SSPs, ad servers will cease to coexist as an industry matures

Posted by Daniel Rowlands On May 11, 2015

Programmatic was once a space populated by hordes of software providers.

Like the group buying industry, it grew fast, with opportunists cropping up left, right and centre to capitalise on the windfall. Now the market is starting to consolidate. We’ll see vendors merge, many die, and within two years, supply side platforms (SSPs) and ad servers will cease to exist as we currently know them.

SSPs traditionally focussed on maximising the value of unsold inventory. They bolted into traditional ad serving systems to give publishers an extra sales channel for remnant inventory.

They were focussed on just one piece of the sales equation, leaving publishers to operate in multiple systems to optimise inventory sale. With various devices and formats adding to the complexity, publishers are crying out for an integrated, one-shop stop for managing inventory.

SpotXchange started as a real-time bidding marketplace. Today, we consider ourselves a holistic inventory management platform – an SSP, ad server and yield optimisation tool rolled into one.

We also consider the marketplace, long tarred by claims it devalues inventory, as important a piece of the pie as direct sales. The idea programmatic marketplaces are a race to the bottom is a conditioned response. It’s totally inaccurate.

When they operate as part of holistic inventory management platform, publishers can sell their inventory for more than they do today by giving buyers the addressability and optionality they yearn for.

If you allow an advertiser to buy the audience they want, you can sell it for more. Inventory management platforms are proven to increase yield. Across our networks, we’ve seen effective rates increase year on year. CPMs in Australia are double what they are in the US, with premium inventory in the open marketplace commanding on average 250% more than the average CPM.

In fact, Australian CPMs are the highest of any country in our global marketplace, the dynamics of which enable publishers to take advantage of variances in inventory levels and respond to demand in real time. If current news or an event occurs to make certain inventory more desirable, publishers can capitalise on the spike using the real-time insights a holistic inventory management platform provides.

The consolidation into holistic platforms has already begun. Singtel’s acquisition of mobile ad tech firm Amobee is one of the earliest of similar deals to follow across Asia Pacific (APAC). Web giants like AOL, who bought Adap.TV, and Facebook, recent acquirers of Liverail, are in on the act too.

The mobile arm of the adtech sector will be first to consolidate in APAC, where mobile spend is soaring and device penetration is among the highest in the world. The space may still be expanding rapidly, but the rate at which proprietary companies are proliferating is unsustainable, and it’s getting easier for advertisers to trade programmatically themselves.

SSPs and ad servers will still exist, just as moving parts of a single platform. In order to survive, SpotXchange and the entire industry – these companies on the supply side – have to become the entire solution.

Daniel Rowlands