Why advertisers need to optimize their supply paths to prepare for 2023 and beyond

By: Graeme Lynch, Head of Demand, EMEA

Supply Path Optimization – or SPO – is the process of finding the most profitable path to ad inventory, identifying the most efficient connections and using them to transact with sellers. This year, SPO has taken on new importance, moving up the priority list for buyers in the face of macroeconomic influences, sustainability, and addressability challenges. Here we take a closer look at why advertisers need to optimize their supply paths, specifically how collaboration with publishers and their supply-side partners can unlock quality, efficiency, and convenience.

From Optimization to Collaboration

The SPO process involves auditing supply paths, consolidating the number to reduce complexity, and optimizing the exchanges that are left. SPO criteria generally centers on Inventory access (the coverage and efficiency), transparency and quality (fees, auctions, inventory quality), and collaborations. Under new challenges, the latter of those has become more important to fuel the former.

SPO has been put into the spotlight more recently due to events such as DSPs removing Google Open Bidding (OB) inventory, the shifting nature of the identity landscape, macroeconomic impacts, and demand for more transparency on ad emissions.

On sustainability, for instance, the IAB Tech Lab’s Green Supply Path Initiative adds to the work the IAB has been doing with Ad Net Zero in setting standards for the measurement and management of emissions from media. SPO can be part of the sustainability journey but one that requires more collaboration to provide transparency around fees, operations, relationships and data sharing to create more efficient supply paths that are better for the environment.

However, SPO is both a driver and a result of buyers’ desire for closer relationships with the supply-side and their need to drive efficiency, addressability, transparency and improved measurement. For instance, publishers’ valuable relationships with users gives them the unique data within premium environments to meet some of those requirements.

SPO’s positive impact for buyers

While SPO isn’t a new concept, in the face of a changing digital landscape buyers need to find the right supply paths that work for them. Meanwhile, publishers are investing in ways to offer buyers improved inventory access, audience addressability, and more efficient workflows that continue to protect their data and consumers’ privacy. As a result, SPO’s positive impact is being felt in 3 key areas:

Time and resource efficiencies

As ad budgets become more stretched and marketers look to improve the effectiveness of their spend, SPO can provide media buyers with bid efficiency and cost transparency through streamlined access to inventory across geographies and channels – reducing waste and promoting a healthier return on investment.

However, to access such inventory requires much closer collaboration with the right publishers who in turn are looking to SSPs such as Magnite to help curate inventory for programmatic guaranteed deals, PMPs, and auction packages. As an omnichannel SSP, Magnite already works with publishers across display, CTV, online video, mobile, audio and DOOH helping them offer prioritized access to inventory combined with the powerful data and efficient workflows that allows buyers to make well-informed decisions about planning, bidding, and buying.

Increased transparency

Delivering on those promised efficiencies means giving buyers transparency into the planning and buying processes including fee transparency and access to log-level data, auction transparency, and controls around inventory quality including brand safety and fraud protections. Higher levels of transparency into each path through more accurate campaign reporting can help improve optimization of campaigns, as well as helping to reduce our environmental impact.

Magnite has direct integrations with the world’s biggest media owners representing every content genre and all formats globally. These relationships give advertisers access to premium inventory from a single, centralized access point with the controls and reporting required. Magnite is also continually looking to reduce its environmental footprint while shining a spotlight on sustainable content through partners such as Primis.

Continued privacy compliant audience addressability

With Google’s third party cookie deprecation being pushed into 2024 with no exact timeline, there’s an opportunity for buyers to build stronger ties with the supply-side, consolidating to the paths that can continue to provide audience addressability, optimization and measurability now and in the future.

As a result, buyers should look to work more strategically with the publisher supply paths that provide better data enablement (particularly those with first party data), better audience curation, and improved contextual intelligence. Brands should divert budgets towards solutions that can ensure an optimal path to their media buys in all environments regardless of the level of addressability. With their supply side partners, publishers are investing in ways to better identify, curate and showcase their audiences and inventory to buyers through a range of methods such as premium marketplaces, seller-defined audiences (SDAs), and data matching.

Quality beats convenience

Clearly SPO is contributing to a more efficient and transparent digital landscape after recent research from ISBA, the Association of Online Publishers (AOP) and PWC revealed that the ‘unknown delta’ – or spend that couldn’t be followed through the supply chain – has fallen from 15% to just 3% between 2020 and 2022. In addition, the proportion of advertiser spend spent through programmatic pipes that reaches publishers has increased from around half to 65% in the last 2 years.

While there is still work to be done, SPO is a key tool for buyers in driving more efficient and effective media buying e.g. Magnite and Horizon Media signed a multi-year SPO deal in late 2022 to bring advertisers closer to premium publisher inventory. Combining quality data with improved workflows publishers and their supply side platforms like Magnite are bringing significant efficiency gains, quality media buys, and better performing campaigns across all formats including CTV, online video, display, mobile and audio.