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[Tech Talks] Understanding Supply Path Optimisation and What it Means for the Industry

As the programmatic industry has grown, digital supply chains have become increasingly complex with a huge array of middlemen between advertisers at one end, and publishers at the other end.

A highly fragmented ecosystem has led to inefficiencies and under the table mechanics – and many advertisers or media buyers have come to the conclusion that their digital supply chains are not delivering the ROI they should be.

Emily Yri, Marketing Director, APAC from PubMatic talks about supply path optimisation and what it means for the industry.

In order to ensure every ad dollar is as traceable and impactful as possible, media buyers have started to examine and refine their relationships with supply-side partners - SSPs. The result is Supply Path Optimisation.

In a nutshell, SPO means buyers assessing the effectiveness of their SSP partners and demanding increased transparency and buying efficiencies.

There are a variety of tactics that all fall under the umbrella of SPO. These include:

  • Pruning long-tail SSPs that offer no real incremental value, and consolidating on fewer, more strategic partners.

  • Demanding full fee transparency across the supply chain to understand exactly how much media spend is ending up as working media in the publishers’ pockets, and what is being charged by DSPs, inventory quality vendors, data providers, verification partners, and SSP’s along the way.

  • And leveraging real-time algorithms that rely on data from supply partners and machine learning to adjust bids in real-time at an impression level.

So what are the benefits of SPO for buyers?

Fundamentally, SPO is a mechanism for buyers to reclaim control of their supply chains. This comes in a couple of guises:

Firstly, economic control – when many people think about SPO, the first lever that comes to mind is economics. Media buyers can use consolidation as a means of extending the impact of their ad dollars.

By working with fewer SSPs, it is easier for buyers to understand and manage supply chain fees, to leverage buying power, and reduce counterproductive auction dynamics (where bidding across multiple SSPs for the same inventory, means buyers can sometimes end up bidding against themselves!)

Secondly, SPO gives media buyers quality control. The proliferation of digital content and audience targeting has unlocked tremendous potential for advertisers to reach their consumers wherever they may be engaging online. However, it is also an environment ripe for nefarious activity like ad fraud.

In the absence of any SPO, a buyer’s ad spend will naturally flow to riskier supply paths. For example, if SSP #1 has direct integration with a website and implements measures to restrict spoofing (where a low-value website pretends to be a premium site – a bit like catfishing, but for digital advertising), but SSP #2 is not directly integrated and has no measures in place, the buyer may not be able to differentiate between the two paths and ad spend may inadvertently flow to the less expensive spoofed version of that website.

By employing SPO buyers are able to ensure their ad spend ends up on premium apps and sites.

Lastly, control over behaviour. It is nearly impossible to adequately monitor one’s supply chain, let alone fully understand it. When operating within a highly fragmented ecosystem. Fragmentation and limited visibility can create a breeding ground for under-the-table mechanics that may not have a buyer’s best interests in mind. By employing SPO efforts that reward ‘good’ supply partners, the buy-side can incentivize SSPs to place greater emphasis on driving advertiser ROI.

Media buyers across the globe are embracing SPO and it’s no surprise it’s a hot topic in the industry right now.

However, it is important to remember SPO is not a one-time task – it is an iterative process that requires careful evaluation and continual assessment.

The PubMatic platform empowers independent app developers and publishers to control and maximize their digital advertising businesses and enables advertisers to drive ROI by reaching and engaging their target audiences in brand-safe, premium environments across ad formats and devices. 

Since 2006, PubMatic has created an efficient, global infrastructure and remains at the forefront of programmatic innovation. Headquartered in Redwood City, California, PubMatic operates 14 offices and nine data centres worldwide. 


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