Kristina: What is Supply Path Optimization?
Alex Perrin, VP of Programmatic Strategy, Adelphic: The advertising supply chain comprises countless publishers that supply digital impression opportunities. The sheer number and complexity of these transactions makes it difficult for brands to keep track of where they are purchasing ad impressions. For example, a green-conscious brand could unknowingly purchase an impression on an oil industry news site. While this is a simplistic example of SPO, it sets the stage for more complex and serious issues if the supply chain is left unmanaged.
With the above in mind, SPO is an emerging category of tools, systems, and policies, allowing programmatic buyers to 1) gain more transparency into the supply chain, 2) identify optimal supply paths based on media efficiency goals, and 3) build robust toolsets for brand safety and impression efficacy.
Kristina: What are the potential consequences if brands do not utilize SPO?
Alex: Brands that do not utilize SPO expose themselves to non-transparent publishers that could be antithetical to their brand mission, as exemplified by the green-conscious brand purchasing impressions on an oil website. This lack of transparency can even translate into indirect funding of questionable intermediaries, as malicious supply entities can transfer a brands' ad dollars into these activities without their knowledge. Another consequence of not utilizing SPO is higher advertising costs, or a higher cost per CPM. When an ad buyer purchases a set of impressions, that request travels through inefficient or unnecessary intermediaries. Each intermediary "hop" captures a fee during the process of delivering ad impressions, and these fees can add up quickly when multiple intermediaries are used. This so-called "supply tech tax" is estimated at about 50% of total media spend. This is a massive value-drain for brands, and the costs from this are often overlooked.
Kristina: What technologies are enabling brands to pursue SPO?
Alex: While there are many variations and mechanisms of SPO, none is more popular than Ads.txt. Ads.txt is a mechanism for publishers to authorize specific supply paths when transacting impressions. Ads.txt is the publisher's way of signaling to buyers that they are the real authorized source. The derivative, app-ads.txt initiative provides equivalent transparency and spoofing protection for mobile app inventory. For DSPs that work with Ads.txt solutions, the DSP will reject bids from supply sources that are not authorized by the original publisher. These rejections protect buyers from purchasing the wrong impressions and arguably retains revenue for the intending publisher source. If Ads.txt allows the buyer and the original seller to signal to each other indirectly, sellers.json serves as the connective tissue for that signal in the supply chain, often via an exchange. The sellers.json file discloses each seller ID and specifies whether that company is the publisher or an intermediary. Generally, this file acts as the key when working with supply sources in multi-path inventory environments.
Kristina: What are some practices of effective supply path optimization, and how do they protect the budgets and reputations of brands?
Alex: SPO is all about data collection, observation, and taking small actions to decrease the distance between supply sources and the buyers. There are many practices and emerging technologies that are supporting these goals. Implementation and use of Ads.txt (and its derivatives) ensure brands are buying from authorized sources. In the supply object, sellers.json ensures the authorized source is being transacted against in the supply path. Ultimately, brands should curate the right deals for their business by learning over time which publishers and supply platforms offer the most value, efficiency, and transparency for their programmatic needs. It is always best to maximize single path inventories whenever possible (and sensible). Brands can make their jobs easier by utilizing a reporting system built on curiosity, learning, and iteration. If their current SPO practices are working today, that doesn't mean they can't improve tomorrow. When possible, brands should consider reserving a test budget for new supply entities and emerging SPO technologies to ensure an iterative process.
Kristina: How can one effectively balance supply-side transparency with the need for abundant and unique impression opportunities?
Alex: Savvy advertisers who utilize SPO's many mechanisms can identify the most trustworthy partners in a programmatic market by focusing on unique opportunities at the lowest cost. This process requires advertisers to keep their foot on the gas at all times and to continue the pursuit of transparency, scale, and unique omnichannel access.
Balancing supply efficacy, and scale/performance outcomes in programmatic can be very similar to the story of Goldilocks. Brands have to try both extremes to identify their perfect fit based on their unique brand outcomes. Advertisers must start broad, and, over time, hone in on supply sources that generate the most value and transparency. SPO is not a silver-bullet solution. It's a hodgepodge of tools, theories, and emerging protocols that allow brands to take more control over the supply chain. Thus, performance and "value" are very subjective from advertiser to advertiser.
Kristina: How does Viant implement these best practices into its DSP, Adelphic?
Alex: Viant/Adelphic has been maintaining rigorous SPO practices before the popularity of modern mechanisms like ads.txt and sellers.json. With Viant's extensive history in programmatic, we've been focused on working with specific publishers, supply-side platforms, and exchanges to find the fewest number of "hops" to the end publisher and maximize value for our brands. Viant's extensive history with traffic-shaping and supply path curation has carried over when working with self-service brands that utilize the Adelphic DSP. The Adelphic DSP aims to connect brands with all supply sources possible, but as mentioned, targeting the whole universe is not practical or economical. With that in mind, we recommend advertisers ask about resold inventory and non-essential intermediaries that can be redundant in the supply chain. Adelphic has an astute team of programmatic strategists and a media strategy investment team that help advertisers rethink their approach with value and transparency in mind.
Kristina: What does the future hold for SPO? Do you see it becoming more or less necessary?
Alex: The future is bright for SPO, and that is not necessarily a good thing. In a space that's riddled with complexity and high degrees of fragmentation, there will always be malicious or non-economical entities that await an unsuspecting brand. To carry on our comment from earlier, SPO is not a silver bullet, but rather a muscle that has to be continuously exercised over time to be effective. In many ways, SPO is comparable to how we've built safer cars, better road hazard warnings, and provided better drivers training -- the dangers remain, but rates of accidents have decreased with each innovation. In this vein, there will be more technologies, more "required" features of DSPs (like ads.txt), and more training for programmatic professionals so that we can reduce the impacts from inefficient sources and bring the most value back to the advertisers we work with or for.
Tweet
