Crunching some BidSwitch numbers shows that between 2020 and 2022 bidstream traffic increased 157%. This is a trend confirmed by eMarketer, which reports that bid requests transmitted through the programmatic bidstream grew around 2.3 times between 2020 to 2023.
At the same time, programmatic ad spend outside the walled gardens is going up at a far more modest rate, with Jounce Media estimating it at 18%. This points to a status quo in which the volume of traffic available to buy is increasing faster than the budgets to purchase it.
In short, there’s a mismatch between supply and demand.
The why of the over-supply
The culprit is a huge growth in duplicated bids being sent from SSPs to DSPs across multiple supply paths—meaning DSPs potentially see the same impression opportunity 20 to 50 times.
Much of this is down to the widespread adoption of header bidding, which provides most major SSPs with access to the same publisher inventory via multiple integration points. At the same time, experience tells them that sending the same bid requests many times to one DSP increases the likelihood of it being monetized, further increasing the incentive for duplicate (and potentially untargeted) traffic.
But why is it an issue?
As traffic volumes grow, with duplication a key reason for this, DSPs struggle to keep within their QPS limits, while also seeing their processing costs soar. Without sophisticated filtering tools, they cannot ensure they are only listening to the most valuable inventory—as illustrated by more BidSwitch data, which shows the auction win rate has declined 24%—meaning monetization opportunities are being left on the table.
The story is similar on the supply side: Duplicated traffic means SSPs are using up their allocated QPS with DSPs, while facing higher technology-based fees. They are also under pressure from DSPs, who want to reduce their own processing costs and minimize waste, to clean up the traffic they send so that it’s more relevant and valuable. Resolving the problem allows SSPs to reduce their own distribution spend without impacting monetization. It also allows them to increase bid rates with certain DSPs, driving up bid density and eCPMs, which results in higher yields for publishers and raised fees for the SSP itself.
Looking at the bigger picture, efficiency, cost-savings, SPO, and environmental sustainability are critical concerns for all programmatic players—over-supply has a negative effect on each of these issues.
Solving the over-supply problem
Tackling the issue of over-supply requires optimizing the programmatic bidstream to send buyers more of the traffic they want to buy and less of what they don’t. Cleaning up the bidstream via traffic shaping tools like BidSwitch's LiteSwitch means DSPs only listen to the most valuable inventory.
The concept of traffic shaping has been around since the early days of RTB, but many tools are not robust enough for the complex challenges of today’s programmatic supply landscape.
However, all parties in the ecosystem can contribute to tackling the problem.
The BidSwitch checklist for better supply
On the supply-side
- Regard demand partners increasingly prioritizing partners based on their ability to send relevant, easily monetizable inventory as an opportunity.
- Determine if a proprietary solution is a good investment, or whether a partnership approach makes better business sense. The former requires significant budget and data science expertise, but delivers flexibility and ease of customization, while the latter can by deployed more quickly and will ensure the models that predict which traffic is relevant for each DSP are effective.
- Implement a framework that makes it easy to understand the effectiveness of shaping the bidstream on win rates and media spend.
- Ensure the tools are flexible so that they can be optimized as needed to balance the needs of buyers and publishers.
- Evaluate the available data continually so that prediction models can be improved to further ‘shape’ traffic.
- Work closely with demand partners to ensure the service is adding value and that increased latency or reduced spend capacity are not hampering trading activities.
On the demand-side
- Analyze the efficiency of current SSP partners, using the ratio of inbound traffic to bid response as a key metric.
- Examine cloud costs (if possible) for listening and processing inbound traffic and compare it to the fees collected on media spend on a partner-by-partner basis.
- Work to optimize the connection of partners delivering lower margins or migrate spend to more efficient pipes.
- Provide SSPs with specific guidance on traffic-shaping expectations and determine whether the tools they have will optimize the bidstream to the required buying patterns.
- Reward suppliers that provide relevant traffic with more spend.
Advertisers, agencies and media owners
- Include traffic shaping in vendor selection criteria.
- Remember that partners with effective bidstream optimization tools can help all-important sustainability initiative, and may also improve programmatic performance.
- Embrace the key role played in controlling spend and supply.
To learn more about BidSwitch traffic shaping tools, or for specific advice about how best to apply them to your trading, reach out to your BidSwitch account manager or get in touch.