The line separating SSPs and DSPs is all but disappearing. And SSPs are building AI-based easy buttons to get closer to buy-side demand.
PubMatic, an SSP, announced during NewFronts earlier this month that it’s expanding its Activate self-serve solution for buyers. The move solidifies PubMatic’s new strategy of building an end-to-end programmatic platform as it outgrows its SSP roots.
PubMatic is also rolling out new AI optimization features to help buyers curate deals. And these tools are helping it forge closer relationships with ad agencies like GroupM that are ramping up their use of AI.
When Activate launched in 2023, it gave buyers a direct connection to publishers’ CTV and online video inventory. The solution effectively blurred the lines between SSPs and DSPs and cut DSPs out of programmatic guaranteed deals for video.
Now, PubMatic is expanding Activate beyond its initial video focus to include all forms of media. And it’s extending buyers’ connection to publishers across PubMatic’s entire addressable market, which includes 1,900 premium publishers and 821 billion daily ad impressions, according to the company.
Consolidation in action
All of these moves by PubMatic are proof of the ongoing consolidation between the buy sides and sell sides of the programmatic marketplace, said Jason Jutla, head of practice for EMEA and UK at GroupM.
What’s driving the consolidation trend? Advertiser concerns about media quality in the open web have driven them to seek more direct paths to premium inventory, Jutla said. Increasingly, that means buyers going directly to SSPs.
“Growth in the open internet has been depressed because of this concern on quality,” he said, “so reducing steps to publishers and to audiences is a very valuable thing.”
But if an SSP goes directly to buyers, is it still really a sell side platform? PubMatic, at least, is now openly going end-to-end.
PubMatic is also leaning into programmatic’s shift from open auction to curated deals – another trend that’s being driven by advertiser attempts to target only premium, high-quality inventory while avoiding the worst of the open internet.
PubMatic has offered its own sell-side curation solution, called Connect, for years. But it’s adding an AI agent that can ingest campaign prompts and KPIs, then suggest which curated deal IDs the advertiser should target. The agent also suggests ways to optimize spending against those deal IDs mid-flight.
Data infrastructure
These kinds of AI agents are quickly becoming table stakes for programmatic platforms and ad agencies. But PubMatic believes its efforts to build a fully owned data infrastructure will set its AI capabilities apart, said its CRO Kyle Dozeman.
PubMatic’s AI model uses the platform’s hundreds of billions of daily impressions as training data, Dozeman said. Of course, doing so requires an incredible amount of processing power. But PubMatic owns the servers that power its AI, so the platform is not beholden to cloud vendors’ data limits, he said. Plus, the data centers run on renewable energy, and reining in AI’s carbon impact will be an important consideration as the technology proliferates, he added.
The AI agent will be in beta until Q4, and PubMatic is still working out how it will impact the platform’s pricing model, Dozeman said.
By curating premium inventory while also automating the dealmaking process, PubMatic is satisfying two growing needs on the buy side, GroupM’s Jutla said. It’s reducing the number of partners involved in purchasing in-demand media while also making the process of setting up and optimizing those deals much less manual.
And it’s a perfect fit for GroupM, whose holding company, WPP, has been open about building its own AI platform and integrating the tech throughout its workflows. Rather than acquiring data assets like some of its agency holding company rivals, WPP has been building a federated model that relies on connections with data partners – hence cultivating a closer relationship with PubMatic.
In that sense, using PubMatic’s AI tech to manage the explosion of curated deal IDs is just scratching the surface for how GroupM can work with the platform, Jutla said. GroupM will also train its buying processes to align with the way programmatic platforms like PubMatic handle real-time bidding to “give our clients a data advantage or a cost advantage,” he said.
SSPs vs. DSPs
Plus, as a legacy SSP, PubMatic is positioned closer to the premium publishers buyers want to connect with, Jutla said, which gives it strong insights into those publishers’ audience data.
“Everyone was asking what was the value of the SSP in the space for a number of years,” Jutla said. But now, brands are faced with regulations limiting how data can be passed from platform to platform and the ongoing loss of signals like third-party cookies and device IDs. So advertisers are coming to appreciate “the ability for the partner closest to the publishers to surface differentiating data that’s not available in the bidstream,” he said.
Plus, being able to augment publisher first-party data with third-party data sets that are activated on the SSP side – rather than within a DSP – lets advertisers achieve “reach and scale whilst delivering cost efficiencies,” Jutla said. That strategy also maximizes the amount of ad spend that ends up going to publishers, which makes for stronger advertiser-publisher relationships, he added. Of course, it’s not great news for DSPs.
But PubMatic isn’t committing to cutting DSPs out of the supply chain entirely. Buyers can still activate the deal IDs surfaced by PubMatic’s AI agent within the DSP of their choice – if they choose to use a DSP, that is.
And GroupM isn’t looking to cut out DSPs either, Jutla said. So far, GroupM has mainly used PubMatic’s Activate self-serve connection to set up always-on deals through various supply partners, not exclusively through PubMatic. Going forward, Jutla said he anticipates using PubMatic’s new AI features in conjunction with other solutions for bidding across multiple DSPs in order to find the most efficient paths to premium inventory.
That being said, GroupM considers PubMatic a “really close partner” that will be instrumental in its federated AI model, he added.
And consolidating down to key partners – going “fewer, bigger, better” – is ultimately on just about every ad agency’s agenda, Jutla said. Particularly as the curation trend has agencies managing an “unmanageable” number of deal IDs, he added.
“One of the things that keeps me up,” he said, “is the number of platforms, the number of tactics, the number of partners that the teams are working with.”
