Imagine two scenarios of selling your inventory. One, where you know the buyer’s needs, and another, where you don’t. You can suggest the right inventory and the right way of buying it (supply path) when you know the buyer and what they’re looking for.
Whereas, when you are unaware, the buyer is on his own. There are chances that he’ll choose a route that’s ‘average’ at its best. Consequently, both you and your buyer get suboptimal results from the trade. Demand-Path Optimization is all about helping the advertisers to get better ROI while ensuring you, the media owner gets the maximum dollar possible. Let’s dig deeper.
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What’s a Demand Path?
In a programmatic auction, the path of an ad creative from an advertiser’s server to the publisher’s site is complex. It goes through many intermediaries — often necessary — like DSPs, SSPs, exchanges, and wrappers. These parties create the path that connects the publishers with buyers.
The path helps the advertiser to target the right user, at the right time, and on the right site. When you see this path from an advertiser’s point of view, you call it a supply-path. Look at it from the publisher’s end, and it becomes a demand-path.
What’s Demand Path Optimization?
Too many intermediaries are not the only reason behind the complex demand paths. The connections between the intermediaries also add to the complexity. A single wrapper can connect with many SSPs. An SSP can connect with many exchanges, an exchange to DSPs, and so on. Such interconnections can create a web of demand paths where an ad has many routes for reaching from the advertiser to the publisher.
With demand path optimization, you find the most efficient path to connect with your buyers. Once done, you want your buyers to purchase your inventory from those paths because they are the most profitable for you and efficient for the buyer.
First, you need to understand the specific advertiser with the help of analytics and data, and then, you come up with an ideal path(s) for the advertiser to reach your inventory. This path or paths should be efficient for advertisers and most importantly, profitable for you, the publisher.
“Demand-path optimization is the reverse of supply-path optimization. I’m looking at what’s the most efficient path to get marketers’ dollars to me.”
– Scott Messer, SVP of Media, Leaf Group
Isn’t it the same as Supply-Path Optimization?
It sounds the same, but it’s different because of the purpose behind it. Read our post on SPO, and you’ll find that SPO tries to shorten the path and reduce the fees. But DPO aims at selling impressions through the best performing demand paths. Sometimes, the shortest path can also be the best path, but that’s not the only case. In DPO, your attention is on the buyer and on making him buy your inventory from your chosen path.
Publishers like Bloomberg examine data points like win rates, response time, page load, and ad quality to choose the best partners for optimum results. Simon Baker, Bloomberg’s Head of Programmatic, believes DPO improves yield. Publishers receive more revenue, and clients get transparency.
How do Publishers Optimize the Demand Path?
Programmatic technologies can provide a lot of transparency in the bidding process. Publishers can obtain granular details about how their inventories are getting sold, who are the buyers, how much are they bidding, etc.
By studying millions of impressions, they can find out all the different routes from where an advertiser is buying the ads. While some of the routes may be very profitable for the publishers, others may yield below-average prices. Later, they try to shift the advertisers from lesser profitable paths to more profitable paths. Here are some ways to do that:
- Using data: Data points like win rates, response time, page load time, ad quality, payment terms, clearing prices, etc., help a lot in DPO. Publishers use such data points to select the right partners and the right path.
- Optimizing the Supply-Path: By removing the middlemen with no unique value, publishers shorten the supply-path. It saves the advertiser’s money that ultimately goes to the publisher. It also helps with ad frauds, latency, and transparency.
- Providing First-Party Data: Some publishers simultaneously offer their inventory on the open web and in PMPs. They provide their first-party data to the PMP participants. By leveraging the first-party data, the PMP advertisers bid only when the ads are most likely to perform. In this way, they get the right inventory, and the publishers get the right amount. The supply-path shortens too.
- Bringing Transparency: Publishers and advertisers share their SSP and DSP fees to bring transparency to the process. It also helps them in minimizing the cost of executing the transactions.
What can you do for DPO?
DPO and SPO are two sides of the same coin, and that is why the best practices overlap each other. Here are some ways of optimizing your demand path:
- Observe your log-level data to find out your best buyers and optimize the path to them.
- Study the revenue-share of your partners and remove those who do not bring enough value to the demand-path.
- Understand the strengths and weaknesses of your partners. In this way, you’ll know which partner to work with.
- Keep your Ads.txt updated so that your buyers can verify your partners.
- Evaluate your buyers as well. Buyers with malvertising issues, low-quality ads, payment issues, etc., will hurt you in the long run. Try to keep such buyers away from your site.
What’s Next?
Demand path optimization is a new concept among publishers. It’ll keep gaining traction with publishers and SSPs. Soon, you may even see expert companies that can help you implement it.
But ultimately, its objective will remain the same. You have to optimize your demand path in such a way that it helps your advertisers buy your inventory efficiently, and you get a bigger share of their ad spend. Keep in mind that your DPO efforts should not compromise the user experience on your site.
A novel idea coined as Buyers.JSON is also floating around in the industry. Just like Sellers.JSON helps buyers with a clear view of the supply-path, Buyers.JSON can help publishers with the demand path. While the industry works on developing DPO solutions, you can stay updated with all such happenings with our weekly ad tech newsletter for publishers.
