By Amit Gelber, Chief Growth Officer at Perion
A healthy market has a good balance between supply and demand. In digital advertising, brands bring their budget to publishers who offer audiences, inventory and performance. Of course, many layers of ad-tech have been built up over the past twenty years to complicate this market. So much tech, that a lot of buyers and sellers are actively working to streamline and simplify it. One of the approaches is Supply Path Optimization (SPO), where brands strike deals with the sell side to get a more direct line to what they want to buy.
Brands like SPO because it means they can get to the inventory they want more directly, paying fees to fewer partners. In a strong market, SPO can also be enticing to publishers for a few reasons. It improves latency, reducing the number of partners bidding on an ad before it loads. It requires less time managing so many different partners and technologies, and can theoretically drive higher profitability as a result of better page performance.
The problem starts when publishers are feeling the squeeze of a tough market, which is where we are today. Publishers are losing traffic as a result of AI search. They are facing competition from “AI slop” websites that suck up impressions. And they are seeing a dip in ad spend compared to the big political spend in Q4 2024.
With all of this downward pressure, publishers are enticed by reseller partners who promise net-new revenue opportunities. The trouble is that publishers don’t have a good way to analyze demand from resellers to determine overlaps across their partners. The new agentic AI technology emerging across the industry could finally give publishers the visibility they need.
It Starts With the CRO
Of course the word “publishers” is a simplification. A publisher employs a wide variety of professionals; they each have different goals and strategies. Business managers who own parts of the company like website performance and audience attention all prefer SPO because it helps their performance. Even the CEO is going to like the idea of streamlining their advertising stack if they feel like it can help them grow over time.
The CRO, however, looks at things differently. With a monthly revenue goal to hit, SPO is not always the right answer for them. Not only is it a risk to lean into SPO and hope that revenue per impression goes back up after an initial dip, it’s not clear that every reseller is simply funnelling the same set of bids as every other reseller.
While the talk in the market says that SPO is a “no brainer” because the same bid request goes through so many reseller channels, that isn’t the full story. There are many resellers that do have unique demand or unique tech – even if it’s just a small percentage of what they offer. And there are many larger ad-tech partners that have a pretty big percentage of unique demand or pretty cool performance enhancements. SPO is great, but it doesn’t always apply to a publisher’s real experience – it’s one important part of a larger picture.
Strike a Balance With AI
This tendency of the CRO to keep the door open for unique demand is actually likely to increase in the future. Rather than focus solely on SPO and managing as few partners as possible, publishers have an opportunity to use agentic AI to work with more partners, but in a smarter way. If they could have more powerful tools to analyze demand at the bid level, they could determine which resellers are worth adding to their list, and which are mostly just duplicative.
To date, a lot of agentic AI solutions are focused on the buyers – providing automated buying across partners, optimizing campaigns, and delivering specialized buying like curation. This is all great for buyers, but it ignores the role of the publisher. Publishers aren’t simply passive sources of audience and inventory, they are actively working to maximize revenue. They don’t want to open their product catalogue to an AI agent and sit back with their fingers crossed.
I believe we do need to keep the market balanced, providing just as much insight and control for publishers as it does for buyers, combining SPO goals with revenue goalsPublishers could be more active players, searching for unique demand and leaning into a wide array of reseller partners in a smart and streamlined way. The way to balance between supply optimization KPIs and the need to earn revenue requires sophisticated AI algorithms that can combine smart traffic shaping with unique monetization engines.
SPO is a powerful strategy for streamlining buyers-seller relationships, but as an industry, we now have an opportunity to also include incremental revenue opportunities in a way that doesn’t over-complicate the system. AI is the first technology that enables a balance between supply optimization KPIs and the need to earn revenue.
—
