartec, the marketing technology sector went from 4,891 solutions in 2016 to 5,381 in 2017. However, there is reason to the chaos. Every third party service generates some kind of business or performance related value.
Did You Know?
There were only around 150 dedicated MarTech and
AdTech solutions to be found in 2011.
Besides MarTech Stacks, more and more online publishers are also making use of AdTech Stacks. The advertising aspect is extremely crucial for online digital content platforms, since it’s their main source of income. However, not everything is a garden of roses when it comes to their implementation.
The Modern Day Web Ecosystem
The blend of in-house developed code and third party software in the modern web ecosystem is similar to a typical whiskey cocktail drink in many ways.
Just like you never know what exactly is in the whiskey cocktail drink that the barman is serving you, managing a modern web ecosystem can be tricky. As your reliance on third party software increases, so does the need to understand its flipside. The steady but significant growth of the common MarTech stack has empowered online content publishers. However, it has also introduced challenges to user experience and, more recently, user privacy concerns.
The Visible Costs of Third Party SERVICES
1 – Cost of Purchase
Every online publisher needs to spend money to set up his AdTech Stack, which typically consists of third party solutions and services. These expenses can be monitored easily and worked into a budget. There are rarely any surprises when it comes to laying the foundation since market pricing is a transparent thing.
More and more Chief Marketing Officers (CMOs) are investing in advanced cloud based third party solutions. Marketing software demand is so high that dedicated software spending is expected to reach $32 billion by the end of the year (2018). Another recent Gartner research shows that CMOs are currently outspending Chief Information Officers (CIOs).
48% of marketers today utilize a MarTech stack while only 21% use a
2 – Control & Integration
More often than not, CMOs make the choice to integrate third party scripts into their ecosystem. This typically happens due to lack of resources, tight deadlines or with the aim of gaining some business value. Unfortunately, MarTech stacks are a compromise. Just like great ingredients don’t always add up to a great dish, third party services often don’t help in creating a great ecosystem.
A glaring issue with deploying third party solutions is the lack of transparency with regards to dependencies and optimization, especially after code changes. This means that a perfectly optimized website can change drastically after a third party vendor makes a change in his solution’s code. Lack of control is a cost commonly associated with this decision.
The Hidden Costs of Third Party SERVICES
1 – Site Performance Metrics: Need For Speed
Every online publisher should realise that third party services have performance costs besides the visible costs mentioned earlier. Having great content on your website isn’t enough. Neglecting the performance aspect can lead to loss of customers, who expect nothing but the best when it comes to responsiveness.
To complicate matters, many third party services call an additional tool (a fourth party) to perform their tasks or to improve their functionality. In other cases, the third party pings a fourth party service and provides it with your data to generate insights and analytics. More often than not, these fourth party connections slow your site down and hurt performance metrics.
Are you aware of your third party service dependencies?
2 – Privacy: It’s Not What You See, It’s What You Don’t See
Online publishers and retailers all across the world are preparing themselves for the General Data Protection Regulation (GDPR), which will officially take effect on May 25th , 2018. Any website attracting EU customers will be required to adhere to these privacy guidelines. Failure to do so can result in hefty fines and/or legal action that can potentially put you out of business.
The urgency to gain GDPR compliance is not exclusive to online publications. Retailers, financial organisations and entertainment portals are also preparing for the upcoming GDPR changes. Are you sure that a third party vendor isn’t using non-compliant third-party services to access/store your client’s personal data? This isn’t possible without implementing a proper monitoring solution.
Did You Know?
GDPR regulation breach fines can be 2-4% of your company’s annual
global turnover or up to €20 million.
3 – Code Changes: Preparing for Tomorrow
Site performance has become a crucial factor in today’s competitive space, with consumers looking for the optimal user experience. With an average of 75 services running on a typical website today, you may be looking at over 200 code changes at any given time. When left unmonitored, these changes can affect site performance metrics without your knowledge.
Unmonitored third party software can also create numerous privacy loopholes that can compromise your GDPR compliance. Even if you are initially compliant, a single code change made by a vendor can change the dynamics of your ecosystem and expose you to legal issues that can have serious implications.
Discover the True Footprint of Your Services
Since full visibility doesn’t end with third party services and due to the potential implications of code changes made by third party vendors, it is crucial to implement a comprehensive monitoring solution to create the optimal user experience. Understanding the true footprint of your MarTech or AdTech Stack is crucial to surviving in today’s competitive market.
That being said, third party services are not your enemy. Having optimized and well-managed MarTech and AdTech Stacks can save your organization a lot time, resources and money, while bringing added value to your business. However, one must always remember to consider the hidden costs involved and take the required steps to minimize their impact on performance and privacy.