What Is Supply Path Optimisation and Why Should Media Buyers Care?
White Paper | Author: Janette Higginson, Index Exchange Australia, Programmatic Council Operations Subgroup
The programmatic industry is synonymous with pervasive reach and endless growing scale. Marketers around the globe are embracing programmatic and the efficiency that this method brings to their digital campaign objectives. However, sheer expanse of the open market can create efficiency challenges for buyers, especially when they’re looking to target the right inventory while reaching the right audience.
Consequently, there’s been a significant industry focus toward efforts that optimise the supply chain. In many cases, this is the industry’s effort to clean up the supply chain to make it more efficient, competitive, and transparent by ensuring that every party who plays a role in serving an ad impression is adding more value.
Supply path optimisation (SPO) was developed as a method for improving advertising outcomes by minimising the number of exchanges a media buyer or marketer works with. These improvements fall into four key categories: greater innovation, increased savings, improved trust and transparency, and an optimised user experience.
SPO allows buyers to assess the effectiveness of their supply-side partners and identify opportunities for more transparency and innovation in their bidding processes.
The Inner Workings of SPO
There are many influencing factors to consider when it comes to designing an SPO buying strategy. This is because SPO can occur on a group, agency, brand, or even a campaign level. Ultimately, what’s right in one instance may not always drive the same outcome in another.
Agencies and marketers set out with the intent to buy premium advertising that reaches their intended audiences. However, the process of buying quality media isn’t always so simple. This is because of the complexity of the media supply chain—the desire for strong performance alone, isn't what delivers positive results and quality media. What drives these outcomes are the processes and optimisations that a brand has in place to identify why it should bid on one impression over another. These optimisations result in better, more accurate buying decisions that help improve campaign ROI by maximising working media dollars.
Additional metrics can help brands and agencies better understand the desired supply buying path and classify inventory accordingly. These include impression requests, placement levels, eCPM, viewability measurements, discrepancies, and the winning rate of bids in an ad server (not just within a DSP). By taking these variables into account, brands and agencies can choose the ultimate buying path to reach their desired audience at the best price, while ensuring accountability throughout the bid stream.
Why Should Media Buyers Care?
Buyers want to maximise working media in relation to transaction fees, and they’re looking for programmatic pipes that can bring efficiency to negotiations, provide fee transparency, and reduce technical costs.
A newer component of SPO is the development of supply-side control, and optimisation from a delivery perspective. This means that for the very first time, agencies and marketers are starting to utilise SSPs to control their own supply chain from an activation, investment, and management level. In addition, direct access to publisher inventory allows for a high-quality, and more efficient buying path.
Agencies and marketers are now looking to log-level data to better understand their own auction mechanics and outcomes. Log-level data sets contain every piece of information about a single impression, which are a huge driver of SPO. These insights can inform future decisions on suitable strategies to help increase productivity, and efficiencies across a marketer's programmatic spend.
The capacity to build trust with selected partners—and differentiate between transparent and non-transparent participants—is one of many ways in which SPO has gained momentum across the agency community.
Ultimately, SPO specifically answers the concerns of marketers by reducing intermediaries in the programmatic chain to determine the optimal, most direct path to supply. This helps marketers reduce the amount of commission they’re paying as the programmatic chain becomes shorter.
