The Trade Desk OpenPath and the future of SSPs

The Trade Desk announced a new product for publishers last week called OpenPath. OpenPath will allow The Trade Desk to cut out SSPs and bid directly on publisher inventory.

The Trade Desk has served advertisers exclusively since its inception, so OpenPath introduces many questions around the motivations of The Trade Desk with this new supply-side offering.

What is OpenPath?

The Trade Desk did not divulge any technical details when they announced OpenPath. But thanks to a lively discussion on Twitter, we know that OpenPath connects The Trade Desk advertisers to publishers directly via a Prebid adapter and The Trade Desk handles publisher payments.

Prebid is the open-source header bidding software that allows publishers to compete programmatic alongside direct-sold demand. Prebid offered SSPs a path to further integrate with publishing clients, and now The Trade Desk will look to do the same.

Before OpenPath, The Trade Desk could only access publisher inventory through an SSP. With OpenPath, The Trade Desk can bypass SSPs and bid directly on publisher inventory if the publisher uses Prebid.

Many large publishers have signed on to enable OpenPath: Reuters, The Washington Post, Gannett, Condé Nast, USA Today Network, to name a few.

Alongside the OpenPath announcement, The Trade Desk also said that they will now cease all buying through Google Open Bidding, the Google solution to combat the threat of header bidding.

Since allegations surfaced of Google taking exorbitant fees, cutting preferential deals, and manipulating ad auctions, it makes sense that The Trade Desk would want to access publisher inventory more transparently outside any potential Google funny business.

The Trade Desk has not indicated that they will stop buying inventory from other SSPs. Whether that will remain true is a topic we will explore further in this post.

The Trade Desk will take a rev share on media even though the company is positioning it as a fee:

Theoretically, publishers and advertisers will benefit from The Trade Desk cutting out an entire hop in the supply chain since there is one less mouth to feed (SSPs). TTD could use that gained margin to increase publisher revenue and decrease advertiser spend.

Why is OpenPath such a big deal?

Since time immemorial, Supply Side Platforms (SSPs) cater to the needs of publishers, and Demand Side Platforms (DSPs) serve at the pleasure of advertisers.

SSPs provide tools for and work in the interest of publishers, the supply side. The tools help publishers package and sell their inventory.

In contrast, DSP customers are the advertisers who pay to serve their ads on publisher properties. DSPs provide tools to facilitate digital ad buying, with all the integrations necessary to power a modern programmatic buying experience.

With OpenPath, The Trade Desk looks to cut out SSPs and buy inventory directly from publishers. There is an unspoken implication in this move. The Trade Desk would now need to cater to advertisers and publishers, which could strain their existing SSP relationships and focus on advertisers.

The move raises many existential questions surrounding the value of SSPs. Are supply-side platforms necessary? Or are they simply margin-sucking middlemen ripe for disruption?

Do SSPs provide value?

Yes. SSPs provide tools for publishers to effectively run a programmatic selling operation. These can include:

• Yield management

• Inventory management (Creating private marketplaces)

• Reporting / Forecasting

• Bid inspection & troubleshooting tools

• DMP Integrations

• Fraud Prevention

• Customer support

SSPs have developed all the above features with the goals and motivations of publishers in mind. There is no question that SSPs provide value at this current point in time.

Although, DSPs could replicate the offerings of SSPs. But adding on an entirely new customer base and feature set is a monumental task. Regardless, the OpenPath announcement puts SSPs who only provide pipes to DSPs on notice — either you provide incremental value or die.

Is The Trade Desk becoming an SSP?

The Trade Desk included this little diddy in their announcement:

Cue the eye rolls. This statement cannot be factually, logically, or even philosophically true. If The Trade Desk is paying publishers directly for their inventory, they are by definition serving them in some capacity.

But The Trade Desk needs to appease its existing set of advertiser customers. The Trade Desk advertisers will want reassurance that they are still special and that the company will bend over backward for their precious revenue.

If TTD now serves publishers, that could trigger concern from their current clients that they might start spreading themselves too thin on product development — if they now need to develop features for advertisers and publishers.

