The supply-path optimization (SPO) trend has DSPs going direct to publishers, cutting out SSPs in the process. Meanwhile, SSPs are going direct to buyers, cutting out DSPs.
But who gets cut out when an ad agency implements its own SPO policy? As it turns out, SSPs are still generally seen as expendable hops in the programmatic supply chain. Although agencies still have some close SSP partners they prefer to work with for reaching specific publishers or testing emerging agentic AI sales tools.
Independent ad agency Goodway Group has been on its SPO journey since 2019. For some context, The Trade Desk launched its OpenPath direct-to-publisher connection in 2022, and SSPs PubMatic and Magnite launched their direct-to-buyer connections the following year. In addition to testing these SPO solutions and others, Goodway also worked with supply chain quality measurement provider Jounce Media to create its own SPO initiative, called Goodpath.
The philosophy behind Goodpath was to test whether Goodway Group could still achieve scale for its campaigns by focusing on just a few SSP partners and layering in integrations with The Trade Desk’s OpenPath and Yahoo DSP’s Backstage direct-to-publisher solutions, said Andrea Kwiatek, Goodway’s director of strategic partnerships.
The test worked. So Goodway has been full throttle with its SPO efforts over the past year or so. As a result, Goodway Group has cut the number of SSPs it works with from about 20 at the end of 2024 to just single digits today.
SSP selection
Kwiatek would not name the specific SSPs that Goodway Group still buys ad inventory through. But she confirmed that Goodway is more likely to work with SSPs that operate their own direct-to-buyer supply paths.
Kwiatek also said that some SSPs are reasserting their relevance in the programmatic market by launching new agentic AI sales tools. Goodway has been engaging with SSP partners to test some of these solutions.
But, Kwiatek said, one of the most important determining factors for whether Goodway Group works with an SSP is its willingness to cut out unnecessary resellers and clean up undesirable supply like made-for-advertising (MFA) inventory.
Often, Goodway Group will start by nailing down which publishers it wants to include in a campaign, then work closely with those publishers to determine the best supply paths to buy their inventory.
Such a strategy often means bidding through an SSP, rather than buying directly from the publisher, because not every publisher is capable of scaling its inventory on its own, said Tom Swierczewski, VP of media investment and partnerships at Goodway Group.
Besides, he added, buying through an SSP means the publisher isn’t grading its own homework, and there’s a third party providing verification of where ads ran and how they performed. And working with SSPs also makes things like frequency capping and targeting across different publisher portfolios easier, he said.
However, even when buyers target inventory via SSPs using a list of preapproved publishers, it’s common for other inventory to sneak into open web campaigns via off-site audience extension and resellers. Much of Goodway Group’s SPO efforts have focused on working with Jounce to curate its own inclusion list of premium publishers while cleaning its supply paths of any inventory it doesn’t explicitly want to purchase.
To address the wasteful ad inventory that can sneak into campaigns, Goodway Group has been requesting that SSPs share SupplyChain object reports that detail what inventory was purchased during a specific time frame and via what supply paths.
That transparency helps keep SSPs accountable, even in situations where they might not be aware of what’s included in their own supply, Kwiatek said.
For example, an SSP might pitch the agency on a solution that helps buyers avoid MFA inventory or that prioritizes supply paths with as few intermediary hops as possible. But even in those cases, MFA can be included in the buy, and some of the supply paths can contain more hops than expected. So Goodway Group prioritizes working with SSPs that can clean up those issues within a day or so, Kwiatek said.
SPO results
It’s not surprising that so much undesirable inventory sneaks into programmatic’s convoluted supply paths, said Chris Kane, founder of Jounce Media.
The typical publisher still sells ads through more than 25 SSPs on average, according to Jounce. Some of these SSPs are simply reselling ad impressions that were previously auctioned off by other SSPs.
Working with so many SSPs in theory allows the publisher to boost its revenue yield through bid duplication, since whichever SSP returns the highest bid gets to sell the impression. But buyers want to bypass auction manipulation and cut the waste associated with duplicative and re-sold supply.
Based on Jounce’s study of programmatic supply chains, about 32% of open-auction bid requests include the resale of non-exclusive inventory by an SSP or other intermediary, Kane said. However, he added, most buyers try to avoid bidding on such bid requests; as a result, that 32% of non-exclusive inventory only attracts about 22% of ad spend on average.
However, because of its SPO efforts, Goodway Group has cut its spend on non-exclusive inventory down to about 2%, Kane said.
Prioritizing maximally direct supply paths is paying dividends for Goodway Group and its clients – and also for publishers.
Through its Goodpath initiative, Goodway claims it now has 28% more of its ad spend flowing to working media rather than going toward intermediary ad tech fees. And it spends between 10% and 20% less on fees overall compared to off-the-shelf inventory packages sold in DSP marketplaces.
Furthermore, Goodway has seen 25%-30% improvements in verified human traffic from its preferred supply paths. And it has reduced CPMs for CTV, online video and audio by up to 40%.
Next on the agenda for Goodway Group and Jounce is determining the extent to which direct supply paths and high-quality media correlate to ad performance and business outcomes.
But quality isn’t just a proxy metric for performance, Kane said. The real reason to care about media and supply-path quality is to identify partners you can trust, he emphasized.
Fortunately, he said, other agencies can reproduce Goodway Group’s SPO initiatives at scale thanks to the industry’s work on standardizing campaign reporting and introducing signals like the SupplyChain object. He added that doing so requires agencies to continuously analyze campaign reports and constantly unpack their supply paths, but these tasks are much easier to accomplish now than they were a few years ago.
“You have to be committed to it,” Kane said. “But Goodway is an excellent example that this is a highly solvable problem, and you can deliver 98% of your investment through maximally direct paths to publishers that you trust.”
