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The overwhelming majority of the time that a bid request is sent out by a supply-side platform, offering an opportunity to advertise on a publisher’s website, no one responds.
The standard fill rate for SSPs is 1%. In other words, there is just a 1% chance that a bid request sent out by an SSP is met with a bid from an advertiser or its buy-side tech partners, according to executives from three large SSPs.
This doesn’t mean that most publishers’ inventory is unmonetized. Publishers work with many SSPs that can send separate requests for the same slot, especially since the advent of header bidding almost a decade ago.
What it does mean, as we all know but perhaps not to this extent, is that there is a lot of duplication—and, at times, inefficiency—in the programmatic supply chain.
Tons of supply paths exist, while not necessarily offering any distinction from one another. Couple that with dwindling signal loss due to the deprecation of cookies next year, and monetizing the open web, an estimated $88 billion, is only going to get more chaotic.
“Header bidding has multiplied the number of supply paths,” said one SSP executive, speaking anonymously. “It’s an interesting question to see if they’re all adding value.”
Pruning supply paths
At SSP TripleLift, gross request volume is hundreds of billions every day, despite there being around 5 billion people globally with internet access, said chief product officer Andrew Eifler.
“Those numbers don’t really add up,” he added. “For sure, there are tons of duplicate supply paths.”
While brands and publishers have been pruning supply paths for years under the banner of supply path optimization, consternation about the inefficiencies of the programmatic supply chain is only building.
Trade body the Association of National Advertisers recently found that the average advertiser uses 19 SSPs. Of the top 25 SSPs used by brands, fees range from 5% to 20% of media spend, while revenue paid to the publisher ranges from 40% to 83%. The ANA recommends that brands work with between five and seven SSPs.
Meanwhile, a separate study found that 38% of brand marketers are working to refine their SSP activity. Publishers, speaking earlier this year during turbulent SSP headwinds, agree that their tech partners should offer bespoke features and selling opportunities, rather than simply drumming up as much demand as possible.
If a bid request falls in a forest
The fact that so many bid requests go unanswered isn’t inherently an existential crisis for the businesses of open web publishers.
“We sometimes get [ad request] calls for pages that don’t have any ads on them, or we’ll get called for five sizes for an ad, or we’ll get called even though that ad has committed to a sponsorship advertiser,” Eifler said. “The requests far exceed the actual number of advertising opportunities.”
A bid request often corresponds to a set of eyeballs, and not an actual ad slot. Plus, a publisher could be seeking to monetize a single ad slot in multiple ways. For example, the site might take one long banner ad or two short ones, Eifler said.
SSPs are at the end of the innovation cycle.
Mike Brooks, industry consultant
Yet the 1% metric is very important to the economics of SSPs, the first executive said. If the fill rate slips below 1%, an SSP would be in a difficult situation. If it grew, that firm would have more profit margin to play with, the executive added.
The similarity of fill rates between SSPs is indicative of the matureness and, at times, commoditized nature of open web auctions, where SSPs fight over delivering the cheapest CPM (cost per thousand impressions) to advertisers.
“[SSPs] are at the end of the innovation cycle,” said Mike Brooks, who has served as an executive at several sell-side ad-tech companies. Other services that SSPs provide, like SPO, can show more differentiation between providers.
Dwindling supply due to signal loss
Against the backdrop of unanswered bid requests, there is also less supply getting monetized. The culprit here is a different phenomenon: signal loss.
“There is no appetite to monetize unidentified inventory,” said a second SSP executive source.
The impact of Apple’s rejection of third-party cookies has been immense but gradual, starting with 2017’s deprecation in Safari and nixing identifiers in iPhone in 2021, as mobile ad-tech firms have resorted to fingerprinting to maintain tracking. But Apple has been slowly closing loopholes, Brooks said.
The decreasing supply of addressable inventory will grow into a much greater problem when Google deprecates third-party cookies in Chrome next year. And just as the problem of duplicative inventory persists, so does the problem of signal loss as marketers lag in looking for alternatives.
“We’re in this stage of wandering through the desert. No one is crying loud enough to say we’re in the desert,” the second SSP executive said. “We don’t have an oasis unless we learn to build a well.”
