3 ways traditional SSPs cost publishers money

Supply-side platforms (SSPs) were created to help publishers connect to multiple potential buyers in order to maximize revenue. But change happens quickly in our industry, and the SSPs need to catch up with today’s complex demand landscape.

Fragmented Demand
Most publishers today want to work with a diverse set of brand-safe advertisers, via networks and real-time bidders, and they’d like to make their inventory available to the buyer willing to pay the most for it. This reasonable desire is unfortunately stymied by technical constraints that keep network and RTB demand completely separate. Traditionally, once the SSP decides to send inventory to a network, there’s no hopping the wall to the real-time buyers. For a publisher, this fragmented demand is problematic on multiple levels.

Less Buyer Competition
Let’s say an SSP is managing three ad networks (A, B and C) on the publisher’s behalf. Network A agrees to pay a CPM of $1.50, Network B agrees to pay $1.00, and Network C just $0.25.

Now, an impression becomes available and the SSP must decide how to monetize it. It pings the real-time market for bids. Let’s say the highest bid is $1.25. The obvious choice is to send the impression to Network A instead, which will pay $1.50, right?

Not so fast. Defaults or passbacks are always a risk with networks. In fact, there’s a high chance that Network A will default, and if that happens, the SSP can no longer offer the impression to the real-time bidder willing to pay $1.25 for it. Due to daisy-chain limitations, the SSP’s only choice is to try to sell it to Network B for $1.00, and so on until a buyer is found. Best case, a default in this scenario results in a $0.25 loss for the publisher, and in the worst case, it costs the publisher $1.00. Multiply this by hundreds of millions of impressions, and the loss becomes really significant.

If a network defaults and the next highest price is an RTB bid, the SSP should sell it to the RTB buyer rather than simply passing it through the network chain without regard for the RTB bid. Is that too much to ask?

Lost Billable Impressions
Here’s another reason why RTB and network demand sources should be considered simultaneously: Too many perfectly valuable impressions are filled with house ads. Why? Once the network route is taken, the inventory may face a barrage of hops in a search for a buyer. Remember, the SSP offers the impression to a network, but often, the network is under no obligation to accept it. If a buyer can’t be found in a reasonable time frame, house or public service announcement (PSA) ads are shown.

This contrasts with RTB demand, which represent real buyers committing to purchase the impression right then and there — seriously mitigating the need for house or PSA ads.

And all of this affects a publisher’s bottom line. Fragmented demand creates inefficiencies that lessen competition, reduce billable opportunities and lower the optimal value of impressions.

The barriers between network and RTB demand channels are artificial, driven by historical limitations. Publishers work too hard to not receive maximum value from their inventory. But help is on the way.

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