Direct Supply Paths Are Becoming Standard Practice in Programmatic

In programmatic, the advertising industry has lost the value of direct relationships. The rapid expansion of the ecosystem resulted in a chaotic web of platforms and providers, with countless intermediaries between the brands who buy ad space and the publishers who sell it.

In programmatic, the advertising industry has lost the value of direct relationships. The rapid expansion of the ecosystem resulted in a chaotic web of platforms and providers, with countless intermediaries between the brands who buy ad space and the publishers who sell it.

This paved the way for inefficiency, a lack of transparency, and the potential for questionable practices. An increase in inventory sources across the ecosystem exacerbated the situation, with duplication and overlap in publishers causing the volume of bid requests to skyrocket on the buy side.

But this situation is now changing as both supply-path optimization (SPO) and demand-path optimization (DPO) techniques are employed across the ecosystem. As we approach the start of a new decade, direct integrations in a simpler, cleaner supply chain are fast becoming the norm – and reopening direct paths from advertisers to publishers.

A Demand Side Perspective (SPO)

Every day, demand-side platforms (DSPs) and agencies place more importance on finding the most direct and efficient paths to quality inventory, allowing them to successfully execute media buys through fewer supply-side partners.

While smaller DSPs are largely doing manual SPO and talking to supply-side platforms (SSPs) to identify overlapping supply, larger DSPs are already exploring algorithmic SPO. They are using new transparency standards such as sellers.json to determine which supply sources are directly integrated with publishers, and which are resellers of inventory.

Jounce Media recently published the SPO Fact Pack, compiled using  ads.txt and sellers.json files. It is designed to help buyers make smarter decisions around SPO based on the scale of ad exchanges and how directly they are integrated with publishers.

Some DSPs are already switching off traffic from sources listed as resellers because reselling can introduce supply-chain fees, cause latency, and provide redundant access to supply that is available through a more direct path. But it’s still too early for most DSPs to take the blunt action of switching off resellers altogether. This could block access to unique and valuable inventory sets that particular supply partners perform well on.

Instead, buyers should take a more considered approach to SPO, using resources like the SPO Fact Pack to create a shortlist of trusted exchanges that predominantly use direct integrations and provide scale, efficiency, and transparency. In addition, buyers should look for exchange partners that offer differentiation in supply, have transparent fee structures and inventory floors, and are third-party accredited for brand safety, fraud, and viewability.

As the industry moves toward direct paths, buyers might be tempted to cut all resellers, but for now it might be more appropriate to make smaller changes when looking at which partners to cut or keep, rather than eliminate them all.

A Supply Side Perspective (DPO)

With the demand side looking to streamline supply with fewer partners and direct paths to publishers, SSPs need to prove their value, leading many to employ DPO techniques. The reverse of SPO, DPO helps the supply side gain a better understanding of buy-side capacity limitations, as well as the type of inventory buyers want to see, so they only send impressions DSPs will value and want to bid on.

By using data – such as win rates, payment terms, bid response times, and ad quality – SSPs can identify their best buyers and ascertain how they like to buy inventory; they can then adjust the demand path to make it as easy as possible for those buyers to win auctions. SSPs can optimize toward DSP-specific KPIs and work to queries-per-second (QPS) limits to avoid bombarding buyers with bid requests.

For publishers, DPO means higher revenues from committed buyers, the security of working with credible ad tech vendors, and fewer latency issues (currently caused by sheer volume of bids).

The Path Forward

For too long the complexity of the programmatic ecosystem has obstructed the direct relationships that are vital for business success, but with the advent of sophisticated SPO and DPO techniques this is changing.

Buyers want simple, transparent supply chains with direct paths to publishers, and collaboration between the demand and supply sides is facilitating this trend. As a new decade beckons, the value of direct relationships is being reestablished in programmatic advertising as direct supply paths become standard practice.

Retargeting With Demand-Side Platforms in Display Performance Media

A key driver for growth in display advertising is the rise of technology that seeks to bring efficiency to ad impression buying — i.e., demand-side platforms (DSPs). Approximately 10 percent of today’s online spending flows through DSPs, with forecasts calling for that figure to increase to as much as 50 percent over the next few years.

A key driver for growth in display advertising is the rise of technology that seeks to bring efficiency to ad impression buying — i.e., demand-side platforms (DSPs). Approximately 10 percent of today’s online spending flows through DSPs, with forecasts calling for that figure to increase to as much as 50 percent over the next few years.

Large brands will fuel much of this growth as they shift large ad network budgets to DSPs for better pricing, increased transparency/brand safety, centralized ownership, protection of visitor data, among other benefits. Even marketers who failed with display in the past can achieve success with the ad vehicle in the present via DSPs, thanks to the inherent advantages some DSPs bring to the table.

Many direct and performance-based marketers who were unable to measure traditional display buys to a reasonable return on investment in the past are starting to explore DSPs as a new source of incremental sales and leads. Since a retargeting buy is publisher agnostic (i.e., the advertiser is buying impressions served to specific cookies, not impressions served on specific websites or content channels), DSPs offer the most scale and efficiency, reaching 98 percent of internet users through one-bid management platform using global frequency controls.

Thanks to these advantages and the relevance they offer, retargeting campaigns often convert two times to 10 times more than traditional display ads, and can, at times, show an ROI equal to or better than generic search or content targeting campaigns.

Display advertising continues to evolve, and certain key strategies are starting to take shape that can help advertisers control risk while gaining valuable insights for future channel maximization. Depending on website traffic and ROI flexibility, performance-based advertisers typically have the most success kicking off testing with site-based retargeting.

This strategy enables advertisers to retarget consumers who visited their site, browsed and left without ever converting into a lead or sale. By placing a retargeting tag in the footer of these pages (e.g., the home or shopping cart pages), advertisers can build and bid on multiple retargeting segments using segment-specific messaging or offers across the web through an ad buy on either a DSP or ad network.

So why not just limit testing to retargeting? Although advertisers may be able to achieve ROI close to search or affiliate campaigns with retargeting, impression volume will eventually limit growth. Similar to the role of generic terms in driving brand term volume in a paid search campaign, it’s important to test and explore a broader set of display performance media strategies that may work at higher, more flexible RS/CPA levels in conjunction with retargeting to help drive site traffic that feeds a retargeting cookie pool.

DSPs can help advertisers implement these strategies. Run of network buys (testing different DSPs/networks with and without filters), contextual targeting and site targeting, when bought in a biddable marketplace, are all viable in driving cost-effective traffic to an advertiser’s site. If an advertiser has the right tools and processes in place, DSPs can even be profitable in and of themselves.

For advertisers that are willing to be more flexible and effectively leverage it, display performance media can quickly become the next big untapped channel. These emerging strategies will continue to evolve and pave the way for targeted display advertising for years to come.

Special thanks to contributing author Kirstin Peters of Performics.