What is a Supply-Side Platform? How SSPs work explained
In digital advertising and marketing, SSP stands for “Supply-Side Platform”.
Parties that operate on the “side” of selling ad space are referred to as the “supply-side”, as they’re the ones who “supply” the space required for advertisers (also referred to as the “demand-side” of advertising) to display their ads to users that visit published content online.
This guide covers what an SSP is, how they work, and their importance in online advertising.
Table of Contents
- What is a supply-side platform (SSP)?
- How does an SSP work?
- Benefits and challenges of using SSPs as a publisher
What is a supply-side platform (SSP)?
A supply-side platform or sell-side platform (SSP) is an ad tech (advertising technology) software platform that allows publishers to manage and automatically sell their ad space.
SSPs are the publisher-counterpart to DSPs (demand-side platforms), which are used by advertisers to manage the automatic buying of the ad space offered by publishers.
SSPs are typically offered by companies as SaaS (software as a service) products.
Pricing models for SSPs vary, though in many instances a percentage of the ad revenue generated by the publisher by using the SSP is charged as a fee.
In some cases, publishers choose to build and use their own SSPs in order to avoid these fees – though the cost of building an SSP is a significant investment.
An SSP service typically includes most (or all) of these features:
- Header bidding (allowing bids to be received from multiple DSPs and ad exchanges)
- Yield optimization (managing prices and ad placements to improve ad space fill rate)
- Latency optimization (ensuring ads are served using the fastest connection speed)
- Frequency capping (working with DSPs to limit how often a user sees the same ad)
- Real-time analytics reporting
- Ad inventory and campaign management
Some examples of popular SSPs include:
How SSPs align with publisher monetization objectives
In digital advertising, ad space is commonly referred to as “ad inventory” – a term used to describe the number of available ad impressions (or the number of “ad views” from visiting users) a publisher has available to sell to advertisers.
A publisher’s website has the capacity to display ads in many predetermined locations throughout their content (for example, in the page header, in the sidebar, within a piece of written content, or at the beginning, middle, or end of a video or podcast – etc.).
These locations, which can be interpreted as digital “real estate” or even “billboard space”, are often referred to as “ad zones”, which effectively serve as “slots” in which the ads of various advertisers (or “demand sources”) may be displayed.
The objective of publishers is to fill all of their available ad inventory with ads that will generate the most ad revenue for them.
This objective can be described by the term “yield optimization”, which refers to practices that both publishers and advertisers follow in an effort to maximize the overall value they receive from their participation in digital advertising (in the case of publishers, this means maximizing the amount of ad revenue they generate).
This is where SSPs come in.
The role of an SSP is to maximize a publisher’s yield optimization, by automatically placing the right ads in the most effective ad zones, and by securing the best prices for each ad impression as it becomes available to sell.
In some cases, SSPs are even referred to as “yield-optimization platforms”.
While SSPs are powerful ad tech tools, they aren’t able to accomplish their objective without being connected to an array of other ad tech platforms owned and operated by other parties.
The system created by all of these different connected platforms working together in unison is referred to as “programmatic advertising”.
What is programmatic advertising?
Programmatic advertising is the name of the “ecosystem” of different ad tech platforms that come together to enable the automated buying and selling of digital ads online.
If you’re new to programmatic advertising – it can be a complicated topic to begin learning.
However, put simply, the term “programmatic advertising” is almost entirely synonymous with the term “automated” – and SSPs have an important role to play in the automation process.
Why are SSPs important to programmatic advertising?
Many aspects of SSPs make them a highly useful publisher-oriented component of programmatic advertising.
SSPs serve as a gateway that allows publishers to connect to the rest of the programmatic ecosystem. Without SSPs, publishers wouldn’t be able to sell their ad space programmatically.
While alternate methods of selling ad space exist (such as ad networks and direct deals), SSPs offer an essential level of inventory control options to publishers – including a method for selling their remnant inventory (ad impressions that aren’t sold through direct deals).
Additionally, certain types of direct deals classified as “programmatic direct” require the use of an SSP to carry out the fulfilment of ad placements according to the terms of the deal.
Programmatic advertising wouldn’t be nearly as popular as it is today without the inclusion of SSPs to simplify and enhance a publisher’s ability to automatically manage ad placements and set optimal prices based on algorithmic data.
How does an SSP work?
While appearing simplistic on the surface due to their intuitive user interfaces, SSPs are made up of a series of different components that work together to automate ad selling.
Knowing how an SSP works “under the hood” of its interface requires an understanding of its different components, and the processes it uses to carry out automated auctions.
