Since the introduction of header bidding, the programmatic industry has witnessed an increase in auction duplication.
It looks like this: the same ad spot is being auctioned off on multiple platforms simultaneously, similar to multiple real estate agents unknowingly trying to sell the same house. As a result, the same ad can take several different paths before eventually being displayed on your screen.
At first glance, this seemed like a smart strategy. Demand-side platforms (DSPs) and agencies aimed to maximize their reach by sourcing ad inventory from as many supply-side platforms (SSPs) as possible, hoping to secure the best deals. However, this approach has led to unforeseen complications.
The most pressing issue is self-competition. With the same ad spot being auctioned across multiple platforms, DSPs and agencies often end up in a bidding war against themselves, unintentionally driving up the cost of ad placements. A recent study found that significant part of programmatic bids are duplicated across platforms, leading to inefficient spending.
Ultimately, this highlights just how intricate and sometimes counterproductive the world of digital advertising has become, with what initially seemed like a more efficient method instead introducing new layers of complexity.
However, the introduction of SPO brought a solution to this problem.
Together with demand-side platforms (DSPs) — the sell side's simultaneous push toward programmatic efficiency and transparency — the sell-side platform is bringing the publisher and the advertiser, the endpoints of the digital supply chain, closer together.
It's about creating direct connections, consolidating spend, and helping each side understand the value of their partners.
Research shows that 87% of brands, agencies, and DSPs actively implement SPO, mentioning brand safety, reduced ad fraud, and improved ad revenue as the key benefits of SPO. The absence of hidden fees is also one of the advantages that SPO brings to the table.
It is a direct CTA for all ad tech industry stakeholders to adopt SPO as one of their core business functions.
So, let's focus on what is supply path optimization, how it works, and its benefits for publishers and advertisers.
What is SPO supply path optimization?
SPO, or Supply Path Optimization, is essentially a smart algorithm that demand-side platforms use to figure out which bids will connect to ad impressions in the quickest and most effective way. Its main goal is to pinpoint exactly where and how bids win in supply path optimization programmatic auctions while also identifying which vendors bring in the highest yield.
This ultimately helps to show the value of programmatic advertising investments more clearly. By optimizing the supply path in programmatic advertising, it makes the whole ad process smoother, more transparent, and beneficial for both buyers and sellers.
Let's see the mechanics of bid requests in SPO
So, how does the supply route affect the cost of an ad? The mechanics of this process you can see below:
Benefits of programmatic supply path optimization
Increased Transparency and Control
One of the major benefits of using Supply Path Optimization (SPO) is how it brings much-needed transparency to the media supply chain. This clarity allows advertisers to have a clearer picture of where their advertisements are shown and to identify which Supply-Side Platforms (SSPs) are involved. By carefully selecting trustworthy and high-quality partners, brands are able to avoid unnecessary intermediaries. This not only helps in eliminating hidden fees but also significantly lowers the risk of advertising fraud.
Improved Efficiency and Reduced Costs
SPO in marketing is like finding the best route to buy ads without stepping on your own toes. Think of it as being smart about where to shop for ad space. Instead of scattering efforts across too many channels, it's about picking the best ones that make sense. This smart move cuts down on the awkward situations where you end up bidding against yourself on different platforms, which can just lead to shelling out more money than necessary. By teaming up with a few dependable Supply Side Platforms (SSPs), companies can not only save some cash but also make their advertising push more effective, avoiding the unnecessary flood of queries per second (QPS).
Enhanced Ad Performance
If you focus on getting your ads from the best places, ensuring they're with quality publishers, you're laying the groundwork for ads that don't just get more visibility but also genuinely connect with your audience. Letting go of mediocre ad placements and partnering with trustworthy sources means your campaigns will perform better. Plus, you'll have the added comfort of knowing your brand is well taken care of. This strategy also makes your efforts to reach your target audience more precise and effective.
Reduced Latency and Faster Delivery
One of the standout benefits of leveraging Supply Path Optimization (SPO) lies in its efficiency to reduce latency, meaning the waiting time before an ad actually appears to the viewers. This is achieved by cutting out unnecessary or less effective intermediaries in the ad delivery process, ensuring SPO ads reach viewers faster. Not only does this create a smoother experience for users, but it also diminishes the chance of people getting frustrated and leaving the webpage. For advertisers looking to hone their ad performance, especially on mobile and other fast-paced platforms, those saved milliseconds are incredibly valuable.
Better Ad Fraud Prevention
Ad fraud is a massive headache in the digital advertising sphere, setting the stage for potential global losses that could hit a staggering $172 billion by 2028. The silver lining? Advertisers can roll up their sleeves and get serious about tidying up their supply chains. By choosing to only collaborate with reputable, transparent Supply-Side Platforms (SSPs), there's a tangible chance to dodge the fraud bullet. This tactic, known as Supply Path Optimization (SPO), is all about ensuring that ad dollars are spent on real, meaningful engagement. It’s a savvy approach that not only protects a brand's good name but also boosts the real value of its ad spend.
Increased Trust and Accountability
By streamlining the DSP supply chain, advertisers can partner with a smaller, more open set of collaborators. This builds a stronger sense of trust throughout the media supply chain. With greater accountability, we can ensure that every dollar spent actually reaches the intended audience, cutting down on mismatches and inconsistent reports.
