What is pathway optimization (SPO) in programmatic?

What is pathway optimization (SPO) in programmatic?

In one decade, programmatic advertising has undergone a complete technological metamorphosis. Whether you think of it as a niche buying tactic or the leading transactional vehicle for digital advertising inventory, everything in the world of programmatic advertising is transforming and evolving every second. When it comes to selling inventory to advertisers on the publisher side, publishers follow a route more commonly known as the "supply chain," and ad costs vary depending on the specific supply route.


The longer the route, the higher the cost, because it involves multiple layers of intermediaries. The advertising landscape is now controlled by automation, and this inevitable choice leads them to the insurmountable problem of distorted transparency. Advertisers and buyers find it difficult to determine which SSPs get quality inventory through their conveyors, where bids are not duplicated for the same impression. Many advertisers came to the obvious conclusion: Supply chains were inefficient, complex and opaque, and as a result, the return on ad spending was not what it should be. In 2019, advertisers in the U.S. spent nearly $60 million on programmatic digital display advertising. By 2022, spending is expected to rise to nearly $95 million. So, do you want to provide a resourceful path, fewer intermediaries and lower fees for buyers/advertisers? A big "yes!" But how can you do that? The answer is simple - supply chain path optimization (SPO). Supply Path Optimization (SPO) is the latest advancement in the AdTech world. IAB Europe has released an industry-specific "Guide to Supply Path Optimization (SPO)." The purpose of this guide is to educate all stakeholders on the importance of a good SPO strategy and implementation. The report states that SPO provides critical assistance by enabling buyers to choose buying paths that are low cost, transparent and of high quality. With 87% of brands, agencies and DSPs actively implementing SPO, citing brand safety, fraud reduction and improved KPIs as major benefits, this guide is a call to action for all stakeholders to adopt SPO as a core business function. At its core, SPO is an attempt to eliminate the problem of duplicate auctions and provide multiple benefits to publishers and inventory buyers. What is supply path optimization? Supply path optimization is a process, usually performed by demand platforms (DSPs), in which multiple variables are evaluated to nudge buyers toward the most efficient path to purchase. Defining Supply Path Optimization - IAB's definition of SPO focuses on the buyer. "Supply Path Optimization (SPO) and Demand Path Optimization (DPO) is a skill no organization at either end of the supply chain will ever regret investing in. It will deliver efficiencies across the board, whether it's cost, improved win rate, improved profitability, or increased reach of quality inventory or audiences. It will also increase the likelihood of repeating any success. The key is to understand and own your SPO or DPO strategy, and to make sure that your business interests are at the heart of the strategy. This guide will help the reader understand the need and basics of SPO and DPO, and ask the right questions to start the journey to an SPO or DPO or help sharpen the current strategy." - David Goddard, senior director of EMEA business development, DoubleVerify and chairman of IAB Europe's Software Commerce Committee. The crusade for pathway optimization (SPO) will continue to gain momentum because of the growing complexities in the AdTech industry. However, it's not just about SPO, there is a growing awareness of a similar trend - Demand Path Optimization (DPO). DPO will ultimately help publishers avoid selling inventory at less-than-optimal rates. While SPO caresses the advertiser's side, DPO will act as an endorsement from the publisher's side. Remember, publishers with exclusive and premium offerings will always have an advantage in the monetization game.


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