In the fast-paced world of programmatic advertising, Supply-Path Optimization (SPO) has taken center stage as a game-changer. In 2023, SPO became mainstream, with DSPs and SSPs promoting their SPO products and a staggering 39% of programmatic advertisers now directly purchasing inventory from an SSP. The rise of SPO can be attributed to concerns surrounding audience extension offerings, invalid traffic, and MFA inventory. SSPs are stepping up by investing in data marketplaces traditionally associated with DSPs, enabling audience matching between advertisers and publishers. With a focus on video and CTV inventory, SPO aims to enhance integration between SSPs and publishers while preventing disintermediation. The programmatic marketplace sees both competition and collaboration between DSPs and SSPs, with partnerships continuing to shape SPO efforts. It is speculated that SPO may revolutionize programmatic buying, with direct connections becoming the default for buying decisions. The Trade Desk is already moving in this direction by excluding inventories not deemed of interest to buyers. All signs point to SPO becoming the new normal in programmatic advertising as we move towards 2024.
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2023: Supply-Path Optimization (SPO) Goes Mainstream
2023 marked the year when Supply-Path Optimization (SPO) became mainstream in the programmatic advertising ecosystem. DSPs (Demand-Side Platforms) and SSPs (Sell-Side Platforms) heavily promoted their SPO products, with 39% of programmatic advertisers now purchasing inventory directly from an SSP. This shift in the industry was driven by concerns about audience extension offerings, invalid traffic, and made-for-advertising (MFA) inventory. Advertisers sought greater transparency and efficiency in their ad buying processes, leading to the widespread adoption of SPO.
DSPs and SSPs Promote SPO Products
DSPs and SSPs played a crucial role in driving the adoption of SPO. They actively promoted their SPO products to advertisers, highlighting the benefits of bypassing unnecessary intermediaries and gaining direct access to high-quality inventory. By implementing SPO, advertisers can optimize their supply path, improving the efficiency and effectiveness of their programmatic campaigns. This promotes better targeting, increased transparency, and ultimately, better return on investment (ROI).
Direct Purchasing from SSPs on the Rise
One significant trend in the programmatic advertising landscape is the rise of direct purchasing from SSPs. As advertisers become more concerned about the transparency and quality of their ad placements, they are increasingly bypassing traditional intermediaries and purchasing inventory directly from SSPs. This shift allows them to have greater control over their ad placements and ensures that their ads reach their intended target audience. By establishing direct relationships with SSPs, advertisers can access premium inventory without the need for unnecessary intermediaries.
Concerns Drive Adoption of SPO
Several concerns have driven the widespread adoption of Supply-Path Optimization. Audience extension offerings, which involve extending the reach of an advertiser’s campaign to audiences beyond the original targeting criteria, have raised concerns about the quality and relevance of the ad placements. Invalid traffic, including bot traffic and ad fraud, has also been a pressing issue for advertisers. Additionally, the presence of made-for-advertising (MFA) inventory, which refers to websites created solely to display ads, has further fueled the need for SPO solutions. By implementing SPO, advertisers can mitigate these concerns and ensure that their ad placements are brand-safe, fraud-free, and reaching the desired audiences.
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Advancements in SPO Solutions
As SPO became mainstream, significant advancements were made in the development of SPO solutions. These advancements aimed to address the specific challenges faced by advertisers and improve the overall efficiency and effectiveness of programmatic advertising campaigns.
SSPs Investing in Data Marketplaces
SSPs recognized the value of data marketplaces traditionally associated with DSPs and started investing in similar infrastructure. This allows SSPs to offer advertisers access to valuable first and third-party data, enabling better audience targeting and optimization. By integrating data marketplaces into their offering, SSPs can facilitate audience matching between advertisers and publishers, leading to more effective ad placements and improved campaign performance.
Focus on Video and CTV Inventory
In response to the growing demand for video and Connected TV (CTV) advertising, SPO solutions started placing a greater emphasis on video and CTV inventory optimization. As video consumption continues to rise across various platforms, advertisers are eager to capitalize on the engagement and highly-targeted nature of video ads. By optimizing the supply path for video and CTV inventory, SSPs can integrate more directly with publishers, ensuring seamless delivery of ad content and bridging the gap between advertisers and their target audiences.
Preventing Disintermediation
One of the key goals of SPO is to prevent disintermediation, the process by which unnecessary intermediaries are removed from the supply chain. Disintermediation has been a concern for both advertisers and publishers, as it can create inefficiencies and increase costs. SPO solutions offer a way to streamline the supply chain by optimizing the direct path between advertisers and publishers. By establishing direct connections and reducing the number of intermediaries involved, SPO helps improve transparency, reduce ad fees, and maximize the value of ad spend.
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Partnerships and Competition in the Programmatic Marketplace
In the programmatic marketplace, DSPs and SSPs coexist as both partners and competitors. While they compete for advertisers’ attention, they also rely on each other to create a seamless ad buying and selling ecosystem. Partnerships between DSPs and SSPs play a significant role in shaping the efforts and effectiveness of SPO.
Coexistence of DSPs and SSPs
DSPs and SSPs coexist in the programmatic marketplace by fulfilling different roles and catering to various stakeholders. DSPs enable ad buyers to manage their campaigns effectively, while SSPs provide the necessary infrastructure for publishers to monetize their inventory. This coexistence ensures a healthy programmatic ecosystem and allows for smooth transactions between advertisers and publishers.
Influence of Partnerships on SPO Efforts
Partnerships between DSPs and SSPs have a significant impact on the advancement and effectiveness of SPO efforts. By collaborating, DSPs and SSPs can develop comprehensive solutions that align with industry standards and best practices. These partnerships enable the exchange of data and insights, leading to more informed decisions and improved programmatic strategies. Furthermore, by working together, DSPs and SSPs can address the challenges of disintermediation and fraud, creating a safer and more transparent advertising environment for all stakeholders.
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The Future of Programmatic Buying: SPO’s Impact
Supply-Path Optimization has the potential to transform the way programmatic buying is done in the future. As the industry continues to evolve, SPO is poised to become the new normal, driving greater efficiency and effectiveness in programmatic advertising.
Direct Connections as Default in Buying Decisions
SPO is likely to influence the way programmatic buying decisions are made, with direct connections becoming the default option. Advertisers have realized the advantages of bypassing unnecessary intermediaries and establishing direct relationships with publishers. By making direct connections the default, advertisers can have more control over their ad placements, ensure better transparency, and optimize their campaigns for maximum results.
The Trade Desk’s Default Setting
The Trade Desk, a leading DSP, has already made moves towards making SPO the default setting in programmatic buying decisions. The company has excluded inventories that are not deemed relevant or of interest to buyers, prioritizing transparency and quality. This default setting reflects the industry’s growing focus on SPO and underscores its importance in ensuring efficient and effective ad placements.
SPO as the New Normal in 2024
Looking ahead to the future, 2024 may be the year when SPO becomes the new normal in programmatic advertising. As advertisers and publishers continue to prioritize transparency, efficiency, and ROI, SPO will play a pivotal role in achieving these goals. By optimizing the supply path, reducing unnecessary intermediaries, and focusing on direct connections, SPO empowers advertisers to make informed decisions and maximize the value of their programmatic ad spend. In this way, SPO will reshape the programmatic ad landscape, driving industry-wide advancements and delivering better results for advertisers and publishers alike.
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