Supply-Path Optimization: Unraveling the Complexity of Programmatic Ad Buying
The path from buyers to sellers is often a convoluted and opaque journey. The lack of transparency and
complexity in the programmatic ad buying ecosystem has left advertisers scratching their heads, unsure who they're buying from and how much of their ad spend is being eaten up. Enter supply-path optimization (SPO), the industry's answer to untangling this web of confusion. At its core, SPO is about buyers making deliberate choices to identify the most efficient connections and transact with
sellers. The goal is to eliminate inefficient and expensive paths to supply, ensuring that advertisers get the most value for their investment. However, the term "SPO" has been thrown around by nearly every constituent in the supply chain, creating unnecessary complexity and confusion. It's time to cut through the noise and focus on the core opportunity at hand. The SPO battle is heating up,
with industry giants like The Trade Desk, Magnite, and Pubmatic launching competing solutions such as OpenPath, Clearline, and Activate, respectively. But why are we breaking the programmatic supply chain in the first place? The answer is simple: margin and control. The growth of online video and connected TV (CTV) has attracted significant investment, leading to a land grab for both
supply and demand. Traditional demand-side platforms (DSPs) and supply-side platforms (SSPs) are no longer necessary intermediaries in this landscape. Most online video and CTV deals can be executed directly through integration into the publisher's ad server, eliminating the need for additional platforms. There
is much debate surrounding the benefits of supply path optimization (SPO), a technique used by advertisers to gain more transparency and control over the programmatic advertising supply chain. While some view SPO as a valuable tool for improving ad performance and increasing ROI, others remain skeptical of its true value. One such skeptic is industry expert Matt Barash, who argues that SPO can be used for creative accounting and margin manipulation, and that it often masks the core issues at
play in the competitive landscape. Barash's concerns about SPO stem from a belief that the technique can be easily used to manipulate data and metrics in order to make supply chain partners appear more effective or efficient than they actually are. By doing so, advertisers can create a false sense of competition among partners, leading to higher costs and less transparency overall. Additionally, Barash argues that SPO can be a
distraction from the real issues at play in the advertising industry, such as ad fraud and viewability concerns. Despite these criticisms, many advertisers are still eager to embrace SPO as a way to optimize their programmatic advertising efforts. By gaining greater visibility and control over the supply chain, advertisers hope to reduce costs and improve performance across their campaigns. However, it remains to be seen
whether SPO will live up to its promises, or if it will prove to be a wolf in sheep's clothing, masking deeper issues in the industry. So, how does SPO actually work? Each DSP has developed its own strategy for supply-path optimization. Some use it to identify the most relevant bids with
the highest chance of winning, while others use it to turn off SSPs that don't implement second-price auctions. The key reasons for DSPs to embrace SPO are bid duplication and the various auction mechanisms used by SSPs. Header bidding, in particular, has put a strain on DSPs, processing a higher volume of impressions per second. Additionally, the industry needs more transparency in pricing and auction dynamics to ensure fair and efficient transactions. But wait, aren't all auctions conducted using the second-price model? Unfortunately, that's not the case. Each SSP has its own logic for how it submits bids into a publisher's ad server, including second-price, first-price, or other auction formats. This mix of auction models, exacerbated by the proliferation of header bidding, creates a significant challenge for DSPs and highlights the need for SPO. Companies like AppNexus and Iponweb have developed their supply-path optimization algorithms to address these challenges. AppNexus analyzes a publisher's SSP partners, traffic, and win patterns to automatically turn off SSPs using "aggressive auction tactics." On the other hand, Iponweb offers SPO as a third-party service to DSPs, leveraging technologies like artificial intelligence (AI) and machine
learning (ML) to optimize supply paths. However, the journey to effective SPO is not without its hurdles. In the vast sea of supply chain jargon, the terms "choice" and "optimization" are often misused, leading to confusion and a lack of consensus on the definition and benefits of SPO. While buyers seek SPO insights to negotiate better terms and reduce bid duplication, sellers view it as a
way to understand how DSPs bid and increase their chances of making a sale. The challenge lies in finding the right mechanism for eliminating duplication while considering the impact on advertiser results. Deduplication may seem like a straightforward solution, but it's not that simple. Perfectly duplicating exchanges and choosing one over the other does not guarantee optimal results, as
various factors come into play, such as fees, transparency, take rates, and auction models. Real-time deduplication is technically infeasible due to the speed and scale of RTB auctions. Instead, SPO systems employ static, per-placement, per-region mappings of duplicate paths to supply, making intelligent decisions about which auctions to bid on. However, unless the exchanges are
identical in every aspect, there will always be variations in value, resulting in suboptimal outcomes. While the buy side has largely embraced SPO, the sell side remains skeptical. Publishers are financially incentivized to work with as many partners as possible, leading to a proliferation of supply paths. However, changes are underway as DSPs, SSPs, and agencies strike SPO deals and create curated marketplaces that exclude publishers with inefficient supply paths. The ultimate goal is to eliminate structural inefficiencies in the market, driving economies of scale and superior unit economics. As the industry navigates the intricate web of programmatic ad
buying, supply-path optimization stands as a potential solution to streamline and optimize transactions. However, it is crucial to cut through the jargon and focus on the core opportunities presented by SPO. By understanding the complexities, challenges, and potential benefits, advertisers can make informed decisions about their programmatic ad spend, ensuring efficiency and
transparency in an ever-evolving landscape. |
All the news you need today, in a format that isn't TL:DR, summarized for the busy executive.
