What Is Supply Path Optimization and How Curation Can Help

Published on November 19, 2024

Everyone is talking about efficiency these days. It’s a gold standard in the advertising industry. All digital marketers want to stretch their ad budgets as far as possible. Enter Supply Path Optimization (SPO), a strategy for streamlining the process of buying ad inventory.

What is Supply Path Optimization?

Supply Path Optimization involves identifying and utilizing the most direct and cost-effective routes to purchase ad inventory in programmatic advertising. Supply-Side Platforms (SSPs) are technology platforms that help publishers sell their ad inventory through ad exchanges. In the simplest of terms, SPO is the practice of scrutinizing the intermediaries between advertisers and publishers, such as ad exchanges and networks, and removing parties that are not adding value to the supply path in terms of reducing costs, adding transparency, sustainability and campaign performance.

Why is Supply Path Optimization Important?

Think of your advertising campaigns like a road trip. You want the most efficient route to your destination, right? Why waste time and gas on a long, winding road when a more direct highway exists? That’s what Supply Path Optimization (SPO) does for digital marketers. SPO is about finding the most streamlined path to reach your audience, ensuring you’re getting the best results without wasting resources. SPO isn’t about cutting corners; it’s about eliminating unnecessary detours and maximizing the impact of your ad spend.

Increased Efficiency: By reducing the number of intermediaries involved in the ad buying process, SPO helps decrease the “tech tax” at each stage—ensuring more of your budget goes directly to the publisher, potentially increasing their ad revenue
Increased Transparency: Supply path optimization may surface insights into the placement of their ads and the costs involved at every stage of the supply chain. OpenRTB tools like the SupplyChain Object and ads.txt files provide detailed information about each entity involved in a bid request, allowing buyers to understand the path their ad takes from publisher to impression. SPO may help uphold brand safety when analyzing and eliminating supply paths inclusive of ad placements on low-quality or fraudulent websites. Higher quality placements can lead to higher conversion rates and a higher return on ad spend (ROAS).
Reduce waste: Eliminating supply partners with high carbon emissions can make your advertising “greener” and contribute to a more sustainable digital advertising ecosystem.

How to Get Started with Supply Path Optimization

Okay, we know what SPO is, and why it’s important. Now, how can digital marketing agencies effectively utilize programmatic curation to achieve SPO? Implementing SPO effectively involves a thorough analysis of your existing ad tech stack. Here’s a step-by-step guide to minimizing the influence of intermediaries and maximizing your ad spend:

4_Steps_to_Get_Started_with_Supply_Path_Optimization

1. Assess Your Current Supply Path

Start by thoroughly analyzing your current supply paths. Extract detailed reports from your Demand-Side Platform (DSP) to see where your ads are being placed, which Supply-Side Platforms (SSPs) are involved, and how each path is performing. Identify multi-SSP hops in a single supply path and paths that include re-seller players, especially those that are overly expensive. Key Metrics to Review: Focus on impressions, conversions, cost per acquisition (CPA), click-through rates (CTR), and costs (CPMs) associated with each supply path.

Identify Trends: Look for patterns in your data. Are there specific SSPs or sellers that consistently deliver strong performance? Are there paths that are expensive but underperforming?
Document key Insights: Keep detailed records of which SSPs, sellers, and sites perform best under various campaign conditions. This will help you make informed decisions when launching new campaigns.

2. Consolidate Supply Partners

With your data analyzed, the next step is to identify the SSPs, sellers, and sites that consistently yield the best results for buyers.

Curate Your Supply List: Based on your findings, create a curated list of the most effective SSPs,sellers and inventory properties. This list will form the foundation of your SPO strategy.
Create allow and block lists: Filtering inventory eligible for your ads to run on grants more control to the advertiser.
Engage with Key Partners: Reach out to your top-performing supply partners to negotiate better deals, customize inventory, and explore private marketplace (PMP) opportunities.

3. Continuously Monitor and Optimize

Supply Path Optimization is not a one-time task; it requires continuous monitoring and adjustment.

Regular Reporting: Set up regular reports to track the performance of your curated supply paths. Stay vigilant for changes and be ready to make adjustments as needed.
Maintain Partner Communication: Keep in regular contact with your supply partners. Regularly review performance and explore new ways to enhance your curated supply paths.

4. Embrace New Solutions like Programmatic Curation

To truly unlock the full potential of SPO and stay competitive in the industry, consider integrating programmatic curation. This advanced technique goes beyond basic supply path optimization by giving you greater control and transparency over your programmatic advertising. Programmatic curation leverages machine learning to analyze vast amounts of data not available to DSPs and automate supply path optimization, reducing manual work for buyers.

By using programmatic curation, agencies can strategically select premium inventory from multiple SSPs and package it into private marketplace (PMP) deals. This curated approach allows for greater transparency, higher-quality inventory, and better alignment with campaign objectives.

