Agency Supply Path Optimization – A New Era in Programmatic Buying Starts Now

Post on February 7, 2019 by Jaan Janes

Jaan Janes VP, Customer Success

With PubMatic’s announcement of an industry-first, fully transparent, agency-controlled SSP fee model with Goodway Group, we are now moving into the next era of programmatic buying. This new era brings true fee transparency to the buy-side, offering agencies and advertisers complete clarity into the SSP fee charged on all of their transactions.  It also brings the promise of improved yield to our publishers, as advertisers can now better understand and feel more confident in their advertising supply chain—while maintaining integrity within the auction.

What Does This “New Era” Entail?

The partnership, which moves control of the SSP fee to the agency, will enable Goodway Group to be charged a single transparent fee across all transactions and all publishers on the PubMatic platform.  Historically, this fee has been contracted directly between PubMatic and publishers, which is the common model utilized in the industry today. Agencies and advertisers have long been frustrated with their level of insight into the SSP-publisher relationship, as they do not know how much of their spend goes to the SSP and how much actually goes to the publisher.

Now, Goodway Group has complete transparency into the fee structure to access media. Plus, the application of a consistent rate across all supply will allow them to bid with confidence across the thousands of high-quality publishers on the PubMatic platform. Goodway Group’s buying teams will also be able to understand the true cost of media so they can refine optimization methods and bidding strategies to drive stronger results for their clients.

We anticipate that this shift to SSP fees being set with the buyers will accelerate in 2019 as it provides buyers with complete transparency across all transactions, competitive and consistent rates, and enables them to leverage their buying power. It also reduces the technical load on the buyer, as these deals will lead to a reduction in the number of SSP platforms that agencies buy through. Consequently, this then means fewer connections to support and maintain.

What Are Buyers Looking For?

It is very important to note that while rates are one component of supply path optimization, it is typically the last part of the conversation with any agency or large buyer. Buyers are first evaluating SSPs on a number of “must-have” criteria including:

  • Fraud-free, brand safe inventory
  • Global, direct publisher scale
  • Transparency (including fee structure, txt enforcement and other measures)
  • Technical efficiency (including match rates, timeout rates and other essential elements of “clean pipes”)

If these components are not in place first, there is no conversation around rates.

Publishers Will Benefit From This New Fee Structure

While this is a fundamental change for publishers, we believe there is a lot of upside potential to increase revenue as buyers will start to push more spend through supply chains offering 100 percent transparency. The PubMatic Customer Success team conducted proactive briefings with some of our top publishers about this new way of programmatic buying. All of the publishers we spoke with were excited about the potential of increased spend, even if they did not control the revenue share in these cases. These buyers will naturally have competitive take rates as a component of consolidating spend on our platform.

We are making this change to support buyers and publishers and create the transparent marketplace that has long been discussed. But we are also protecting publishers’ interests, as all buyers are still treated equally in the auction, and they still need to bid at competitive rates to win the auction. All publisher controls, such as pricing floors and blocklists, will continue to be honored for all buyers. Net bidding will be maintained to ensure pricing integrity in the auction run by the publisher.

What This Means For The Future

We expect to be announcing more of these agency supply path optimization (SPO) relationships in 2019 and our publisher partners will benefit as we meld buyers running on “traditional” revenue share with large-scale buyers transacting at their own negotiated rates.

Our company mission statement is to “fuel the endless potential of Internet content creators.” We believe this new era in buying methods will do just that, driving more spend into the overall programmatic marketplace as buyers can buy at scale with 100 percent transparency for the first time. We look forward to working with all our buyers and publishers to take programmatic to a new level of partnership and trust.