By Simon Halstead, Founder of Halstead Incubation Partners – a strategic advisory/consultancy helping businesses scale growth and work through strategic challenges.
We have seen articles questioning the need and value of SSPs. I feel compelled to come to the defence of supply-side platforms (SSPs), an often much-maligned part of the industry, tarnished by the phrase the ad tech tax, suggesting that costs are being taken out without value being provided. Sometimes it feels like there is a view of exchanges as dumb pipes, or margin stealers.
Let’s recognise that nearly all companies in the supply chain, on the demand and the supply side provide additive value and often (needed) simplification. The choice of the volume of partners to add or utilise in a campaign sits with the ultimate end clients, Advertisers and Publishers.
Significantly, the separation of the value chain has exposed some costs that were managed by the ends of the chain, and are now within the middle with a service provider. This changes how costs are presented to the buyer, and where in the process they are absorbed.
SSPs serve multiple partners, with the publisher as the ultimate end customer. They should act in the publisher’s best interests, to facilitate the demand types a publisher wants to see. Interestingly, it feels that DSPs are freer to act in the interest only of the buyer and to focus on a buyer’s KPI’s.
SSPs are frequently doing some of the heavy work that people would not necessarily want to do in terms of management and curation of supply (whilst not being perfect). They manage a scale and range of publisher types and formats, and provide management tools, pricing guidance, and invest in Agency relationships to manage demand to help publishers monetise. They are constantly investing to keep the pipes working – working closely with bidders to Q&A why delivery doesn’t occur.
There are significant efforts to screen and remove fraud, both with partners and in-house technologies. They bear significant infrastructure costs, to host auctions and bring supply and demand together. They are often instrumental in the application of IAB protocols to help improve the ecosystem or working through how to enable schemes like the TCF and GPP. They also run significant and complex billing operations in partnership with DSPs.
This isn’t to say there is a need for continued focus and attention to quality, but the role of the SSP is to surface an opportunity for a buyer to decide if they wish to bid. Many SSPs are working in tandem to exclude MFA from PMPs or fully from the auction, and working to shape traffic in line with a DSP’s requirements. They also work to understand why brand safety blocks have occurred, and partner with verification companies.
SSPs serve markets where there is demand – so market forces should drive the reduction in the number of partners, and cleaner, less carbon-heavy auctions. Let’s also recognise that unless all customers of the DSP stop responding to a bid request, the auction does still occur. If buyers are bidding on inventory, then that’s a challenge for an SSP to choose to not monetize that inventory when there are players in the market, who will be successful in that monetization. To a degree, it’s the market functioning as intended.
Now I also don’t want to pretend all is perfect in SSP land. Some players aren’t acting in the publisher’s interest, or are mislabelling inventory. Header Bidding, originally conceived to manage challenges in the ad server, has led to an excessive growth of partners in the header, and an overduplication of bid volumes.
SSPs are responding, and traffic shaping, as well as developing curation always on inventory deals, and direct tools, to improve supply addressed.
The excellent ANA study before Christmas highlighted some of the challenges we face as an industry. Bidding across 80,000 domains – having 20+ SSPs connected to a wrapper isn’t efficient. For both publishers and advertisers, having a direct relationship with a curated group of SSPs that service your needs, and understand your boundaries should lead to a cleaner supply chain.
Lean into finding sufficient scale, and understand how each SSP differentiates. The critical opportunity is a partnership between Advertisers, DSP and Exchanges to surface inventory of value that meets requirements. I strongly believe this is the future we are headed to, but also that SSPs are a critical component of this future in an increasingly tighter partnership with the holders of budget.
