Tech challenges and opportunities for mobile SSPs in the post-identifier age

Good to see you again for the fourth edition of Xenoss MadTech Digest. As always, we are back with a closer look at trends and issues that have lately been stirring the waters of AdTech. This digest is an outlet for us to share a technology-driven take on the challenges and opportunities within the ecosystem.

Did you miss our last newsletter on choosing the right database management system for an AdTech platform? You can always catch up here!?

In today’s episode of the MadTech digest, we will take a look at the challenges in developing mobile SSP and examine solutions AdTech vendors can leverage to strengthen their offerings.?

The newsletter got its starting impulse from an in-depth blog post on the challenges and opportunities for mobile SSPs written by Dmitry Sverdlik, CEO of Xenoss.?

SPO has SSPs facing extinction

It has been a little over a year since The Trade Desk released OpenPath: A solution that allows advertisers to bypass SSPs and access inventory directly. In retrospect, the project was not a stellar success - publishers were somewhat reluctant to adopt it, and the SSP market attacked a new release on many occasions, saying it, too, was an SSP in disguise.?

Yet, one year later, the trend of leaving SSP partners out is still going strong. Just a while back, Yahoo’s decision to shut its billion-dollar SSP platform down had pulses racing. On the same day, EMX Digital, an SSP backed by Big Village Media, filed for bankruptcy.?

Throw sustainability commitments and the growing ad fraud problem into the mix, and there’s hardly a positive outlook for the market.?

The tightening in-app privacy grip

A wave of panic ensued when iOS rolled out App Tracking Transparency, a privacy feature that limited the use of IDFA - Identifier for Advertisers - that allowed for tracking in-app activity. Google followed suit, announcing Privacy Sandbox - an analogous feature for Android.?

With ad IDs, cookies, and device-level IP tracking out of the picture, one can’t help but wonder what is left for advertisers to reach the audiences they need. The industry is facing a signal drought, which is why it’s likely that the choice of mobile SSP vendors will boil down to the amount of data a platform has within its reach.?

Fraud is getting bigger

For the last couple of years, in-app fraud has been given its spotlight, and one would argue that the industry has been proactive in trying to solve the problem. But, as is often the case, the bad guys are moving faster, and, by the time an industry-accepted solution is ready, new threats have already spread across the ecosystem.?

At the moment, the common strategies fraudsters still rely on are fraudulent in-app purchases (16% on Android, 17% on iOS), remarketing fraud (15% on Android, 19% on iOS), and attribution fraud (13% on Android, 19% on iOS).?

It’s estimated that, by the end of the year, these and others will have cost advertisers over $12 billion. As a consequence, advertisers are growing wary of mobile campaigns and expect more action from AdTech players in weeding out malicious actors.?

The balance shift to the buy-side

2022 was tough for publishers: Yahoo, CNN, BuzzFeed made the list for cost reductions and massive tech layoffs. Media executives chose to downsize due to a sharp drop in revenue and flatlining ad spend. App engines like Unity were also struck by the layoff hammer: The company let go of over 200 employees in January.?

By the end of the year, publisher confidence was low, and it became clear that we are entering a buyer-dominated market.??

Under those conditions, mobile SSPs find themselves pressured to either meet DSP demands or be left out of supply chains.?

The tech is slow to catch up

From a tech perspective, building a mobile SSP is a massive undertaking: These platforms need to integrate with a variety of ad network SDKs, update and synchronize functionality, as well as creative formats.?

Most AdTech providers need robust in-house engineering teams to maintain their platforms. Think of changing these monolith structures to meet the changing demands of the industry, and you run into an urgent need for more skilled developers. The issue is that professionals in whom engineering and AdTech skills collide are always in short supply, making it harder to whip up new features when the market needs them most.?

The path is there, but it won’t be easy

There’s a lot of hype about “the death of SSP” and the SSP being a “disposable item” but the truth is - there always has been. It’s been a topic for discussion all the way in 2017 and before - but years later, there are still opportunities in the mobile SSP market.?

