The quest for cleaner supply has been high on the buyer agenda for some time, with much written about why routes through the complex programmatic supply chain need to be optimized, and how to achieve this.
In contrast, the sell-side equivalent – demand-path optimization (DPO) – has, to date, received less attention.
Why DPO matters
Programmatic, by its nature, introduces some level of risk to publishers. Uncertainty about who is buying their inventory through programmatic channels opens the door for bad ads to be shown (which have the potential to hurt user experience and create long-term reputational damage).
It may also increase financial exposure if the platforms buying those ads are under duress. As more ad revenue flows through programmatic pipes, it’s time for publishers to shine the same light on their “buy chain” as buyers do on their path to purchase.
DPO vs. SPO – the same but different
While SPO implies that ad buyers will focus on finding the cleanest, safest, most financially advantageous path to ad inventory, DPO is about publishers making active decisions based on deep analysis about which demand paths to use for which buyers to generate the optimal results for their business.
In some cases, that might be measured in yield, and in others it might be measured in better payments terms.
An SSP with better audience match rates makes it the optimal route for retargeting campaigns, for example, while campaigns that deal with high-value inventory, such as direct deals, CTV and video, are better off going through an SSP with a lower take rate fee.
Publishers should work with their demand partners to derive insights and advise on their preferred path to purchase. Data – such as win rates, clearing prices, payment terms, bid response times and ad quality – lets a publisher identify its best trading partners and ascertain which demand paths are working, troubleshoot those that aren’t but should be (where the win-rate for high CPM bids is low) and remove those that are negatively impacting its business.
Closing the gap between demand and supply
Optimizing the buying process to use fewer intermediaries provides both publishers and buyers with more control. By closing the gap between supply and demand, publishers can know which partners connect them directly with their buyers and what those buyers are looking for from an audience or inventory standpoint. Closer proximity between publishers and their demand partners instills trust and sows the seeds for long-term success.
In contrast to pitting the supply and demand sides against each other, DPO fosters an approach that sees publishers work in tandem with media buyers to put the best opportunities in front of them. The end result? A better functioning and more transparent advertising ecosystem.
An effective DPO requires publishers to have access to all buy-side activity, including who is bidding on their supply at what price, and which inventory is clearing. They also need sophisticated blocking tools across the board. We must not risk allowing unverified or unqualified partners to participate in the buy chain.
Initiatives such as the IAB’s ads.txt and sellers.json have made significant inroads into helping buyers protect themselves. The creation of new tools such as buyers.json have the potential to offer the publisher equivalent, helping them avoid bad behavior resulting from murky demand paths. Essentially, it promotes educated decisions about who should buy inventory and at what price, and how publishers can make deals with media buyers to more effectively reach their unique audience.
The current environment
As the industry hurtles toward a world without third-party cookies, DPO is increasingly relevant. With publishers holding the keys to valuable first-party data, they can expect pressure to share it to be exerted by DSPs. Publishers with their ducks already in a row as a result of good buy chain management can be selective about what data they provide to which partners, and ensure that they derive the appropriate value from it, while also being confident that secure sharing channels prevent it being leaked to intermediaries who can profit from it. Moreover, publishers can use first-party data to their advantage to persuade demand partners to use their preferred path of purchase.
In that context, and with the basic principle of DPO aligning with the business tenet of knowing who you are working with, yes, it’s time to zero in.