What is Demand Path Optimization and Why Does It Matter to Streaming Publishers?
Supply path optimization (SPO) is a well-known term throughout the industry, referring to the process where buyers look for the most direct path to quality inventory to remove unnecessary hops. The term is considered a strategy for buyers, enabling them to limit unwanted costs while still activating on the inventory they want. As an industry, SPO has been prioritized to ensure that the buy-side gets the most direct and efficient path or connections to supply.
However, there is a lesser-known term describing the inverse of SPO: Demand path optimization (DPO). This strategy focuses on how publishers can understand their connections to advertisers and streamline the buying process to ensure publishers maximize their revenue in a strategic and transparent way.
So, why hasn’t DPO been as widely championed on the sell-side? And what exactly should publishers consider when developing their own formal DPO strategy to drive the best results for their business?
Let’s break it down.
Why DPO should matter to publishers
Most of the narrative to date has been about supply from the buyers’ perspective. Publishers have adopted - and supported - it to ensure there is more transparency and efficiency in the programmatic supply chain. But DPO is built for publishers, helping to shine a light on who is bidding on their premium inventory and how exactly their inventory is making it to the auction floor via which DSP or exchange. While many may believe that having as many connections to demand sources as possible is the best approach, there are opportunities to be more strategic about it. And like SPO for buyers, DPO is a huge value add for publishers for many reasons.
1. It can help publishers identify partners that add value to their demand paths such as resellers with unique audience data, distribution partners, or partners with exclusive rights to sell to local businesses or agencies.
2. It also can provide transparency to see what demand is truly unique and use that clarity to strengthen direct advertiser relationships and trust.
3. It can help uncover hidden fees that publishers might not realize they are paying for, such as additional hops which can eat into revenue and even make certain inventory less attractive to the buy-side. Not to mention, for every 100 bid requests sent for resold inventory, direct inventory only needs four requests to generate the same amount of spend.1
4. And last, but certainly not least, it can ensure more inventory is being seen by potential buyers. DSPs can’t listen to every bid request and will pre-emptively filter out supply based on their own algorithms. By evaluating all the ways supply gets to a DSP, publishers can ensure the right paths are prioritized and can avoid excessive “supply-path noise.” In fact, it has been found that bid responses are 9.8x higher for direct sold inventory.1 This is especially important for live events where an even higher volume of supply is being sent to DSPs.
How publishers can better optimize demand paths
Many publishers may be wondering where to start when it comes to DPO. Today, there are a few steps that publishers can take to better understand their demand paths and how they can better optimize them to ensure they get the most out of their valuable, premium inventory.
1. Audit: Publishers can and should start by conducting an audit of all the demand paths. This will allow them to get a better understanding of how demand is reaching them and how direct they are, and how many intermediaries add a hop along the way. Ultimately, an audit lets a publisher evaluate the most efficient path to sending all their inventory. Publishers should work with a technology partner that provides a detailed, transparent look at where all demand comes from.
2. Assess: Once an audit is conducted, publishers can better assess what the most strategic demand routes are - what is performing well and driving results for their business and what is not.
3. Optimize: Publishers should think through and optimize. As Chris Kane noted: Many publishers are focused on “skinny pipes” or those that pass their inventory in as many places as possible - but they should be focusing on having fewer, “fat pipes” that give them direct, performative paths to buyers and allow them to better monetize their valuable inventory. One analysis found that there was a 72% increase in revenue per bid request when the demand path was optimized.2 Publishers should not shy away from testing out new, strategic partners to help enhance their performance.
4. Require: The IAB introduced two new buy-side transparency standards, Buyers.Json and DemandChain Object, to encourage more demand path transparency. Publishers should require that all SSPs or intermediaries they work with support these standards to ensure that the industry is furthering transparency within demand paths.
“With the fragmentation that exists across the streaming landscape today, demand path optimization has become an essential tool to help us maximize yield,” said Rose McGovern, DIRECTV, Head of Programmatic & Digital Ad Sales. “We look to solutions that can offer the most direct connections to demand, increase transparency, and ultimately drive value for our inventory while delivering impact for our clients.”
Optimized paths will drive efficiency and transparency for streaming advertisers and publishers alike
While demand efficiency is essential for content owners to optimize their revenue, it is also imperative to ensure a positive viewer experience, especially when it comes to streaming, where convoluted buying paths can lead to repetitive ads. Whether it's the buy or sell side, having the most beneficial direct connection is going to provide the best results. Because, if the path is optimized, it will benefit both sides. An effective way to ensure this is by working with a partner that sits right at the center of everything - making it easier for both buyers and sellers to transact across all screens and platforms.
Sources:
1. Programmatic Module, March 2025.
2. Marketplace Platform Exchange, March 2025.
This article was written by Soo Jin Oh, Chief Commercial Officer, FreeWheel
Posted at MediaVillage through the Thought Leadership self-publishing platform.
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The opinions expressed here are the author's views and do not necessarily represent the views of MediaVillage.org/MyersBizNet.
