Why Brands Need To Take Supply More Seriously
Within the programmatic landscape, there is a two-sided relationship between the buy-side and the supply side. Supply in its simplest of terms relates to the inventory that publishers have available for monetization which in fact goes beyond ad space. The actual supply is the billions of ad impressions that span across the internet daily in the form of users visiting publisher domains enabling publishers to monetize their sites. Programmatic has enabled endless possibilities of optimisations and the ability to value each impression to meet advertisers needs.
The supply ecosystem is broad, complex and to many brands, it is a foreign concept. When discussing the matter of supply with brands there are often many questions around how it fits within their overall strategy combined with the usual buzzwords such as SPO, Consolidation, and Curated Marketplaces. For others, there are preconceptions that supply is simply the concept of where their advertising campaigns are being shown. While in the grand scheme of things this is accurate, there is a lot more to it.
This article looks to explore the reasons why brands need to take programmatic supply more seriously and offers food for thought for future planning.
Supply & Demand
The law of supply and demand is a microeconomics theory that explains the interaction between the sellers of a resource and the buyers of that resource. In the case of programmatic, publishers sell their inventory in the form of ad space while advertisers buy the ad space to display their campaigns. While the theory may seem simple it plays a key role within the programmatic landscape which advertisers cannot ignore. Without publishers selling their inventory advertisers would not be able to deliver their advertising campaigns and without the demand from advertisers, publishers wouldn’t be able to monetise their inventory. This two-way relationship highlights the need for advertisers to interact greater with publishers to understand their offerings but also to create equilibrium so both can win.
Understanding the concept of supply and demand is only the beginning of the supply puzzle. Brand suitability offers an added dimension to building meaningful relationships with suppliers whilst carving out a tailored supply strategy that meets an advertiser brand strategy and image. Brand suitability is an additional brand safety measure that ensures digital advertising campaigns appear against content that is deemed relevant and appropriate for the brand.
If we take the events of the last year and a half, the global pandemic, many advertisers reacted the same way by blocking news sites as a whole or adding pandemic related content to their keyword block list. This impacted the supply side but arguably advertisers missed an opportunity. Pandemic related content was in and is still in high supply but being able to distinguish the difference between positive and negative pandemic stories could have benefitted advertisers to get their campaigns in front of the right audience. Vendors such as Double Verify and Mantis offer this capability and for advertisers looking deeper into supply, they can easily turn a negative into a positive, as morbid as that may seem.
As in any industry, innovation drives growth in the form of new opportunities for brands in the context of programmatic emerging channels that innovation is driven by the supply side. Sure, the advertiser’s demand for specific formats helps drive the conversation forward, but the ultimate result comes from the supply side. We have seen this across many new formats over the years with the most recent being Connected TV (CTV). Tipped at being the future of video consumption and the evolution of linear TV, CTV is heavily on the radar of advertisers, yet from a supply perspective, it is still drastically fragmented within Europe. In the US there is a much greater opportunity for CTV with supply sources such as HULU being well established at scale. If advertisers utilise resource to investigate trends and work closely with supply partners, there would be an enhanced opportunity for them to invest in innovations that are market-ready. These types of partnerships and understanding can help advertisers plan their future roadmaps.
Let’s face it money talks, so if nothing else from this article appeals to you then let it be this. Advertisers taking their supply more seriously can save money and give greater control of where media dollars are going. Whilst the need for Supply Chain Optimisation (SPO) is ideally needed to take advantage of this economic opportunity, we can break down the efficiencies advertisers may gain by tackling four key challenges that exist within the supply chain.
- Understanding Supply Chain Fees – The typically black-box nature of SSPs combined with multiple supply paths adds complexity in understanding the fees. The supply chain economics becomes even more fragmented when SSPs work with resellers that also charge a fee meaning questions around the value of ad dollars, multiple fees, and discrepancies lead to unresolved questions. By consolidating the number of SSPs, it becomes easier for brands to foster better supply relationships and understand the supply chain fees that are applied.
- Leveraging Buying Power – A brand’s ad spend is historically split across multiple SSPs, making it difficult for brands to leverage true buying power as a means of influencing negotiations. Consolidation means that the spread of ad spends across fewer SSPs enables brands to grow strategic partnerships where they can influence negotiations and create value for both themselves and their suppliers.
- Inefficient Auction Dynamics – Current auction dynamics see buyers purchasing across multiple SSPs for the same inventory. This fragmentation and the fact that buyers are often SSP agnostic can mean that buyers are bidding against themselves resulting in being overcharged for inventory. New developments in SSP technologies such as Bid Shading helps buyers achieve more favourable dynamics in auctions which often leads to greater savings and higher return on ad spend (ROAS)
- Supply Chain Efficiency – Infrastructure costs SSPs incur tend to operate on a fixed cost model meaning they remain constant regardless of how much buyers spend. These costs dictate the SSP fees a buyer must pay and therefore any inefficiencies result in higher fees being passed on to buyers. Consolidation of spend to specific supply partners can help in maximizing the efficiencies of these infrastructure costs for an SSP which can often be passed on to a buyer, generating improved economic value for buyers.
Greater information on the benefits of SPO can be found here.
The supply ecosystem is vast, complex and spans far greater than just where ads are displayed. Advertisers need to allocate resource and internal education to understanding the supply side to reap the benefits. Knowing where to start may be intimidating. The Programmatic Advisory are here to help brands develop a bespoke supply strategy and provide internal workshops on all things supply.