SPO 2.0: Bang for Your Buck & Partnership Evaluation

SPO 2.0: Bang for Your Buck & Partnership Evaluation
For a lot of us in the supply chain, our latest innovations can feel like brand-new sports cars on a bumpy, unpaved road. The supply chain is home to technology, creation, and collaboration, but unfortunately, it is also home to fraud, misinformation, and shady deals.

Supply Path Optimization, or SPO, means something else to every organization in the programmatic supply chain. Finding the most efficient and direct path is a goal that every company has to make sure there is no waste in their processes, whether it be time, resources, revenue, or inventory. Like many realities in ad tech, the industry seems to be failing publishers when it comes to SPO. They have yet to conquer the challenging task of deciding which exchanges and intermediaries are aiding their performance, and which are hurting it, and a lack of resources may be the culprit. 

The sell side is facing issues catching up to the buy side's ability to optimize their processes. According to the most recent data by Sellers.guide, the average number of ads.txt lines in a publisher's file is 459. In the last two years, this number has escalated by a growth rate of over 70%.  The supply chain is complicated – Jounce Media claims that over 60% of publishers work with over 10 exchanges. Creating connections within the supply chain to save revenue and streamline efficiency is the ultimate goal, but for publishers, knowing which partners are truly adding measurable value can be a struggle.

Direct vs. Profitability 

The most direct path is not always the most profitable. The simple answer for many organizations looking for the best SPO practice would be to try to find the most direct route from point A to point B. While there is something to that, trimming all of the meat in the middle – such as intermediaries and exchanges – can cause publishers to lose out on vital partnerships they need to thrive. 

The ultimate goal is to better understand where your resold inventory brings you value, and where it is potentially unnecessary or even hurtful. For intermediaries, there is a stronger need to reflect on their own SPO processes in order to add value to the supply path. 

Trust the Numbers.

There is no doubt that there is a lot of ad fraud and misrepresentation in the industry. Intermediaries and exchanges are not always trustworthy and that fact causes a lot of publishers to act with caution. The main question we all have to ask ourselves is: does this partnership add more value than it extracts in fees? If you can answer this question with ease, you’re golden. When publishers evaluate which partners to maintain and which to cut ties with, it is all a numbers game.

Partners should be A/B tested just like our marketing tools. If you leave 50% of your inventory with your partner and 50% without, the inventory that is more “direct” may not be the one with more value. Deciding which partners bring your company value trumps finding the most direct path. 

Here are some of the main questions all publishers should consider:

  1. Who are you working with? Do you understand their business?

  2. Is the deal that your partner offered you beneficial to both companies?

  3. If your partner is a reseller, do you know who they are reselling to? 

  4. Finally, do you trust the people you are working with and are their business interests aligned with your own? 

On the surface level of many companies, you see a product. But everything that is behind that technology is what really makes working with them worthwhile. The service and support they deliver, the innovative capabilities, the environments they cater to — that’s where the true value comes into play. If your partner’s rates aren’t worth the increase in revenue or their promises are not being fulfilled, they do not deserve access to your inventory. There are plenty of fish in the ad tech sea.