By Chris Gurciullo, Regional VP, Advertiser Solutions, PubMatic
It used to be that marketers wanted access to every impression that existed, which resulted in them working with hundreds of partners through programmatic buying. They quickly realized the many problems inherent in the supply path, from quality concerns and fraud to fragmentation and a lack of streamlined processes. Those issues cause redundancy, trust concerns, and unnecessary fees. From this chaos came the evolution of supply path optimization (SPO).
In its truest form, SPO was designed to bring advertisers and publishers closer together, remove the noise, and pull back the curtain that historically formed between the two. It has more recently evolved into creating space for advertisers to work with their tech providers in order to strategically align and innovate.
These days, an SPO strategy is a proven approach to consistently driving performance for advertisers: Helping them better leverage their buying power, using programmatic to drive up win rates, improve CPMs, reduce fraud, and improve quality. For these reasons, more and more brands and agencies are taking control of their supply paths and leaning in with a streamlined mix of partners. This promotes strong, built-in feedback loops that traditionally were not available on the open internet.
Through a turbulent year, SPO has helped many advertisers and agencies optimize their costs, brand safety, and performance to get better results. Looking ahead, establishing a smart strategy could create efficiencies and improve ROI for years to come.
A few important elements for advertisers to consider include:
First, move on from simply trying to reduce the number of redundant partners in order to reduce costs, and instead start to think in terms of additive value. Many companies have been in “cost reduction” mode this year, but looking at which partners offer unique audiences is just the beginning of that “value-driven” view of SPO. It is important to remember what lies ahead – new privacy laws, the sunsetting of third-party cookies, and the continued rise of new channels like OTT and CTV. All of these elements should be considered.
Next, establish swim lanes and plan who will own different elements of your strategy. It is at this stage that you could have your partners start becoming an extension of your brand or your vision. As those partners lean in, you can now optimize for key components within the supply chain. Some examples include making decisions based on which identity solutions matter, or determining if mobile or CTV is a strategic channel. Some technology partners are willing to develop custom solutions, integrate with new partners, and share log-level data within strategic relationships.
Finally, think about what growth looks like in the coming few years. It will not be a continuum from what came before. New strategies like SPO are starting to play in the CTV and OTT space which often include very different goals such as brand awareness and reach. So while SPO was very much a reaction to header bidding in the display space, it continues to develop along with header bidding and CTV.
Similarly, new (old) ways to buy media like contextual targeting will become more important in the coming months due to changes with third-party cookies and privacy laws, which may require a more creative approach to SPO if a unique audience is not a primary comparing factor.
SPO helps ensure that buying paths across all of these transaction types are free from artificial costs, and are transparent and high quality. Done well, SPO creates real differentiated value and drives meaningful cost savings. For example, one travel provider worked with tech partners to create a custom exchange that helped improve several KPIs including filtering non-organic traffic, filtering indirect paths, activating custom audiences and implementing buyer-controlled fees. Each buyer has the ability to request custom solutions that ensure they get value from their select partners – and isolating KPIs can help lead those activities.
Publishers as well will have to be mindful of what’s going on in the entire digital ecosphere. They must prioritize and think about what areas are growing. They can’t just put their attention towards what they are good at now. This year alone, we’ve seen OTT and mobile growing rapidly, and publishers must address how they will meet this demand. With the need for cookie-free data, everyone, not just publishers, must develop plans to stay relevant around this area of concern.
The good thing is that SPO is no longer a blunt cost-savings conversation. But with that, partners and publishers will be challenged to prove their unique value to advertisers, their ability to partner and their strategy for growth. It’s a big undertaking, so one must determine what can be done internally and where vendor partners can be leveraged. Don’t rush it, SPO is a long-term investment that should be refined over time according to performance, efficiency and overall manageability in a market with many big changes on the horizon.