Advertisers Embrace a Side Hustle
In marketing and advertising circles, demand-side platforms (DSPs) and supply-side platforms (SSPs) used to operate in isolation. Publishers used SSPs to sell their inventory at the highest price possible, while advertisers used DSPs to buy at the lowest price possible.
In the past few years, though, the two platforms have been meshing as platform providers look to maximize revenue. Today, DSPs and SSPs often work together as essential components of a singular, unified advertising ecosystem that also includes publishers, advertisers, and ad exchanges, as well as ad servers, data management platforms, and third-party data providers.
“Consolidation within digital advertising has prompted SSPs to invest in demand-based services for advertisers. Meanwhile, some DSPs are experimenting with publisher integration tools to bypass exchanges and sell inventory directly on their platforms,” executives at tvScientific, a connected TV advertising and marketing platform provider, observed in a recent blog post.
And for many, the thought of building or deploying a DSP or SSP without wondering how to connect it to the rest of the advertising ecosystem seems rather strange. This entire process will only take between three and nine months, experts agree.
In this unified ecosystem, DSPs and SSPs coordinate with ad exchanges to facilitate the buying and selling of ad impressions in real time and balance pricing through real-time bidding, a multistep programmatic media buying process that uses automated auctions to sell ad impressions on a per-impression basis.
Advertisers and publishers alike benefit from integrated SSPs and DSPs in several ways. Publishers can maximize their ad revenue by connecting to multiple buyers, while advertisers can access a broader range of inventory. Advertisers also get improved targeting, leading to better engagement and conversion rates. Cost efficiencies are also likely as automated bidding helps advertisers achieve lower costs per impression. Campaigns can be scaled across multiple platforms and formats, giving advertisers a wider cross-channel reach from a single source.
That was the impetus for InMobi, an established provider of content, marketing, and monetization tech, to integrate the InMobi Exchange SSP into Yahoo’s DSP, giving clients direct access to premium in-app supply and a global user base at scale.
Prior to this collaboration, InMobi’s international audiences were only accessible through third-party exchanges; this integration offered a direct connection to inventory, creating smooth supply path optimization for advertisers and increased transparency, reach, and efficiency for buyers.
Kunal Nagpal, senior vice president and general manager of the publisher platform and exchange at InMobi at the time, said in a statement that supply path optimization is an important element on which many throughout the industry are focused.
“This partnership gives advertisers a straight line to the Yahoo DSP with greater efficiencies in setting up and optimizing campaigns to better reach target audiences,” Nagpal said.
Elizabeth Herbst-Brady, vice president of global revenue and client solutions at Yahoo, added in a statement at the time that “Yahoo cultivates robust, diverse premium supply. In partnering with InMobi, we’re creating a more direct line of sight for advertisers and boosting transparency and optimization opportunities.”
Across the industry, many adtech vendors and advertisers themselves are finding that DSPs integrated with SSPs and ad exchanges increases the ad inventory. And by consolidating supply in a single platform, DSPs can automate the ad buying and real-time bidding and, in turn, enhance transparency, accountability and advertisers’ reach across the sites of different publishers.
Working directly with publishers provides DSPs with more contextual data as well as additional click-through funnel data, according to Amir Sharer, founder and CEO of BRAVE, an online advertising technology company.
Obtaining access to direct advertisers provides SSPs with client data at a greater scale than they can get through working exclusively with DSPs, says Sharer, who notes that another advantage is a greater understanding of advertiser key performance indicators.
Though she has misgivings about how much integration is actually occurring and the impact of it, Katherine Cartwright, a principal, partner, and cofounder of Criterion Global, an international media planning and buying agency specializing in multinational paid media and global expansion, says that many clients are attracted to some of the new DSP/SSP offerings.
“The benefits are ease of purchase and a lower degree of cross-platform training for staff,” Cartwright says.
Some Detractors
At the same time, though, Cartwright doesn’t see a major current impact for DSP or SSP customers from the current wave of integrations.
“The push to integrate DSPs with SSPs is simply differentiation or the illusion of it,” Cartwright explains. “If you think of it from a buy-side point of view, there is very little way for firms to offer clients a different or better way to buy media inventory at scale. The inventory itself becomes commodified, as do the platforms themselves.”
She notes that integrating DSPs and SSPs gives the illusion of efficiencies by trimming margins in that pass-off from sell-side to buy-side, but performance fees, arbitrary platform use fees, or data fees can call into question how platforms are monetized.
“Programmatic is problematic, and its many problems are simply unsolved by a closer integration of demand- and supply-side inventory,” Cartwright adds. “In reality, any savings or efficiency on the SSP side is probably being absorbed in the name of take rate on the DSP side. The supply chain is just too murky to know.”
Consolidating to single-system unified platforms can be a liability by limiting freedom of mobility (tying up data), transparency in true media costs, quality of supply, and neutrality of performance data, according to Cartwright. “There’s also the factor of platforms evolving to keep pace with industry norms: When you consolidate, you relinquish your ability to adapt to changes elsewhere in your ad stack or to take advantage of new advancements. Take, for example, clean rooms or custom buying algorithms, which all platforms may not support.”
It’s no surprise then, that some marketing leaders see a contradictory trend emerging: a disintermediation war being waged between buy-side and sell-side platform providers. Under the guise of advertising optimization, some DSP providers are forging direct relationships with publishers and broadcasters, while SSP providers are building direct links with agencies. In effect, one side is looking to squeeze the other side out of the equation.
