From data to decisions: how supply path analysis enhances advertising

If you sometimes worry that you’re not keeping up with technological development, rest assured, you’re not wrong. Let's narrow our focus to programmatic advertising - one area where things are moving at pace. Latest estimates show that programmatic advertising was worth $546 billion in 2023. This figure is expected to reach $779 billion by 2028.

The industry is growing rapidly, which means greater complexity for everyone involved. For some, it’s a challenge and an invitation to participate in the race. For others, there’s a desire to shield themselves from the complexity of programmatic advertising completely.

In this article, we'll talk about optimising the supply chain of advertising inventory: what it is, who is responsible, and what this knowledge can bring to all of us. The focus is on choosing the most profitable partners for inventory monetisation and programmatic advertising through self-education in the ad tech field.

The technical side of supply-path optimisation

Thanks to OpenRTB technology, an ad request from an inventory supplier (an app or website with a specific audience) enters the global programmatic advertising market. The request then goes to direct advertisers (demand side platforms/DSPs) and resellers called ad exchanges.

At its most basic, supply path optimisation (SPO) performs two significant optimisation efforts.

• Firstly, it allows you to eliminate excessive resellers in the advertising chain: you can choose only resellers that provide favourable access to advertisers. The reason is that with each transfer of ad requests from reseller to reseller, the inventory increases in value for advertisers.
• Secondly, it eliminates duplication of bids: advertisers will be offered inventory at the most favourable price, not the same inventory at several prices simultaneously, as is often the case with some advertising ecosystems.

Simply put, optimisation is useful to almost everyone. The only losers are the resellers who do not have unique demanders to offer. However, experience shows that efficiency is a relative concept. Supply chain optimisation can go beyond the essential functions.

Increasing transparency and boosting revenue by focusing on preferred bid routes

Optimising bid routes is a skill that lies at the intersection of data analytics and system operation.

This optimisation consists of three key steps:

1. Preliminary analysis of supply routes and their efficiency, and the same analysis for specific partners (nodes) in the chain.
2. Adjustments to the bidding routes: blocking some paths, prioritising others and excluding specific nodes from the chain, and so on.
3. Conducting post-analysis of the adjustment results to further improve performance.

The better your initial analysis, the better your optimisation results will be. But this raises an important question: Who should take charge of this optimisation? Don't worry - we've got the answer. Optimising supply chains rests with the supply platforms through which publishers sell their ad space. By stepping up, these platforms ensure a smoother, more efficient process for everyone involved.

This begs the question, why should we study it? Again, this is a rhetorical question because it is your right to demand better terms for advertising partnerships.

Dealing with SPO as a regular advertising participant

By regular, we don’t mean that you’re a programmatic advertising business. If you’re a business owner, you need tools to analyse supply chains and apply optimisation rules. However, what if you’re a publisher or an advertiser? You have no direct influence on the product you use.

Let's move backwards and start with advertisers.

1. Choose niche DSPs where you are in direct contact with the team rather than large advertising networks like Google Ads.
2. Ask your advertising partners about the percentage of direct suppliers in their portfolio. If the number of intermediary sellers is more than 50%, you have good reason to discuss increasing the number of direct suppliers.

That's all advertisers can do as supply path optimisation is more of a supply-side than a demand-side task. Instead, there is a mirror process called demand-path optimisation.

Next, we will look at how publishers that monetise their websites and apps can influence supply path optimisation.

1. Partner with niche SSPs rather than large ad networks like Google AdSense or Google AdMob. This is always a more profitable option, but it does require additional attention.
2. Ask the provider directly if they conduct supply-path optimisation. If they do, how can you find out about the results? If they don't, you should find out why and what can be done to speed up the process.
3. Analyse the advertising assets broadcast on your resources. If your partner can provide additional statistics, it will help you understand the current state of play.

Fundamentally, that’s it. We know it's always better to partner with a company that initiates programmatic infrastructure optimisation voluntarily. However, reliability and trust are more important - new technologies might be adopted and acquired relatively quickly.

We hope you've enjoyed this article from TeqBlaze. We are a team of enthusiasts who build and develop advertising platforms, helping adtech companies launch and run their programmatic businesses under the white-label model.

Becoming the change driver is always a step forward in a game. And if you're ready to take this step, our experts will stand by your side. Keep going and developing; we wish you the best!

Copyright 2024. Featured post made possible by TeqBlaze.