Why SSP consolidation driven by agencies is benefiting the larger SSPs

The header image features two hands in a business handshake.

Supply-side platforms (what’s left of them anyway) have come a long way since the days of ad network optimization. 

What was once billed as software that helped publishers make money selling ads, is also now software that can help marketers make money buying ads. 

In the last month or so alone this pivot has been on full display. 

Havas struck a deal with SSP Freewheel to help it buy CTV in smarter, more transparent ways. Then Horizon plugged its identifier solution into OpenX’s SSP platform. 

Oh, and there’s also the RFP doing the rounds among SSPs at the moment. It’s from a large media agency network that’s reviewing the marketplace solution it put in place several years ago, said one ad exec with knowledge of the brief. In its place, the agency wants to work with SSPs that can reduce redundant, suboptimal and low-quality supply paths. To do this, the agency is asking for SSPs to help it do several things such as reduce hidden fees, give media buyers greater control over how impressions are curated, and offer more auction transparency. 

A few years back a deal like this would’ve essentially been a “preferred partnership” — a contractual arrangement to incentivize advertisers to spend more money with SSP in exchange for lower fees, better transparency on those rates and improved reporting. 

These economics are still vital to these deals, of course. But so are things like sustainability, curation and data these days.

For example, the Horizon deal with OpenX is more about how the former can do more data targeting on the supply-side of the marketplace. It is built on the back of a direct integration between both companies, with the SSP able to give media buyers greater control over inventory quality, audience targeting and overall campaign performance against their metrics.

“Agencies like Horizon have invested significantly in developing proprietary audience and identity solutions,” said Brian Chisholm, svp of strategic partnerships at OpenX. “The issue is that these solutions can be siloed which limits the benefit to their brands. By integrating with a supply-side platform Horizon can amplify their existing data and tech investments and reach and report on audiences at scale.”

Deals like this are becoming increasingly important to the survival of SSPs. Without them agencies are more inclined to take their dollars elsewhere. The closures of SSPs from Yahoo and EMX last week as well as a recent round of layoffs at Triplelift make that all too clear. 

And yet working with agencies brings with it a whole host of other challenges since the SSPs that do it are now having to juggle the interests of two opposing forces.

On the one hand, SSPs have to mollify publishers, as ever, with better fill rates and higher prices, ultimately driving toward more revenue. At the same time, SSPs have to make it as efficient as possible for media buyers to buy impressions, lest those same marketers optimize them out of plans. If this happens then it diminishes the core pitch to publishers. Nevertheless, it’s a challenge commercial execs at SSPs are working through. 

“The direction these deals are headed is toward helping media agencies activate their products on the supply side, whether that’s through data, analytics or even curation,” said Kyle Dozeman, chief revenue officer of ad tech vendor PubMatic’s Americas business. “The agency execs want these deals to help them continue to have a vibrant business.”

There are a few reasons for this that can be whittled down to two key points: 

First, agencies seem to feel that SSPs are better placed than other ad tech vendors to enhance their margin-making ability in programmatic advertising because they’re closer to publishers and have insight into ad inventory that few others have. Second, it’s easier to get these deals done. After all, an SSP is more likely to be more attentive to an agency that controls a lot of ad dollars, whereas a demand-side platform doesn’t have to. Often, at least when it comes to the larger programmatic advertisers, DSPs will have a contractual arrangement directly with that business and so isn’t as reliant on the agency’s preference when it comes to securing ad spending through its ad tech, 

This is consolidation driven by agencies — and it benefits the larger SSPs. 

“It’s no secret that agencies and SSPs are getting closer as a result of the former wanting to consolidate their ad dollars and access better quality supply,” said Matt Barash, svp, Americas & global publishing, Index Exchange. 

He would know. His role is a direct consequence of this shift. As he explained: “SSPs are having to think more carefully about how to design around marketplaces so that they can pave the way for this next generation of transactions from the holding companies. They want to use those marketplaces to be able to curate and define access to the publishers that matter to them, whether that’s on a one-to-one or one-to-many basis, in a way that’s simple and operationally efficient.”

All these efforts boil down to the likes of Index Exchange and OpenX giving media agencies the tech they need to shape all the traffic being sold by that SSP down to quality sellers for individual advertisers. Or to put it another way, the big media agencies are using SSPs to sustain their own programmatic supply chains. And the more money that flows through those chains, the more control the agencies have. 

“For a while agencies have been uneasy about their ability to differentiate their businesses in programmatic and subsequently extract revenue,” said an ad tech executive who has worked with agency execs to do just that. “If you were on the investment team at WPP 30 years ago you had differentiation around buying power and that’s ultimately all they needed. So everything they’re doing with SSPs is about making investments in programmatic that matters to their businesses. The SSPs that can help the agencies do that will be fine.”

These aren’t new moves per se. Agencies and SSPs have been cosying up to each for several years now. 

But therein is the point. 

Doing what was once diametrically opposed to their raison d’etre is increasingly a matter of course for SSPs. 

Gone are the days when they could get by on exclusive publisher relationships as differentiators. The rise of header bidding made sure of that. It essentially ensured these ad tech vendors had roughly the same demand, which rendered the exclusivity they dined out on somewhat meaningless. 

So SSPs — or rather the ones that could afford to — tried something different. They started helping advertisers and agencies buy more quality impressions at lower fees. This has come in all sorts of guises over the years, from private programmatic marketplaces to supply path optimization to sell-side targeting and even product development. 

It’s not all upside with these arrangements. They tend to leave a lot to the imagination as they’re ultimately about agencies doing deals in exchange for preferential treatment. Cynics argue there are shades of gray to that commitment. They wonder whether those deals are a way for agencies to receive additional rebates as an additional incentive to work with one SSP over another. 

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