By Daniel Elad, CSO, The Viewpoint
Despite relations between advertisers and publishers having their moments, both parties go above and beyond in their troubleshooting techniques to make them work. A real breakthrough in this area belongs to private marketplaces and direct deals, which laid the first stones of path optimization. Yet, it was only with the introduction of the header bidding technology when relationships between publishers and advertisers were taken to the next level. New Demand Path Optimization (DPO) methods address transparency with great commitment. However, in order to widely adopt them, publishers do need some reassurance. So, let’s bring it by unmasking the nature of DPO.
What is Demand Path Optimization?
eMarketer’s report on digital video trends showed that programmatic advertising dominates the market with at least 55.8% of US CTV ad dollars being transacted programmatically in 2020. With more brands embracing these types of deals, whilst publishers expand the number of supply-side platforms (SSP) they work with, the issues of transparency and efficiency have come into the spotlight. This is exactly when Demand Path Optimization treads the boards.
Generally speaking, DPO comes down to publishers being able to analyze how their inventory is bought rather than sold, by who, and on what terms. Knowing what demand sources are linked to what advertisers, how they bid, and in what way revenue is shared with SSPs is paramount for suppliers when setting up valuable and profitable connections with current and potential buyers.
How does DPO work?
Creating a shortcut between supply and demand is what DPO worships the most. Speaking programmatically, this is about sellers helping buyers to win more auctions for their (sellers’) impressions. Therefore, typically all actions that are taken by publishers to make DPO work are aimed at reducing the distance between them and media buyers:
Scouting for best buyers. A primary step of DPO is a thorough buyers’ analysis. To get the ball rolling, typically CTV publishers would look into the pool of buyers to identify their types (brands, agencies, DPSs, ATDs), intent, money spent, number of bid requests, win rates, clearing prices, payment terms, bid response times, and ad quality. This way, a publisher collects enough cards to play with when categorizing buyers.
Finding a perfect match. With numerous parameters in mind, CTV sellers go to “the field” to find the right ones. This process relies on strategic goals and the potential business outcomes publishers are pursuing, be it quicker auction execution, higher yields, and the like. This stage of untangling the CTV demand path can be considered successful if it ends with a coherent short list of the most suitable offers in the publisher’s pocket.
Fine-tuning interactions. After best-matching buyers have been selected, CTV publishers would have to go the extra mile to get a clear picture of their needs and wants, e.g. server preferences, budgeting settings, desired formats, etc. This part is totally based on communication, frequently initiated by publishers, to make necessary adjustments at both ends. For instance, aligning floor prices with bids, frequency capping settings or even creating private deals, if necessary. At this stage, it’s worth exploring technologically advanced ad monetization platforms, like TheViewPoint, that provide vast optimization opportunities for CTV publishers.
For CTV publishers DPO means:
- Demand clarity. Publishers gain a better understanding of the demand for their ad inventory through DPO. Moreover, they are free to use this information to cut out intermediaries. A clear picture of the KPIs set by buyers allows sellers to tweak their filters, plan and optimize paths more efficiently by prioritizing better-performing demand sources.
- Increased revenues. Around 60% of digital buyers plan to shift Linear TV budgets to CTV in 2021, according to IAB. This fact makes the need for enhanced inventory distribution vital for CTV publishers. By pricing ad placements correctly and selecting the best paths, channel owners can drive their monetization results through higher yields.
- Minimized safety risks. Dealing with anonymous buyers can be risky in terms of potential revenue losses and reputation damage. With DPO, all CTV buying activity is in the palm of publishers’ hands. Insights into who purchases what inventory and at what price work in conjunction with blocking tools, such as IAB’s ads.txt, to prevent any unauthorized buyers from accessing the inventory.
- Smooth ad execution. Header bidding and direct deals suppress bid volumes and thus reduce the loads on publishers’ ad servers. Besides, being able to approach demand partners and make simultaneous alterations to overcome compatibility issues, using DPO guarantees a more rapid auction execution.
For CTV advertisers DPO means:
- Supply clarity. US CTV ad spending is expected to reach $10.81 billion in 2021, based on the data presented by eMarketer. However, transparency concerns are the key factors that keep this figure from skyrocketing. Businesses are ready to invest more money in CTV, provided that they can get the desired ROI. In the meantime, a recent survey by IAB showed that only 18% of buyers link CTV with a proven ROI. Deploying DPO will facilitate ad buyers work directly with CTV channel owners, as well as bring more trust, transparency, and investments to the space.
- Reaching target audiences. According to IAB’s data, 55% of buyers value the incremental reach that CTV offers, while 81% appreciate its targeting opportunities. If augmenting these statements with DPO’s capabilities, CTV advertisers will be able to build better relations with their target audiences by making sure relevant ads are served on relevant platforms.
- More negotiating power. One would think that as more players appear in the CTV advertising arena, ad prices would naturally drop. In reality, prices don’t reflect the actual value of impressions due to the large number of intermediaries involved, which eagerly grab their pieces of the pie. DPO gives CTV advertisers more negotiating power by pointing to the most suitable supply paths and removing unnecessary third parties from the chain.
For CTV viewers DPO means:
DPO does not only reward publishers and advertisers. A streamlined interaction between buyers and vendors reduces latency and ultimately ad loading time, whilst adjusted frequency capping settings eliminate viewers’ ad fatigue. Hence, DPO assists a great deal in delivering better ad experiences.