Will Supply-Path Optimization Solve Efficiencies within AdTech?

In the ever-moving, fast-paced world of digital advertising, staying ahead of the curve is a perpetual challenge. Advertisers are continually seeking ways to maximize the efficiency and effectiveness of their ad and marketing campaigns. One of the key strategies to achieve this is Supply-Path Optimization (SPO). 

SPO is a complex but essential technique that helps advertisers make informed decisions about their programmatic ad buying, ensuring their messages reach the right audiences at the right time and in the most cost-effective manner. 

However, is SPO the holy grail for advertisers and transparency? I don’t think it’s as simple as that. And this article will help explain why

Firstly, let’s do a sense check into SPO and the benefits it is bringing to the industry.

Benefits of Supply-Path Optimization

• Cost Efficiency: By eliminating intermediaries, advertisers reduce the fees and costs associated with each transaction. This directly impacts the overall cost of running programmatic ad campaigns, making the budget more efficient.
• Enhanced Transparency: SPO provides advertisers with a clearer understanding of where their ad dollars are going. This increased transparency allows for better decision-making and budget allocation.
• Improved Data Quality: SPO helps to maintain data quality and consistency throughout the advertising supply chain, ensuring that advertisers are using accurate information for targeting and analytics.
• Reduced Ad Fraud: The streamlined supply path can help reduce the risk of ad fraud by minimizing the number of opportunities for malicious actors to manipulate the system.

Whilst I agree that SPO is a good thing and holds many benefits within control and transparency, I do have reservations that we run the risk of going too far in that direction, therefore putting the power in the hands of a small few – meaning aspects such as innovation and keeping a competitive edge will falter due to market dominance.

Further, aspects such as scale and price may overrun value, and that simply cannot happen. Big-volume SSPs that offer the lowest rates are currently being preferred over those SSPs that build the tools that add value to the supply chain. This can often be down to far too narrow scopes provided by the auditors. I understand cost and scale might be good for the short term, but removing value will only impact advertisers in their long term strategies.

For me, ‘value’ should always be the core focus, and I really do hope phase 2.0 of the SPO journey will start to shift focus and get back on track. 

Other Challenges with SPO 1.0

Advertisers should consider the following:

• Trade-offs: Cutting down the supply path may increase transparency and reduce costs, but it could also limit access to certain inventory and audiences.
• Continuous Monitoring: SPO is not a one-time effort but an ongoing process. Advertisers must regularly reassess their supply paths to adapt to changing market dynamics.
• Technical Expertise: Implementing SPO requires a strong technical understanding of the programmatic ecosystem. Advertisers may need to invest in data scientists or ad tech experts.

In an era where transparency and efficiency are paramount, SPO allows advertisers to make the most of their programmatic ad budgets. By streamlining the supply path, reducing costs, and enhancing transparency, advertisers can achieve better results and more effectively reach their target audiences. However, it’s essential to approach SPO with a well-defined strategy and a commitment to ongoing optimization to reap the full benefits of this powerful technique.

We cannot lose sight of value, and we need to ensure we do not let that slide in the bid to add scale and limit costs in the bid to drive efficiency.