**New York**: As programmatic advertising is set to reach $180 billion by 2025, the industry contends with inefficiencies due to increased bidstream requests. Amazon DSP’s Dynamic Traffic Engine aims to mitigate these challenges by enhancing inventory relevance and reducing wastage in ad spend.
As programmatic advertising continues to grow rapidly, poised to reach an estimated $180 billion in the U.S. by 2025, the industry is grappling with significant challenges concerning efficiency and scale. The complexity of the ad supply chain has intensified, primarily attributed to a remarkable increase in bidstream requests between demand-side platforms (DSPs) and supply-side platforms (SSPs), which have surged 2.3 times from 2020 to 2023. This rise has outstripped actual inventory growth, creating a market environment laden with inefficiencies that impact all stakeholders, including brands, agencies, DSPs, and SSPs.
The situation has resulted in substantial ad spend wastage, stemming from duplicate bid requests and ineffective inventory matching, thereby hindering campaign performance. Furthermore, operational costs have escalated as DSPs and SSPs cope with a burgeoning volume of bid requests, many of which do not culminate in delivered impressions. These challenges compound the difficulties advertisers face in optimising their return on ad spend and reaching their intended audiences effectively.
Traditional solutions meant to address these issues—such as supply path optimisation (SPO), pre-bid filtering, and query-per-second (QPS) throttling—have fallen short. According to Mark McEachran, senior vice president of product management at Yieldmo, “The fundamental issue is how the advertising system operates today. Suppliers flood the system with every possible ad opportunity, hoping to find the right match for advertisers. This creates a massive processing burden for DSPs and, ultimately, unnecessary costs and inefficiencies for advertisers trying to reach their audiences.” This situation forces SSPs into a position of significant pressure from DSPs to streamline their traffic, which simultaneously hampers publishers by lowering CPMs and diminishing competition for premium inventory. A 2023 report by the Association of National Advertisers estimates that inefficiencies in programmatic advertising may account for up to a 35% loss in potential ad revenue for publishers.
In response to these obstacles, a new collaborative approach to traffic optimisation is emerging. A noteworthy development is Amazon DSP’s launch of the Dynamic Traffic Engine (DTE) in beta, a tool designed to foster real-time communication between Amazon DSP and SSPs. This tool allows Amazon DSP to share real-time demand insights with SSPs, facilitating the delivery of more relevant inventory and reducing unnecessary bid requests. Chris Conetta, head of supply at Amazon DSP, stated, “Dynamic Traffic Engine is a key component of our strategy to help advertisers efficiently access quality inventory across the open web. By providing granular, real-time demand insights to SSPs, we can communicate exactly what inventory our advertisers need.”
The DTE tool has shown significant promise during pilot testing, having reduced undesired or low-demand bid requests by over 40%, with Yieldmo reporting a 7% improvement in fill rate and expenditure per million ad requests during testing. The cost-effectiveness and operational efficiencies gained through DTE suggest substantial benefits for stakeholders throughout the ad supply chain. “The solution was cost-effective to implement and reduced operational costs,” McEachran explained. “Amazon’s granular instructions on which attributes to look at improved our efficiency significantly.”
As the trajectory of programmatic advertising unfolds, Amazon’s DTE exemplifies a compelling model for achieving efficiency while upholding robust data privacy standards. The solution employs aggregated demand signals that safeguard advertiser data, allowing SSPs to optimise their traffic seamlessly. Conetta acknowledged the varying stages at which SSPs find themselves in traffic optimisation, stressing the importance of flexible technology solutions: “Every SSP is at a different stage of their journey in optimising traffic flow. To be successful, they need technology solutions that can meet them where they are and grow with them as their capabilities evolve.”
Looking to the future, the potential of collaborative traffic shaping seems extensive, with expectations that systems will become even more intelligent and responsive. Conetta outlined the vision for DTE, suggesting it could eventually predict and shape traffic patterns in real-time, enabling advertisers to access the most pertinent inventory for their specific objectives. “We see Dynamic Traffic Engine as a stepping stone towards a more intelligent programmatic solution that will benefit stakeholders,” Conetta added, projecting a landscape where agencies enhance results for their clients and publishers, along with SSPs, attain improved monetisation of their inventory.
As the industry continues to advance, the role of collaborative traffic shaping backed by secure demand insights is anticipated to become increasingly significant in resolving existing programmatic inefficiencies. While challenges linger, the movement towards more intelligent and cooperative traffic management is set to redefine the programmatic advertising terrain in the years ahead.
Source: Noah Wire Services
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