AD TECH INSIGHTS
by Roman Vrublivskyi
Posted on Jun 11, 2024
Supply-Path Optimization: 3 Strategies for Success
by Roman Vrublivskyi
by Roman Vrublivskyi
More and more businesses across the world are adopting programmatic advertising, but the technology itself is still evolving. One of the crucial steps in its evolution became the introduction of supply-path optimization.
The programmatic model entered the stage in the early 2000s, and during that time, it implied leveraging automated systems to sell and buy ad inventory. RTB (real-time bidding) emerged in 2009, which had a great impact on programmatic advertising and the introduction of SSPs and DSPs. The concept of header bidding appeared in 2014, and a few years later, supply-path optimization became a part of the technology, solving the challenge of bid duplication.
The need for enhanced transparency and streamlined processes became the driving force behind the emergence of SPO. But what does SPO mean? How does it work, and why is it important? In this guide, we will answer these and other questions.
Let’s start with the SPO definition. In short, SPO is a practice that involves media buyers finding the shortest and the most effective ways to ad inventory and then using these paths to transact with sellers. The key goal is to improve the transparency of the ad tech supply chain and increase the efficiency of programmatic advertising.
Adopting SPO is beneficial for all the parties involved. For advertisers, the main advantages are avoiding duplicated auctions, increasing the campaign performance, reducing costs, and maximizing ROI. For publishers, these are improved ad fill rates, higher revenue, and better user experience. Additionally, enhanced transparency allows for reducing the risk of fraud and, as a result, building trust between publishers and marketers.
At the same time, there is one more answer to the question, “what is SPO?”. It is a specific algorithm integrated into the demand-side platform that is responsible for identifying the bids with the most effective connections to the impression.
Now that the SPO meaning in business is clarified, along with the benefits like greater visibility of the ad supply chain, let’s figure out how exactly it works. While advertisers and publishers need to refine their strategies, DSPs utilize different methods to ensure better transparency of the adtech supply chain.
For instance, a DSP may decrease the number of supply-side platforms that do not allow the platform to take part in second-price auctions. One more approach is to select bids that have the most promising chances of winning. For advertisers, this is very convenient since DSPs analyze SSPs and identify the shortest paths automatically.
At the same time, marketers should not rely solely on demand-side platforms. Here are several recommendations on how to implement SPO advertising effectively.
To implement supply path optimization programmatic advertising effectively, marketers have to choose demand-side platforms and supply partners that follow the same approach and prioritize transparency. For instance, it would be helpful to select a DSP that is already equipped with advanced analytics and optimization features so that it would be easier to track the performance of the campaigns and detect the most effective publishers. The same applies to SSPs. Buying from those that allow demand-side platforms to participate in second-price auctions is one more way to optimize the supply path.
Apart from DSPs, advertisers may need to integrate additional software — for example, verification tools that will detect spoof domains.
Continuous analysis plays a crucial role in SPO. First of all, it is essential to perform an internal assessment to identify the number of SSPs and ad exchanges that advertisers are buying inventory from. The same applies to the number of intermediaries. After this, it will be possible to find out where the impressions come from.
The next step is to analyze SSPs. This enables marketers to minimize the number of resellers and decide what platforms to prioritize. Tracking the campaigns’ performance is important, too. For instance, marketers can identify bids that are most likely to win the auction, and sticking to them can help optimize the supply path.
However, a thorough initial analysis is not enough. Continuous monitoring is essential for maintaining an effective and optimized supply path.
For media buyers, the most obvious way to minimize the number of intermediaries is going for direct programmatic advertising, especially for the guaranteed type.
After analyzing the performance of current and past campaigns, marketers can identify the most effective publishers, use a DSP to contact them, and then negotiate ad placements, prices, and other details. After everything is agreed, ads are delivered to the audience according to the specified conditions.
Building direct relationships is beneficial for both advertisers and publishers. Marketers collaborate with sellers who will definitely bring the desired results, while website and app owners do not need to worry that their users will see some inappropriate content. In general, it would be helpful to work only with a specific number of trusted partners, even if it is not about guaranteed advertising. By applying filters and black and whitelists, marketers can aim for impressions from reputable publishers. Note that cooperating with sellers who offer exclusive inventory is one more way to implement SPO.
To help advertisers reach publishers in the most effective way, owners of ad exchanges need to match their demand and supply partners with precise accuracy. With SmartHub, a white-label ad exchange solution, this task is simple.
Instead of building your own platform from scratch and investing loads of resources in this process, you can get an ad exchange customized according to your preferences within just a week. On SmartHub, you can match your partners not only according to the ad format and traffic type — there are many more functionalities. For instance, you can allow or block certain traffic for your DSPs and SSPs, apply price and traffic volume filtering, create blocked and allowed lists, etc.
By applying these and other features, you match your partners effectively. As a result, advertisers deliver ads to their audience, publishers monetize their inventory, and you drive media trading income. Additionally, the platform is equipped with ad fraud detection capabilities and supports the generation of ads.txt and sellers.json files.
Does SmartHub look like the right solution to you? Then let’s talk!
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