Consolidate Supply Paths: Programmatic curation helps you narrow down the number of intermediaries by pre-selecting the highest-quality inventory and removing unnecessary third parties. This ensures more of your ad spend reaches the right places, maximizing efficiency and campaign performance.
Leverage Audience and Contextual Data: Programmatic curation allows you to tap into first-party data from publishers and target audiences across multiple publishers seamlessly. This results in more precise targeting and higher match rates than traditional cookie-based methods, which are being phased out.
Enhance Campaign Performance: With curated deals, you can optimize inventory based on supply-side signals such as audience data, real-time performance, and bid price. By working with curated SSPs and premium inventory, you boost campaign relevance, engagement, and conversion rates.

By integrating programmatic curation into your SPO efforts, you not only streamline the supply chain but also significantly improve campaign outcomes by focusing on transparency, quality, and performance-driven decisions.

Frequently Asked Questions (FAQ) About Supply Path Optimization

How often should I review my supply paths?

We’d recommend reviewing your supply paths at least once a quarter. Monthly reviews can help ensure you’re consistently optimizing your ad spend and maintaining transparency. Regular reviews help identify any new inefficiencies, fraudulent activities, or opportunities to improve your supply path.

What’s the difference between Supply Path Optimization (SPO) and traditional media buying optimization?

Traditional media buying optimization focuses on optimizing where and how often your ads are shown, typically through manual adjustments and broad strategies. SPO, however, goes deeper by analyzing the entire supply chain of your programmatic advertising to ensure you’re working with the most efficient and cost-effective partners and minimizing the role of intermediaries. While traditional optimization might focus on ad placement, SPO ensures that every step in the ad supply chain is optimized to minimize costs and maximize transparency.

Can Supply Path Optimization help reduce ad fraud?

Yes, SPO is an effective tool in reducing ad fraud. By carefully selecting and monitoring supply partners, you can minimize exposure to fraudulent inventory. SPO helps you work with more transparent, high-quality partners, which reduces the chances of your ads being shown on fraudulent sites or being subject to invalid traffic.

How does SPO impact ad costs?

SPO can significantly lower ad costs by eliminating unnecessary intermediaries and selecting the most cost-effective and efficient supply paths. By optimizing these paths, you’re able to get more value out of your ad spend, ensuring that a higher percentage of your budget goes directly toward purchasing valuable impressions rather than being eaten up by hidden fees and less efficient partners.

What role do SSPs and DSPs play in SPO?

Supply-Side Platforms (SSPs) and Demand-Side Platforms (DSPs) are crucial components of the programmatic advertising supply chain. SSPs help publishers manage and sell their ad inventory, while DSPs allow advertisers to buy this inventory in real-time. SPO focuses on optimizing the interaction between these platforms, ensuring that you’re working with the best partners on both sides to achieve maximum efficiency and effectiveness in your campaigns.

Can smaller agencies benefit from SPO?

Absolutely! SPO is not just for large brands or agencies with big budgets. Smaller agencies can benefit just as much, if not more, by ensuring that their limited ad spend is used as efficiently as possible. By carefully selecting and managing their supply paths, smaller agencies can compete more effectively in the digital advertising space, achieving better results with their budget.

Is SPO a one-time process or an ongoing effort?

SPO is an ongoing process. We all know how fast the digital ad market changes. To ensure optimal performance with your campaigns, it’s essential to continuously monitor, evaluate, and refine your supply paths. This ongoing process helps ensure that you’re always getting the best value for your ad spend.

What’s the relationship between SPO and brand safety?

SPO directly impacts brand safety by enabling advertisers to choose trusted, transparent supply paths. By carefully vetting supply partners and avoiding intermediaries that are prone to fraudulent activity or poor quality, SPO helps protect your brand from being associated with inappropriate or harmful content. This enhances your overall brand safety and ensures your ads appear in the right context.

How Lotame Can Help with Programmatic Curation

Supply Path Optimization (SPO) is a key strategy for maximizing ad spend, but it can be challenging without the right tools and partners. Lotame’s Programmatic Curation solutions help simplify this process to deliver exceptional results.

Why Choose Lotame Curation?

Reach New Audiences : Lotame connects you with custom audiences tailored to high-performing inventory, ensuring that your campaigns are effective and cost-efficient.
Optimized to Your KPIs: Lotame fine-tunes every aspect of your media buying to align with your specific goals, whether you’re aiming for cost efficiency, brand safety, or superior performance.
Deliver Benchmark-Beating Performance: Impress your clients with campaigns that exceed benchmarks and uncover real audience insights, helping your agency stand out in a competitive market.
Reduce Costs & Enhance Quality: Lotame Curation solutions provide all the benefits of private marketplace deals without the complexities, offering dynamic pricing and tailored inventory that maximizes your budget.

Ready to elevate your SPO strategy? Contact Lotame today to discover how our Programmatic Curation solutions can transform your campaigns and enhance your agency’s success.