As examples of this, experts point to the following moves in just the past year or two:
- In 2023, Yahoo’s Backstage DSP began allowing advertisers to buy inventory directly from a curated selection of top publishers, bypassing the need for a traditional SSP to access this premium inventory.
- Also in 2023, SSP providers Magnite and PubMatic announced solutions that enable advertisers to bypass DSPs to purchase CTV video ads in what it said would increase transparency, efficiency, and cost savings; reduce fraud; and grow revenue.
- In March of this year, Disney began integrating directly with Google’s and the Trade Desk’s DSPs, providing them direct access to Disney’s ad platform, the Disney Real-Time Ad Exchange (DRAX), to buy streaming inventory across Disney+ and Hulu. The move opens up Disney’s streaming inventory more widely to the programmatic ecosystem while essentially eliminating SSPs from these deals.
Still, despite where industry experts stand on SSP/DSP integrations and their benefits, few can argue that it is under way.
It’s Happening Nonetheless
There are many examples of the changing SSP/DSP landscape, which started a couple of years ago. The following are just a few of the more recent moves:
- The Trade Desk, which has one of the most popular DSPs, in February 2022 launched OpenPath as a direct-to-publisher product that allows advertisers to access premium content directly on its platform. OpenPath provides a simplified, transparent supply path that connects clients directly to participating publishers across the open internet.
- An aggressive acquirer of adtech platforms itself, ironSource, providers of a business platform that empowers mobile content creators to turn their apps into scalable, successful business, was acquired in mid-2022 through a $4.4 billion merger with Unity, providers of a platform for creating and operating interactive, real-time 3-D games. The transaction in effect created a consolidated platform incorporating Unity’s game engine, ads, and game analytics with ironSource’s assets, including Supersonic, its ad-based game studio.
- Havas Media Group partnered with SSP Freewheel to help it buy CTV in smarter, more transparent ways.
- Hawk Platform, a multichannel DSP provider, partnered in 2022 with Azerion, provider of the Improve Digital SSP, to enable marketers to reach Azerion’s audiences at scale, via impactful rich media formats, as well as native, video, and display advertising across Azerion’s premium games and publishers. The partnership reportedly made it easier for Hawk’s customers to access a brand-safe and highly diversified inventory, including more than 17,500 games, to connect 425 million monthly active users through immersive advertising experiences.
In a BeetTV interview, Mike Evans, Magnite’s senior vice president for demand facilitation, explained his company’s moves by saying that DSPs used to be plugged into many more ad exchanges and had primacy over SSPs.
“Those DSPs specifically were the point of contact in order to access supply,” he explained. “Connected TV a few years back really changed that perspective, and what it’s led to, ultimately, is a lot more connectivity and collaboration with the agencies around planning.”
Sharer credits much of the transition in the market to an effort to compete with Google, Meta, and other digital platform and content providers that have been serving both sides of the advertising ecosystem.
Another incentive came when Apple introduced its App Tracking Transparency (ATT) user privacy framework for all Apple devices as part of its iOS 14 release more than two years ago. Apple’s ATT was designed to help soften the blow of advancing privacy legislation and the sunsetting of cookies, both of which are limiting marketer’s access to personal data about the consumers who visit their digital properties.
ATT requires apps to request user permission to access the Identifier for Advertisers to track the user or device. This is done via a pop-up prompt and allows users to choose whether an app can track their activity across other companies’ apps and websites for advertising or sharing with data brokers.
And then, too, publishers have faced their own challenges ever since publications started going digital. Companies lamented that they were “trading analog dollars for digital dimes.” New publishers emerged, but the amounts they received per impression were far lower than what had been available in the analog world.
All of these trends represent a natural evolution of the marketplace,” according to Mike Burton, cofounder and senior vice president of sales at Bombora, a provider of intent-based B2B data solutions for sales and marketing.
For many years, the evolution of programmatic advertising has hardened into place. So the natural evolution is to start competing for where your solution can add value and to enjoy the benefit of that value, he continued.
However, though there is a growing area in which SSPs and DSPs seem to be crossing into each other’s historic territory, for the most part SSPs continue to serve the needs of publishers and DSPs the needs of advertisers, according to Burton.
“There’s more innovation happening,” Burton says. That innovation includes SSPs and DSPs starting to provide capabilities that used to be found only “on the other side.”
“Traditionally, an advertiser would supply the data that they wanted to use to target a campaign on the DSP level,” Burton explains. There is an increasing trend of the data getting applied on the SSP side. However, advertisers will still use a DSP to run, manage, and optimize advertising campaigns, but now some of the data layer will be on the SSP side.
Evans wants DSPs to limit the number of SSPs with which they work. “There should only be a handful, ultimately, of SSPs that DSPs are working with,” he states. “If we consolidate down the overarching SSPs that are being accessed through DSPs, I think that is a step that can easily be taken tomorrow to ultimately impact what’s happening.”
Sharer approaches it with a little more immediacy. “The future will bring more DSPs and SSPs working to work directly with publishers and advertisers. There’s no turning back the clock.”
Phillip Britt is a freelance writer based in the Chicago area. He can be reached at spenterprises1@comcast.net.