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It is fair to say the ad industry has been buffeted by many challenges and changes in the past 12 months: with economic issues and the delay of third-party cookies, it is clear that now is the time advertisers need to shift their thinking and find new solutions.
While there are new technologies to combat the identity and connected TV challenges, it is also important to consider those technologies which have been available for a long time and can be adapted. This is where SPO or supply path optimisation comes in.
Not everyone has the same definition of SPO. In its simplest form, it means to exert more control over the full digital supply chain by not just looking at the demand-side platform (DSP) in isolation.
In its early years, SPO was used to understand supply paths. In particular, it helped advertisers as the programmatic ecosystem became unnecessarily complex with the advent of header bidding, with multiple SSPs bidding on the same inventory. This complexity led to a lack of transparency into fees and reporting and SPO was able to simplify this process.
But how can it contribute to the current issues facing the industry?
A focus on efficiency
With the current economic situation, it is clear marketing budgets are likely to be cut in the coming months. Though this is expected, marketers still want to maximise their working media to ensure their marketing dollars provide the best possible results.
This need for efficiency means there needs to be effectiveness throughout the supply chain, both with regards to fee transparency and with all intermediaries creating value along the chain. SPO helps to make digital supply chains as transparent and streamlined as possible as it removes any unnecessary intermediaries which aren’t adding value, reducing advertisers’ “ad tech tax” as much as possible. And, by maximising working media in this way, marketers can achieve a higher level of auction performance and win over their competitors when bidding the same.
Considering your customer
While it is important for digital supply chains to become more efficient, they also need to become more ethical. As well as ensuring media dollars are well spent, advertisers need to be appealing to their consumer base; consumers are crying out for more ethical advertising and a sustainable approach.
SPO can play a role in delivering a more ethical and sustainable advertising ecosystem for all. For example, in order to reduce the environmental impact of digital advertising; SPO can simplify the number of intermediaries in the supply chain. This means there are less unnecessary and duplicated calls being made and responded to, which results in less carbon emissions. This further leads to increased optimisation in supply chains which means more control for buyers.
Through this simplified approach, advertisers will be working with fewer supply-side platforms which allows for stronger relationships with all intermediaries across the supply chain. The result is a more direct relationship between advertisers and publishers and, therefore, the end user. In turn, this relationship enables advertisers to secure the best inventory at the best rate, while also working towards common goals around identity and measurement. This further allows more scope for advertisers to partner with experts in spaces such as Diversity, Equality & Inclusion or sustainability.
As we get properly stuck in to 2023, it is more important than ever for marketers to consider alternative solutions. When it comes to SPO, it is important to start by deciding what you need from your supply chain - whether that’s more control, more transparency, more working media, more effective targeting or more ethical advertising. From there, it will be important to work with partners that can help you deliver against these goals to ensure an optimised supply chain.
Michael Simpkins is commercial director, marketplace development at Xandr.