A Q&A with Jounce Media’s Chris Kane and Teads’ Jeremy Arditi
As supply chain concerns abound, marketers are increasingly focusing on the main motivators that drive efficiency in their operations, including financial considerations, supply chain transparency and, most recently, environmental concerns.
Sustainability has not always been at the forefront of the digital video buying process for the ad industry, but brands like Teads are taking steps to eliminate environmentally wasteful processes, recognizing that these actions are just as important as achieving business objectives. It has shown that efficiency, financial and sustainability goals can be achieved in tandem, as highlighted by Jounce Media’s recent report which found that among the 10 largest omnichannel SSP exchanges, when it comes to supply path optimization (SPO) among web video supply chains, Teads ranks in the top spot — offering 80% directness to DSPs and 100% transparency of its bidstream.
In this Q&A, Chris Kane, founder and president of Jounce Media, and Teads co-CEO Jeremy Arditi, these professionals discuss Jounce’s findings and how SPO can be utilized to drive business and sustainability outcomes.
Can you tell us a little about the methodology behind this custom research?
Chris Kane: At Jounce we put math around the movement of money from DSPs to publishers. As part of that, we operate data systems that integrate data from public sources like ads.txt and sellers.json with data from private sources like DSP delivery reports. This allows us to quantify how much money flows through the supply chains that connect DSPs and publishers across a million websites, half a million mobile apps, and 50,000 CTV apps. Some supply chains are direct while others are less so, and we can identify which is which. What we’ve done for this particular research is isolate web video inventory and benchmark how much of the bidstream — powered by Teads and other companies selling web inventory — meets our proprietary standards for directness.
What are the core benefits of SPO for publishers?
Jeremy Arditi: One of the main and obvious benefits of SPO for publishers is financial efficiency. For publishers, this should mean higher yields, whether that’s through improved CPM or higher volumes. We are also seeing certain holding companies and agencies looking to concentrate more of their client dollars into more direct supply paths, which should translate to better unit economics and larger volume for publishers in the medium term. But there are other lesser-known benefits as well.
The control over the publisher’s general B2B positioning in the marketplace is one such benefit. If they are working with 150 different platforms that are all allowed to access their inventory, that means that the sales narrative of that publisher is being told in 150 ways. For long-standing, established publishers, a more direct supply chain can give them increased control over how their story is told.
Chris Kane: For example, over the summer there were concerns that some publishers were unable to distinguish between in-stream video and out-stream video in their own inventories. Well, if a publisher operates its auctions through a direct supply chain, it’s pretty easy to tell the difference.
But it’s borderline impossible for publishers who sell most of their video inventory through multihop supply chains that are outsourced to an intermediary. We had premier publishers coming to us asking if there was any mechanism that would give them insight into whether or not they were giving buyers an incorrect impression of what they were selling to them. And the answer is no, it’s next to impossible to know how your inventory is being presented to buyers if you sell through multi-hop supply chains.
SPO as a concept has been around for some time now. How has it evolved in the past five years? What lessons has Teads learned in that time?
Jeremy Arditi: Over the last five years, we’ve seen a clear acceleration of the attention and care coming from the buy side. It seems that large agencies and advertisers are becoming increasingly aware of the complexities of the supply chain compared to just a few years ago.
This is a much more important topic now. Five years ago everyone was concerned with connecting the pipes – what are the metrics and currencies that we measure? How do we detect and eliminate fraud? That kind of thing. That layer has by and large been built.
CTV is still young, but on the web, the basic plumbing has been constructed and is well understood at this point. The core of SPO is, “How do we make the plumbing more efficient?” Large advertisers and agencies want to reduce the overall number of supply partners they are working with, so we’ll continue to see that trend of consolidation from the supply side.
Chris Kane: Adding to Jeremy’s point, publishers are behaving very rationally here. On the surface, opaque supply chains look wasteful and unnecessary, but they are a rational way for publishers to maximize their share of DSP demand. So if we’re going to rationalize supply chains, that change has to come from the buy side, which is already happening more and more.
For a decade, there has been an open auction and private marketplaces. And while private marketplaces are going to continue to exist, the open auction is already changing. The sophisticated buyers will continue to have one-to-one agreements with a handful of premier publishers, but instead of dumping the rest of their spend into the open auction they will look to increasingly specific supply chains.
The current iteration of the open auction has become too diverse, ranging from the very best to the very worst of the open internet. To combat this, buyers are making decisions about which supply chains are on by default when they run a campaign across many different websites and ads. The open auction is being segmented and eventually won’t exist as a singular thing that is seen by all buyers. There will be an open auction as agency A buys it, versus how agency B buys it.
