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What Is a Supply-Side Platform (SSP) and How Does It Work?

April 13, 2020

ssp

Programmatic is becoming a dominant form of media buying in digital advertising.

In fact, for digital advertising, more than 86% of display ads in the US in 2020 will be purchased using programmatic.

Advertisers increasingly prefer to purchase ad spaces automatically through real-time auctions in the programmatic ecosystem. This method is more cost-effective than direct and provides extensive options for targeting.

Publishers are quickly adopting programmatic to streamline sales of the inventory. The key to succeeding in this new programmatic landscape is to understand the publishers' side in programmatic media buying and how SSP helps them monetize their inventory effectively.

What is an SSP?

A supply-side platform is a software for publishers to monetize traffic from their media. SSP is a gateway for publishers to trade their advertising inventory programmatically across their website, game, or mobile app through an automated auction. The SSP enables them to fill their ad spaces with ads and receive revenue.

The main objective of the SSP is to provide timely reporting on campaign results and maximize the price of ad spaces for publishers.

SSP enables publishers to:

  • Access the demand from buyers
  • Review the market situation
  • Adjust the price
  • Control fill rate and overall yield

A supply-side platform is a critical component of the programmatic ecosystem that allows publishers to auction off the impressions of their audience. The SSP links publishers to multiple buyers and puts forward inventory for bidding.

SSP provides an interface for publishers to oversee ad campaigns. It can review campaign details, manage the format of ad inventory, and control CPM (i.e. cost per thousand impressions). SSP provides a single platform that can work with several campaigns and trade with multiple demand partners. An SSP can integrate with DSPs, agency trading desks, ad networks, and ad exchanges.

How SSP works

SSP represents publishers in the programmatic ecosystem and negotiates the deals on their behalf. After the publisher sets up SSP ad tags on their pages, the media buying takes place automatically through a real-time auction or other programmatic buying methods. SSP streamlines the process and automatically reviews the ad request, combines it with the relevant inventory, and conducts an instant negotiation.

Although inventory trading is fully automated, publishers have several mechanisms to avoid bad deals. SSP safeguards the publisher's revenue with a minimum price for impression. Publishers can set up the price floor for the inventory, and the auction will never fall below it.

Additionally, SSP guards the reputation and brand safety of its partners. SSPs have an effective mechanism to filter out spam and inappropriate ads and help publishers to build a loyal audience.

Publishers can restrict the ads that are shown on their pages, with whitelists and blacklists of advertisers. For instance, a publisher can prevent tobacco and alcohol companies from displaying ads on websites with content geared toward children. 

How SSP sells the inventory

SSP has several methods of selling ad inventory programmatically. Through an SSP, a publisher can establish a priority and sell some of the inventory directly, reserve some for the closed marketplace of selected advertisers, and auction off the rest through real-time bidding.

programmatic buying

Programmatic guaranteed

This method resembles direct media buys between the publisher and advertiser. The parties agree on the number of impressions and the price. Those impressions are reserved and guaranteed to a particular advertiser, and not offered anywhere else. The negotiations occur automatically through an API.

Preferred deals

A preferred deal is a method of setting up primary advertising partners. The publishers first offer their inventory to the selected advertisers at a pre-negotiated price. However, a particular number of impressions are not guaranteed. If advertisers skip the chance to purchase those impressions, they are then transferred further to a private marketplace (PMP).

Preferred deals provide a great convenience for publishers to sell inventory directly to high-paying clients, with a possibility to sell it via other methods if the inventory remains unused.

Private marketplace

A private marketplace or PMP is an invitation-only trading platform for selected advertisers. Frequently, it is used by big publishers and media holdings with premium segments in their inventory. Instead of parading their inventory on the market, they sell it to a close circle of advertisers, such as luxury brands.

The process of buying and selling ad space takes place through a closed real-time auction with an exclusive number of participants. In the private marketplace, the advertiser's DSP connects directly to the SSP.

Real-time bidding

Real-time bidding is the broad term that sometimes includes openRTB and Header bidding, and may encompass various selling methods.

At the core, real-time bidding or RTB is a way of trading advertising spaces in the form of individual impressions through the real-time auction. The process of selling and buying takes place in the browser, server, or ad exchange that connects to publishers through an SSP and to advertisers through a DSP.

