woman working on supply path optimization

Five years ago, media buyers were running on every ad exchange possible without much control over where and who bids and impressions were going out to, meaning the exchange picked the best supply path. Today, buyers are ready to have greater control over the supply chain, and many are demanding a solution. Enter ad tech’s latest buzzword: supply path optimization.

What Is Supply Path Optimization?

Supply path optimization (SPO) identifies the right path to bid and win inventory at the best price, empowering you to take ownership and accountability for your supply chain. SPO’s goal is to help buyers access quality inventory and minimize wasted impressions.

What Does Supply Path Optimization Do?

Adweek says it well: SPO cuts the clutter between media buyers and publishers hungry to sell inventory. By clutter, they mean extraneous sellers, URLs and companies who demand their own fees along the ad supply path and stand between the buyer and a publisher. Think of SPO as Marie Kondo’s KonMari Method for the ad tech industry. In the same way you might banish clutter from your closet and only keep clothing and items that bring you joy, media buyers can banish clutter and tidy up the ad tech industry to receive higher quality inventory, lower fees and more transparency in programmatic advertising.

How Do You Create a Solid Supply Path Optimization Strategy?

Root Out Ad Fraud Continually

Ad fraud includes non-human traffic that is intentionally misrepresented or is never seen. Detect, analyze and eliminate fraud by working with a partner who uses pre-bid anti-fraud controls to block fraudulent users, sites and suspicious inventory. Also, ensure your partner has experts who can complete post-bid analysis and work to manually catch what algorithms can’t.

For example, our RealValue® Platform has two industry-first algorithms that allow advertisers to algorithmically optimize their supply paths as well as root out and avoid fraudulent sites and users. With a full suite of pre- and post-bid technology that supports campaign success from beginning to end plus post-bid analysis reporting and analytics capabilities, our RealValue Platform can support complex optimizations, beyond what humans can achieve, and improve your average campaign lift 26% over control!

Go Direct

Our VP of enterprise partnerships Amanda Martin believes to be successful in our field, you have to understand the path a bid takes via an auction. It’s an important part of making informed decisions about ad buys. You need to value how much working media gets to the publisher and recognize who in the middle improves what you’re trying to buy and has supply path elements that benefit you and the client from a performance standpoint.

  • Digging in to understand those supply path elements and how they affect your campaign performance is a good plan of attack, but how do you go about it? Use ads.txt to your advantage. Ads.txt is an IAB-backed tool that places a text file on publishers’ web servers that lists all the companies authorized to sell a publisher’s inventory. This is a good starting point to ensure you’re buying from approved SSPs and sellers.
  • You can also use ads.txt tools, such as Sellers.json and OpenRTB Supply Chain Object, that provide additional verification to fully understand who on the sell side are inventory direct sellers or resellers down to the bid request.

Working with publishers directly and with fewer suppliers can also help you avoid buying resold inventory, or the same site through multiple suppliers. As a bonus, this better protects you from unnecessary ad tech fees too.

Nurture Valuable Relationships

To be successful with SPO and improve the ad tech industry, our president Jay Friedman agrees you should first remove SSPs that aren’t making the cut:

“Everyone can shut off 60 of those 75 exchanges and not lose an ounce of scale,” Jay said. “If all major marketing companies or holding companies get on board, we can consolidate spend around the real exchanges and SSPs that deliver value.” He went on, “We want choice in the market, but we aren’t going to get rid of noise if we don’t consolidate.”

How do you consolidate and be selective about the SSPs you keep? Treat these valuable supplier relationships just as you would client relationships. Connect and collaborate with only a few SSPs for more transparency. Because you’re working closely with a few hand-picked partners, you can feel comfortable asking your SSPs for log-level data to analyze bids and see the fees across the inventory you’re buying. This will help you understand how SSPs measure quality inventory and be sure it aligns with your goals. Another option is to determine the supply path strategy that shows the best performance for you and your clients and tailor your supply path strategy to that SSP/site combination. Lastly, remember to stay proactive. Continue to add and remove SSPs based on how their inventory performs.

Keep Innovating

With the industry always changing, learn the latest SPO techniques and experiment with them. Focus on volume control, programmatic-guaranteed structures and new products to stay one step ahead of ad fraud. Also, use your buying power to negotiate partnership terms, lower fees and better tools. For instance, we recently partnered with PubMatic to foster SPO in the digital advertising industry. Jay said this about our industry-first partnership, “The level of effort required to be the first mover was pretty significant on both sides.” But he thinks this innovation and major effort were well worth it, especially if they convince more buyers across the industry to also consider consolidating spend with one of the top exchanges. “If one of the largest holding companies in the world does a deal like this, it will carry more industry weight and momentum, and all SSPs and exchanges will need to look at building something like this.”

What Are the Benefits of Supply Path Optimization?

This is the answer you’re probably most interested in. SPO efforts and hard work can lead to positive results that will ripple across your media campaigns and across the entire ad tech industry:

Benefit #1: The Ad Tech Industry Will Consolidate

Fewer industry players means you’ll pay a lower ad tech tax so more of your budget will go to working media. This will optimize your performance potential and boost your buying power. Adweek explains ad tech tax is the part of your budget that advertising middlemen take for their services rather than direct premium publishers, and it estimates these middlemen take 60 cents of every programmatic dollar!

Benefit #2: The Ad Tech Industry Will Raise Its Standards

Behavior, transparency and inventory quality across the ad tech industry will improve. Media buyers will have more inventory control (know who is sourcing direct and indirect inventory) and can purchase inventory more efficiently and effectively.

Benefit #3: The Ad Tech Industry’s Programmatic Advertising Auctions Will Be Cleaner

Ad buying will become simpler and less redundant, with fewer bid requests and queries per second. Brand-safe inventory will be more available and ad fraud opportunities, such as domain spoofing (when a fraudster makes it appear they’re a premium publisher), will diminish.

Now that you understand SPO and how to reap the benefits, you can improve your own campaign performance and media efficiency while also improving the ad tech industry. We can help you tackle SPO right from the start or guide you with our expertise and insights along the way. To find out more about working with our team, reach out to us!