BidSwitch Webinar: Turning Supply Path Intelligence into Competitive Edge

Supply Side Optimization (SPO) has been around since 2016, when it was adopted as a strategy by AppNexus, as the company started to look carefully at the partners with whom it chose to work.  It has been a popular topic among programmatic practitioners since then, and although the industry has instigated a clean up in the intervening years, in recent months SPO seems to have picked up renewed interest and momentum.

A 2019 survey by Pubmatic showed that over 70% of brands, more than 65% of agencies and 80% of DSPs were actively implementing SPO strategies, or were planning to do so this year.  Although SPO can mean different things to different people, whether that’s auditing for full supply chain transparency, or optimizing towards the most efficient or best performing path to specific supply, it seems clear that the industry is working towards the same goals.

In a recent webinar to explore SPO, BidSwitch’s Vice President of Client Services, Valerie Zeltser, was joined by Rachel Parkin, EVP of Strategy and Sales at publisher ad management company, CafeMedia, and John Rogers, VP Global Business Development at independent advertising platform, Amobee.  The event is available to view in full here.

The discussion explored the variations of SPO, considered why it’s gaining traction now, and looked at best practices for implementing an SPO strategy that creates competitive edge for buyers and sellers alike.

Why is SPO still so important?

SPO is rooted in the shift in perspective around driving quality over quantity, which results in a better experience for publishers and more control for the buyer.

The need to constantly provide value for both advertisers and publishers is unlikely to diminish and will continue to be driven by changing market environment; SPO provides some of the tools to achieve this business perspective.

John Rogers notes: “Providing value to the advertising chain helps advertisers get that all-important look at where they are running.  It’s recognizing that while anyone can be a part of the supply chain, but it doesn’t necessarily mean they should.”

The pandemic has driven long-overdue changes, observes Rachel Parkin.  “Lockdown life has seen consumers get creative and turn to digital publications to learn new skills; the resulting uptick in traffic has put strain on programmatic pipes as QPS figures amplified under the weight of publishers with many different supply partners and supply paths.”

The varying definitions of SPO

For BidSwitch, SPO is about control, regulation and trying to add a premium layer to programmatic advertising, while also changing the perception of it by pivoting away from words like remnant and long-tail, which are often still (negatively) associated with programmatic trading.

“Reducing QPS is an element of SPO, along with evaluating new ways to drive performance and value for advertisers, whether that is improved viewability, efficiency around CPA, better targeting, or overall reduction of CPMs,” says Rogers.  “It’s also about taking a consultative approach with demand partners, in order that their definition is understood – and then executed.”

Parkin notes: “SPO looks at identifying and using the pathways that drive the best performance, whether that is tied to efficiency by putting the most ad dollars into working media, or effectiveness in terms of how well the pipes work so that bids are not dropped. Ultimately it’s focused on helping buyers reach their audiences more easily and more effectively.”

She adds: “From a publisher perspective, it centres around partner preference and selection because, for users to keep coming back, publishers need them to enjoy their site experience.  Part of that is about minimizing the risk of running a bad ad that put people off.  But it’s also about honing in on what is really unique in terms of what a partner brings to the table and being 100% clear on the value they offer to advertisers.”

Ad tech, brands, agencies and publishers – collaboration is key

Collaboration is the ideal, but the reality is that SPO activity often happens in silos believes Valerie Zeltser.

Rogers confirms the necessity for collaboration, not least because all parties have different strategies that are critical to understand.  He also stresses the importance of being in-market. “As the supply side team for a demand side platform, we get leaned on a lot to be experts – providing meaningful consultation requires us to understand the differentiators of each publisher, platform and partner, both from a technical and people perspective.”

Technology should not be allowed to make all the decisions, says Parkin: “Serving an ad requires a partnership chain, and that cannot be guided by algorithms alone.  SPO isn’t about having one effective path per partner, the end result needs to meet the advertiser’s objectives – and that comes down to talking through the options.”

She also notes that data doesn’t always perform the way it is expected: “The path predicted to be less efficient can turn out to be more efficient.  Learning from that requires collaboration and conversations.”

Establishing and expanding the SPO stack

Parkin acknowledges that it may sound dated, but advises understanding the waterfall, in terms of the companies being worked with and what makes them a preferred partner.  When evaluating new partners she advises drilling down: “We need to know how they will be beneficial to our stack. Starting with the basics – where does demand come from, how it is sourced, how it is marketed, etc – we work up the dialogue from there.”

Rogers agrees and adds that: “While some questions are straightforward, if a partner finds it difficult to articulate the value it offers the publisher – and the ecosystem in general – it’s worth more in-depth fact-finding.  Ultimately we need to know that their business is a good match for ours so that we deliver value to our partners.”

Successful SPO – partners, pipes and pricing

“Partners need to bring true unique value; they have to be doing something different to everyone else,” Parkin reiterates. “Making sure every bid gets through is also critical, and ‘leaky pipes’ are an industry issue that a supply partner needs to resolve. Finally, with everyone watching the bottom line, pricing is always critical so we need to be increasing the amount of working media for advertisers.”

Rogers concurs, adding: “SPO means that advertisers can be more confident in where their ad dollars are going.  It’s about transparency, with a cleaner supply chain making sure campaigns are delivering as effectively as possible.”

“And our use cases to date indicate that it is worth the legwork.  We’re seeing CPA cost improvements of 10-35%, double digit improvements in viewable CPMs and CPM cost reductions of 20-30%.”

Further discussion and insights are available in the webinar, which is available here.