Let’s address the elephant in the room first: “What is SPO?”
An SPO (Supply Path Optimization) is a way to identify some effective connections and use them to prevent purchases from ineffective or expensive paths. It helps make a deliberate and calculated choice about which paths and ways to take and which ones to ignore while making a purchase decision.
Let’s talk about the function and use of an SPO to understand it even better.
Why Do We Need SPO for the Advertisement Industry?
The ad-buying ecosystem lacks transparency which leads to complexities. It becomes harder to understand from which buyer a consumer is purchasing a product or service and how much it is taking out of a buyer’s ad spend. That is why we need an SPO (Supply Path Optimization).
It is high time that we adopt SPO as one of the core strategies to run a business. An SPO offers a lot of key benefits such as the following:
- Reducing the risk of fraud
- Ensuring the safety of the brand
- Improving Key Performance Indicators (KPIs)
It aims to eliminate the issue of auction duplication and makes it easier for both inventory buyers and publishers.
Here, a few key benefits of SPO are mentioned to understand why we need it.
Better and Higher ROI
Publishers can use SPO to get a highly competitive demand for their inventory. With SPO, publishers with unique products or services can enhance the value of their brand. It will further help them get a higher and better Return on Investment (ROI) than before.
Reallocation of Media Spend
SPO has so many uses, one of which allows us to detect buyers who perform fraudulent activities and use manipulative tactics to get higher sales. On the other hand, those publishers who have high-quality inventory will automatically start getting more yields.
A lot of mediators are involved in delivering one ad from the advertiser to the publisher. If the number of mediators is higher, so will the fees and commissions. Publishers don’t get enough of the ad spend because of the multiple supply paths or parties being used in the process. It increases the cost as everyone will be collecting his fees for accelerating the process.
Reduced Ad Frauds
The cases of ad fraud are continuously increasing and cause significant losses to ad buyers. These threats of fraud can be reduced by using SPO. With the number of limited trusted players in the advertising industry, the chances of ad fraud will shrink. On the other hand, when the supply paths are long and involve multiple players and mediators, it becomes easier for the imposters to carry out fraudulent activities.
With SPO, advertisers can choose to bid solely on inventory that is more likely going to improve the win rate. As a result, the cost of advertising goes down. It helps advertisers save that money and reinvest it to advertise more inventory and get higher returns in the long run. The publisher gets the advertising budget. He receives huge chunks of investment and reinvestments, and the cycle goes on. Hence, SPO helps fetch better revenue!
Control Over Behavior
Simplicity is at the core of SPO. It further reproduces accountability. So, you can keep a check on the behavior of the supply partners whether they are working according to their interests or not. You can use positive reinforcement by rewarding them, and you’ll rest assured that they repeat the same behavior every time.
You can also collect a lot more data and information about the auctions using SPO. Once you have the details, you would know which auction has been canceled. You will have all the valuable insight about which auction was first-priced.
A lot of advertisers are worried about getting their ads displayed on inappropriate pages as it affects their brand image. SPO mechanism can help them get rid of this problem by eliminating those suppliers who are suspicious and don’t care about the brand safety.
How to Implement SPO
Now that you know how effective SPO can turn out to be, you must make sure that you implement it by following the below-mentioned steps.
First of all, you must understand the goal of your business. Once you are clear about your goal, you’ll know what needs to get done to develop and improve your business. Ask yourself questions about the ad exchanges, the source of impressions, and the number of mediators you are paying fees to.
After proper internal assessment, you must know what strategy you are going to run. The evaluation criteria will then be based on the strategy to start the evaluation process.
To design your SPO strategy, you must look at the SSPs (Supply Side Platforms) to choose your preferred ones among them. You can make your SPO successful by preparing testing scenarios. It will help you test the SSPs to analyze if there is any advertising campaign-related issue that needs to be fixed. It will also help ensure that the integrations are working properly.
Optimization is an ongoing process. You must evaluate your delivery paths according to the your current SPO strategy. Repeat this several times in a year or so.
To Sum Up
SPO is not a straightforward and simple concept. However, it plays a vital role in the ad tech world. It is a process that offers a lot of benefits to both publishers and advertisers. Marketers must follow a proper guide and improve their SPO efforts. This helps ensure that they are implementing SPO properly to reap its benefits!