SPO explained: Everything you need to know about supply chain optimisation

If you’ve worked anywhere in the vicinity of ad tech for the last few years you’ve almost certainly heard the phrase ‘supply chain optimisation’, or its acronym, SPO. Far from a simple buzzword, SPO is one of the most effective ways for brands to dissect the layers between media buyers and media owners.

What is SPO?

Traditionally, publishers have adopted the ‘waterfall’ model for selling their inventory, dictated by supply-side platforms (SSPs). The rise of ‘header bidding’ tipped this model upside down, making publisher inventory available via multiple SSPs simultaneously.

Now, exclusive and preferred partnerships between publishers and SSPs have become less relevant. As the ecosystem shifted, buyers have been granted greater levels of choice, and with this comes more control over where they buy their inventory.

As programmatic claims a larger share of media spend, it’s an excellent time for brands to take advantage of their more significant levels of control to challenge their supply partners. Brands should be asking themselves: “what value does this supply partner add and does this value justify the cost?”

What are the benefits of SPO?

The most obvious benefit of SPO is economic. Consolidation can help increase the efficiencies of brands’ ad dollars by tackling four key challenges:

1) Understanding supply chain fees – The multiple supply paths to purchase complicates understanding suppliers’ fees. When SSPs work with resellers this becomes even more fragmented. Consolidating the numbers of SSPs makes it easier for brands to foster better supply relationships.

2)Leveraging buying power – Consolidation of ad spend means that brands can grow strategic partnerships where they can influence negotiations and create value for both themselves and suppliers.

3)Inefficient auction dynamics – Current auction dynamics have buyers purchasing across multiple SSPs for the same inventory, which can lead to buyers being overcharged. New developments in SSP and DSP (demand side platforms) technology such as ‘bid shading’ and machine-learning algorithms help buyers to make greater savings and get a higher return on ad spend (ROAS).

4)Supply chain efficiency – The fixed cost model that SSPs operate on means that higher costs often get passed on to buyers. Consolidating the spend can mean greater efficiency and therefore greater value for the buyer.

What other benefits are there?

On top of these economic benefits, SPO can also help with quality control. Today’s web infrastructure means that new websites are being created daily and with programmatic targeting, brands can reach these audiences at the right time with the right messaging. SPO can help brands avoid low-quality websites by utilising ‘ads.txt’ or block lists to avoid these ‘bad apples’.

SPO is also a boon to innovation, allowing a brand’s focus to be concentrated on forging meaningful partnerships with desired SSP partners who they can work with to define product roadmaps.

Additional SSP auctions add layers of complexity to auctions that rarely result in any real insights. With SPO, brands can gain better visibility and greater insights on how to improve their business with fewer participants.

Finally, there is control behaviour. Supply partners can be difficult to police when there are so many in the mix. An optimised supply chain can help simplify proceedings, making it easier to see at a glance which partners are behaving acceptably and which aren’t. This enables brands to hold supply partners accountable and also reward partners that are acting in line with the brands’ best interest and impacting return-on-investment positively.

How can I implement SPO?

SPO is a vast and complicated topic, so lets break down how Publisher Collective support our partners.

How are Publisher Collective addressing SPO?

At Publisher Collective we believe that as a publisher we have a responsibility in aiding the buy-side to efficiently buy our inventory with confidence whilst eliminating the complexity of the supply chain. We are working to address the SPO challenge in 4 key areas:

1) Building meaningful relationships with the buy-side: Buyers purchase inventory across a number of publishers across many buying channels. We believe in order to help buyers to understand the most efficient way to buy our inventory that we need to work with them in a meaningful way to understand our inventory and how we sell it. We are actively working on identifying buyers and inviting them for discussions on how we can help them to achieve their buying objectives and build trust with us.

2) Consolidation: We continue to assess and ask the question “what value does this partner bring and does it justify the cost?” to ensure that our supply partners are adding incremental value to both us and buyers whilst removing partners that don’t follow our best practice protocols.

3) Supporting Transparency Initiatives: Addressing concerns around transparency within the supply chain need to be tackled by all parties involved therefore, we support and continue to adopt transparency initiatives such as Ads.txt and SupplyChain Object to declare to buyers who are authorised to sell our inventory and who are not.

4) Innovation: Given the fast-paced nature of AdTech innovation is at the core of our product development. We believe that by adopting new technologies and frameworks that aid in addressing the supply chain complexities it will in turn help the supply chain to become more efficient and transparent for our buyers.

For more information on this tool and to find out how we can support you in reaching your target audience, get in touch here.