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Here's why you should care about supply path optimisation!

Team InMobi
Team InMobi
5 min read
Posted on August 19, 2022
Here's why you should care about supply path optimisation!

"This article first appeared in B&T"

Media buys and programmatic advertising are a constant force within the digital-led modern world, and InMobi are pushing businesses to understand the relevance of Supply Path Optimisation (SPO) and how it can save your company both money and time.

So if it’s so important, what is Supply Path Optimisation? Thanks to its rapid evolution and growth, programmatic advertising can often become muddied down with multiple paths and intermediaries standing between publishers and advertisers, which can incur additional costs for the buyer and reduce overall profits. SPO is designed to cut down the various pathways and find the single best option to connect the publisher, the users and the advertisers.

According to InMobi, SPO specifically answers the concerns of advertisers by reducing redundant intermediaries in the programmatic chain, all to determine the optimal path of supply for buyers. This helps the advertisers reduce the amount of commission they’re paying as the programmatic chain becomes shorter.

Think of it this way: thanks to the rapid growth of the digital programmatic world, the links between publishers and advertisers can often become a web of middle men, including both Demand Side Platforms (DSP) and Supply Side Platforms (SSP) designed to automate media buys. SPO looks at all the threads of the web and finds the most efficient route from A to B in a way that delivers maximum return on ad spends.

There are plenty of benefits to SPO. Not only can a buyer remove redundant intermediaries, but they can also reduce or eliminate self-competition – that is, competing bids on separate SSPs for the same inventory. It can also benefit publishers, as reduced fees can deliver higher CPMs for publishers while also driving more spend from buyers when they see higher efficiency.

SPO can also represent the potential for publishers to attract even greater demand from buyers and advertisers. When buyers are selecting a publisher to do business with, one with a much clearer and more direct sales path will be more attractive than one with a web of intermediaries at play, so the potential for business goes up.

The importance of SPO isn’t lost on most companies. Daniel Tozer, trading director, Havas Media Australia said: “Transparency and real value for our client dollars across the supply chain has been at the forefront in our industry. A cleaner/simplified supply path ultimately means a stronger level of inventory and better performance.”

Jonas Jaanimagi, technology lead, IAB Australia added: “Enhancing automated trading efficiencies through fully transparent paths via SPO are a critical utilisation of the programmatic standards. These efforts help buyers to gain efficient access to verified supply, build greater trust in the programmatic eco-system and can underpin the yield-management strategies for premium publishers.”

According to InMobi, there are two tactics for SPO. The first is to utilise algorithmic-driven real time supply filtering, a type of program that removes indirect supplies (intermediaries, for example) and allow the buyer to filter inventory sources.

These mechanisms can include ads.txt and app-ads.txt, a method of providing text files declaring authorized SSPs on a seller’s site; Sellers.json, a file type that shows all publishers an SSP works with directly; and Supply Chain Object, which allows buyers to see the number of intermediaries between the SSP and the publisher as nodes and helps to plot the clearest path available.

The second method for SPO is a strategic approach marketers can employ. By consolidating bidding and media buying to a list of a few trusted SSP partners that can provide scale efficiency and transparency, a buyer can reduce overall risk and create more streamlined supply paths.

A more nuanced approach is required when considering in-app advertising. There are some distinct differences between advertising on the web vs in mobile applications, thanks to websites being open spaces anyone can access while apps are individual programs, and this plays into the roles advertisers can take in both. Unfortunately, while advertisers have arguably more options available to them when utilising in-app advertising – including better reach and personalisation – the medium also requires more depth to its SPO.

A good example of this is in-app OTT, or over-the-top video streaming. Content syndicating companies will seek out video content and license them to third-party OTT apps and channels in return for monetisation rights for a proportion of the inventory. The variety of companies involved in these transactions adds to the complexity of the media buy, since there are technically entities with the genuinely direct access and authority to sell this inventory programmatically.

Fear not, dear readers, for buyers can still implement solid SPO strategies when advertising in-app. Finding efficient and direct paths can be done by utilising algorithmic-driven mechanisms like app-ads.txt and Sellers.json to compare SSPs and eliminate suboptimal paths with redundant intermediaries. You can also optimise your reseller paths – not all reselling is bad and identifying which ones can create value and which will only add to the complexity is an important tool in any buyer’s belt.

An example of good SPO use is Nick Brignell, general manager, speciality business – Xaxis, Sightline & INCA, Group M. “We have seen that deliberately choosing a specific SSP but still dealing directly with the publisher or broadcaster, helps us cleanse and take control of the supply chain as well as gain significant pricing and priority advantages for GroupM clients,” he said.

“This has flow on effects like driving advantage in a biddable environment, better brand safety controls and ultimately more working media dollars to increase quality of supply for our clients”

Most buyers these days are already well-versed in web SPO, but with the ongoing rise in in-app advertising, understanding the differences and knowing how to create the most direct and efficient supply path possible can be critical to the success of an advertiser. Good luck, media buyers, and go forth and make strong business choices!

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