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Supply Path Optimization | Expert Talk

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By Ekkehardt Schlottbohm, Regional Vice President, Central & Northern Europe, PubMatic
May 28, 2020

The programmatic purchase of media and the expansion of the inventory and controllable channels are constantly increasing. This causes many industry participants to demand more transparency in the hope of achieving greater efficiency in the advertising budget. Supply path optimization (SPO) has recently become a trend topic in this context and for good reason. But what is SPO and how can it help users of the programmatic ecosystem?

SPO refers to an evaluation process in media purchasing. It enables buyers and traders to evaluate the effectiveness of their supply side partners (SSP) and identify opportunities for more transparency and innovation in their bidding processes.

In summary, the supply path optimization provides:

  • Economic Control – SPO can broaden the impact of a buyer’s / advertiser’s spend on advertising formats by providing visibility into the fees, efficiency and effectiveness of the auction dynamics of each technology provider, as well as the degree of direct connection to the inventory and willingness of the SSP manages to offer buyers / advertisers preferential prices for consolidating expenses.

    • Quality control – significant amounts of fraud remain difficult to understand, and many websites offer user experiences or content that brands do not want to be associated with. Both problems arise only because an SSP offers a disastrous player access to the auction. This in turn has consequences, because “bad handling spoils good manners”, which means: you are only as good as your weakest SSP.

    • Concentrated innovation – If each SSP is integrated into over 100 DSPs and each DSP in turn works with over 100 agencies, a future-oriented product strategy is at best difficult to sustain. By entering into future-oriented, global partnerships with SSPs, agencies can influence the product roadmap. The SSPs also receive incentives to develop customer-specific technologies.

    • Holistic view – Programmatic auctions are complex processes within the framework of header bidding. With a high number of SSP auctions, the complexity increases to such an extent that it is no longer possible to gain real insights. By consolidating advertising expenditures on less programmatic partners, traders receive more transparent information and can thus use the available knowledge better to optimize the purchase, that is, the results for the customer.

    • Behavioral control – Fraud thrives primarily in a complex ecosystem. Simplicity and transparency, on the other hand, create responsibility and are thus the core of supply path optimization. By preferring those supply partners who continuously act in accordance with these standards, buyers can positively influence the ROI of the advertisers together with the SSP partners.

SPO boils down to the following:

In a programmatic market that operates very globally, savvy buyers and traders know which SSP to choose and why. They have experience working with these SSPs and achieve the best possible results.

In the past, the first steps towards implementing SPO have been even rougher. For example, traders had to make extreme efforts – for example, switching off or switching on entire exchanges – to use an exclusion principle to identify who they had bought their supply from. This practice was reserved only for programmatic traders, who were generally considered “clever”. However, this did not mean the important insider know-how about Supplyer, but more instinctive behavior.

This approach paved the way for a specific type of SPO, thanks to which traders buy impressions from a handful of selected ad tech providers. These are trustworthy because they guarantee buyers and traders a number of advantages, from the transparency of how high the publisher fee is to CPM discounts when using a higher budget. This form of SPO was promoted by global network agencies and advertisers, among other things, because they were able to expand their purchasing power to available media.

Given these advantages, here is an SPO in four steps:

1. Internal evaluation

The first step should be to conduct an internal assessment to understand how the processes currently work. This first level helps you understand the answers to important questions, for example: How many SSPs do you buy from? Where do most of the impressions come from? Do you buy certain inventory through certain SSPs? If yes why?

  • Tip: Be as specific as possible.

The knowledge gained here is important because it is an early indicator for your individual SPO goals.

2. SSP assessment

Once the internal assessment is complete, it’s time to take a closer look at your SSP partners. This assessment of your SSP partners is an important step as it enables you to understand the differences between your SSP partners, to understand their willingness to exchange data and to quantify specific or USPs that distinguish each SSP.

It is important for buyers / traders to work with such supply-side platforms that provide tools for the buyer side, on the basis of which purchases can be made and high-quality advertising campaigns can be controlled on a large scale across different formats and devices.

These tools are critical for a deeper look into the deals that have been closed. You can help media buyers make smarter, faster decisions that improve campaign performance. One such tool builds a bridge between the inventory of publishers and the demand of buyers.

Research SSPs that offer self-service options as this gives buyers more flexibility in managing their deals. Ask your SSPs if these solutions are supported by identity providers that make your business future-proof in an increasingly cookie-free world.

  • Tip: Apply the same standards.

This ensures that you identify the respective unique selling propositions on a fair basis.

3. SSP consolidation

Based on the data and insights gained in this phase, you can adjust your consolidation strategy. Consolidation increases efficiency because you only allow and work with SSPs that have identified the potential for a long-term, sustainable partnership.

  • Tip: Good business relationships are crucial.

It is desirable for buyers to be able to inform their DSP which SSPs they will work with. In this context, a strong business relationship ensures a better partnership.

4. Continuous optimization

We work in a constantly evolving industry. It is therefore normal for your SPO strategy to develop further. The ongoing learning process as it progresses is essential to ensure that the SPO path you choose continues to meet your goals. It is therefore important to select SSP partners who work in partnership with them to meet your changing needs.

  • Tip: stay flexible.

Continuously monitor your progress and performance based on the most important parameters for you. While building and maintaining relationships with the SSPs you’ve selected is likely to be a top priority, don’t forget to consistently review your SPO over the long term.

Last but not least: In the future, supply path optimization will be of central importance for programmatic purchasing.

Originally published in BVDW