OpenX Courts the Buy Side as Supply Path Optimization Heats Up

Supply path optimization (SPO) generally comes in two different flavors: cutting out intermediaries to reduce the dreaded ad-tech tax or buyers getting closer to inventory to boost transparency while still transacting through their demand-side platform (DSP). Supply-side platform (SSP) OpenX is favoring the latter form of SPO, and it’s growing out the advertiser-facing side of its business after laying off or furloughing roughly 15% of its staff in April due to the economic impact of the Covid-19 pandemic. OpenX said it has renewed SPO deals with a handful of major holding companies in addition to new or renewed deals with four large brand advertisers that put the SSP on a shortlist of preferred exchanges. OpenX wouldn't name the companies, but it did say that some of the arrangements include prioritized access to inventory and discounts on large purchases. “What this is about, if you're giving a marketer exactly what they want, they will pay more for it. The more we can deliver them the audience that they want, they will pay a premium for that audience, which is good for the publisher,” said OpenX CEO John Gentry. GroupM and Omnicom Media Group have already begun partnering with SSPs to secure premium inventory and negotiate discounted rates. SSPs curate ad inventory across the open web, which is then largely transacted in open exchanges where media placements are offered to a wide pool of potential buyers. OpenX now wants to work more directly with brands or agencies to create deal IDs based on data from its relationship with publishers and OpenAudience, which is then transacted in private marketplaces through a buyer’s DSP of choice. “We're not about eliminating anybody in the process,” Gentry said, in reference to cutting out intermediaries. “It's about how do all the pieces in the chain optimize for the buyer.” The financial crisis caused by the pandemic has further motivated buyers and sellers to reevaluate their supply paths, which has exposed the issue of needless reselling that eats into margins without adding anything valuable in return. Buyers working directly with SSPs to target specific audiences against specific inventory via deal IDs can mitigate cost and transparency issues with reselling, especially in desktop and mobile where inventory is seemingly limitless. Chris Kane, CEO of consultancy Jounce Media, said it’s much easier for marketers to work directly with media owners in connected TV as opposed to desktop or mobile. “In the web or app world, there are literally hundreds of thousands of properties where a marketer might reasonably want to run. There are dozens of properties in CTV where a marketer might reasonably want to run. That does change, in a pretty fundamental way, how you go about the media planning process and how you go about setting up campaigns,” said Kane. Jounce Media recently published a whitepaper on the complex state of reselling, outlining the difference between value-extracting reselling, which simply eats into margins, and value-added reselling, such as a small publisher outsourcing yield management to a third party. Kane said the industry needs to recognize that an intermediary reselling inventory on behalf of a media owner due to agreements of inventory splits is “nothing like” one exchange reselling the inventory of another’s. “We create a deal ID. [Advertisers] buy it just like they normally do through their DSP, but because we're integrated at the publisher level and they're not dealing with multiple hops, they're able to go out … and target that audience,” said Gentry. However, OpenX doesn’t directly integrate with all publishers, which is common for SSPs. So even though an agency might be buying curated inventory on a deal ID in a PMP, that transaction could then be routed through another SSP before it reaches a publisher. OpenX has hired Brian Murphy, formerly of StartApp and Quantcast, to lead buy-side operations as svp of demand. Gentry said the company is hiring in specific areas but has slowed hiring overall as the pandemic plays out.