The programmatic universe consists of tens of different players. I believe the raison d’etre of these players need to be examined, not only to know why they exist, but also for being able to assess how they can be utilized effectively.
The basic chain is: Advertiser-Agency-Trade Desk-DSP-Exchange-SSP-Network-Publisher-Audience.
I will not question the raison d’etre of advertiser, agency, publisher and audience, because three of them speak for themselves, and for the last one, agency, I would not dare question an institution that existed for a century now 🙂
So, let’s start with trade desk: These are specialized desks which utilize tools and human resources to align programmatic purchasing with the agency’s advertising composition/strategy. Every big agency has its own trade desk, Omnicom has Accuen, WPP has Xaxis and Quisma etc. This is pretty straight forward, the need is there, the justification is there.
Next three, DSP-Exchange-SSP is where it gets dirty. An exchange can easily dismiss the need for DSPs and SSPs by arguing that an exchange that brings together buyers and suppliers is all we need in this already complex universe. DSPs and SSPs can do the same for exchange, defending that exchanges need not be, because DSPs can directly communicate with SSPs.
I believe, as a publisher network, SSP is a must have. To be able to maximize revenues, a publisher must work with multiple SSPs, because it is an SSP who assumes to advocate the value of those impressions and to communicate that value to the DSPs. A DSP or exchange cannot do bid optimization (compare bids coming from demand and use historical data to set price floors) because that would be against the benefit of the demand side.
From an agency point of view, a DSP is a must have as well. Minimizing the cost of those impressions, aggregation of supply and targeting capabilities are what the trade desks look for when they link to a DSP.
The weakest player of the three is obviously exchange. It can neither side with the agency, nor the publisher. However, for high-scale publishers and publisher networks which have close relationships with agencies, exchanges can easily be an optimal solution: Trade Desk-DSP-Exchange-Publisher/Network. In this scenario, creating demand for their inventory is in your own hands. One exception is Google Adx, which has its own “default” demand of Adwords as a giant buyer.
In the end,I believe multiple paths of connecting supply to demand (DSP-SSP-Publisher, DSP-Exchange-Publisher) can and should be utilized, by constructing a waterfall.
That leaves us with the reason d’etre of publisher networks. The synergy of representing multiple publishers is very apparent. We represent our publishers with a sales team of 20 people, specialized by industry and display/video/mobile verticals. Our operations team consists of 18 people. No publisher, except for a few giants maybe, is big enough to justify such a structure. Programmatically, the synergy strengthens further, due to the fact that our networks capability and know-how is extremely higher than that of a typical publisher. We currently have over 20 partners in programmatic. We have around 10 simultaneous tests going on, with new partners, testing new ad models, new deals. This is also hard to achieve for a standalone publisher.
In addition to the “basic” flow, DMPs, creative optimizers, verification and measurement companies coexist in the programmatic universe, penetrating the basic chain at multiple points. DMPs are arguably the most critical players within this subset and deserve to be a different post’s subject altogether.