9 min read

What are the top 5 Challenges Programmatic SSPs are Facing in 2023?

As the industry evolves, many SSPs are on life support due to new challenges arising in 2023, from DSP bid request limits and ad spending slowdown to the looming disintermediation of SSPs in the supply chain - it's a tug of war.

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Written By
Angela Oladipupo
Published on
2/20/2023

In today's digital world, Supply-Side Platforms (SSPs) are crucial in helping publishers monetize their online content. However, as the industry evolves, many SSPs are on life support due to new challenges arising in 2023, from DSP bid request limits, and ad spending slowdown to the looming disintermediation of SSPs in the supply chain - it's a tug of war.

With more advertisers switching their advertisements to the sell-side and putting more money on the line, it is only logical for larger ssp companies with a larger share of the programmatic advertising industry to strive for monopoly. Therefore, not only do ssps face competition from other programmatic players, but they must also combat disintermediation within their own kind.

In this article, we will be exploring these challenges to be overcome in detail in order to drive efficiency and monetization at scale.

confiant displaying various ad fraud programmatic ssps face

Ad Fraud

Ad fraud is a significant problem for the programmatic advertising industry and continues to challenge SSPs. The inability to audit ad inventory and trace it to specific users, as well as untested ways to bundle inventory, will, unfortunately, increase the likelihood of fraudsters using various tactics to manipulate the ad-buying process, including bots, domain spoofing, click injection and cloaking, leading to the loss of significant revenue for advertisers and publishers.

Today drive-by downloads have evolved; it's no longer about one click. It's about two clicks. They first get the person to click on the fake ad. It's an actual ad, a button paid for, but it is fake. 

“For example, if you go and try and download Slack from Google Search, in October, 8% of all the ads targeted the US for Slack. 

When someone Googled Slack and downloaded 8% of all the ads, the first link on the page was malware. So, there's a bad actor pretending to be Slack to Google, paying Slack to put ads as if they were Slack. Cloaking it because, again, Google's trying to catch these things, too. Cloaking it so that you can't see what it is unless you match the targeting parameters and then only decloaking and showing itself when the right type of user was being served up. And then, in that case, it looks like Slack; it works like Slack, except it's got a back door in it where you've actually just installed a maliciously hacked version of it,” Jerome Dangu, Co-founder of Confiant.

Because of this, SSPs and ad exchanges need to invest in ad fraud detection and prevention technologies such as Confiant, Escalated, Clickcease, and more to reduce the risk of fraudulent activity. 

![GumGum's logo on a banner ads]( "GumGum's Journey with Assertive Yield so far")

Bidstream Inefficiency

While there are various causes for the mounting inefficiencies in the ad buying process, one of the underlying causes is the prevalence of inefficient bidstreams, with more than 90% of bid requests currently ending in wasted traffic that receives no bids from DSPs and their advertisers.

The programmatic arm race has accelerated in recent years, pushed by an oversaturated market and growing tech infrastructure costs, resulting in fewer DSPs and a more tense relationship between SSPs and the remaining DSPs.

Although, DSPs have implemented queries per second (QPS) restrictions to simplify the bid request process and lower the significant costs associated with billions of inquiries in response to the bid request inflation. 

However, these methods have also raised some concerns, like who should be in charge of vetting bid requests: the supply side or the demand side?

A graph demonstarting the ad spending slowdown between 2022-2024

Graph by: eMarketer

Demand-Side Platforms Bid Request Limitations

DSP bid request limitations have been a significant challenge for SSPs recently. DSPs rely on bid requests to make real-time decisions about which impressions to buy on behalf of advertisers. However, limitations on the number of bid requests that DSPs can process can harm the performance of SSPs

One of the main reasons for DSP bid request limitations is the increasing volume of ad requests being generated. According to a report from eMarketer, digital ad spending in the US is expected to exceed $200 billion by 2023, and this growth is leading to a surge in ad requests. As a result, DSPs are struggling to keep up with the sheer volume of bid requests, which can reduce the number of impressions being sold by SSPs.

Another factor contributing to the challenge is the rise of header bidding. Header bidding allows SSPs to offer inventory to multiple demand sources simultaneously, significantly increasing bid requests. However, this influx of requests can cause DSPs to hit their processing limits, leading to missed opportunities for SSPs.

