Getting short-changed? How to Align Value Through the Supply Chain

Supply and demand path optimization (SPO/DPO) are not exactly the latest or the sexiest topics. They seem to have taken a back seat recently, being overshadowed by the death of the cookie, privacy concerns and the rise of CTV.

Yet, the importance of these initiatives can’t be overlooked for both the buy and the sell sides of the industry.

During a recent panel discussion at the Programmatic Summit in Sydney, I sat down with Jason Denny, GM Commercial Operations at NewsCorp, and Flaminia Sapori, Head of Partnerships at Matterkind, to dig into how they are embracing these initiatives and what they are looking for from partners to drive value for their businesses.

Historically, demand or supply-side optimization have been about shedding light on the ‘black box’, focusing on transparency and understanding exactly where the money is going and how many middlemen are clipping the ticket.

While still super important, transparency has become table stakes in these negotiations. What we are seeing as these initiatives evolve is publishers and buyers wanting to work together with a smaller number of partners that not only complement each other but drive value outside of just media access and revenue.

As Jason says: “NewsCorp is on a journey to optimize the demand partners we work with this year. As our business evolves, we need our partners to come on that journey with us. There are a range of factors that play into evaluating demand partners, from the provision of log-level data to unlocking new revenue streams, but where we are interested most is understanding the unique proposition or secret sauce brought to the table that differentiates the business opportunity from the pack. Here is where we can potentially partner and work to add value to the equation.”

One of the challenges with SPO/DPO strategies is that, although they work towards a similar goal, in the end, there is no one-size-fits-all approach.

When working with partners, it helps to take a step back and think about what exactly you’re trying to achieve and then go forward from there. There are many different supply and demand partners out there that specialize in certain areas, and it pays to understand what the end goal is and work backward from there.

In the next 12-24 months, we’re expecting to see many big global brands leaning in closer with their agencies and wanting to understand which partners they are working with and looking to streamline or fill some gaps where possible.

There will be more and more conversations happening with publishers or SSPs, who need to educate brands and buyers about why they should not be SPO’d out of the picture or why they should buy through a particular provider over another.

This is where going through the value chain becomes crucial.

Matterkind is embarking on a new round of SPO, looking at how they can ensure their clients’ budgets are maximized across a whole range of formats and technology partners.

What’s been interesting in the process, Flaminia says, is that, “When it comes to SPO, there are many factors that are extremely important to us beyond cost. What we are all striving to is a healthy marketplace first and foremost. With this said, the ability to create performance efficiencies and cost savings for our brands is a key component of SPO because at the end of the day this is how an advertiser will likely measure success within this context.”

So, education is very important here, with SPO we are focusing on giving our clients the opportunity to be more competitive in an auction environment and there are a number of strategies to achieve this beyond cost.’

As SPO and DPO initiatives become more adopted, it will be increasingly important for both the buy and the sell sides to align on how to work best together rather than operate in isolation.

For example, the advertiser, agency, and publisher may all have different SPO objectives. Those could be reach, win rate, cost efficiency, or something else entirely. This creates an opportunity for those operating on both the buy and sell sides to help brands and agencies bridge the gap with their publisher and supply partners.

Having a higher level of participation from both sides can help establish who the right partners are for you both from a demand or supply-side perspective, where different types of inventory and campaign requirements are considered.

Like many things in programmatic, this can get complicated quickly. Yet, a focus on aligning real value from both your supply and demand partners will no doubt pay off for everyone in the end.