Better Brand Safety
SPO digital marketing allows advertisers to team up directly with dependable supply-side platforms (SSPs) and publishers, which minimizes the chances of their ads popping up on low-quality or unsuitable websites. This direct collaboration helps in weeding out the less trustworthy intermediaries, allowing advertisers to protect their brand's image more effectively. This ensures that their ads are only showcased on top-notch, relevant sites.
Optimized Inventory Quality
SPO offers a way for advertisers to really fine-tune their hold on inventory quality, giving them the power to zero in on the cream of the crop ad spaces while steering clear of those not-so-great impressions. This kind of optimization naturally brings about a boost in engagement, improved conversion rates, and at the end of the day, campaigns that really hit their mark.
Reduced Data Leakage
By streamlining their supply chains, advertisers can significantly reduce the chance of accidental data exposure. This step is imperative to safeguard sensitive user information from falling into the wrong hands. It's vital for keeping user confidentiality intact and staying on the right side of laws such as GDPR and CCPA.
Reasons why SPO’s are important for advertisers
With SPO, DSPs will finally escape the problem of bid request duplication associated with multiple auction formats applied by SSPs that use header bidding. It will make media buying more efficient and transparent. The unique value that advertisers can unleash through SPO is:
Better Control Over Your Budget
SPO illuminates the often unclear aspects of fees and inventory quality in header bidding. It's like gaining a clear understanding of each participant's contribution to the process - revealing who's supplying the inventory, how they're doing it, and whether it's through a direct sale or not.
Stepping Up the Quality Game
Ad fraud poses a significant challenge in the digital advertising ecosystem, as some Supply-Side Platforms (SSPs) are not diligent about verifying the sources of their ad inventory. This lax approach means that unauthorized resellers, whose motives may be questionable, can freely participate in the supply chain. Supply Path Optimization (SPO) serves as a gatekeeper, meticulously scrutinizing ad inventory to ensure that it meets predefined quality benchmarks while discerningly avoiding dubious sources.
As tech evolves, the issues once confined to web inventory, like auction duplication, are starting to pop up in mobile apps and connected TV too. That's why the role of SPO is expanding, making it crucial across various platforms.
Simplifying Complexity
Imagine SPO auctions as daily meetups where media buyers and publishers come together. Each participant, whether it’s an exclusive supplier, a partner, a direct seller, or an SSP, adds their own unique flavor to the mix, making for an intriguing, albeit complex, dynamic. However, when media buyers channel their ad spend towards select programmatic advertising partners, they unlock direct access to vital insights. These insights are gold, helping fine-tune and boost the performance of their campaigns.
Reasons why SPO’s are important for publishers
The digital advertising ecosystem, including SPO advertising, is deeply interconnected, meaning that what benefits media buyers also ultimately supports publishers. Through effective supply path optimization (SPO) in advertising, high-performing supply-side platforms (SSPs) can reap the rewards of redistributed media spend, leading to higher yields and a healthier overall marketplace.
Redistributed Media Spend
Publishers who provide high-quality ad space and uphold transparency in their operations are poised to reap the greatest rewards. Supply Path Optimization (SPO) plays a crucial role in diverting advertising expenditure from low-value or deceptive sources, thereby enabling reputable publishers to secure a greater portion of the advertising budget. Industry estimates indicate that around 25% of advertising spending is squandered on subpar inventory, a problem that SPO effectively addresses.
Higher Yields
SPO plays a vital role in creating a natural competitive environment for high-quality ad inventory. It empowers publishers who possess unique and valuable ad space to negotiate better rates. Through the optimization of the supply path, publishers can effectively highlight the value of their premium inventory, consequently attracting greater demand. This increased demand leads to higher yields and improved pricing for the media placements, benefiting the publishers' revenue streams.
Enhanced Fill Rates
Supply-Side Platforms are essential for overseeing and enhancing the pathways through which publisher inventory is made available to potential buyers. Through constant optimization, SSPs can effectively enhance the distribution of inventory, leading to improved fill rates for publishers. By implementing better path management strategies, SSPs can ensure a more stable demand, thereby enhancing yield and fill rates for publishers over time.
Below you can see the main objectives that typically push media buyers and sellers to implement SPO:
Wrapping it up
Supply Path Optimization (SPO) is already transforming the way buyers and sellers collaborate in the expansive programmatic ecosystem. Looking ahead, ad tech platforms will increasingly work together to establish industry standards and identify areas for improvement, whether through implementing solutions like ads.cert or rethinking transaction mechanisms altogether.
At our demand-side platform (DSP), we ensure that buyers receive the most direct and efficient path to impressions, minimizing intermediaries and maximizing transparency. Our secure, full-stack exchange ecosystem provides clear visibility into exchange pricing, helping buyers make informed decisions.
Our proprietary bid manager continuously analyzes win rates and traffic patterns in real-time, prioritizing the most relevant bids with the highest likelihood of success. This ensures that buyers can trust their investments are being optimized for maximum performance.
Take control of your supply chain optimization today. Register with SmartyAds DSP or join our trusted publisher network through SmartyAds SSP.
Have confidence in your supply chain optimization. Register at SmartyAds DSP or join a trusted publisher network at SmartyAds SSP.
