A Closer Look At Demand-Path Optimization: Why Humans Matter

“The Sell Sider” is a column written by the sell side of the digital media community.

Today’s column is written by Erik Requidan, vice president of programmatic strategy at Intermarkets.

In September, I wrote a column that introduced the idea of demand-path optimization, the process by which publishers optimize the path from supply-side platforms (SSPs), exchanges and ad networks to trade desks, demand-side platforms (DSPs) and brands that buy media in-house.

Where supply-path optimization focuses on the most cost-effective way to access inventory for buyers, DPO is more focused on how publishers can drive meaningful, human-to-human business results. Publishers always want to help buyers save money, but it’s also critically important that we make sure they’re achieving their unique goals.

To start optimizing along the demand path, publishers must first look at the buyers for all inventory and organize, prioritize and categorize those buyers by opportunities, volume of bid attempts, money spent, number of bid requests, win rates and any other significant segments.

The next step is to dig deeper with specific buyers from whom a publisher wants to encourage more spend and develop an optimized path for that premium demand. What is considered premium will depend on a number of factors, but often the first clue to where demand-path optimization is needed is the volume of attempts, so scale will take priority over total dollars spent. While it’s true that big dollars equate to big wins, there’s always room for improvement.

Let’s use this graph below to illustrate.

Click here for larger image.

DSP 1’s first buyer has expressed the most intent to win auctions, with 15 million bid requests. But since Buyer 1 only won 1.6 million impressions, the publisher wants to help the buyer improve its win rate or, better yet, understand why or where it is losing. The publisher must discuss the data directly with the buyer and initiate action to help its demand partner find the best paths into its supply.

Perhaps the price of its bid needs to be adjusted down or up. Maybe there are private deals that may be created with the buyer to secure the publisher’s desired inventory. It’s possible that performance thresholds are not being met, so adjustments in placement or frequency capping may help. Perhaps the buyer’s supply path was not as clear at the exchange or URL level. Maybe there are blocks and filters that are inadvertently restricting deal flow enablement that can be cleared.

After the publisher worked directly with its buyer, its win rates improved to 6 million impressions won out of 15 million bid requests versus 1.6 million previously.

In this scenario, the buyer secured more of what it wanted and gained a better understanding of its supply, while the publisher increased revenue and CPMs and learned more about its buyer’s needs, in terms of its KPIs and business goals. It also had an actual marketing conversation with a buyer and its excellent customer service made the buyer happy.

The publisher could also go to DSP 1’s second buyer and discuss how it is bidding 10 million times, but still losing too often to Buyer 1 because its bids are lower. The conversation could include its KPIs – are they still strong? – and whether it wants to bid more. Would a slight increase in its bid floors still give the advertiser the return it wants, but also give it the chance to win more?

DPO is all about streamlining the path to the most wins for the buyer and delivering the most efficient and effective buys possible.

Customer Service Still Matters

The real beauty of DPO is that it’s not just an automated technical process. It’s a process for the advanced and experienced digital advertising professional who relies on both a technical backbone and vast amounts of data, but it’s driven by human intelligence and relationships.

Some of the ways we currently decide how to manage our marketplaces are antiquated, which contributes to a broken process. DPO creates a new way for publishers to manage and can help them decide how to organize programmatic territories, whether they are based on a brand, agency holding company, location or some other parameter.

It empowers the humans in the process to decide who they want or need to work more closely with based on the information they see and analyze during this process. Based on business intelligence and KPIs, marketers can practice SPO to decide who it makes sense to partner with or to work even more closely with.

We’ve seen an explosion of new sites, but not an explosion of new buyers. While SPO is great to help buyers find sites that are valuable, DPO helps publishers provide the right level of customer service, which is often overlooked in programmatic today.

Power To The People

It’s true that DPO is a complex optimization process for publishers involved in data-driven programmatic technology. It sounds incredibly technical and confusing, particularly to those who haven’t been entrenched in the industry for the last few years.

But ultimately, DPO is all about the human: It’s the human who has to understand the goals of buyers to forge the ideal path. It’s the human who has to glean the intelligence that will determine what the ideal path will be. And it’s the human who will manage the relationships with very human buyers who have very human concerns about meeting their business goals and keeping their bosses happy.

Without human involvement, programmatic will certainly automate the process of buying and selling ads, but it takes people to understand and optimize for meaningful goals.

Follow Erik Requidan (@Requidan), Intermarkets (@intermarkets) and AdExchanger (@adexchanger) on Twitter.

This post was syndicated from Ad Exchanger.