Key Points

  • Direct-to-DSP connections are emerging as a new path to demand, with major DSPs beginning to offer publisher-direct integrations
  • While these connections may streamline the supply path, they may not deliver the immediate revenue gains some expect
  • Publishers need to carefully weigh the operational complexity of managing direct DSP connections against potential benefits
  • For most publishers, working with a partner who can aggregate demand and manage these connections offers the most efficient path forward

The Evolution of Supply Path Optimization

The ad tech ecosystem is constantly evolving in pursuit of greater efficiency, and direct-to-DSP connections represent the latest step in that evolution. As DSPs look to optimize their supply paths and reduce the number of intermediaries between themselves and premium inventory, they're increasingly exploring direct integration options with publishers. 

This shift has significant implications for how publishers approach their monetization strategy.

Understanding Direct-to-DSP Connections

Direct-to-DSP connections represent a fundamental change in how publishers can make their inventory available to advertisers. Rather than routing bid requests through multiple SSPs, publishers can connect directly to DPSs themselves, potentially streamlining the path between advertiser and publisher.

Key aspects of direct-to-DSP connections include:

  • Elimination of SSP intermediaries for participating demand
  • Potential for reduced supply chain complexity
  • Need for sophisticated technical implementation
  • Requirements for scale and operational capabilities

The most prominent example currently in market is The Trade Desk's OpenPath program, though other major DSPs are exploring similar initiatives.

The Current Ad Tech Supply Chain

The digital advertising ecosystem has evolved into a complex network of technologies and intermediaries, each playing a crucial role in connecting advertisers to publisher inventory. At its core, the system relies on two primary types of platforms: Supply-Side Platforms (SSPs) that help publishers sell their inventory, and Demand-Side Platforms (DSPs) that help advertisers buy that inventory. 

When a user visits a publisher's webpage, multiple SSPs compete in the publisher's header bidding auction, each bringing their own pool of demand from various DSPs. This multi-layered system means a single impression often travels through several intermediaries before an ad is ultimately served. 

For instance, a DSP might connect to the same publisher's inventory through multiple different SSPs, each offering a slightly different path to that impression. Each platform in the chain takes a small fee for their services, creating what's known as the "ad tech tax" – the cumulative cost of all intermediaries involved in a single transaction.

While this system has served the industry well by creating robust competition for inventory, it's also created inefficiencies. The same DSP might bid on the same impression multiple times through different SSPs, leading to bid duplication. 

Additionally, each hop in the supply chain adds latency to the auction process and incrementally reduces the working media dollars that actually make it back to publishers. These inefficiencies have driven both DSPs and publishers to look for ways to optimize their supply paths, leading to the emerging trend of direct connections.

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The Reality Check: Revenue Impact

Before jumping headfirst into direct DSP connections, publishers should understand the actual revenue implications. There's a common assumption in the industry that removing SSPs from the supply chain will automatically increase revenue because of reduced take rates. 

The logic seems sound at first glance – if SSPs typically take 15-20% of the bid, then removing them should mean more money flows to the publisher, right?

Not so fast. Here's what publishers need to know:

  • Reduced take rates often don't translate directly to higher publisher revenue, as DSPs may simply lower their bids proportionally. If a DSP was willing to bid $1.00 through an SSP knowing that $0.80 would make it to the publisher, they're likely to just bid $0.80 when connecting directly, knowing they can still win the auction with that bid.
  • The primary benefit is maintaining access to demand as DSPs potentially shift spending to more efficient paths
  • Revenue impact varies significantly based on publisher scale and audience quality
  • Implementation and maintenance costs need to be factored into the equation
  • DSPs are mainly interested in reducing their own costs, not in passing savings along to publishers

Think of it like buying a product through a retailer versus directly from the manufacturer. Just because the manufacturer doesn't have to pay the retailer's markup doesn't mean they'll sell the product to you for less – they're more likely to pocket the difference themselves.

The truth is that direct connections are more about future-proofing your demand access than driving immediate revenue gains. As DSPs potentially shift more spending toward direct paths, being connected directly may become more important for maintaining revenue than for growing it.