So far, all we know is that TTD is hooking into Prebid, and there is no concept of private marketplaces or creative review, or any other SSP features. But if OpenPath is a success and gains more traction, there will only be more incentive to cater to the needs of publishers.

Will OpenPath kill off SSPs?

Advertisers are not the only ones who may want reassurance. The Trade Desk integrates with many SSPs that rely on the advertising spend generated from The Trade Desk's advertisers.

The release of OpenPath is absolutely an existential threat to supply-side platforms, particularly SSPs focused on the web. If DSPs only need to create a Prebid adapter to muscle their way into a header bidding auction, the barrier of entry is pretty low.

Mobile in-app SSPs are probably more safe for the time being since integrating SDKs requires a heavier lift from both the publisher and DSP. Connected TV also does not have a plug-and-play model that a Prebid wrapper can provide on the web.

OpenPath may not pose an imminent threat to web-focused supply-side platforms, but it does raise questions about the future of these SSPs and their continued role in the programmatic supply chain.

SSPs still provide value through differentiated features, and publishers still need them to access demand. But what happens if other DSPs release OpenPath-like products and buy directly from publishers?

1. SSPs will lose spend and margin

Advertisers will shift spend to the most optimized supply path that grants them the best inventory for the lowest amount. SSPs will lose advertiser spend and find their margins squeezed as they attempt to cling on.

2. Smaller publishers will be hurt

Any publisher leveraging Google Open Bidding will now miss out on spend from The Trade Desk advertisers. Any publisher not big enough to score a direct deal with The Trade Desk or any DSP moving to a pub-direct model will miss out if they restrict advertiser spend elsewhere.

3. Publishers will push inventory exclusives

Publishers may only make some or all inventory available on their direct DSP of choice, effectively forcing advertisers to buy on a specific DSP.

Only the heavyweight publishers could pull this off. But some supply sources have pushed buyers to transact this way already.

All the social media platforms (FB, Twitter, SNAP, TikTok) have their buying portals, retail media players like Amazon and Wal-Mart have their own DSPs, and even Roku pushes buyers to its DSP, OneView (dataxu).

4. Publishers and advertisers will create new monopolies

If The Trade Desk continues enhancing OpenPath and pushes more publishers to go direct, those publishers will become more dependent on a single platform (TTD) for revenue. Similarly, advertisers may only have one place to buy certain publishers.

We know what happened when Google controlled both sides of programmatic transactions. Everyone loses transparency, choice, and leverage, except the one running the show.

If The Trade Desk ever achieves market dominance like Google, we can only count on their benevolent goodwill to not pull the same type of shenanigans. Last I checked, publicly-traded companies do not increase their stock price with benevolence — unless you fake it, like Apple.

How can SSPs survive?

Supply-side platforms need to innovate and create value worthy of the fees they extract.

SSPs can continue to differentiate by offering features that DSPs cannot due to their position in ad transactions. SSPs can take advantage of their holistic view of all demand partners and add value through forecasting and facilitating publisher first-party data strategies.

SSPs who hedged their bets by focusing on platforms outside desktop and mobile web may have a rosier future ahead.

DSPs cannot elbow their way into CTV, mobile in-app, or even DOOH through a Prebid wrapper. If SSPs focus on these environments where DSPs will have trouble finding inroads, it may bear fruit for them moving forward.

If the OpenPath trend catches on and DSPs add publisher-centric features, we could see a continuing consolidation of ad tech platforms. DSPs could gobble up SSPs if they want to turbocharge rolling out publisher-focused features and acquire talent well-versed in the supply side.

Consolidating DSPs and SSPs (and even ad servers) into one platform is an alluring proposition, and the industry has seen some companies attempt the feat with varying degrees of success — but nobody has been able to pull it off quite like Google yet.

Each platform type serves different interests, and the competing desires can disrupt the focus required to lead in each space. Although, eliminating any obstacles (and the fees that come with them) between buyers and sellers presents an opportunity too lucrative to ignore.

SSPs are not going anywhere anytime soon, but we may look back on this moment as the catalyst that kickstarted the beginning of the end for many supply-side platforms.

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