Furthermore, the growth of programmatic advertising has also contributed to these challenges. Programmatic advertising relies on real-time bidding (RTB) technology, which generates a high volume of bid requests. With many DSPs only able to process a limited number of requests per second, SSPs may find selling all of their inventory challenging.

A table by magnite predicting ad spending slowdown for the us market

Report table source: Magna

Ad Spending Slowdown Still Growing

One of the biggest challenges SSPs are facing in 2023 is the decrease in the amount of money advertisers are willing to spend on advertising through its platform because advertising budgets are the first to be cut off in the market when push comes to shove.

When ad spending slows down, it can impact the revenue of the SSP and the publishers that use the platform to sell their ad inventory. 

In its recently released ad spending forecast for 2023, Magna projects that globally, ad spending revenue for media owners totals $833 billion, a year-over-year increase of 5% from $795 billion. The revised forecast is 1.5% lower than Magna's June projection. They also cited a deteriorating macroeconomic outlook for lowering its projection. The 5% year-over-year increase in 2023 is lower than the +7% registered in 2022 and +23% from 2021.

Magna also further predicted that:

Following advertising spending projections depending on geography, LATAM is highlighted as its advertising expenditures are projected to exceed $25 billion (+14%) in 2022. However, according to the IMF, the regional economy, which was already slow in 2022 (GPD +3.5%), would decline further in 2023 (+1.7%). 

As a result, advertising revenue growth in LATAM will decelerate to +9%, which is unusually low for a region with high endemic inflation. Other programmatic adspend forecasts such as Forrester, Zenith and even BIA Advisory Services all made similar ad spend projections for 2023.

Thus, SSPs must find ways to adjust their revenue streams to compensate for the decreased demand. This can include diversifying their offerings, increasing efficiency in their operations, and looking for new revenue opportunities to guard themselves against this impending ad spending decrease.

Report table source: Magna

Ad Blockers

Ad blockers are another significant challenge facing SSPs, as they reduce the reach and impact of digital advertising campaigns. Ad blockers limit the visibility of online ads, making it more difficult for SSPs to monetize their inventory and provide value to their clients. Ad blockers have become increasingly popular among consumers, leading to a decline in viewability and revenue for SSPs. 

And as advertisers are becoming more concerned about where their ads are appearing and are beginning to move the activation of their programmatic advertising to the supply side of the ecosystem where the sustainable data is. So, SSPs must adopt new and innovative ad formats that provide a better user experience, such as native and programmatic video ads and work with publishers to improve the overall user experience of their websites while reducing the number of intrusive ads and improving load times. 

a piechart demonstrating the differences between ad blockers & non ad blockers on computers

Disintermidiation In Programmatic

With more advertisers shifting their ads to the sell-side and putting more money at stake, it is only natural for bigger ssps with a larger proportion of the programmatic advertising industry to seek monopoly. 

As a result, SSPs must compete with other programmatic players and deal with disintermediation inside their own market. 

“Trying to own this premium publisher space, which includes half of CTV, are the DSPs, SSPs, publisher consortiums and other new networks. It’s not about the ad tech industry being OK with disintermediation, it’s about what makes sense now.” Rob Webster, chief strategy officer, Canton Marketing Solutions.

Integral Ad Science, for example, began as an ad verification service. Still, its latest tool, Total Visibility, sounds very similar to what SSPs have been recommending to marketers in previous years. 

The technology assists marketers in determining the most effective path to premium publishers and determining a fair price for their inventory.

"Brands and agencies want more visibility into their programmatic buys to understand what optimizations can improve campaign performance and drive high-quality supply paths. Leveraging IAS's QPO solution and metrics like qCPM will allow advertisers to identify the most effective channels for purchasing high-quality inventory at the most efficient cost." Lisa Utzschneider, CEO at Integral Ad Science

Aside from these intricacies, it's evident that IAS competes (a little) with SSPs, who are no strangers to disintermediation. As a result, they've been attempting to reach out to marketers that usually pay DSPs in order to enhance their own publisher-focused companies.

Because they were no longer exclusive to publishers, SSP executives felt compelled to become the preferred pipelines to inventory for marketers. DSPs are beginning to feel threatened by this development, which is why TradeDesk built its direct-to-publisher solution, the OpenPath, which allows other DSPs to have direct access to publishers, thereby cutting off ssps. Is this a subtle payback? We'd never know, would we?

a banner displaying texts that reads "shapping a greener future for programmatic"


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