  1. Publishers make the ad inventory available through the SSP.
  2. Then, the SSP connects with demand partners (DSP or Ad exchange) and places a bid request.
  3. Once advertisers assess the available ad inventory, they send a bid request back to the ad exchange or SSP.
  4. SSP accesses the bids, filters out blacklisted and inappropriate ads, and sells the impression to the highest offer. DMP usually facilitates this process through the exchange of data, and cookie matching between the demand and supply platforms.
  5. After the deal is finalized, the ad server inputs the creative in the ad spot of the publisher's site.

The transactions occur instantly within milliseconds while the web page is loading. Real-time bidding is usually an open marketplace without particular restrictions, where everybody can join. Nevertheless, three distinct models define the dynamic of sales: OpenRTB, header bidding, and hybrid model.

OpenRTB

OpenRTB uses the method of waterfalling or daisy-chaining, sequentially selling the publishers' inventory, requesting one demand source at a time. Publishers run a succession of real-time auctions until all of their ad inventory is bought. Publishers offer the inventory sequentially to the demand partners in the established order, according to their historical yield.

OpenRTB operates via the second-price auction model. The winning bidder pays the price offered by the second-highest bidder plus $0.01. 

Header bidding

Header bidding is another auction model that is starting to get mainstream adoption in the industry. In header bidding instead of the separate auction for each demand partner, ad exchanges can bid at the same time at the highest priority in the ad server. Header-bidding uses the plain and simple first-price auction model. Not all of the SSPs offer the header-bidding functionality.

Header bidding is becoming a new standard in the industry, while openRTB remains a practical strategy for publishers who want to prioritize a specific pool of advertisers. 

Hybrid model

There is also a hybrid model that combines features of header-bidding and openRTB to deliver the maximum value of each impression. The server conducts the openRTB second-price auction and then goes on to a header bidding first-price auction. The winning bids compete in an additional auction that determines the best price offer. The hybrid model increases the chances of getting higher bids and amplifies monetization.

How publishers choose SSP

SSP services are a crowded marketplace of companies hustling to stand out and prove their value. According to the Programmatic Intelligence Report, on average, publishers use 3-4 different SSPs to diversify traffic and to get access to various features.

Publishers want to work with SSPs that partner with numerous demand partners and can help them make better decisions by sharing insights and timely reporting results of the campaign.

Here are the aspects publishers value the most when choosing an SSP:

  • Performance: a stable source of demand and prospective revenue for different ad formats.
  • Capabilities: platform UI/UX, functionality, analytics, ease of use and integration.
  • Partnership: accountability, attention to the publisher’s goals and feedback, timely response.
  • Vision: partner’s position in the market, reliability, innovation.
what's most important when choosing an SSP

6 key features of supply-side platforms for publishers 

Let's go over the six key features that publishers look for when choosing SSPs. 

1. Ad quality/format variety

SSPs support various advertising formats. When you contract an SSP, you can be confident that their publishers adhere to a single ad serving protocol, and consequently, you won't need additional adjustment to serve ad creatives.

SSPs work in a range of different media environments: web, in-app, in-game, CTV, DOOH. In each environment, SSP supports various ad formats: display ads, banner ads, native ads, playable, push, and video ads.

Some SSPs specialize in web advertising, mobile and desktop traffic, and there are certain SSPs that operate exclusively in the OTT/CTV sector. However, most SSPs are trying to grasp more niche markets and reach as many environments and formats as possible.

2. Real-time transactions/bidding

SSPs are optimized in real time based on the extensive publisher's data. It allows marketers and advertisers to aim at individual impressions instead of buying blocks of advertising. The actioning model fosters the transparency of the digital marketplace and allows advertisers to get real market-value of the ad placements.

Auctioning may drive up the price of specific placements, but in the long run, it is a more cost-effective strategy for advertisers than direct media buys.

3. Geographic targeting

SSPs provide information-rich geolocation data for the advertisers. The precision depends on the type of device and its connection to the network. Desktop devices with fixed internet access can provide IP information for geotargeting, although it is rarely accurate beyond the country level.

Geotargeting for mobile devices is distinct from targeting desktop impressions. Mobile devices can connect to the web in several different ways:

geotargeting accuracy

4. Located and contextualized impressions

SSPs structure data from publishers to offer better targeting options for advertisers. Publishers track customer’s habits and preferences and can offer highly-contextualized impressions paired with behavioral data. If a user surfs websites about open-ocean fishing, the SSP will categorize those impressions and suggest them to local fishing rod dealers.

