Auction dynamics: SPO & DPO

The programmatic landscape is run on auctions, and with the advent of header bidding, traditional auction dynamics have been reevaluated and new practices have been introduced.
Programmatic trading has historically operated on a 2nd-price auction.
With header bidding, where multiple exchanges bid against each other in real time, SSPs shifted to a 1st price auction – where the auction closes at the highest bid price – aiming to provide more transparency to the auction landscape.
This has meant additional operating costs for the demand side (more bid requests processed, single impression duplicated multiple times, …), so DSPs have reacted by increasing their Supply Path Optimization (SPO), a practice that help buyers find the optimal path to reach their target audiences.
They may opt to only receive certain pub’s bid requests from certain SSPs – something important for DSPs that also own SSPs as they have the most to gain if they buy from themselves.
SSPs and brands have responded to the rise of SPO with demand path optimization (DPO), which focuses on how ads and imps are sold, providing more advertiser visibility into the bid path.
To note: DPO focuses on how ads and imps are sold, while SPO provides transparency into not only cost but ROI each partner generates.
Other sources: see in the LinkedIn comments.
Previously posted by Luca Brighenti via LinkedIn. 

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