Publishers and SSPs traditionally transacted via a rev share model, but that model doesn’t allow for transparency or strategic partnerships. At Publisher Forum New Orleans, a DSP, an SSP, and a publisher came together on one stage to share their vision for how their relationships and the industry can evolve.
In many industries, collaboration between partners is key to continued success of all players, and the digital media and ad tech industry is no exception. Publishers, SSPs, and DSPs need to work together to ensure all parties get what they need from one another. However, publishers often lament the lack of transparency and the slow evolution of SSPs.
At PubForum New Orleans, AdMonsters’ Content Director, Lynne d Johnson facilitated a panel discussion to unpack this complicated topic. Panel speakers included Samuel Youn, Vice President of Programmatic, Chegg; Nick Coté, Senior Director, Supply, Madhive; and Peter Cunha, Managing Director, Ad Management, Sovrn.
SSPs Cater to Buyers Rather Than Publishers
Publishers have expressed a desire for more SSP transparency, differentiation, and granular reporting among other things, and Cunha noted an evolution is beginning.
“Changes started happening around the same time we started focusing a lot on the buy side, as a shift in where a lot of our engineering focus and investment went. I think we’re starting to see a lot of differentiation now in the SSP tier, and people making some interesting bets,” he shared.
Part of this shift is due to where the money is coming from, noted Youn. SSPs make money by taking a rev share of the media sold on a publisher’s site but don’t have a say in where the money is spent.
This means the control they have lies solely in trying to capture more of the proverbial pie, leading SSPs to prioritize buyers over publishers, and decreasing the incentive to evolve.
“If I put myself in an SSP’s shoes. if I could build something with a finite amount of resources to get more budget from a buyer rather than get a publisher to say, ‘I really liked working with you,’ I would focus on the buy side,” Youn added.
Changing the SSP/Publisher Relationship
The question, says Coté, is how to build solutions that support the buy side and offer them insight into what they are buying. Then it becomes a question of where we can drive real value.
“There needs to be a better way to communicate what buyers are looking for, and how things are performing. This information can be fed back to publishers, so they can understand how traffic is doing and where improvements can be made,” he proposed.
For example, if a publisher knew they were consistently coming in at only $1 under the floor price during auction, they could adjust their floor to garner more traffic. This could help publishers reach a larger audience and increase their revenue.
Cunha shared that in April Sovrn eliminated its exchange rev share across all managed services. As of November, the company released a case study revealing this change drove increased efficiency for buyers and higher yields for publishers. This, he said, is the type of partnership Sovrn is pursuing for the future.
“This was a recommendation from the steering committee we launched late last year, in pursuit of an alternative revenue model for SSPs to something that was more of a SaaS model. We charged Ad Management publishers a SaaS fee on a per-impression basis, eliminating the rev share. We saw more spend bias toward the Sovrn exchange path, now second only to AdX within that stack of 66 different SSPs. We also saw the publishers’ share of the media dollar increase by 16 percent,” Cunha explained.
Innovating the Industry: Moving Toward a SaaS Model
Youn agreed that a SaaS model is preferable to how auctions typically run today where an SSP’s incentive is to look like a performance platform for a DSP. For the publisher, a Saas model…
- Provides a clearer view of how much of the media budget from a DSP is actually getting to the publisher
- Allows the publisher to assess SSPs based on contractual deliverables and SLAs rather than just where they rank in the publisher’s stack
- Provides budget clarity for the publisher as they have to pay for and budget for the SSP services rather than it just coming out of revenue share
Rather than focusing on getting the cheapest inventory, SaaS models help SSPs and publishers both understand the true value of inventory. It can also allow publishers to request specific deliverables from their partner SSPs, which will consolidate the space and lead to fewer, but higher-quality, partnerships.
“Piggybacking off of that, on the DSP side, it’s the amount of bid requests we see where the floor pass to us for the same publisher is totally different between ten to twelve different names, and being able to leverage a SaaS business model to identify, ‘What is the source of truth here? Where is the actual price point? Who is running a dynamic rev share, who’s padding by a couple bucks on top of whatever they’re intending on selling it for?’” added Coté.
There is a chance to make a difference in the space and do things a new way, Cunha shared. “The opportunity here is innovating in a space that hasn’t really had that level of innovation in a long time. We’ve been so accustomed to rev shares after rev shares. That’s table stakes, but there’s an opportunity to differentiate from the gorillas in that sense,” he said.
For SSPs to fulfill their purpose — offering value to publishers — they need to work in conjunction with publishers to find a solution that creates true partnerships. A rising tide truly lifts all boats; if all sides (SSPs, publishers, and buyers) work together on a solution, everyone can win.