By Qasim Saifee, SVP of Monetization Platform, OpenX
Supply-Side Platforms (SSPs) were created to help publishers connect their inventory to multiple third-party buyers in order to maximize their revenue. In fact, back in the day, SSPs were often referred to as yield optimizers.
If that’s true, then why, according to the recent Forrester report on SSPs, are more publishers turning to exchanges instead? We believe it’s because traditional SSPs are not fulfilling their promise to deliver optimal yield for publishers. Due to technical challenges, traditional SSPs have not been able to fully combine network and real-time bidding (RTB) channels, resulting in fragmented demand.
Let’s examine this concept in more detail. Traditional SSPs were designed before the advent of real-time buying and were predominantly focused on managing multiple networks on behalf of publishers. As programmatic gained traction, RTB was added to their platforms, but was not fully integrated with their core technology. And that creates problems. Let me explain:
When an impression becomes available, traditional SSPs have to decide between network and RTB demand. Instead of looking at the demand channels holistically, the SSP decides which path – RTB or network – to send the ad request. If the network path is selected and the network defaults, the SSP can no longer solicit RTB buyers and instead must select another network as the next alternative. This inefficiency minimizes competition and lowers the value generated for each impression, substantially shrinking a publisher’s revenue.
So how does this have an effect on a publisher’s bottom line? Let’s say an SSP is managing three ad networks (A, B and C) on the publisher’s behalf. When an impression becomes available, the SSP must make a choice on how to monetize it. Let’s assume the SSP estimates that Network A will pay a CPM of $1.50 if it takes the impression, Network B will pay $1.00, and Network C will pay just $0.25.
At the same time, the SSP pings its RTB buyers to get bids from that demand channel as well. The highest bid it receives from an RTB buyer is $1.25. The obvious choice then is to hand it over the Network A, which will pay $1.50, right?
Except that Network A has the potential to default on the impression and this happens often. Should Network A default, the SSP can no longer offer it to the real-time bidder willing to pay $1.50 for it.That door is shut due to the limitations of daisy chaining. At this point, the SSP’s only choice is to send it to Network B, who’ll pay $1.00 if it accepts the impression. And so on until a buyer is found. At the very least, the fragmented demand has resulted in a $0.25 CPM loss and could result in as much as a $1.00 CPM loss for the publisher.
So what do publishers really need from an SSP? It’s rather simple. If a network accepts an impression at a price that is higher than the RTB bid, then by all means, give that impression to the network. But if that network defaults and the next highest price is an RTB bid, then sell it to the RTB bidder rather than simply passing it to another network without regard for the RTB bid.
Here’s the good news: an innovative solution is on the horizon. OpenX has been working on a new approach that fuses network and RTB demand to deliver higher yield. Want to hear more? Stay tuned.
Join us on Thursday, June 19 at 11am PDT for a webinar on the new OpenX SSP.