Thought Leadership

Using a Scalpel, Not a Sledgehammer to Optimize Supply Chains

May 11, 2020
By John Clyman

In our first installment, we talked about the long-overdue transparency that schain and sellers.json bring to programmatic supply chains. But what do you actually do with the information you gather?

Sellers.json and schain can provide a new level of insight into participants in the supply chain, and specifically the flow of payment. That’s useful information for combating fraud and for making informed decisions about preferred supply paths.

For example, if there’s an intermediary you simply don’t trust, you could opt out of buying any inventory it’s involved with by looking for its presence anywhere in the schain.

You could also use schain data to begin evaluating the length of particular supply paths and developing a better understanding of the fees involved. (Note that neither sellers.json nor schain provide any fee information directly; that’s something you’ll have to determine through other channels.)

More generally, though, we recommend considering supply paths individually rather than using crude metrics like length of the schain alone. When it comes to making decisions about preferred supply paths, beware of using a sledgehammer where a scalpel is the better tool.

Many Varieties of Intermediary

While Rubicon Project has direct relationships with large numbers of premium publishers, we also have many intermediary sellers that have different business models and value propositions. Each of these intermediaries is listed as an “intermediary” in our sellers.json file, but that alone doesn’t describe the diversity of their roles in making supply available to buyers and helping them fulfill campaign goals. Don’t think of intermediaries as a homogenous group, but rather consider how different types of intermediaries aim to add value and which of those approaches are most consistent with your campaign strategies.

We tend to categorize intermediaries into three broad categories. The first group provides exclusive access to some slice of inventory: Perhaps a collection of sites, or a particular distinctive ad format. For example, publisher co-ops are common in Europe, where newspapers across a country form an entity to jointly manage all their inventory and increase scale. The fact that co-ops are a payment intermediary and show up in schains shouldn’t be a negative — in fact, it’s likely the most direct path available to the inventory.

A second type of intermediary is the aggregator. These can be parties that focus on particular subsets of inventory, such as high-viewability placements, or that perform audience or data (often location-based) enrichment, often selling deals against this inventory. Aggregators may collect smaller publishers that lack scale to work directly with an exchange, or may monetize mobile apps via a common SDK.

And a third type of intermediary includes integration mechanisms such as Google’s Open Bidding (formerly known as Exchange Bidding) and Amazon’s Unified Ad Marketplace.In those cases, the integration partner (Google or Amazon) handling payment is listed as an intermediary in our sellers.json.

All these different types of intermediaries perform different roles, and using a sledgehammer-like edict to crush all inventory involving intermediaries oversimplifies a complex analysis.

Practically speaking, how do you sort through all this variety? One way is to establish a close partnership with exchanges to help illuminate the different inventory sources and the value they offer. The right partner will encourage brands to ask questions, provide deeper insights into business models, and give guidance towards achieving better supply path optimization. They’ll help you use a scalpel to eliminate supply chains you don’t want, or help you refine, curate, and sculpt the ones you do.

There are, of course, some tell-tale signs that you might want to keep in mind when it comes to sellers.json and schain. If you frequently see really long schains, with numerous intermediaries, you should ask questions. If a company has posted its sellers.json but it’s filled with entries marked “confidential” or that contain only site names rather than business entities like corporations, you might ask why they’re not being more transparent. And if a company’s sellers.json contains nothing but intermediaries — that is, no direct publisher relationships at all — you might want to be extra certain that you understand the value they’re adding and that they’re not just taking a piece of the transaction for reselling undifferentiated inventory.

In our final installment, learn about misconceptions associated with sellers.json and schain.

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