What Supply Partner Consolidation (SPC) Means for Advertisers

spotx logoWith the rise of advertisers moving to an in-house agency model, largely on the promise of cost reduction, a natural next step is for brands to take control of media Supply Chain investments. By reducing the number of suppliers to a preferred, qualified roster, advertisers stand to gain big savings and performance of the media. In parallel, while navigating the vetting process and negotiating preferred supply partner agreements, advertisers are able to establish standards and expectations at the source.

However, as advertisers are learning, it is not as simple as making a decision and snapping their fingers – there is a wide range of criteria to consider, and critical questions overlooked that should be inclusive of a gold standard to qualify.

What is Supply Partner Consolidation?

SPC is a media Supply Chain Management strategy where advertisers or agencies strategically evaluate supply-side inventory partners and supply path in order to reduce overall costs, gain transparency, and improve efficiency and performance of media investments. This process effectively reduces suppliers within each media channel and focuses on establishing preferred relationships with the most successful suppliers in that category.

What are the benefits for advertisers?

The headlines in the last few years around fraud, transparency, and business practices have led to distrust from the buy-side and an imbalance in the industry. However, advertisers embracing a ‘new media supply chain’ will find that the ‘table stakes’ of transparency, brand safety, accountability, and responsible privacy practices have completely changed.

Through new quality controls and relationships from their preferred inventory suppliers, consolidation can lead to meaningful results, including:

  • Cost efficiency
  • Performance efficiency
  • Accountability of SSPs for brand-safe media
  • Increased transparency with a direct line of sight into the inventory
  • Supply curation
  • Deeper partnerships, negotiated and customized to the advertisers’ needs including log-level data sharing
  • Audience activation
  • IP exchange and knowledge sharing with supply-side technology partners
  • Extension of headcount and resources through preferred partners

Who should consider SPC?

Global and national brands buying online media, particularly video and OTT, can realize cost and performance benefits. Often, national brands say they don’t have big budgets, and yet that’s exactly the reason to consolidate; to reduce waste and gain leverage in supplier partnerships.

What criteria and steps should be considered in the process?

Start everything with the NDA and begin the learning process from who are you currently sourcing inventory to which SSPs are leaders in the industry that you may be missing today. Establish your brand scorecard specific to each media channel and based on what your brand needs and considers the ‘price of entry’ to work together.

Key supplier considerations for video and OTT are:

  • Company and technology: time in business, global reach, the reputation of technology and services, publisher references
  • How inventory is sourced: direct integration, reseller
  • DSP integrations
  • Diversification and scale of inventory
  • Brand safety: third-party measurement, brand safety, and integration protocol
  • Compliance: ads.txt, TAG certification
  • Transparency: fees

How to take action

Many brands have dedicated task force teams responsible for evaluation and negotiation, while others begin auditing channels dependent on where the largest planned budgets will go. For example, OTT, online video or display. Taking ownership today will ensure you have the competitive edge and accountability of media, and as Marc Pritchard, a chief brand officer of P&G shared, “It’s time to invest our brainpower into an ecosystem that builds in quality, civility, transparency, privacy, and control from the very start. A new media supply chain that levels the playing field and operates in a way that is clean, efficient, accountable and properly moderated for everyone involved.”

Read more: How Sellers.json and OpenRTB Supply Chain Object Reinforces DSPs/Buy-Side Confidence in Programmatic Advertising

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