Below is the view the Xenoss team holds on ways in which the supply side can weather the storm of recession and continue driving value to advertisers.

The age of data partnerships

In the absence of in-app tracking, SSPs should be developing alternative mechanisms for data gathering, which, for the record, they do:?

• Data partnerships. Telcom companies like Ericsson (with Emodo) are offering network data that SSPs can leverage and add to their offering.?
• Alternative ID solutions: UID 2.0 is one of the most popular solutions but not the only option available. At least a dozen universal IDs are hitting the market.?
• Leveraging AI/ML for audience prediction: IBM has released a Watson Advertising Predictive Audiences offering that helps teams enrich their data with over 13,000 data signals. According to the vendor, predictive audiences have a 44.6% lower cost per customer and a 45.7% higher conversion rate.?

As said by Roman Garbar, Marketing Director at Tenjin: “Even with the data left, 99% of marketers are not going to take advantage of it. This opens a lot of new opportunities for AdTech vendors that want to dig deeper”.?

Leveraging the power of predictive analytics and other innovative tools can be one of those tech goldmines.?

Search for new opportunities to create value

With the ongoing trend of disintermediation, mobile SSPs should focus on proving their value beyond acting as an intermediary and, in many cases, a gatekeeper. Maciek Wiktorowski, VP of Product Management at Smaato advises publishers to “look beyond a single-touchpoint solution and towards partners that offer added ROI throughout the programmatic value chain”, underlining the need for mobile SSPs to offer a tangible return on investment.?

The good news is that there are ways for SSPs to do that, even if by encroaching on the DSP turf and building proprietary platforms that would make a supply-side platform a one-stop shop for the ecosystem.?

Another way to drive value is by zeroing in on channels where inventory is in short supply and focusing on becoming an access point for high-quality placements. That is the case for ironSource, an SSP now acquired by Unity, that will become a primary gateway to a huge inventory and its 1.5 billion-audience. The deal is strategic for Unity’s ambition to have more control over the advertising ecosystem and could lead to increased competition with existing DSPs.

The acquisition proves that mobile SSPs are still relevant as an access point to premium inventory - however, following Unity’s example, it’s likely that more publishers will acquire or build proprietary solutions moving forward.?

Focus on anti-fraud solutions

The unsolved problem of ad fraud puts SSPs under the pressure of compliance at the risk of being sidelined and the expectation to support the sell-side in eliminating ad fraud. To stay afloat, they need to clean up due diligence processes and eliminate every doubt of shady inventory.??

At the same time, mobile SSP vendors would do well to include anomaly detection tools in their offerings, playing a part in preventing supply-side fraud. Leading fraud prevention platforms - Pixalate and Adjust - are giving advertisers the tools they need to detect spoofing, spot COPPA compliance risks, and verify app publishers.

Find the skills to keep the tech up to speed

Since most SDKs are black-box and share little data about their tech, building functional integrations is a challenge. To be confident in their systems, mobile SSP providers should not hesitate to bring outside consultants who can reproduce the logic of ad networks based on their outputs and use it to design integrations.?

To avoid falling behind tech-savvy competitors, building a deep bench of skilled AdTech developers that can jump in when in-house capabilities reach their limit will be an intelligent, future-oriented move.?

Let’s recap

The deprecation of cookies and mobile IDs, increased sustainability awareness, and SPO that fractured the “DSPs only talk to SSPs'’ dogma created new challenges for the supply side. Now, more than ever, mobile SSPs are pressured to enter the race for high-quality data and inventory.

Expanding their offerings and building meaningful partnerships are a way to thrive for supply-side platforms. Introducing anti-fraud solutions, transparent reporting, and access to direct inventory alongside programmatic capabilities can ensure an SSP’s long-term survival and steady growth.?

A question for mobile SSP vendors, how did the wave of SPO and data scarcity affect your products? Which capabilities do you see as fundamental for the sustained growth of SSP platforms? Share your thoughts in the comments.