The QPS Silver Lining

While direct revenue gains might be elusive, direct-to-DSP connections could offer a less obvious benefit: improved query efficiency. Every bid request that hits a DSP's infrastructure costs them money, regardless of whether they bid or not. When publishers route traffic through multiple SSPs, DSPs often see the same impression multiple times, multiplying their processing costs without adding value.

Think about it like this: if you were getting the same party invitation from five different friends, you'd probably want them to coordinate and just send you one invitation. Similarly, DSPs are more likely to "accept the invitation to bid" (in the form of higher bid rates and increased spending) when publishers can deliver their inventory through a single, efficient pipe rather than bombarding them with duplicate requests through multiple SSPs.

What this means for publishers:

  • More efficient request routing could lead to higher bid rates
  • DSPs may be willing to open up larger QPS allowances for direct connections
  • Better QPS efficiency could translate to more consistent demand
  • Improved chance of maintaining steady access to DSP spending

The catch? This only works if you can actually reduce duplicate queries through sophisticated traffic management. Simply adding a direct connection while maintaining all your SSP connections might actually make the problem worse.

Scale Matters: Who Should Consider Direct Connections?

Not every publisher is a good candidate for direct DSP connections. Understanding where you fit in the ecosystem is crucial for making smart strategic decisions about supply path optimization.

DSPs consider all of these factors when deciding if they’ll work with a publisher to set up a direct connection:

  • Monthly impression volume and revenue
  • Technical resources and expertise
  • Operational capacity for managing direct relationships
  • Quality of audience and content
  • Ability to provide unique value to DSPs

This is where working with a partner like Playwire becomes particularly compelling. DSPs are actively looking to reduce the number of direct connections they need to manage while still maintaining access to premium inventory. 

An ecosystem like Playwire, which aggregates thousands of quality publishers representing billions of monthly impressions, offers DSPs exactly what they want: scale and efficiency through a single integration point. 

Case in point: Playwire already has a direct integration with The Trade Desk's OpenPath program, giving our publishers streamlined access to this important demand source without requiring individual implementations.

The benefits of this approach are clear:

  • Publishers get access to direct DSP connections without managing individual relationships
  • DSPs get the scale they need through a single trusted partner
  • Traffic shaping and optimization can be managed centrally
  • Technical implementation is handled by experts
  • Operational overhead is significantly reduced

For most publishers, particularly those without massive scale, working with a partner who can aggregate demand and manage these connections offers the most efficient path forward. It's the difference between trying to get a meeting with a Fortune 500 CEO by yourself versus having a well-connected business partner make the introduction.

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The Role of SSPs in a Direct-to-DSP World

Despite the rise of direct connections, SSPs aren't going away anytime soon. They continue to provide valuable services that many publishers rely on, especially when it comes to sophisticated yield optimization and inventory management.

Key SSP functions that remain valuable:

  • Traffic shaping and optimization
  • Bid stream enrichment
  • Quality control and brand safety
  • Yield optimization
  • Technical implementation support

The future is likely to involve consolidation rather than elimination of SSPs, with stronger players maintaining their position in the ecosystem.

Making the Right Choice for Your Business

Publishers need to carefully evaluate their position in the market and available resources before deciding how to approach direct-to-DSP connections. Working with a partner like Playwire can provide the scale and expertise needed to optimize your supply path while maintaining operational efficiency.

Consider these strategies:

  • Evaluate your current demand stack and identify key revenue drivers
  • Assess internal technical and operational capabilities
  • Consider the benefits of working with a partner who can aggregate demand
  • Focus on maintaining access to diverse demand sources
  • Keep monitoring industry developments and adjust strategy as needed

The key is finding the right balance between maintaining efficient access to demand and managing operational complexity.

Looking Ahead

As the industry continues to evolve, publishers need to stay informed about supply path optimization while making pragmatic decisions about their monetization strategy. Direct-to-DSP connections represent an important development, but they're just one piece of a complex puzzle. The most successful publishers will be those who can navigate these changes while maintaining focus on their core business objectives.

Ready to optimize your supply path and maximize revenue? Let's talk about how Playwire can help you navigate the evolving ad tech landscape while delivering the results you need.

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