Programmatic has come a long way since it was first introduced as a solution for automating the digital advertising purchasing process. Automation gave brands easy access to the right audience and premium inventory while increasing campaign performance. Over time, programmatic advertising has become more complicated. Now, with duplicate auctions bidding for the same individual impression, it can be a challenge for buyers to ensure they’re getting the value and transparency they seek. Out of this need, Supply Path Optimization (SPO) was born.

What is Supply Path Optimization?

Imagine yourself in the produce aisle of the supermarket looking to buy apples. But, not just any apples. You want those that are fresh, organic, and priced fairly. With the complexities of the modern food industry, you may also want to buy an apple that hasn’t traveled the world first. Plus, buying local ensures a fair amount of your money spent ends up in the farmer’s pocket.

As you stand in front of the large display of apples at the store, you review the product information – price, origin, etc. – and any other available details that will help you make the right decision. This is what we would call SPO.

Supply Path Optimization Chain

Your decision relies on some critical information and the store you choose to go to matters. If they are unable to share the information you seek, your decision becomes impossible, which is why transparency and traceability are key in an SPO strategy.

The SSP Brings Buyers and Sellers Closer Together

When buying through programmatic today, it can be hard to discern how many players have been involved in a transaction and if they all added a true value that justifies the end take. Buyers need a clear understanding of and decision power over the inventory they purchase to ensure they maximize ad delivery and unlock the best opportunities.

This now involves compliance with market standards created to increase transparency within the chain – such as ads.txt, sellers.json, and SCO – as well as a commitment to strict quality rules to prevent fraud and ensure brand safety. Buyers should also go as deep as possible into the analysis of their buys through a clear overview of Auction Dynamics, fees, and log-level data to be able to make the right decisions.

With programmatic buying, the SSP can play a large role in bringing their expertise and support into making those decisions easier and more relevant. This is especially true given the control the tech giants now exert over the advertising ecosystem. SPO can help buyers find additional opportunities with SSPs who can ensure scale, KPI achievement, and safety all at once.

The New Era Of Tailored PMPs

At the SSP level, we expect to build more and more tailored solutions to fit the SPO strategy of each agency, depending on its criteria and with a broader focus than just performance. We’re already seeing many partners asking about DEI initiatives, for example. While this can mean working with minority-owned media, other criteria will likely come into consideration as SPO takes off. All of this should result in a growing number of sustainable and meaningful partnerships between agencies and a selection of top SSPs who will be able to answer their custom needs.

If we return to our apple analogy, we know a focus on origin and sustainability is becoming a true game-changer. If every supply chain will eventually need to become greener, the digital advertising ecosystem shouldn’t be an exception.

“Supply Path Optimization is really a unique opportunity to deeply transform our industry and get back to its more fundamental and simple use case: an advertiser addressing a potential consumer,” said JC Peube, Smart’s SVP of Analytics & Quality. 

Choosing the right partners will be a strategic decision between both buyers and sellers in the coming years as the focus on how partners stand by the true value of media and commit to quality and compliance continues to grow.

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