For the past couple of years, the major trend dominating discussion of programmatic technologies has been the disintermediation wars being waged between the buy-side and the sell-side. Under the guise of supply-path optimisation, demand-side platforms (DSPs) are forging direct relationships with publishers and broadcasters, while supply-side platforms (SSPs) are building direct links with agencies, as each side of the programmatic supply chain seeks to squeeze the other side out of the equation.
Or are they? There are those in the industry who believe all the chatter around disintermediation is overblown. Jeff Green, CEO of The Trade Desk, is one of them. On an earnings call discussing his company’s results earlier this year, he compared trade press reporting on The Trade Desk’s own OpenPath and other company’s supply-path optimisation (SPO) products to reality TV drama creation.
“I think that’s often [the trade press] looking for drama,” said Green. “And I think they’ve learned over time that if you write something about The Trade Desk, you get clicks.” (Logic which, presumably, inspired the launch of The Current…).
Green’s not the only one. Alongside each new SPO product announcement, there’s been debate on social media about how much it really means, and whether any of it really constitutes an effort at disintermediation. Do the dissenters have a point? Is talk of disintermediation off the mark?
A brief history of SPO
As mentioned above, the disintermediation discussion fits into the wider trend of supply-path optimisation, a process by which buyers, sellers, and ad tech vendors are working to create more efficient paths between the advertisers spending money, and the publishers and broadcasters which display their ads.
Supply-path optimisation has been happening in one form or another for years, often driven by ad tech companies themselves attempting to deliver better results from their partners. Around the start of the pandemic, we also saw a number of media agencies committing to working more closely with a smaller number of sell-side partners. Again, the idea was to deliver more efficient supply paths, as well as more transparency for buyers around where their money was being spent.
These moves, by necessity, saw some ad tech companies lose out. Those which performed poorly, or couldn’t provide enough transparency, found themselves increasingly cut out of the picture.
However a few recent moves from SSPs and DSPs have looked to some observers to be more aggressive – efforts to not just cut out the weaker players on the other side of the programmatic equation, but to circumvent the other side altogether. But is that really what’s happening?
As the demand-side platform crowd has thinned in recent years, most recently with MediaMath declaring bankruptcy, The Trade Desk has risen to the top. The company positions itself as a champion of the open internet, standing most obviously in opposition to Google, whose own DSP is a major competitor for The Trade Desk.
In February last year, the company announced OpenPath, a product which allows publishers to directly integrate with The Trade Desk, giving advertisers a more direct route of access to those publishers. Transactions run through OpenPath don’t require a SSP, leading some to speculate that OpenPath was a first step towards cutting out SSPs completely.
CEO Jeff Green has maintained frequently that this is not the case. In fact he’s almost argued the opposite. OpenPath shares bids and asks with publishers via Prebid, and Green says that doing this allows SSPs to better run yield optimisation for their publisher partners, adding more value in the process.
And, for the time being at least, this seems to be true. OpenPath can enable SSP-free transactions – in cases where SSPs are just dumb pipes funnelling through bids, The Trade Desk can take that role. But Green has been clear that while OpenPath might facilitate yield optimisation, The Trade Desk won’t handle yield optimisation itself.
“The Trade Desk is clearly saying over and over again, we are a buy-side business,” said Chris Kane, founder of Jounce Media, a specialist in programmatic supply chain management. “The subtext of those statements is that The Trade Desk is not in the business of helping publishers make more money. They’re saying ‘Publishers can think of us as a giant source of spend, and we think we can help buyers by working directly with publishers, but our goal is not to improve publisher yield, we’re working for marketers’.”
Dan Larden, chief strategy officer at TPA Digital, pointed out that The Trade Desk’s strategy isn’t a new one. “Amazon, Meta, and Google all have direct to publisher paths, and then you add in Xandr, Adform and Criteo, who have proved clear advantages of direct paths in terms of audience targeting, measurement and transparency,” he said. “So it wasn’t a surprise to me to see The Trade Desk follow suit.”
ClearLine and Activate
On the sell-side meanwhile, two product announcements caught the headlines this year: ClearLine from Magnite and Activate from PubMatic.
Both of these companies had already built more direct relationships with agencies. Notably Magnite and PubMatic were the two SSPs chosen by GroupM for its Premium Marketplace, which gave GroupM direct access and favourably pricing for premium video inventory across the two companies’ supply partners.
