So, What’s Supply Path Optimization?

January 17, 2023by David Wroten

A common misconception is that Supply-Path Optimization (SPO) is all about getting the absolute lowest price for a given impression in the marketplace. More accurately, SPO is the practice of eliminating steps in the programmatic buying process that don’t actually add value to the inventory. The difference here being that some higher inventory costs can be justified, such as publishers that layer in their own data segments or allow for 1st-party attribution connections. We wouldn’t want to cleave away these inventory partners for simply being more expensive.

SPO is about removing the unnecessary steps in the chain, and those can take the form of some less reputable supply-side platforms (SSPs) and publishers that:

  • Charge larger tech fees than other SSPs for the same inventory
  • Re-sell inventory at a higher rate to pocket the difference
  • Sell poor-quality inventory under the same name

There are essentially two primary strategies to achieve SPO:

  • Exclude low efficiency SSPs and publishers from bidding
  • Develop closer relationships with higher quality SSPs

Excluding low efficiency SSPs is simple enough in the age of machine learning and optimization, but let’s take a closer look at developing direct relationships with quality and trusted SSPs and publishers. First, a look at the 3 ways we can buy programmatic inventory:

  1. Open Market Real-Time Bidding – This is the open exchange offered by many DSPs giving access to most inventory across the open internet. Here you can apply any and all targeting parameters, frequency caps, and bids as you see fit to find your target audience.
  2. Private Marketplace (PMP) – These are preferred deals/contracts giving a buyer access to a more exclusive auction with a more defined floor price and better access to inventory. These CPMs are dynamic, and targeting and frequency caps can be applied to find the right audience members within this marketplace. 
  3. Programmatic Guaranteed/Direct (PG) – These contracts are essentially a direct insertion order from a given publisher or SSP for a certain number of impressions. Targeting can be added to these campaigns, but it must happen on the publisher/SSP side and CPMs are fixed. Typically CPMs here are lower than the Open or Private markets, but there are minimums to meet with each publisher. Essentially, these deals allow you to run direct buys through your programmatic DSP to help with measurement against other active campaigns. 

There are good use cases for each of the above deal types, but here at Ventura Growth, we typically recommend clients stay in either open market or PMPs. This is because those deal types allow for more buyer decisioning and don’t lock marketing plans in with a certain publisher or SSP as is necessary with PG. 

Additionally, our preferred programmatic DSP has a vast library of PMPs already built out and negotiated with every major SSP and publisher across the web to assist with SPO activation at every turn. 

Want to talk about this topic or other programmatic news or even strategic questions?  We’d love to hear from you: