Another month, another acronym in the world of programmatic.
SPO or supply path optimization is nothing new, but in times of heightened frugality, SPO is back in the hype-cycle, and for good reason! As more dollars transact programmatically, and new formats trade via real-time bidding (RTB) for the first time, there’s no denying the efficiency, transparency, and scale programmatic provides. However, this gravitational pull can be a double edge sword for unsuspecting or unprepared advertisers.
While some have come to believe that SPO is a simple list of product requirements for a demand-side platform (DSP), that’s far from reality. SPO is a vast and expansive set of tools, mechanisms, and workflows, with one universal requirement —shared responsibility.
Successful deployment of SPO’s many moving parts isn’t up to just DSPs, supply-side platforms (SSPs), or publishers — it’s also up the brands, agencies, and consultants that act as connective tissue to allow SPO to be deployed successfully based on the unique goals and objectives of each advertiser. That is to say, that SPO is a subjective reality for each advertiser and should be treated as such.
For many already invested in SPO practices, there a growing misconception that any intermediary in the supply chain is inherently negative and lacks any benefit to the advertiser. On the contrary, not all intermediaries are inefficient or bad. An intermediary might have a great position on a publisher’s website which leads to better returns even if it’s 10% more expensive vs. going direct. SPO is a practice of understanding the supply chain within media investments to make better decisions about where dollars go. In doing so, advertisers will want to remove any seller who isn’t providing value relative to the cost they’re taking – intermediary or not.
Advertisers are rightfully looking for ways to drive more efficiency in terms of performance and costs, which historically brought focus on supply chain dynamics, starting with how DSP fees impact the bottom line. However, even today it’s rare to find an advertiser looking deeper into the ecosystem’s supply chain – where the most value can be extracted.
Which SSP is driving the most value?
Where are brands and agencies paying higher CPMs for redundant impression opportunities?
These are the questions that must be asked.
Marketers who buy through programmatic systems without SPO practices now deal with resellers, directly integrated ad exchanges, and duplicative supply sources with non-disclosed costs. These convoluted situations often result in multiple auctions for the same impression on a given website or channel – maximizing value for publishers at the expense of advertisers. Because of this, it is not enough for DSPs to have varied inventory. Advertisers must arm themselves with transparent reports on how SSP fees (and resellers) measure up to the value they provide.
The emerging practice of SPO requires advertisers to take an empirical approach – to observe and take small actions over time to cause a lasting effect. Over half of U.S. media professionals now rely on SPO to prevent fraud, achieve desired outcomes and avoid brand safety issues. By investigating, and potentially removing duplicate or undesirable auctions and resellers, brands can not only receive more cost efficiency, but also more insight from trusted supply sources.
Advertisers should use data as their guide to identifying the most trustworthy partners in a programmatic market focusing on unique opportunities at the lowest cost. To ensure initiatives have the desired effect, marketers need complete transparency from supply sources, and are encouraged to set tangible goals and measure results by tracking progress regularly with their supply contacts. Advertisers can then create a more flexible marketplace and simplify the digital supply chain while reducing costs and strengthening partnerships between exchanges and sellers.
SPO allows all parties to maximize impact by truly understanding efficiency through a well-lit supply chain. Advertisers who take advantage of SPO’s many tools can retain control of the digital supply chain and prepare for new frontiers in programmatic. Ultimately, this allows them to connect directly with partners who offer competitive rates, thereby enhancing value and improving overall performance.