According to Digiday, Supply Path Optimisation is “essentially an algorithm used by demand-side platforms to streamline how they interact with supply-side platforms”. In November 2019, they published a report on the progress and impact of this trend in the UK and found that “87% of buyers, made up of brands, agencies and DSPs are actively implementing supply path optimisation”. Such a high level of engagement is not surprising given that “Programmatic will account for almost 90% of display spend by 2020” according to eMarketer. However, no two DSP capabilities are the same, so in this blog article, we look into what the main drivers and challenges facing media buyers in this area are.
What are the main drivers of Supply Path Optimisation?
The main drivers of Supply Path Optimisation (SPO) are the sell-side tech transitions to first-price auctions and header bidding. From a buy-side tech perspective, SPO should be a fundamental element in how DSPs analyse and bid on every impression, including private deals. Given the shift to first-price auction models, this is true of not only auto-optimised tactics but also for ‘fixed’ bidding tactics.
The level of protection that each DSP offers against auction dynamics, content verification and fraud vary, and buyers should assess their DSP options on their capability to ensure the most effective and efficient buying at scale. If a DSP is inadequate in this area, then more manual SPO attempts will be insufficient. Once accessed, the buyer should centralise all activities on a single DSP to consolidate their view of inventory sources. This is especially important due to fragmentation caused by the other mentioned transition to header bidding.
Another effect of this fragmentation is that it has put a strain on the processing power of all DSPs. Those with the best infrastructure have been able to use it as an opportunity to analyse the transactional options it affords and finds the most efficient route to acquiring each impression and reaching each user. However, due to this strain, some DSPs have chosen to throttle impressions that they make available to the buyer.
There are, at times, legitimate reasons for this such as fraud protection, but sometimes it is simply because the DSP is not reading all available impressions, with the primary motive being to reduce the Queries Per Second they are having to process, due to cost and/or the basic limits of their infrastructure. This takes the data and decision-making power away from the buyer, so should be another factor in the criteria for DSP selection for the sake of SPO.
The main blockers to effective SPO are blunt manual approaches to SSP consolidation which carry the risk of misinterpreting historical data as the future status quo. The opportunity to adapt to change is cut short if you have already excluded the possibility, wholesale. While there may be some SSPs that are not providing value across the board, there are also cases where a more granular view is needed to salvage the pockets of value. Analysis at the level of the ad unit, page, site/app, publisher, SPP/Exchange is exactly what the right DSP provides a consolidated view of. It allows for a more sophisticated and nuanced approach to accessing the value an SSP represents and retaining only what is worthwhile.