Direct Supply Paths Are Becoming Standard Practice in Programmatic
In programmatic, the advertising industry has lost the value of direct relationships. The rapid expansion of the ecosystem resulted in a chaotic web of platforms and providers, with countless intermediaries between the brands who buy ad space and the publishers who sell it.
This paved the way for inefficiency, a lack of transparency, and the potential for questionable practices. An increase in inventory sources across the ecosystem exacerbated the situation, with duplication and overlap in publishers causing the volume of bid requests to skyrocket on the buy side.
But this situation is now changing as both supply-path optimization (SPO) and demand-path optimization (DPO) techniques are employed across the ecosystem. As we approach the start of a new decade, direct integrations in a simpler, cleaner supply chain are fast becoming the norm – and reopening direct paths from advertisers to publishers.
A Demand Side Perspective (SPO)
Every day, demand-side platforms (DSPs) and agencies place more importance on finding the most direct and efficient paths to quality inventory, allowing them to successfully execute media buys through fewer supply-side partners.
While smaller DSPs are largely doing manual SPO and talking to supply-side platforms (SSPs) to identify overlapping supply, larger DSPs are already exploring algorithmic SPO. They are using new transparency standards such as sellers.json to determine which supply sources are directly integrated with publishers, and which are resellers of inventory.
Jounce Media recently published the SPO Fact Pack, compiled using ads.txt and sellers.json files. It is designed to help buyers make smarter decisions around SPO based on the scale of ad exchanges and how directly they are integrated with publishers.
Some DSPs are already switching off traffic from sources listed as resellers because reselling can introduce supply-chain fees, cause latency, and provide redundant access to supply that is available through a more direct path. But it’s still too early for most DSPs to take the blunt action of switching off resellers altogether. This could block access to unique and valuable inventory sets that particular supply partners perform well on.
Instead, buyers should take a more considered approach to SPO, using resources like the SPO Fact Pack to create a shortlist of trusted exchanges that predominantly use direct integrations and provide scale, efficiency, and transparency. In addition, buyers should look for exchange partners that offer differentiation in supply, have transparent fee structures and inventory floors, and are third-party accredited for brand safety, fraud, and viewability.
As the industry moves toward direct paths, buyers might be tempted to cut all resellers, but for now it might be more appropriate to make smaller changes when looking at which partners to cut or keep, rather than eliminate them all.
A Supply Side Perspective (DPO)
With the demand side looking to streamline supply with fewer partners and direct paths to publishers, SSPs need to prove their value, leading many to employ DPO techniques. The reverse of SPO, DPO helps the supply side gain a better understanding of buy-side capacity limitations, as well as the type of inventory buyers want to see, so they only send impressions DSPs will value and want to bid on.
By using data – such as win rates, payment terms, bid response times, and ad quality – SSPs can identify their best buyers and ascertain how they like to buy inventory; they can then adjust the demand path to make it as easy as possible for those buyers to win auctions. SSPs can optimize toward DSP-specific KPIs and work to queries-per-second (QPS) limits to avoid bombarding buyers with bid requests.
For publishers, DPO means higher revenues from committed buyers, the security of working with credible ad tech vendors, and fewer latency issues (currently caused by sheer volume of bids).
The Path Forward
For too long the complexity of the programmatic ecosystem has obstructed the direct relationships that are vital for business success, but with the advent of sophisticated SPO and DPO techniques this is changing.
Buyers want simple, transparent supply chains with direct paths to publishers, and collaboration between the demand and supply sides is facilitating this trend. As a new decade beckons, the value of direct relationships is being reestablished in programmatic advertising as direct supply paths become standard practice.
Jeff Meglio’s career spans over a decade in advertising. His experience across the agency spectrum includes digital account strategy at Corbis, market research at Omnicom's DAS Group, creative video content production for H-Farm, and most recently, programmatic trading at Sovrn.
As the VP Global Demand at Sovrn, Jeff works directly with global advertisers, agencies, and trade desks to help them discover and access Sovrn's community of brand safe independent publishers and their highly engaged audiences across programmatic platforms.