Optimizing the publisher supply path is important. The question is, to whom?

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Selleris a column written by the sell side of the digital media community.

Today’s column is written by Emry DowningHall, SVP of Programmatic Revenue and Strategy at Unwind Media.

The trade office OpenPath launch filled me with nostalgia. Early adopters of header bidding often speculated on the inevitability of a future where publishers would connect directly to DSPs for advertiser demand. In reality, the past six years have been dominated by regulatory changes, identity, and bird-themed memes, as publisher-driven advertising technologies and format innovations have not achieved the momentum we planes in 2015.

At one point, Supply Path Optimization (SPO) threw its hat in the ring as perhaps the most mysterious of conference buzzwords. For me, as a publisher who has spent 15 years in open exchange, the concept of SPO was both ambiguous and important. The question was important for whom?

The Trade Desk (TTD) has made it clear that it is not becoming a supply-side platform. Corn “provide advertisers with direct access to premium digital ad inventory” is the catalyst for every SSP connection a publisher seeks. OpenPath is the third SPO innovation launched by TTD – calling for a single supply path in 2020, GPID (Global Placement ID, which acts as a consistent representation of an ad unit across all exchanges and demand sources) and OpenPath.

Regardless of how it’s defined, OpenPath matters because TTD once again takes SPO from concept to reality. If you think SPO will become a dominant part of any publisher strategy, this is an important announcement, even if you’re not part of the OpenPath Publisher Launch Group. (Ahem, I’m still waiting for my invitation to Solitaire.com.)

SPO is a great concept. But what does this actually mean for publishers or performance teams responsible for driving business KPIs? Although there is no single answer, I will share what I have learned.

Partnership discounts create teachable moments

In April 2020, fueled by a COVID economy, ad tech insolvency issues, and clawback clauses in most SSP contracts, we reduced our partners by 40% and removed reseller lines from our ads.txt. SSPs were not significant contributors of SOV revenue. And, in some cases, we didn’t even know who to notify of their deletion. It was an ad tech break with no one to receive the bad news.

This decision had no effect on performance, but we did not see any impact on key performance indicators. Strategically it was solid. We spent less energy analyzing trades that didn’t move the needle and more time on those that did. By generating additional revenue for our remaining partners, we mattered more to the remaining SSPs in our stack.

It wasn’t until a few months later that I realized my mistake. I had failed to leverage the partners we planned to retain to improve existing business conditions.

Our second round of consolidation had an important dialogue between partners and took much longer. The remaining partners were larger revenue contributors, and the low hanging fruits had been picked. Internally, team members have expressed valid concerns that this could negatively impact revenue if we consolidate too much. I remember wondering why SPO seemed more important to me as a publisher than to my exchange partners.

Did they know something I didn’t? Has that somehow conflicted with their business model? How can we derisk our approach?

Negotiations with each partner differed slightly depending on programs and capacities. We have requested a unified revenue sharing among all Prebid partners for the open exchange with improved conditions for the PMP. This was the critical element of consolidation, as the unification of revenue sharing conditions creates a balanced bid on the client side, which is the cleanest way to assess partner performance. We have not tried to artificially reduce rev-shares. We took our lowest existing rev-share from a large exchange and asked for partners outside of those terms to match.

We also tried to identify differentiated value outside of the open exchange with each SSP. We researched what we thought were the unique strengths of our partners and asked to be included in these programs. We had conversations to define unique revenues flowing through SSP channels, tracking and driving mutual growth.

The need to define the SPO strategy

I wish this experience would provide a blueprint for publishers to follow, but it’s not the reality. While we didn’t see any negative impact on revenue performance, it’s possible (likely?) that lower auction density was offset by more favorable partnership terms. But breaking even still felt like a win since we were more strategically connected with our remaining partners and had a balanced revenue share in the open market for all Prebid connections.

I have little doubt that SPO is important. But I recognize that publisher strategies present very different goals and realities. I recently started a new role and took over a stack that didn’t take the same approach to SPO that I have historically. Despite a large audience and strong KPIs for advertisers, I anticipate going from “pipes to partner” to be more difficult due to lesser scale, which will make my strategic SPO decisions more challenging.

My plan is to take an iterative approach, starting with careful partner assessments, understanding and recognizing contributions beyond net income. Consciously setting this path today expands your track and flexibility for testing. Publisher SPO does not mean the least number of partners or the cleanest ads.txt file. But it should be an intentional strategy that you own.

I have no doubt that SPO investments will matter. I can’t say when.

Follow Emry Downing Hall (@EmryDH) and Ad Exchange (@adexchanger) on Twitter.

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