The NDA Predictions Hub, in association with Xandr, is dedicated to insight and inspiration from some of our industry’s leading figures to help you make sense of how digital marketing and media will develop in 2022.
The predictions of our experts may leave readers wondering exactly how they can shape their own marketing strategies to fit the trends identified. So as part our Predictions Hub, Xandr’s own experts will be stepping in to help with the answers.
With multiple paths available to access the same inventory, many buyers are struggling to find the most efficient route to reach their desired audience and to capture the customer insights they are looking for. In a recent survey of media buyers conducted by Xandr and IAB Europe, 30% of respondents stated that improving transparency around the effectiveness of their digital ad spending was a ‘primary objective’.
Until recently, buyers were happy to purchase a mix of inventory from various sources and leave it up to the DSP to decide which supply path budgets flowed through. Supply Path Optimisation (SPO) is simply about the buyer taking control of this decision so they are able to choose the supply path that best suits their individual needs around performance, efficiency, measurement and fee transparency.
SPO decisions can be complex and often require a lengthy decision making process. However, the pay offs can be significant. For example, by consolidating SSPs, buyers are usually able to secure hefty volume discounts often realised as a sell side fee cap. This means more of a buyers’ budget goes on media and less is consumed by tech fees. An often missed point is that sell side fee caps also make the buyers more competitive in the auction allowing them to enjoy higher win rates with lower bid prices.
Another benefit of a successful SPO strategy is increased transparency into the supply chain. As a buyer it’s essential that you know what you have bought and how much it cost. This requires you to deeply understand what fees are being applied as your budgets flow through the supply chain. Often buyers know what fee their DSP is taking but are totally blind to the fee the SSP takes and how much budget actually makes it to the media owner verses taken out as tech tax. Choosing a supply path that is able to provide transparent take rates and reporting into the exact amount of fees they charged solves this problem and allows buyers to begin to optimise their fee structure across the supply chain.
An increasingly popular way buyers use implement their SPO strategy’s is through the use of curated marketplaces. By building out their own marketplace the buyer is able to exert maximum control over the supply chain and apply their SPO logic before the inventory reaches the DSP for trading.