Home The Sell Sider SSPs: The New Ad Tech Chameleon

SSPs: The New Ad Tech Chameleon


The Sell Sider” is a column written by the sell side of the digital media community.

Today’s column is written by Chip Schenck, senior vice president of data and programmatic solutions at Meredith Corp.

In the ad tech supply chain, supply-side platforms (SSPs) have traditionally served as a proxy for the publisher, helping manage ad network yield and real-time bidding (RTB) as a true partner to publishers. SSPs provided publishers with better tools to manage their inventory and demand in yield-positive ways across open exchange selling, including price flooring, buyer rules and innovative ways to package inventory within a PMP.

However, amid recent market changes such as consolidation, commoditization and pressure to grow, SSPs have started looking more like something else entirely: exchanges that are driven by buy-side requirements. They have been leaning in to demand-side needs at the risk of abandoning their core publisher clients in the process.

For some SSPs, the shift was necessary for survival – morphing was required to maintain volume on their platforms. For others, the move was opportunistic, as SSPs recognized the buy side as fertile ground for growth.

Courting the buy side

First, SSPs created a new set of tools for buyers, making it easier for demand-side platforms (DSPs) to buy inventory on SSP platforms. These initial moves benefited publishers, reducing the friction of buying through RTB pipes. Then, as the demand side provided feedback, the buyer tools, such as enhanced bid reports, have become progressively more like the very tools that publishers had, reducing the publisher’s advantage.

Over the past two years, SSPs have gone further in their quest to court the buy side. With the industrywide move to first-price auctions, DSPs complained they were paying too much for inventory via SSPs. Rather than entirely retooling their existing algorithms to account for the change, DSPs built new tech on top of old tech, leading to the emergence of bid shading. In today’s bid shading market, DSPs bid into an SSP’s auction, leveraging an algorithm specifically designed for second-price auctions; then, often with the help of SSPs, bids are reduced to a much smaller but still likely to win price. While this has been positioned as a positive for publishers to help them maintain revenue, the real result has been downward pricing pressure for everyone.

While each participant in the auction has a right to run its own business, how did we go from helping publishers manage yield to creating downward price pressure in just a few years?

More recently, agencies – which face their own margin pressure from clients – have been pushing for post-auction price reduction agreements with SSPs. It’s now common for agencies to tell SSPs some variant of the following: “Sure, I bid $10 for that impression, but I give you so much volume that I want to pay $9 for all the $10 inventory.”

The thought here is for the SSP and publisher to absorb that reduction. Again, the result is lower yield to publishers.


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With the rise of supply-path optimization (SPO), SSPs have had to find other ways to stay relevant to buyers. Since header bidding increased bid density and the average price needed to win an auction, and publishers often surface the same impressions on dozens of exchanges, buyers tend to stick with the SSPs where they’re most likely to win, quite often at the lowest prices – and stop bidding on the rest. To stay competitive, some SSPs have started to offer services to help increase win rate by providing more bid transparency to the buy side. This keeps liquidity flowing at the SSP, but the jury’s out on whether this practice benefits publishers.

The future of SSPs

These changes are just some I have seen from our vantage point as a publisher. Only time will tell what shape SSPs take in the future, but here are some options:

They could continue as the exchanges they are today, but with greater efficiency. They could become a “safe haven” data depot for publishers, helping inform data-driven buy-side transactions such as people-based marketing. They could become an identity provider in their own right, licensing out people-based marketing transaction identity to buyers as a separate service from their core SSP business.

Or they could become a white-label technology provider (think: Roundel’s partnership with Index Exchange), with potentially lower margins. If all SSPs are doing is providing the pipes, there’s nothing to stop DSPs from integrating directly with publishers, or to stop publishers from “creating” their own SSPs with hand-picked inventory. We’ve seen this dilemma before in CPGs facing competition from private label products: Do you build a lower-cost competitor to your premium product and cannibalize sales, or risk letting someone else come in and undercut you altogether?

Whatever happens, SSPs need to be very careful about how they move forward. Publishers understand SSPs have to work with both sides to maintain a growing marketplace, but if SSPs go too far prioritizing the buy side, they risk alienating the clients their core business was created to help.

We value our key SSP partners. In fact, publishers need SSPs; they are better at what they do than publishers or agencies would ever be. Smart SSPs will collaborate to find publisher-friendly strategies, from price floor optimizations to new business models. To succeed, SSPs must remember their roots and recognize that enhancing auction liquidity should lead to outcomes that benefit both buyers and sellers, not one at the expense of the other.

Follow Meredith Corp. (@MeredithCorp) and AdExchanger (@adexchanger) on Twitter.

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