• What is Demand Path Optimization?
• How is DPO different from SPO?
• Publishers' Challenges with Demand-Path Optimization
• Publisher’s Checklist for Optimizing Demand Paths
• Conclusion

Introduction

There are two sides to selling your inventory: you know what the buyer wants or you don't. Understanding your buyers' demand and needs allows you to suggest the right inventory and optimal supply path.

But when you're unaware, the buyer is left to navigate alone, possibly choosing a suboptimal route. This can lead to less-than-ideal results for both you and the buyer.

Publishers have typically taken a 'plug and play' approach to ad tech, but it's important to understand each partner's benefits against set objectives. The ad-tech landscape has expanded greatly, introducing more market paths and bringing challenges like loss of control and complexity.

While it was once believed that more ad tech partners meant more revenue, the ecosystem has evolved, requiring a more strategic approach for maximum effectiveness.

What is Demand Path Optimization?

“Demand Side Partners call it SPO because they’re managing the publishers, but when the publishers or/and  SSPs are managing the buyers, they call it DPO” Tom Jenen, Assertive Yield’s Advisor.

Demand Path Optimization (DPO) is a digital advertising strategy that simplifies connecting buyers with premium publishers’ inventory through transparent bidding.

The goal is to increase publisher revenue by minimizing ad tech fees and fostering direct relationships. It emphasizes streamlining the demand chain by reducing the number of intermediaries involved, as one wrapper can connect with multiple supply-side platforms (SSPs).

Strategically investing in demand path optimizations leads to more transparent partnerships, allowing publishers to capture more ad spend and cultivate stronger relationships.
With the deprecation of third-party cookies and its impacts on publishers, the focus on bridging the data gap between buyers and sellers has intensified, underscoring collaboration as a priority. 

How is DPO different from SPO?

It's like two sides of a coin: one focuses on Supply Path Optimization (SPO), aiding DSPs in reducing ad tech fees and streamlining the supply-chain process by filtering out unwanted traffic. The other side centers on Demand Path Optimization (DPO), assisting publishers in maximizing their inventory value.

DPO targets selling impressions through the most effective demand paths. While the shortest path may sometimes be the best, it's not always the case. In DPO, the focus is on the buyer and ensuring they purchase your inventory through your chosen path.

Publishers utilizing DPO examine how media buyers navigate their inventory acquisition, while SPO captures advertisers' attention by simplifying the path to purchasing advertising space from publishers.

According to IAB Europe's Guide to Supply Path Optimization, “finding a starting point for DPO is often the trickiest part - what do I unravel first? This often follows the path of the famous adapted quote “I know half of my ad tech works, the problem is, I don’t know which half”.

However, as a publisher, DPO helps you find the most efficient path to connect with your buyers. Once established, you aim to guide buyers to purchase your inventory through these paths, as they prove the most profitable for you and efficient for the buyer. The DPO process unfolds in four key stages: data gathering, analysis, planning, and execution.

“Demand-path optimization is the reverse of supply-path optimization. I’m looking at what’s the most efficient path to get marketers’ dollars for me.”  – Scott Messer, SVP of Media, Leaf Group

Publisher’s Check-List for Demand Path Optimization

✅ Leverage Data Analytics on a Granular Level

Each additional step in the digital advertising supply chain incurs a fee. By assessing existing fee arrangements and streamlining demand partners to those offering the clearest purchasing path, publishers can increase revenue. 

A robust Traffic Shaping solution for publishers might also offer real-time and granular analytics insights to help publishers make informed decisions about inventory distribution. 

By analyzing metrics such as bid responses, win rates, and advertiser preferences, publishers can fine-tune their traffic-shaping strategies to maximize the value of their inventory while meeting advertisers' transparency expectations.

✅ Ensure Data Transparency

 Buyers are reluctant to buy inventory that is only available through inefficient supply chains. To maximize the value of your inventory and meet advertisers' transparency expectations, it's crucial to collaborate with demand partners who can provide streamlined supply paths. This approach does not only boost the number of bids but also elevates the average ad spend on a deal.

Understanding how each of these players work together and the value they bring is key to ensuring complete transparency. However, with so many middlemen in the mix, figuring out where fees are coming from and uncovering hidden charges is step one in the DPO journey. While some fees represent a fair exchange for services or technology, others may not, or worse, are hidden entirely. 

Conducting a demand path audit could give you insights into your partners' fee structures and what's adding value or just adding to your hidden costs. Although it will not solve the problem, as a scalable solution.

✅ Reduce your AdStack Complexity

An AI-powered Traffic Shaping solution can help publishers optimize the demand paths through which their inventory is available to buyers. By collaborating with select demand partners who offer streamlined and transparent supply paths, publishers can improve the efficiency of their inventory monetization efforts. This involves evaluating and prioritizing demand partners based on bid rates, fill rates, and transparency practices.

A traffic-shaping solution can simplify these supply chains by consolidating inventory distribution channels and working with trusted partners. This simplification ensures that the publishers’ requests being sent to buyers are what they want to buy. 

✅ A/B tests your DPO Strategies

To implement A/B testing for DPO, publishers need to establish mechanisms to track and analyze revenue fluctuations resulting from changes in demand paths. This involves collecting and analyzing data on ad performance, revenue generated, user engagement metrics, and other relevant factors. 

By comparing the performance of different demand path configurations in real time, publishers can iteratively refine their optimization strategies to maximize revenue.

A/B testing demand path optimization (DPO) strategies involve setting up controlled experiments where different demand path configurations are tested simultaneously. This allows publishers to accurately measure the revenue impact of their DPO efforts, distinguishing between changes attributable to their optimization strategies versus broader market changes.

