How to create a strong SPO strategy

Kristina: What Is SPO?

Kyle Dozeman, VP, Advertiser Solutions, PubMatic: Ultimately, buyers want access to all the best supply. Within the programmatic advertising landscape, that traditionally meant that demand-side platforms (DSPs) and agencies sought to access inventory from as many SSPs as possible. Each SSP had differentiated access to supply, so connecting to all SSPs was required to meet supply objectives.
 
Today, due to the proliferation of header bidding, publishers are working with many supply-side platforms (SSPs) simultaneously. In the new paradigm where most SSPs no longer have exclusive ad inventory, working with more than three or four SSPs does not provide access to incremental supply.
 
Supply path optimization, or SPO, is really just the process of buyers focusing spend on fewer, higher-quality SSPs. Our new white paper offers greater detail on the value that agencies and advertisers can unlock with SPO.

Kristina: How will SPO impact the overall programmatic industry?

Kyle: The programmatic industry remains highly fragmented. While DSPs, agencies and advertisers are beginning to optimize their supply paths and consolidate spend across fewer supply-side partners, this trend is still in its early stages. As more buy-side players employ SPO, we anticipate a few trends to emerge, affecting the future state of the industry -- such as increased innovation and cost reductions, to name a few.
 
Overall, SPO will accelerate the growth of programmatic by driving improved ROI for buyers. I believe in the technology and its effectiveness and SPO will enable advertisers, agencies and SSPs to collaborate and innovate together in ways that they never have been able to before.

Kristina: Why do buyers employ SPO? 

Kyle: The speed at which SPO conversations are emerging in the forefront of industry dialogue is intensifying, and for good reason. Buyers are realizing that fragmentation of supply paths effectively leads to a lack of control over their bid strategies, to the detriment of campaign performance and advertiser ROI. SPO is a mechanism for buyers to reclaim that control, including economic control, quality control, concentrated innovation, holistic insights, and control over behavior. 
 
In programmatic advertising, extensive fragmentation is risky, ineffective and incredibly inefficient, all of which restrict marketers from driving ROI. A buyer's supply chain is only as good as their worst SSP. Only when supply paths are optimized and spend is consolidated on a set of preferred partners can buyers truly extract the full benefits of a premium programmatic ecosystem.

Kristina: How do you measure success with SPO? 

Kyle: In order to effectively select and refine a buyer's supply chain, it's necessary to accurately measure success. An efficient supply chain will look different for each media buyer, depending on their unique needs and priorities. However, metrics that track performance, innovation, and long-term partnerships can be included in any buyer's analysis to serve as a foundational basis of evaluating SPO success.

Kristina: How do you effectively implement SPO? 

Kyle: Truly optimizing one's supply path is neither an easy task, nor is it a one-time activity. It's an iterative process that requires careful evaluation and continual assessment. It can seem like a daunting journey to embark upon. However, internal assessments, SSP evaluation, consolidation, and ongoing optimization are a few key steps buyers can take to start down the path of determining their optimal supply path.

On top of this, buyers should examine the SSPs that are not part of their chosen supply path a couple of times a year. The digital advertising ecosystem changes quickly, and it's necessary to periodically monitor the changes being made to ensure that opportunity isn't being left on the table. If limited resources, we recommend buyers focus most of their time and energy refining relationships with their chosen SSP partners.

Tags: advertising, advertising trends, ecommerce, ecommerce trends, programmatic advertising, PubMatic, suppy path optimization