SPO and the Path to Greener Ad Tech

Advertising technology is built on the promise of efficient planning, buying, and measurement across the vast digital media ecosystem. As advertising has become a data-driven medium, advertisers have relied more and more on various platforms – especially programmatic tools – to deliver granularly-targeted, high-ROI campaigns.

Marketers were early to appreciate this efficiency: Digital media will account for nearly 75% of all U.S. media spending this year. More than half of that is display advertising, and 90% of display dollars go through programmatic. In 2022, that represented more than $115 billion dollars.

But that efficiency comes at a price. Programmatic requires computing power. It is not on the same scale of environmental impact as cryptocurrency mining, but because engaging multiple ecosystem partners is not cost prohibitive, redundancies have crept into the process, and an ecosystem reliant on mass housing and distribution of data has blossomed.

Without getting overly technical, the mass deterministic data sets housed in DMP marketplaces fuels a “shotgun” approach to open exchange inventory and addressability, with no focus on its eco-impacts.  As data increasingly shifts from the buy-side to the sell-side, a fortuitous “byproduct” is that sell-side data, especially when delivered in real-time, is not only more efficient for the buyers, but also far cleaner and more environmentally friendly.

The Programmatic Supply Chain

Programmatic was designed to connect advertisers with demand from across the web. At the same time, these pipes would allow publishers to open-up their inventory and audience to a wider array of buyers. This was appealing to smaller long-tail publishers who had deeply-engaged niche audiences, but might not have the scale to build-out direct ad sales teams.

Buyers would use demand-side platforms (DSPs) to apply parameters and purchase inventory. Sellers would use supply-side platforms (SSPs) to package their inventory. SSPs and DSPs would connect to each other, forming an efficient technology layer.

As programmatic evolved, more layers developed between the buyer and the seller. Aggregators appeared, packaging inventory from several SSPs and then selling that to DSPs while taking a margin.  The identifiers connecting all of these hops needed to be aggregated, housed, distributed and matched in hosted matching tables to connect all of these disparate platforms.

As the supply chain grew more complicated, publishers saw less and less of each dollar spent and advertisers saw a greater percentage of their ad spend go towards intermediaries. Every platform and hop required additional computing. The net result was bad for publishers, advertisers, and the environment.

Cleaning Up The Supply Path

The growing interest in supply path optimization (SPO) is part of an industry desire to purchase inventory through a highly-efficient path, thereby minimizing the intermediaries between buyer and seller, delivering more value to both advertiser and publisher, while drastically reducing the “ad tech tax.”

One unspoken benefit of SPO is that clearing out some of those hops and requisite computing creates a greener ad tech ecosystem. Streamlining the number of parallel bid requests for the same impression along the supply path automatically cuts the total carbon emissions generated by programmatic ad buys. Fewer ad calls for each impression cuts the amount of energy for each impression. Efficient digital supply paths that ping fewer servers minimize the energy involved, providing brands and agencies a tangible option that reduces the environmental impact of their programmatic advertising.

Curation As An SPO Tool

Tools are emerging that make SPO even more accessible.  Chief among these is curation, the practice of matching premium inventory with data driven audience intelligence.

Curation largely happens within multi-publisher private marketplaces (PMPs) which add controls early in the programmatic buying process, streamlining the number of hops as a prerequisite. This is a more effective approach to programmatic, and SPO is an added benefit.

Beyond that, applying data directly to the supply path cuts down on the amount of data that needs to be housed and distributed daily, creating a smaller carbon footprint.

By leveraging supply-path optimization through curated deals, advertisers access the most direct, efficient path to the end publisher, thereby reducing their ad-tech costs while increasing the amount of revenue to the publisher. Win-win. This combination of curation-driven SPO will help advertisers efficiently reach their audiences now, and even into the future once third-party cookies have been deprecated.  Especially as data integrations move to real-time connections between SSPs and data companies, the amount of data that will need to be shipped daily will be significantly reduced.

“Programmatic ad buying introduced a great deal of ease and efficiency to the market, but over time the convoluted supply path created the hidden ad tech tax. What we’re realizing now is that the environment pays this tax just as much as advertisers do,” said John Osborn. “Curation and SPO are approaches that can demonstrably improve performance and efficiency across all advertising channels while also delivering a tangible positive impact on the environment.”

Thinking about SPO is a sound strategy for marketers as we enter 2024. While they consider SPO as a tool for driving efficiency and efficacy, they should think about it as a best practice for creating a greener, more eco-friendly ad tech ecosystem. The more thoughtful advertisers are about their supply paths, the more benefit they’ll do for not only brands and publishers, but the world around us – and that’s a win-win-win for advertisers, publishers and the environment.