Will 2019 be the year of value path optimization?
By now, you have all heard of supply path optimization. In recent years, demand-side-platforms on behalf of their advertiser clients have prioritized the simplification of their complex networks of supply partners. Within these byzantine relationships, DSPs found themselves all too often bidding against themselves on the same inventory through multiple vendors. This also created both operational complexity in maintaining multiple connections and technical cost due to the load associated with unnecessary QPS (queries per second). But make no mistake: the drive for SPO has also been spurred in no small part by DSPs’ desires to meet their media arbitrage goals.
Meanwhile, publishers have also focused in recent years on pruning the number of resellers who have delivered little value while larding the ad tech tax and keeping more dollars from reaching their coffers. Too many reseller pixels also have shown to have a diminishing effect on publisher site control and user experience, namely exacerbating latency in load times. The recently reported monetary exposure of multiple third-party tech players as a consequence of Sizmek’s bankruptcy illustrates the risks associated with a complex supply chain.
These trends are positive signs that both sides of the marketplace are intent on policing and improving the efficiency of the ecosystem to their individual benefits. What I would love to see happen next is both sides adopting the notion of value path optimization, acknowledging that a shared interest business approach is the best way forward. And at the center of this new road map is data transparency for all.
Buyers’ and sellers’ willingness to safely activating first-party data more aggressively should be the strategic basis of this new mutual cooperation pact. In so doing, brand dollars are optimized and publishers monetize in a more streamlined and efficient fashion, all the while lessening their dependence on the walled garden platforms. Google’s recent announcement on cutting back third-party tracking on its Chrome browser in the name of enhanced consumer privacy is another powerful validation of the importance of first-party data.
The idea of the shared-business approach is to redistribute the value of those data points to buyers and sellers away from the platforms. It is high time that the opacity of the platforms be finally replaced by transparency for all. The walled gardens haven’t had to care about CPMs so much as long as they extract value in a transactional sense by keeping a tight grip on the data.
There has been so much talk over the years about the unseemly media arbitrage that happens in the ad tech supply chain that has not accrued benefit to brands or publishers. While that has been an important flaw in the dynamic to address, there has been relatively scant attention paid to the issue of data arbitrage.
The platforms have not been shy about applying valuable first party data from brands for their benefit while not necessarily making the advertiser’s spend go farther. Similarly, platforms have not lost any sleep over retargeting premium publisher audiences to more effectively monetize lower-cost, lower-quality editorial environments. And publishers are allowing this to happen.
The lack of transparency on the part of the platforms has truly stunted the topline growth of brands and publishers; many ad tech players have not helped by being disingenuous and opportunistic to the detriment of the marketplace as well. With the recent spate of bad ad tech news, one way to change the narrative is by adopting the mantle of transparency and walking that walk. Ad tech firms have a window of opportunity to develop products and services that are all about helping buyers and sellers collaborate and better control their assets that lead to more effective ROAS and monetization. This shared business interest model could be the way to ensure both the seller and buyer are deriving maximum value from every relationship. With all due respect to third-party players, the success of the buyer and the seller is paramount. With that goal in mind, value path optimization is just the elixir that our industry needs.