The position of a supply-side platform has developed alongside the programmatic business over the previous decade. Whereas an SSP’s main perform because the technological connection to promoting demand for publishers stays, the strategic worth an SSP offers has modified. And buy-side initiatives like The Commerce Desk’s OpenPath may threaten SSPs’ worth proposition even additional.
As header-bidding know-how has turn into commoditized and buy-side priorities have shifted, 4 new developments in SSP worth differentiation are rising:
- Curating stock for patrons to distinguish from open-market stock
- Growing effectivity of auctions for patrons
- Scaling stock to keep up relevance in a crowded ecosystem
- Introducing knowledge administration platforms and first-party knowledge options
These developments have been in response to the altering priorities of the purchase aspect. It has turn into clear that SSPs’ enterprise priorities have more and more shifted to patrons, as that’s the place they’ve the least affect.
As SSPs evolve, so ought to the best way publishers work with them. SSP know-how and buy-side paths are commoditized, and the income sharing mannequin doesn’t result in significant partnerships with SSPs.
So it is perhaps time for SSPs to desert income sharing with publishers in favor of a software-as-a-service (SaaS) mannequin.
Issues with income share charges
Income share charges ought to align efficiency incentives between SSPs and publishers. Nevertheless, as a result of introduction of public sale mechanisms, reminiscent of volume-based reductions, post-auction reductions and variable rev-share per public sale charges, income shares are not straight ahead.
In every of those public sale mechanisms, the SSP take charges – or the charges an SSP costs on each transaction carried out – are used as a lever to win extra enterprise from the purchase aspect, which creates complexity for a writer’s understanding of mediation.
A income share additionally implies that the income delivered to the writer must be credited to the SSP. Nevertheless, most, if not all, programmatic demand is accessible by way of all main SSPs. Why ought to a writer pay the identical income share payment for a few of its costliest stock when an SSP did nothing completely different to purchase it?
The largest downside with income sharing is that it doesn’t encourage significant partnership. Income share buildings create a dependency on short-term pondering. An SSP relies on profitable writer income at significant scale, and there are few levers outdoors of take-rate and distinctive codecs that may change this. Because of this, partnerships with SSPs have gotten purely operational as a substitute of being strategic, making it tough to distinguish worth between SSPs.
Transferring to a SaaS mannequin
A SaaS relationship between SSPs and publishers would encourage significant partnership, worth differentiation and transparency.
A SaaS payment mannequin would come with:
- Charges for technical service to allow demand path connections, RTB auctions and reporting.
- SSP-built applications that add worth to publishers.
- Income share agreements for demand uniquely sourced by the SSP.
- Strategic funding in a partnership that encourages renewal on the finish of every contract time period.
A SaaS mannequin is helpful for SSPs as SaaS contracts are simpler to forecast and result in greater income valuation, which allows long-term funding.
However, inevitably, this mannequin would end in fewer SSPs, since publishers would solely want one or two platforms. This might, nonetheless, profit patrons trying to attain their supply-path optimization objectives.
As for publishers, they’re hungry for significant partnerships, and the present path that publishers and SSPs are on doesn’t supply that. The commoditization of header bidding has made SSP relationships transactional and undifferentiated, however a SaaS mannequin may present the change that each events desperately want.
It’s time to rethink {our relationships} if the promote aspect desires to realize momentum within the market.
“The Promote Sider” is a column written by the promote aspect of the digital media neighborhood.
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