The components of an SSP include:
- The backend infrastructure. The infrastructure refers to all of the services and technical processes needed to execute the functions and features of the SSP. This can either be accomplished by using a service provider and server host like Amazon Web Services (AWS), or through custom development work and self-hosting solutions. The infrastructure is referred to as the “backend” because the operations managed by this part of the SSP aren’t typically interacted with directly by the end-users of the platform.
- The ad exchange. In the past, ad exchanges were ad tech components that were often separate from SSPs – requiring users of both DSPs and SSPs to connect to them in order to buy and sell ad inventory. Most modern SSPs have evolved to offer their own ad exchange components, meaning that DSPs may connect directly to the SSP in order to initiate auctions for ad inventory.
- The trackers. Trackers are a component of SSPs that gather information about a publisher’s website, and help to form profiles about the types of users that visit it. This information is then stored in the user profile database, and also made available for review in the reporting database.
- The user profile database. The user profile database is responsible for tracking information about specific users – such as the ads they’ve viewed and how they’ve interacted with certain ads. This information is often shared and cross-referenced with information from platforms like DSPs to create more accurate user profiles.
- The reporting database. The reporting database is a centralized storage and display area for all of the information gathered by the SSP’s trackers. Publishers are able to generate reports from this information, and these reports are often cross-referenced with advertisers to provide campaign performance updates.
- The UI (user interface). Like most software, an SSP provides access to all of its features and functionalities through a graphical interface. SSPs were originally created with the intent to simplify the way in which publishers connected with and interacted with ad exchanges, back when ad exchanges were primarily separate ad tech platforms with limited options for buying and selling ad programmatically. The graphical UI of SSPs solved this by providing publishers with access to a wide variety of options for managing their ad inventory.
- Integrations. SSPs rely on integrations with other ad tech components in order to sell ad space and perform yield optimization. SSPs are capable of integrating with ad servers and DSPs, as well as platforms like DMPs (data-management platforms) in order to maximize the number of bids they receive for ad inventory, and accurately price that inventory to maximize ad revenue.
How the SSP ad selling and placement process works
With all of the components of an SSP accounted for, it can connect to the programmatic ecosystem to begin signaling the availability impressions and auctioning ad inventory.
In order to do this, a sequence of events takes place that looks like this:
- A user visits the publisher’s website content.
- The publisher’s ad server (also referred to as a “first party ad server”) evaluates known data about the visiting user, and preemptively determines which types of ad categories would be relevant to them.
- The publisher’s ad server signals that an ad impression is available to the SSP it’s connected to, while forwarding the details known about the user.
- The SSP “holds” the available impression, and signals its availability to all of the demand sources (ex. ad networks, ad exchanges, and DSPs) connected to it – while adding any additional information possessed by the SSP’s user profile database.
- An RTB process (real-time bidding process) is initiated to carry out an auction for the available ad impression between the various advertisers from each demand source.
- The winning bid is selected, and the chosen advertiser’s ad creative is delivered to the publisher’s website (via the advertiser’s “third party” ad server) and displayed to the user.
- The internal tracking components of the SSP track how much the ad inventory sold for, record that an ad impression took place, and log information about how the user interacts with the ad that was served to them – updating the SSP’s databases and forwarding relevant information to the winning advertiser.
While there are many steps involved in the process of serving an ad, the entire process takes place in just milliseconds, typically concluding before a web page has finished loading.
SSP vs Ad Exchange
SSPs generally offer and house a wide range of different ad management and serving components used by publishers in order to control their ad inventory more effectively.
Ad exchanges are (either public or private) “marketplaces” where publishers and advertisers can connect to buy and sell ads on an impression-by impression basis through automated RTB auctions.
But, ad exchanges were covered as a component of SSPs earlier – right?
In modern digital advertising, all of the major SSPs include ad exchanges – with ad exchanges acting as an operational component of major SSP providers.
Because of this, many people use the terms “SSP” and “ad exchange” interchangeably.
So why are the two terms so often described as separate terms in ad tech?
It has to do with the confusing nature of ad tech’s evolution throughout its history.
When ad exchanges were first created in 2005, they were standalone platforms that publishers and advertisers connected to in order to buy ad impressions in bulk (RTB and impression-by-impression auctions didn’t exist yet).
But ad exchanges were complicated to use and had limited reporting options.
SSPs and DSPs were developed in 2007 as separate ad tech platforms that were used to simplify interactions with ad exchanges, and expand upon their reporting capabilities.
The term “supply-side platform” was originally used to describe a service which helped to make the complicated inner-workings of ad exchanges more accessible and user-friendly for publishers.
