Home On TV & Video As CTV Grows, Advertisers Need To Understand And Embrace SPO

As CTV Grows, Advertisers Need To Understand And Embrace SPO


On TV And Video” is a column exploring opportunities and challenges in advanced TV and video.

 Today’s column is written by Max Knight, VP of analytics services at Amobee.

Ask connected TV (CTV) advertisers what supply-path optimization (SPO) means and you’ll hear a hodgepodge of answers that include selecting exchange partners, avoiding resellers and making decisions based on Supply Chain Object observations. These are important topics, but without an overall strategy, advertisers are investing in an increasingly complex marketplace with piecemeal logic. Rather, advertisers need a big tent view of SPO and a strategic framework for thinking about SPO in the CTV marketplace.

It’s still early days for CTV. According to eMarketer, advertisers are projected to spend $10 billion on CTV by 2021, and CTV will continue to evolve and change. As the marketplace grows, new supply paths will proliferate as sellers look to increase yield. A mix of upfront deals and programmatic are already creating multiple supply paths.

What is SPO for CTV?

Supply-path optimization, simply stated, is the enforcement of a supply strategy in digital advertising. In principle, SPO for CTV isn’t that different. SPO for CTV more broadly includes directly sold broadcaster inventory as a “path,” and understanding those non-programmatic direct paths is important to a comprehensive strategy. To enforce that strategy, buyers must build capabilities around four pillars.

While activity in any of these pillars is SPO, a comprehensive supply strategy must span them all to achieve maximum value. To do otherwise is to leave opportunity on the table, or potentially compromise the efficiency of the buying process.

The four pillars are:

Supply space mapping and data collection

Mapping CTV supply is akin to mapping a city that will forever be under construction. Parsing app-ads.txt files is the key. But real utility comes from understanding traffic flow and volume that comes from bid stream data collection. Additionally, knowing exactly what is being sold on a path matters. The path could reflect a custom ad unit controlled by a technical partner, a publisher’s own ad placement or an auction rebroadcast (when an intermediary resells an auction), or something else. This is an ongoing process because the programmatic supply space is dynamic. Paths are constantly being added and removed and ebbing and flowing in volume. Advertisers need a combination of technical measurement and business research to understand each path’s inventory and value.

Strategic analysis and rule design

Should you work with intermediaries, or eliminate them? The answer depends – some intermediaries are the only paths to certain supply, so cutting intermediaries automatically as a rule could reduce supply. But without mapping and data collection, advertisers are throwing darts in the dark. Too often advertisers think of this pillar as “cleaning up the supply chain.” In fact, this pillar is about thoughtful analysis of supply space data to create bidding rules for the advertiser and campaign levels. In the CTV environment, where many different entities have the right to sell ads within a piece of content due to distribution or carriage agreements, the concept of an intermediary or reseller may be significantly different from other channels. Advertisers should not make sweeping decisions on including or excluding these paths without evaluating the impact on a given campaign. No singular strategy will fit all campaigns. There are many different kinds of campaigns, and a rule set might work for all campaigns of one type, but no rule set will work for all campaigns of all types. 


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Business negotiations with supply-side sources and platforms

Having mapped the supply space, analyzed the flows, and developed an SPO rule set, buyers can improve their outcomes through informed negotiation. The benefits of channeling demand through a set number of partners – whether that includes SSPs, publishers directly or a combination – includes securing preferred take rates and setting up data sharing agreements that give buyers improved insight into a partner’s supply. When possible, advertisers should use these improved data sets to refine their rule generation process.

Technical implementation of rule sets

A comprehensive strategy is for naught if you can’t enact it. Advertisers, agencies and vendors must do the technical work of making SPO actionable at the campaign level. This includes ensuring the buying platform has the capability to ingest and apply the rules you have set. Start by asking the vendor how they will enact SPO strategies and at what level they can implement them on the supply-side and the buy-side. Ask questions such as: Can you implement custom SPO strategies? Can you enforce decisions at the site/exchange/channel/seller level? Can I have different strategies for different parts of my campaign? What you hear will help you gain a strong foothold.

SPO is an evolutionary process

Advertisers must view CTV supply-chain optimization as an evolutionary process – not a box that needs checking. Doing so requires systems that can evolve over time as strategies, and the supply marketplace, inevitably change.

As CTV amasses a larger percentage of advertiser budget, SPO in the CTV space will increase in importance. It is a complicated task, but creating a holistic SPO approach that encompasses all four pillars outlined above will enable advertisers to create more value in a dynamic space with a coherent and adaptable strategy.

Follow Amobee (@amobee) and AdExchanger (@adexchanger) on Twitter.

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