ClearLine and Activate meanwhile represent an acceleration of this tactic. Both are tools which buyers interact directly with, allowing agencies to place orders without the need for a DSP.
In a sense, these two product launches look similar to OpenPath. They cut out DSPs in some cases, but not all of them. Magnite’s CRO Sean Buckley has spoken in similar terms to Jeff Green, saying that “DSPs will remain the primary method for agencies to access premium video inventory on our platforms”.
And while they’re buy-side focused, these two products don’t replicate all the capabilities you’d find in a DSP. “What we have seen so far is that you wouldn’t maintain all the functionality of a traditional DSP when buying through SSP built products,” said Clare Ritchie, SVP global head of programmatic and in-housing at Omnicom Media Group. “The capabilities of these platforms developed on the SSP side have been built out for more of a branding approach centred around video, which would call for less of the nuance and control levers applied in optimising to a more results driven KPI.” It’s no coincidence that both ClearLine and Activate are centred on premium video and CTV – these sorts of buys tend to be a lot simpler, with less complex decisioning, making it easier for SSPs to cater to the buy-side without having to build out a fully fledged DSP.
But those VideoWeek spoke with said there are meaningful differences between Magnite and PubMatic’s SPO products compared with The Trade Desk’s OpenPath.
TPA Digital’s Dan Larden said that Magnite and PubMatic might have a tougher time balancing the interests of the buy-side and the sell-side. “My hunch is that it is easier for companies like The Trade Desk to get publishers to sign up for a Trade Desk tag and ID solution in the hope that more revenue will flow, just as they do for Amazon, Meta and Google,” he said. “It’s an easy sell and they don’t really have to worry about answering any questions on yield or optimisation for the publisher – it’s a take it or leave it sort of deal. SSPs will also have more of a problem with the conflict of who they are working for – are they going to tell the demand side they can get you a better price on premium inventory as they map all the demand and see the opportunities where price and priority are mismatched? How are publishers going to feel about that?”
Chris Kane from Jounce meanwhile said that Magnite and PubMatic’s moves are a more comprehensive push into the buy-side of the business, driven by the fact that the SSP model has faced major challenges in the era of header bidding.
“SSPs used to be yield optimisation software from publishers, but they all got demoted from that position when header bidding came out,” said Kane. “They’re now really just sources of demand, and publishers like the exchanges which bring them the most demand.” In this world, simply scooping up open auction demand from DSPs isn’t enough – any SSP can do that. Building unique demand is key, hence moves towards the buy-side.
The death of the pure-play?
So are these companies all trying to cut each other out of the picture completely? The answer appears to be no – not completely at least. As already stated, it’s not unusual for ad tech companies to serve both the buy-side and the sell-side. And serving both sides of the ecosystem doesn’t allow you to go it alone completely. Even Google, with its massive sources of unique supply and demand, buys extensively through third-party exchanges.
But they are circumventing each other in any cases where the other side isn’t delivering much value (which is what SPO is supposed to be all about). For a DSP like the Trade Desk, it makes sense to cut out SSPs which are just acting as dumb pipes. If the only value they deliver their publishing partners is access to demand – well, few can offer as much demand as The Trade Desk. For SSPs meanwhile, there’s sound logic in cutting out DSPs from transactions where they’re not really doing much technical work themselves, as is the case in CTV.
And we do appear to be seeing more and more convergence between the buy-side and the sell-side. “We are seeing a natural evolution of capability,” said OMG’s Clare Ritchie. “We began with siloed buy and sell side platforms, which on both sides have developed increased functionality. Naturally over time this increased functionality has brought them closer to each other.”
The fact that these platforms have converged a little doesn’t necessarily mean we’re seeing the death of the pure-play SSP and DSP. There are always compromises in serving both sides, meaning there will always be an argument for having dedicated technologies serving buyers and sellers.
But Jounce’s Chris Kane says that on the SSP side, business logic is likely to dictate that platforms will push further and further into the buy-side. Programmatic guaranteed deals for CTV and premium video inventory are relatively easy to run, but that also limits the take rate for SSPs, even when they’re circumventing DSPs.
“Programmatic guaranteed trades and old-school insertion orders are the easiest trades for SSPs to pluck away from DSPs,” said Kane. “But that’s really just establishing a beachhead. They have to reach further into biddable media where their buy-side tool, DSP, or whatever you want to call it is doing more valuable work. Then they can start taking higher and higher margins.”