1 November, 2019

SPO: What It Is And Why It’s A Win For Both Sides Of The Industry

By Erin Macdonald

When it comes to adtech, transparency is now a top priority for buyers and publishers alike. In this piece, PubMatic’s Regional Director for Australia and New Zealand Peter Barry runs through all things supply path optimisation.

Of all the issues dominating adtech discussions, transparency is the one that most concerns buyers. It’s an area in which the industry is collectively investing a great deal of time to tackle. So why is this so important? Ultimately, it’s about trust – trust in programmatic, trust in vendors, trust in the emerging channels (especially in-app and video) and, overall trust in the industry.

Supply Path Optimisation (SPO) has emerged as a way for the buyside to address transparency across the supply chain, fee structures, and inventory. As programmatic has continued to develop, the appeal of SPO has expanded with it – leading agencies to reassess their vendor relationships as they look to develop deeper partnerships with fewer trusted suppliers.

What exactly is SPO? Put simply, SPO is a way for buyers to reclaim control of campaign performance and advertiser ROI in an increasingly fragmented supply chain.

CONTROL – A WIN FOR BUYERS

The first thing that springs to mind when thinking about SPO is economic control. SPO allows buyers to consolidate their supply partners and extend the impact of their ad dollars. In a fragmented supply chain, understanding supply chain fees – who is charging what, and where – can be a challenge. By working with fewer partners, buyers can manage their supply relationships and get full visibility on fees. Consolidation also allows buyers to leverage their buying power – spending more with fewer supply partners to negotiate better rates.

Then there is quality control. Employing SPO keeps buyers away from riskier supply paths in favour of reliable ones, to ensure their ad spend ends up on premium apps and domains, rather than fraudulent or inappropriate ones.

Lastly, SPO allows gives buyers some influence over behaviour of their supply partners. By consolidating spend with a small numbers of SSPs, buyers can begin to work collaboratively with their supply side partners to focus on innovation – building bespoke solutions and influence roadmaps. And crucially – SPO allows buyers to incentivize supply partners that place emphasis on driving advertiser ROI.

BUT WHAT ABOUT PUBLISHERS?

How does a buyer negotiating deals with SSPs like PubMatic – who have traditionally been publisher focused – benefit the sell side? There are a couple of ways we see these deals benefiting our publisher partners.

In fee-based deals – the fee negotiated with the buyer is always a competitive one. This works in the publisher’s favour. As there is a scale commitment made by the buyer, they will shift spend from less economically attractive supply paths to PubMatic. Outcome – increased spend for the publishers in our portfolio.

The supply chain transparency these deals provide into how much media spend is actually reaching the publisher is a key factor when buyers are deciding which supply path partners to work with. Providing this level of transparency means buyers will move spend from non-transparent supply paths to PubMatic. Outcome – increased spend for the publishers in our portfolio.

The confidence that buyers have in the quality of our inventory. Our relentless focus and investment in removing ‘bad actors’ allows us to provide money-back assurances that any SPO deal only includes high-quality inventory. This means buyers will move spend from non-quality supply paths to PubMatic. Outcome – increased spend for the publishers in our portfolio.

SPO delivers benefits for both the buy and sell side – by rendering the programmatic ecosystem more transparent and more efficient, SPO can help to grow the entire digital advertising industry.

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CONTROL – A WIN FOR BUYERS

BUT WHAT ABOUT PUBLISHERS?

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