Both advertisers and publishers have recently returned to a topic that started trending a few years ago: they want to create transparency in digital advertising supply chains, increase business efficiency, and reduce their carbon footprint.
Data and closer relationships between various players have become central to achieving this objective. This is underpinned by the idea of Supply Path Optimisation (SPO). Supply Path Optimisation (SPO) refers to measures taken to optimise the delivery path of an advertising campaign within the digital advertising ecosystem. The aim is to ensure supply chain efficiency, lower costs, enhance productivity, direct campaigns to higher quality inventory, and optimise energy consumption.
The topic has been extensively covered in industry publications. According to Adexchanger, Supply Path Optimisation (SPO) is a strategy where publishers and ad buyers aim to enhance efficiency and cut costs. Publishers strive to identify SSP partners who contribute the most to growth and maintain high CPM levels. SPO is used to eliminate unnecessary intermediaries, but choosing partners is not always straightforward. The article suggests that those utilising SPO most effectively can trim as much as 20-30% of their supply chain. Digiday reports that SPO can help remove detrimental industry actors, benefiting the entire ecosystem.
Significant changes have occurred in the landscape of Supply Side Platforms (SSPs) in recent years. Previously, many publishers had a couple of SSP partners, but today, leading publishers collaborate with several different technologies. This has led to an increasing diversity in ad delivery routes. Therefore, it's advisable to regularly review one's supply chains and partners and focus on finding more direct connections in an SPO strategy. Intermediaries that provide little added value can cause longer delivery routes and unnecessary costs.
Practical measures for publishers
As Header Bidding has become more prevalent, publishers have endeavoured to work with as many SSPs as possible to boost their revenue opportunities. However, an increasing number of publishers now realise that not all SSPs add significant value to them, thus decluttering their networks.
Publishers should focus on efficiency when optimising their technology portfolio. The objective is to identify optimal combinations of technologies, ad placements, and partners to achieve the best outcomes whilst reducing "digital waste". Dispensing with redundant or low-value ad placements and technologies benefits all parties involved. Users appreciate faster loading pages, as do search engines. Furthermore, many advertisers are prepared to pay a premium for higher-quality inventory and demonstrate increased interest in such sites.
Having a robust set of metrics in place helps balance the optimisation of the supply chain and revenue. A key performance indicator worth focusing on from a revenue perspective is sales per thousand impressions. This simple metric effectively smooths out variations between different websites and applications and peaks in traffic. Another important metric is the bid rate, which reflects buyers' interest in offering the inventory. If you manage multiple domains, websites, and apps, comparing these metrics to detect discrepancies and understand the factors influencing positive and negative outcomes is beneficial.
From continuous testing and optimisation to success
The key prerequisite for success in optimising technologies and inventory is continuous testing and learning. It's worth remembering that today's winning strategy might be tomorrow's weakness. If a tactic isn't working today, it doesn't necessarily mean it won't produce better results in the future. The most successful teams and individuals are prepared to develop their operations continually. Ultimately, success always culminates in the people and the data and tools they have. The company's most important task is to coach a team of curious and ambitious individuals, providing them with the necessary knowledge and resources to facilitate continuous testing and optimisation.
If you're looking to streamline optimisation, we recommend exploring Relevant Yield. This tool allows you to comprehensively monitor advertising revenues and key metrics across all digital channels and, for instance, identify valuable and underperforming inventory areas. In addition, you can easily monitor the performance of different SSPs, switch them on and off, and easily implement various tests. With a tool like Relevant Yield, you can increase transparency, streamline processes, save time, and optimise the performance of your platform. If you wish, you can read more about Relevant Yield here.
Optimising the digital advertising supply chain can be challenging and complex, but it's nonetheless crucial. Publishers and advertisers favour shorter supply chains between each other, and it's worthwhile to aim towards this goal, as it benefits audiences, advertisers, sellers, and the environment.
If you have any questions or would like to discuss the topic further, please contact:
Petri Kokkonen, petri.kokkonen(a)relevant-digital.com