Blog - To Consolidate or not Consolidate? That is the question

A year on from the ISBA Programmatic Supply Chain Transparency Study and Supply Chain Transparency continues to be a hot topic within programmatic advertising. Supply chain optimisation, or SPO as it’s more commonly referred to, is a buzzword that carries significant importance to brands looking to take back control of their supply chain. One of the key strategies within SPO is consolidation. Consolidation is focused on streamlining supply sources to a smaller group of suppliers that deliver optimal balance for campaigns. However, consolidation is often a premature strategy that advertisers adopt when optimising their supply chain as it doesn’t consider several other important factors.

To Consolidate or not Consolidate? That is the question featured image

The following are areas to consider before deciding whether consolidation is the right option for you and your brand.

Demand Side Platforms

When it comes to Demand-Side Platforms (DSPs), the best practice is to utilise only one platform, but it is worth noting that not all DSPs are built the same. DSP bidders have multiple integrations with SSPs, each SSP sending traffic to the DSP in the form of QPS (Queries-per-second). However, the volume of QPS sent to a DSP is usually different across each supply source which can impact consolidation.

Picture this scenario. Your metric of success is video completion rate (VCR %) and your DSP of choice is integrated with 10 SSPs. One of these SSPs sends 10 times more video impressions than the other 9. When you report on the activity across the 10 SSPs, you see that the high-volume SSP achieves an 88% video completion rate. Whereas, the other 9 linger around a 60% video completion rate. Instinct would be to optimise towards the high-performing and high-volume SSP. However, the high-volume SSP may be draining 10x more QPS. Therefore, this may be skewing the response and also impacting your costs.

Optimising QPS is an area that all advertisers should get familiar with and should be willing to challenge their DSP partners to be more transparent about the makeup of their bidders. Pre-targeting configurations present within some bidders should be customised to your specific needs to establish the most valuable QPS. Smart throttling is a great solution that several SSPs, such as Magnite, are using to shape the traffic that meets your needs. It is based on historic media buying habits and down weights traffic that you don’t buy from.

Market Coverage

When operating across multiple markets, one size does not fit all, especially when buying across several SSPs. While SSPs cover many regions, there are market nuances such as the programmatic maturity and legislation, that impact market coverage. Yet, one of the biggest factors is local vs global vendors. Local suppliers in some regions are the go-to vendor for tier-one publishers and they often utilise a global supplier like Google as a backfill option for their inventory. These local vendors may deliver next to nothing in any other regions, but a consolidation strategy should assess the loss of inventory that may occur by switching these local partners off.

A prime example of this is the Chinese market. The majority of SSPs will have volume for Hong Kong but will lack any real volume for mainland China. This is because local legislation requires servers in China that are expensive and difficult to set up. Local suppliers such as Baidu or Tanx are the preferred suppliers for publishers in mainland China but outside of this market are less common. Therefore, removing these suppliers from your mix would impact your delivery within mainland China. They should be looked at as a strategic partner that sits outside of your overall consolidation strategies.

Inventory Sizes

If your supply strategy is focused purely on buying MPUs banners, then read no further. Consolidation in this scenario is worthwhile as you do not need multiple SSPs to purchase just one inventory size. The only caveat here is that some suppliers may have exclusive access to MPU inventory. However, this is less common in today’s market.

Understanding the specialism of inventory that SSPs have to offer is another important consideration when looking at consolidation. While header bidding changed the landscape in terms of access to inventory and removing exclusivity, suppliers have not lost their core roots for their specialisms. Take video as an example, we often associate video inventory with vendors such as Teads, Unruly or SpotX. Whilst these vendors may have expanded to include desktop banners, they are still perceived to be video specialists.

When looking at consolidating your supply, you need to consider what inventory makes up that specific SSP and what percentage of publishers utilise them for their specialism. Whilst you can access the majority of inventory via most SSPs, the capabilities these specialist vendors have will likely differ. This provides greater access to more products, future-proofed technology and even in-house expertise to help get the most out of the inventory in question.

Conclusion

Consolidation plays an important role within SPO by helping advertisers gain greater efficiency and transparency over their supply chain. But the bigger picture identifies that consolidation is not as simple as switching the off switch on certain suppliers. There needs to be more education surrounding understanding how to challenge the norms of the industry.

SPO covers a wide spectrum of areas, which can often be difficult to know where to begin. If you find yourselves in this position, then The Programmatic Advisory are here to help! We will work with you to define the SPO strategy that works best for your brand. Contact us or learn more about our Supply Specialism.

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