✅ Embrace & Test New Technologies

Header bidding wrappers are tools publishers use to manage multiple demand sources for their digital advertising inventory. They allow publishers to offer their ad inventory to multiple ad exchanges simultaneously before making calls to their ad servers, thereby increasing competition and potentially driving up ad revenue. 

Now, adding advanced A/B/n testing capabilities to a header bidding wrapper means that publishers can experiment with different configurations of their ad inventory setup in real-time, without needing to write any code. This includes testing different combinations of demand partners, ad formats, ad placements, and other variables to see which configuration yields the highest revenue.

Some top-tier publishers are now implementing this game-changing advanced wrapper, which also has an AI-powered traffic shaping solution integrated, meaning, premium publishers can now further optimize their digital advertising demand paths. 

Traffic shaping involves directing traffic to different demand sources based on predetermined rules and algorithms. This can include factors like historical performance, bid rates, fill rates, user engagement metrics, and more. By dynamically shaping traffic in real-time, publishers can maximize revenue by sending each ad request to the most lucrative demand source available at that moment.

✅ AI Prebid Server Side

Talking about testing, if you have your wrapper on the client side, but would like to try a wrapper server-side, know that the more advanced solution can also offer AI Traffic Shaping, Dynamic Flooring, Unbiased Demand, and ID Solution Integrated, all with only a single line of code - both on the client and server side. Publishers can seamlessly add multiple demand partners without UX impact as the most high-tech support for all prebid adapters.

✅ Cut-out Inefficient Paths

Advertisers, Agencies, and DSPs who are heavily focused on SPO seek partners who streamline the process of purchasing premium inventory with fewer steps in the supply chain and the highest Return on Advertising Spend (ROAS). 

With RTB-enabled publishers typically monetizing through an average of 28 SSPs, plus additional resellers, there's a chance for publishers to eliminate inefficient routes. By embracing DPO, publishers (along with their chosen demand partners) can establish themselves as reliable sources of premium, streamlined media, increasing the chances of repeat buying.

✅ Adopt AI Powered Traffic Shaping for a better DPO

Implementing Traffic Shaping for publishers optimizes demand paths and guides buyers toward the most efficient routes for purchasing your inventory while enhancing your auction revenue, minimizing wasteful requests, and boosting revenue per request. 

With its throttling control, publishers gain efficiency, seeing revenue increase and reducing wasteful requests, ensuring that each bid request aligns with the right partner -improving ad fill rates and CPMs. Data-driven insights from Traffic Shaping facilitate informed decisions, optimizing monetization strategies for success in the digital advertising ecosystem.

“Our SSP partners are getting almost half as many requests, but then maintaining the same level of revenue because we're just cutting out those requests that aren't performing well,” said Andrew Wu, Senior Manager of Programmatic - 9GAG.

By incorporating these practices into your demand path optimization strategy, publishers can maximize the potential of their inventory while fostering transparency, efficiency, better SSP relationships, a cleaner supply path, and revenue growth.

Publishers Challenges with Demand-Path Optimization

“While Supply Path Optimization (SPO) helps ad buyers identify the most efficient partnerships, DPO helps publishers maximize yield by ensuring demand is routed through the most direct path to their page”  Connatix

Image by Connatix.

It's important for buyers to prioritize SPO strategies, while publishers must also align to understand better and optimize the buying of their inventory. Without a thorough understanding and assessment of each partner's supply path, publishers risk significant loss in their monetization strategies due to ad tech intermediaries, as illustrated in the diagram above. 

Every time an intermediary charges a fee, it results in a substantial reduction in CPM by the time it reaches the publisher. According to a study by ISBA and PwC, publishers receive just 51% of ad spend, indicating the need for an overhaul of ad tech and agency buying practices. However, recent findings show some improvement, with the total cut of ad budgets finding their way to publishers increasing to 65% in 2022 from 51% in 2020. 

Too Many Intermediaries in Demand Path Optimization

 “Too many cooks spoil the broth”. This saying applies directly here. The complexity of programmatic advertising and DPO mainly boils down to the sheer amount of players involved, ranging from publishers and advertisers to agencies, DSPs, SSPs, and more. Understanding how each of these players work together and the value they bring is key to ensuring complete transparency. 

With so many middlemen in the mix, figuring out where fees are coming from and uncovering hidden charges is step one in the DPO journey. While some fees represent a fair exchange for services or technology, others may not, or worse, are hidden entirely. Conducting a demand path audit will give you insights into your partners' fee structures and see what's adding value and what's just adding to your costs.

No measurable revenue impact

While DPO is meant to empower publishers to select the most efficient path to connect with their buyers for optimal revenue, currently, there is little to no data available to measure improvements in revenue value.

“Publishers may observe some changes but that can also be just market changes because there’s no way to AB test if these are revenue changes or just market changes, hence why they can’t put solid figures behind these impacts in terms of revenue” - Nils Lind, CEO/Founder of Assertive Yield B.V. 

Questions like "How much will I make if I choose this path? How much will I lose? Will my revenue remain the same?" lack concrete answers due to the absence of solid data. Nevertheless, for publishers with experience in products and an understanding of economic principles, trusting that DPO works becomes a matter of blind trust.

So, what's the solution? How can publishers overcome these challenges to ensure they maximize their inventory's potential? By incorporating these practices into your demand path optimization strategy, publishers can maximize the potential of their inventory while fostering transparency, efficiency, better SSP relationships, a cleaner supply path, and revenue growth.

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