SSPs also helped to alleviate a publisher’s necessity of working with multiple ad exchanges at once in order to optimize their ad tech stack.
However, as the technology used to develop ad exchanges became more accessible, most successful SSP platforms were either able to build their own ad exchanges or integrate ad exchanges that they already owned into their SSP service offerings.
While SSPs are still semantically referred to as the “interface” that publishers interact with vs the ad exchanges that conduct the RTB auctions themselves – realistically, the term “SSP” is one which is increasingly used interchangeably with “ad exchange”.
SSP vs Ad Network
SSPs are platforms that publishers use to connect to a wide range of demand sources in order to sell their ad inventory automatically through programmatic auctions.
Ad networks are companies that look at a publisher’s available ad inventory, categorize it, and price it – before offering to sell it as a package to interested advertising parties.
As described in the section above, SSPs are a term which has become almost entirely interchangeable with the term “ad exchange”.
Because of this, what many people are actually confused about is the difference between an ad exchange and an ad network – an extensive topic we’ve covered in its own post.
The confusion is completely justified.
In modern digital advertising, the lines between ad exchanges and ad networks have become increasingly blurred, as ad networks often offer programmatic direct methods for allowing publishers to sell their ad inventory.
The easiest way to understand the difference between an SSP and an ad network is to remember that the ad selling process used by SSPs takes place on an automated exchange platform, while ad networks generally use manual sales processes to negotiate and sell ad inventory on behalf of publishers.
Benefits and challenges of using SSPs as a publisher
SSPs are a popular option for managing ad inventory amongst mid to large sized publishers. They offer numerous advantages throughout the ad management and ad serving processes, including:
- Time management and overall efficiency. Once configured and connected to the programmatic ecosystem, SSPs allow publishers to automatically categorize and sell their ad inventory to advertisers that align with their website’s content.
- Increased audience reach. SSPs connect to multiple ad exchanges, ad networks, and DSPs – allowing for a diverse range of advertisers to bid on ad inventory.
- Data insights and reporting. Publishers are able to review information not only about their users, but about which advertisers are bidding on their ad space, the average price of their ad inventory, and how often particular advertisers are buying ad space. This allows publishers to easily identify their most valuable customers.
- Fill rate optimization. Fill rate refers to a publisher’s ability to (as the name implies) fill their available ad slots with ads from various advertisers. SSPs automate this process, and have traditionally been used as a reliable way to fill remnant ad inventory (ad space that hasn’t been sold as part of a direct deal with an advertiser).
- Yield optimization. Yield optimization involves strategizing for the long term. SSPs are designed to pick not only the highest bids, but the most relevant ads to serve to a publisher’s website. Features like frequency capping help to avoid user burnout through exposure to the same ads multiple times. Despite sometimes resulting in lower prices for a single ad impression, this results in higher overall ad revenue throughout the long term.
- Price floor management. Price floors are complicated in programmatic advertising, due to new dynamics introduced by header bidding. SSPs allow publishers to easily set hard and soft price floors, and to make use of both first-price and second-price auctions to attain the highest ad revenue possible from each auction that takes place.
- Brand image. Publishers sometimes encounter ads that have poor alignment with their content, or are simply inappropriate (illegal, vulgar, or otherwise offensive subject matter). SSPs provide the ability to blacklist certain categories of ads, or to only allow certain ad inventory to specific advertisers – allowing publishers to continue serving ads that support a positive browsing experience on their website.
Despite being immensely useful to publishers, SSPs do have challenges to consider:
- Cost. While some SSPs don’t cost anything (or very little) to join and use initially, running auctions through an SSP means that a percentage of a publisher’s ad revenue is charged as a fee. However, this is regarded by most as a “necessary evil”, as there are few alternatives available to filling remnant ad inventory for publishers (outside of building their own SSP, which is also expensive).
- Complexity. While SSPs on their own are relatively straightforward to configure and use in most cases, a challenge is presented when publishers attempt to optimize the entirety of their ad tech stack. This has become especially true with the introduction of header bidding, which can often present both strategic and technical implementation challenges when attempting to connect to multiple SSPs.
Making SSPs work in your business
SSPs are a fundamental tool for publishers that are looking to maximize their revenue.
As mentioned during the explanation of how SSPs manage ad placement – a reliable ad server is a key component of a fully optimized ad tech stack.
The AdButler team has over two decades of experience in helping publishers to configure and connect their ad servers to the programmatic ecosystem.
We’d love to share a conversation with you. Ask us a question today!