The Trade Desk recently made waves with the rollout of OpenPath, its direct-to-publisher offering, and its plan to turn off Google Open Bidding, a one-two punch in supply path optimization (SPO).
Both of these SPO moves could reshuffle the ad buying ecosystem, making publishers less reliant on SSPs and cutting off a revenue source for Google’s Open Bidding.
But does OpenPath really represent a seismic shift? And how worried should supply-side platforms be about being singled out as expendable links in the supply chain?
The DL on SPO
The Trade Desk’s SPO moves show media buying platforms are serious about finding solutions that foster direct connections between advertisers and publishers.
Proponents of SPO want to eliminate unnecessary take rates, reduce data leakage and increase price transparency so publishers keep a greater share of ad revenue and advertisers see higher win rates.
Despite being disintermediated by The Trade Desk, Google says it’s in favor of anything that works for the publisher from a monetization standpoint as long as it also drives results for the advertiser – even if that means a platform “optimizes” away from Google.
“Google has been focused on enabling an ad-supported web, monetization for publishers and results for advertisers,” Dan Taylor, Google’s VP of global ads, said on stage in late February at AdExchanger’s Industry Preview event. “If we stick a bunch of fees in the middle that prevent that from happening, that’s not good for anybody.”
With OpenPath, The Trade Desk can bypass SSPs to access publisher inventory directly so long as the publisher uses Prebid.
The Trade Desk appears as an option within the publisher’s Prebid wrapper, allowing the publisher to send bid requests directly to its DSP, not unlike how an SSP sends requests to an ad exchange, said The Trade Desk’s VP of publisher inventory development, Will Doherty.
So … does that make The Trade Desk an SSP or an exchange?
The Trade Desk has no interest in becoming either, Doherty told AdExchanger. The company has been pushing back against the idea it’s trying to cut SSPs out of the supply chain entirely. Publishers can continue to use SSPs via OpenPath if they choose to.
“SSPs cover a massive surface area across regions, formats and publisher types,” Doherty said. “They’re also critical to standing up industry-wide initiatives, like UID 2.0.”
Winners and losers
But what good is an SPO solution if it doesn’t remove unnecessary bloat from the supply path?
Life won’t change all that much for SSPs with a lot to offer publishers by way of yield management, media types and inventory management solutions like private marketplaces. But those that don’t should probably be concerned.
“SSPs have to be more than just a pipe,” said FatTail CEO Doug Huntington.
The Trade Desk is explicitly not offering yield management services to its OpenPath publisher partners, meaning SSPs that lean into their yield solutions should be fine.
There’s a lot of room for SSPs to continue to provide value in the supply chain, said PubMatic CCO Jeff Hirsch, quoting Trade Desk CEO Jeff Green.
PubMatic’s priority has been to pursue SPO relationships that allow it to work closely with buyers, Hirsch said.
“We help them identify exactly what they need to see in the supply chain to be effective and work with publishers to then balance that and maximize their yield,” he said.
Pricing transparency and eliminating fees
SPO is meant to increase pricing transparency by eliminating players that resell impressions or misrepresent bid prices to increase their take rate. But publishers using OpenPath will still have to pay fees to The Trade Desk. It remains to be seen whether publishers will pay lower fees overall.
“It’s interesting that The Trade Desk is charging a fee, because our understanding was that they were always going to be on the advertiser side,” Huntington said. “If you’re charging a fee, you’re now on both sides – so who’s ultimately representing the publisher’s interest?”
Some industry insiders have also expressed doubt that working with the DSP this way will maximize their yield. Lowering fees compared to SSP take rates may not make up for the positive effects those SSPs can have on yield.
The change we needed?
If SSPs can continue to be valuable partners for publishers, does OpenPath truly represent a new world for SPO?
Direct-to-publisher connections that bypass SSPs are rare, but they aren’t new. For example, although Criteo Direct Bidder has offered direct connections to publishers for years, publishers still use SSPs. GroupM’s Premium Marketplace product tackles SPO by offering advertisers a direct connection to publisher inventory, although it relies on SSP partners such as Magnite or PubMatic.
The SSP’s role in these SPO solutions suggests that the real trend is continued consolidation down to a few trusted partners rather than the wholesale elimination of SSPs, said Magnite CRO Sean Buckley.
“This theme of consolidation is going to drive spend toward scaled, well-resourced companies with broad-based capabilities on the supply side,” Buckley said. “If you’re only working with one or two partners, it becomes more achievable to build those comprehensive SSP partnerships around yield management, billing and reconciliation and [other] services.”
Case in point, although GroupM culled its total number of partnerships, it now spends proportionately more with them.
“That’s how the industry will shake out,” said GroupM global head of investment Andrew Meaden.
The publisher POV
But what about publishers? Removing Open Bidding may be a boon to larger publishers, but it could end up being a burden for smaller ones.
Post-OpenPath, publishers that aren’t directly connected to The Trade Desk will lose the revenue they gathered through Open Bidding, FatTail’s Huntington said.
The real value of SPO from the publisher’s perspective, however, will come from making demand interoperable in Prebid and allowing for fully programmatic sell-side ad servers, said News Corp VP of Data, Identity and Ad Tech Stephanie Layser.
If DSPs directly integrate into header bidding wrappers, she said, the “auction bottleneck collapses, and you have one less step.”
“The problem is that the largest players tie their demand to their header bidding solution, and they don’t interoperate with other header bidding solutions,” Layser said. “If they did, publishers would have choice and better yield.”