What lessons can the other large SSP exchanges learn from Teads in terms of achieving greater directness to DSPs?
Chris Kane: Almost every line of logic suggests that maximally direct supply chains are the optimal way to transact business, but there are tradeoffs and opportunity costs. There is a lot of money that flows through indirect supply chains, so to what degree is it the financial responsibility of an exchange to sell the whole internet versus their responsibility to curate inventory that they think is a good investment for buyers?
It’s like being a grocery store that doesn’t sell junk food. You can do that, and that can be a rational business choice, but it comes at a business cost. Some people won’t shop at your store at all because they want junk food, and that’s something Teads has taken into consideration.
In the long run, demand will rationalize toward buying quality inventory for direct supply chains. As an industry we know where we’re going, but not when we’ll get there. The bet is that buyers will change their buying behavior and reward exchanges that almost exclusively operate direct paths to publishers that buyers trust.
Jounce has a broad overview of the market. Have you seen sustainability grow in importance to publishers, DSPs and SSPs? Are publishers and DSPs focused on sustainability as well? Or are SSPs leading the way in this regard?
Chris Kane: Out of the three main motivators that are driving supply chain efficiency, environmental concerns are the newest. And while at Jounce we are not in the business of driving environmental efficiency, we have been thrilled to see that a growing focus on sustainability has put a spotlight on supply chain inefficiency.
For the industry at large, more direct supply chains equal fewer fees making them more financially efficient for both publishers and marketers. They are also inherently more transparent so publishers and marketers have better visibility and control of their counterparties. The sustainability benefits of shorter supply chains further strengthen the argument for directness.
Ultimately we’re at a “no more excuses” moment in the industry. Whatever you care about you land on the same solution as a buyer or seller, which is to transact through high-efficiency supply chains.
Jeremy Arditi: At Teads, we have a great number of people both in our leadership team and within the broader organization that have focused on what role the ad tech industry can play in measuring and reducing the carbon footprint of the ads we serve. It was a very organic push internally that started within our engineering teams who got under the hood and measured the impact of cloud-based infrastructure at an impression level. We wanted to understand what levers we could pull to optimize that.
We also deal with a lot of large global advertisers, and our counterparts there have similar personal and corporate desires to make the industry more energy efficient. It’s just good business from that standpoint.
Where along the supply path have you seen the greatest inefficiencies? How have you addressed those inefficiencies for publishers?
Jeremy Arditi: What this means is that multiple hops in the supply chain reduce a DSP’s ability to scale or reach as many potential impressions where those impressions are using third-party cookies to target. Over time you get DSP/SSP data syncing issues, and the more hops you have in the supply chain, the more those issues are magnified.
Eventually, impressions that could have been monetized may not be, solely because the supply chain leads to a DSP rejecting a potential bid request or impressions because of issues with frequency caps, audience matching, etc.
How prevalent is fraud in the supply chain and how are you helping to prevent it?
Jeremy Arditi: The more actors you introduce into the supply chain, the more opaque it becomes, which leads to increased opportunities for fraud. This doesn’t mean that less direct supply chains automatically have more fraud, but they do have more vulnerabilities.
Chris Kane: Fraud management for the last decade has been done on an impression-by-impression basis. Something is either fraud or it’s not fraud. Now we are moving away from impression-by-impression fraud detection and toward supply chain trust.
Not all supply chains are created equally when it comes to fraud. If there is 5% fraud overall in an ecosystem, then 50% of that 5% might be concentrated in one supply chain. And seeing as direct supply chains have extremely low instances of fraud, the incentive to maximize directness becomes clear.
What role does data deprecation play in the evolution of SPO?
Jeremy Arditi: On the open web today roughly 60% of internet traffic is devoid of third-party cookies, and the closer we get to 2024 the more that number will continue to increase. As a result, a publisher’s attractiveness to the buy side will depend on its ability to share some of the signals or data they have, which I doubt it will be able to do effectively with many different SSP partners.
They are going to have to make specific choices and consolidate their preferred relationships with demand providers. I think that’s another accelerator that we’re going to continue to see.
The pressure is on publishers to consolidate some of their ad tech relationships because the demand side is going to pressure the supply side into some level of data sharing. Publishers aren’t going to want to do that with 100 different companies.
The future of SPO
The benefits of supply path optimization are clear – decreased instances of fraud, reduced signal erosion from multiple hops in the supply chain, and reduced environmental harm, amongst others. And for Teads, it means being able to offer our partners and clients a more transparent and efficient supply chain, which ultimately leads to better performance and a better user experience. By investing in optimized supply paths, we are not only able to increase value for our partners, but also to promote sustainable practices and reduce our environmental footprint.