Dean Kamen, the brilliant engineer who invented both the Segway and iBOT once said that every innovation eventually becomes a double-edged sword. Initial positive outcomes will inevitably need to be weighed against future negative unintended consequences… the internal combustion engine, social media, Open RTB – for starters.
Our industry continues to pivot away from vendors who have contributed to unintended consequences (fraud, loss of publisher control, etc.). However there is an enormous risk to unilaterally severing ties with all your 3rd parties in a mad rush toward SPO nirvana. The culling of the herd needs to be done. However, it must be carried out with precision lest we cut off our noses to spite our faces.
Len Ostroff, SVP at Critero, had this to say about the programmatic supply chain in a recent article in AdMonsters:
Publishers are working with far more SSPs than they were in the past and we have seen a rise in duplicate bid requests, leading to an increase in infrastructure costs and multiple bids for a single impression. While there is typically value in seeing a few bid requests per impression, there is a point of diminishing returns which can cause a degradation in value and a drop in yield while also increasing fees and costs.
So, what are you going to do about it?
This legitimate observation about our ad industry’s Achilles heel has led to calls for Supply Path Optimization (SPO). Let’s face it: There are obviously too many cooks in the kitchen. Reduce or eliminate 3rd party vendors, say some industry leaders. Moreover, publishers don’t want to see nearly 50% of each programmatic advertising dollar slip through the cracks into the hands of redundant intermediaries. Nor should they allow themselves to be victimized by fraudulent activity.
Don’t throw every baby out with the bathwater
The fact is that SPO is not a zero-sum game. Certainly, there are bad actors whose main goal is to siphon off another point or two from your bottom line without adding value. However, there are also great 3rd parties whose entire focus is to increase income, and improve reader engagement, ad viewability, and UX for their partners.
Most of us remember when Marc Pritchard of P&G famously called for “the death of the crappy media supply chain,” at the 2017 IAB ALM. However, I don’t believe that his intention was for anyone to amputate value-added partners to eradicate the cancer that had developed in the ecosystem of our industry.
Rushing to judgement leads to errors that can be avoided with deeper due diligence. Ask your 3rd parties to articulate specifically what they contribute to your business goals, and most importantly to your income. Require that they provide you with data that supports their contribution. Consult with industry experts and ask your peers about their experiences working with partners and vendors. Look to industry award nominees from the various highly valued trade publishers whose evaluations are objective and authoritative.
Trade your gas guzzler in for a Tesla
It is incumbent upon all of us in the industry to seek higher ground and work with the best. With apologies to our friend Terry Kawaja, the LUMAScape does give some insight into the problem we have created for ourselves. Too much is just too much…and not of a good thing:
I’ve written about the “tyranny of choice” here before. There are simply too many players in the ad tech ecosystem. That’s part of the problem publishers face. My suggestion is to K.I.S.S. Identify those vendors who are not adding tangible value, then say bye, bye. Your ad ops and dev teams will thank you. So will your CFO, shareholders, and maybe even Dean Kamen himself.