Why hyperscale pain is no longer bearable for the adtech industry

The adtech industry is growing. But a predicted CAGR of 14.2% between 2025 and 2034 does not signal immunity to risk. Regulatory pressures, supply chain inefficiencies, market saturation, rising hardware costs and macroeconomic uncertainty are all at play – causing brands to carefully consider ad spend and programmatic advertisers to absorb the effects.

With economic pressures mounting, there’s a common denominator under scrutiny: infrastructure, and the rising costs associated with hyperscale cloud specifically.

We caught up with our adtech specialist, Bradley Lewington, and Director of New Business, Lewis Payne, to reflect on these shifting priorities. This is what they had to say.

Hyperscale was the status-quo, but times are changing

For Bradley and Lewis, who work closely as infrastructure advisors in the adtech space, one topic of conversation that comes up regularly is a growing pain around the cost and efficiency of the hyperscale cloud.

“The pain has always been there, but it’s been bearable. As adtech startups went through initial growth periods, the cost of hyperscale cloud was considered worth it for the ease of scalability that hyperscalers like AWS offered in return,” says Lewis.  

But priorities have shifted now. Amidst industry-wide ad spend optimization and cost cutting, SSPs, DSPs, and ad networks want to ensure the long-term financial sustainability of their business models.

It’s something that Alexander Igelsböck, CEO and Co-Founder of Adverity, has also observed within the adtech industry recently: “We’ll see a shift toward composability, with more marketers adopting their own data warehouses and moving away from traditional systems to gain better governance and cost-efficient infrastructure.”   

“The long and short of it is that adtech companies want to know how their businesses will operate beyond the next six months and how to keep that business profitable long-term. All too often hyperscale cloud is the common denominator getting in the way of that,” furthers Lewis.   

And that’s because businesses tend to fall into one of two camps.

The vendor locked – businesses that designed their tech stack around the hyperscale cloud and became locked-in. Typically startups that chose to take advantage of free credits without really knowing what they were signing up for.

The vendor agnostic – businesses that avoided over-reliance on a single cloud hosting provider. This was difficult to achieve if under time pressure, but those who chose this route reduced their risk of incurring technical debt down the line.

The hyperscale cloud bubble is bursting and more adtech companies are choosing to find a completely alternative route or at least move some of their estate to a more cost-effective solution. The journey out of hyperscale will look very different depending on which camp you fall into.

Migration is on the mind

Beyond the direct cost implications of operating in a hyperscale cloud environment, wider financial pressures on adtech businesses are mounting. Programmatic advertisers continue to lose revenue to inefficiency and wasted spend ($26.8 billion in global media value is still lost each year to inefficiencies).

At the same time, Google’s integration of AI overviews into search is changing the landscape foundationally, resulting in reduced ad visibility and forcing a wider shift in ad strategy and format. Hardware costs are also increasing – a direct result of tariffs introduced under the Trump administration.

All these factors combined are pushing businesses to consider cost optimization strategies – including taking the leap to alternative infrastructure solutions. And the consensus within the adtech industry is that total reliance on hyperscale cloud environments is no longer a financially viable option.

“We’re increasingly having conversations about moving away from cloud with businesses reviewing their stance on infrastructure” says Lewis.

And now the topic of conversation has entered the C-suite, with CEOs, CTOs and CFOs aligning on the issue of infrastructure. CEOs want assurance that their businesses will remain profitable, CFOs want to make spend go further, and even CTOs (for whom migrations are the ultimate headache) are coming round to the idea that cloud might be doing more harm than good.

“No CTO wakes up in the morning and thinks I’d love to perform a migration so, when a CTO agrees to migrate, the issue must be business critical, “furthers Lewis.  

David Heinemeier Hansson, co-owner and CTO of 37signals (Basecamp & HEY), is a prime example of an industry spokesperson spearheading for reverse migration to bare metal infrastructure (in this case, on-prem).

“Our cloud spend at 37Signals peaked at $3.7m in 2021. Now, after our exist, our all-in costs (5-year hardware depreciation + power/bandwidth/hosting) are going to be a bit over a million dollars per year,” wrote Hansson in a recent LinkedIn post documenting the final stages of the company’s migration.

37Signals may not be an adtech platform but Hansson’s reasoning is universally relevant and highlights a pervasive problem when buying infrastructure. Most businesses (adtech companies included) are squandering thousands - if not millions - of dollars on unnecessary features.

A case in point: one adtech platform that migrated away from hyperscale cloud to dedicated bare metal infrastructure in 2025, reported an immediate reduction of total cloud spend by 30-50%, followed by further cost reduction of up to 70% over the next 18-24 months.