Advertisers can set up a more cost-effective campaign by using highly targeted inventory that contains located and contextualized impressions. There is a difference between targeting a person in a specific region and targeting fishing enthusiasts who frequently visit the local pond in that region.

Those impressions will cost more since they incorporate provider’s fees for data collection and management. Such data services are generally provided by data management platforms (DMP). SSPs partner with DMPs to better segment audiences, analyze traffic and supply impressions with more precise data. The additional costs vary depending on the provider.

SSP will appraise those impressions higher, but the advertiser can get a better reach and impact of their ads, and ultimately a higher return on investment.

5. Insights into a buyer persona

SSP adds another data dimension to offered impressions by supplying them with the exact location, context, and defining buyer personas. Combining the demographic data, such as gender, education, and income level with nuances of user's behavior, allow advertisers to determine affinities and intents of the potential clients.

SSPs enhance offered impressions with contextual information on audience habits, movements, and preferences allowing advertisers to understand the mindset of the potential clients. Advertisers can better manage their campaigns and tailor their ads to specific segments of their audience.

For instance, if the user visits a web page of jewelry stores or high-end clothing shops and has an income of over $150k+ per year, the SSP will categorize this user as a luxury shopper and place it in the corresponding segment. SSP then offers this highly desirable segment to advertisers who sell products in this price range.

SSP will usually increase CPM for these kinds of profiles, but the advertisers know who is behind an impression and its real value.

6. Privacy

Collecting data on the user's behavior is becoming a sensitive topic. A surge in privacy legislation, such as GDPR and the CCPA, constrain the use of tracking cookies for targeting and personalizing ads. Advertisers are still working on a solution for a more sustainable and confidential data collection model. Despite this, SSP has a couple of perks that can mitigate this problem.

SSPs can build anonymous personas with publisher's data, without ever using personally identifiable information (PII). Publishers don't need to give away personal and confidential information to increase the yield from their inventory. Instead, publishers build anonymous contextual personas based on the user's activities. It combines demographic data with a breakdown of movements and daily activities without violating a consumer's privacy.

A persona does not have a customer's PII; instead, it tells more about the character and intentions of the website visitor. Personas enable the SSP to convey a lot of information about the audience to prospective buyers while keeping users anonymous and protecting their privacy.

How privacy will look like in a cookie-less world

Google's decision to phase out third-party cookies has raised havoc with advertisers and publishers. Website owners who traded their ad space with the assistance of third-party cookies now have to reconsider their data collection model.

For many mid-size publishers, which don't rely on registration for user data, the resurgence of contextual targeting will be the way out. Instead of tracking users' behavior, this model analyzes the content and intent of the web page and serves the most fitting ad. This targeting approach works best if the publishers use programmatic platforms from the same end-to-end ecosystem.

DSP vs. SSP

The demand-side platform, or DSP, is a point of entry into the programmatic ecosystem for advertisers. DSP is a software that allows brands, ad networks, and agencies to purchase ad spaces from publishers programmatically.

DSP sets forth the advertiser's requirement about the audience, price, and campaign goals. After that, the platform automatically assesses available ad inventory and bids on the ad spaces that best meet the requirements. A DSP can also measure and optimize marketing campaigns in real time and dynamically change creatives in the ad space.

How an SSP interacts with a DSP

  • A user enters the website.
  • Information about the potential impression is passed to SSP.
  • SSP offers the impression to Ad Exchanges or directly to DSPs.
  • DSP reviews the impression and analyzes if it satisfies the advertiser’s campaign settings. If it does, DSP bids on the impression, frequently through an Ad exchange.
  • SSP receives bids from all of the demand partners and chooses the highest bidder.
  • The winning ad appears on the website.
DSP SSP process

Conclusion

The widespread adoption of SSPs by publishers improves the quality of publisher-advertiser deals and enhances accountability in these relationships.

Similar to what DSPs do for advertisers, SSPs automate the redundant manual procedures prone to human error and streamlines the ad-buying process for publishers. Publishers don't have to engage in direct negotiation with the salesperson and collect manual insertion orders. Instead, they leave the ad selling to a pre-configured automated platform.

SSPs offer superior options for user analysis, data profiling, audience management, and segmentation. Through SSPs, publishers can provide more detailed insights into their audience, enabling advertisers to precisely target their ad campaigns to the most suitable viewers. 

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