The Cannes Lions International Festival of Creativity turns 70 this year, and it's not just your average awards show. It's a global town square where creatives, marketers, tech companies, and visionaries gather to celebrate excellence in advertising. With AI taking center stage, diversity and inclusion in focus,
and a talent program empowering women, the festival reflects the pulse of the industry. As the anticipation builds for the prestigious Cannes Lions awards, there's a sense that purpose-driven campaigns will dominate, inspiring awe and a tinge of envy. Amidst the rosé-fueled socializing and beach events, the real magic lies in the halls of the Palais, where walls brim with jealousy-inducing creativity. It's where the kick in the ass you need to earn one of those shiny trophies awaits, and that's
what everyone looks forward to most.
AI is indeed a Clint Eastwood movie with its fair share of good, bad, and even ugly aspects. On the good side, Meta's Voicebox promises convenient text-to-speech capabilities, allowing users to edit, style, and even voice virtual characters. OpenAI's GPT-4 model now features function calling, enabling it to access external codes and APIs, enhancing its power and versatility. Microsoft's revamped Bing
search engine boasts impressive accuracy rates and utilizes conversational AI to revolutionize keyword targeting, prioritize visual ads, and support small businesses. However, there's a dark side to AI as well. Researchers have cautioned that if AI trains solely on AI-generated content, the model's performance may deteriorate, leading to errors and irrelevant outputs. It seems humans won't be replaced entirely just yet.
In a protest against
Reddit's plan to charge for third-party integrations, thousands of communities on the social message board site have become inaccessible to the public, creating a standoff that continues into its second week. As Reddit gears up for its highly anticipated initial public offering, the protest highlights concerns over the company's decision, which some view as limiting customization without introducing fees. With Reddit heavily reliant on user-generated content and moderation, the impact
of the protest remains uncertain. Interestingly, three of the site's largest communities have resorted to posting predominantly photos of talk show host John Oliver in response.
The future that business owners once dreamt of, where redundant tasks could be delegated, has become a reality. The introduction of artificial intelligence (AI) and machine learning has
revolutionized digital marketing strategies, allowing business owners to focus on the aspects of their business that truly excite them. The global AI software market is projected to exceed $126 billion by 2025, indicating the significant investment and recognition of the power of AI in growing brands. Machine learning, a subset of AI, enables computer systems to learn from data and improve performance by analyzing patterns and trends. This technology has the potential to take online advertising
from good to great, particularly through predictive targeting, personalized experiences, better product recommendations, and enhanced brand safety. By leveraging machine learning, businesses can deliver relevant recommendations, engage customers, and protect their brand's reputation. Despite some common myths about machine learning, such as it being exclusive to large companies or requiring extensive data, this technology is scalable, accessible to businesses of all sizes, and can provide
valuable insights even with smaller datasets. As more companies invest in machine learning, it becomes clear that its ability to personalize customer experiences and provide insights makes it an invaluable tool for digital marketers.
Kontent.ai, the industry-leading headless CMS, has unleashed its native AI
superpowers to conquer the content management chaos. With real-time control from idea to customer experience, they're making managing content as smooth as butter. No need for external integrations or development resources—Kontent.ai's AI skills deliver efficiency, consistency, and simplicity, leaving marketers, developers, and content creators feeling like content superheroes.
Magnite, the sell-side advertising company, is taking the ad world by storm with its Magnite Access suite, offering a range of omnichannel audience products. With Magnite DMP, publishers can effortlessly create and segment audiences while gaining insights for monetization. Magnite Storefront enables the activation of buyer and seller data, including third-party data, across Magnite's platforms. Magnite Match ensures secure data matching while protecting
user identity. Lastly, Magnite Audiences packages cross-publisher segments, opening new revenue streams for publishers. The industry shift towards sell-side audience and identity frameworks has created an exciting opportunity for media owners to embrace audience data activation at scale
A new study by the Association of National Advertisers (ANA) reveals that the programmatic media ecosystem suffers from significant waste, amounting to billions
of dollars. The report blames advertisers for prioritizing cost over value and failing to properly manage their investments in programmatic advertising. It highlights the prevalence of "made for advertising" websites with low-quality content and intrusive ad formats, which account for a significant portion of the programmatic web market. Lack of data and access to log data from tech vendors also contribute to inefficiencies and overpayment for inventory. The report recommends that
advertisers become more proactive stewards of their media investments, establish direct data access contracts with supply partners, prioritize transparency and brand safety, and eliminate low-quality websites from media buys. The ANA plans to release a comprehensive report and handbook in the coming months to provide further guidance on navigating the programmatic media supply chain.
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THE FUTURE OF TV ADVERTISING: CTV’S DOMINANCE AND INNOVATION The world of television advertising has undergone a significant transformation with the rise of Connected TV (CTV) and the convergence of digital and linear platforms. To explore the exciting innovations and trends in this space, industry experts Jenn Chen from Connatix, James Chanter from Finecast, and Ilana Wollin from Xandr took the stage at the recent
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he's been juggling eyeballs, clicks, and ROI like a seasoned pro. From direct response ad networks to media buying nirvana, Seiman's journey has been a wild ride filled with lessons, laughter, and a healthy dose of innovation. With his sights set on conquering CTV and OTT, he's rewriting the rules and turning campaigns into dazzling performances. So, grab your popcorn and get ready for a show like no other, because with Seiman at the helm, digital advertising just got a whole lot wittier and a
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commonly known as “the Czar” in certain legal circles, is one of the country’s top class action defense lawyers and a nationally recognized expert in Telephone Consumer Protection Act (TCPA) litigation and compliance. His deep experience and encyclopedic knowledge of the TCPA landscape make him an invaluable resource to institutional compliance teams struggling to comply with the shifting regulatory landscape. Eric Troutman is well known for finding creative solutions to complex legal problems
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