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Campaign US: The SPO effect: How GroupM Saved $1.5 million in Supply Fees

WPP’s media investment behemoth drove savings through a preferred supplier relationship with Index Exchange.

Agencies have been leaning heavily into supply path optimization (SPO), which allows media buyers to find the most efficient, effective and transparent path to programmatic supply.

For GroupM, which kicked off its premium supplier strategy in the U.S. last year via a partnership with supply side platform (SSP) Index Exchange, the effort has paid off.

The media buying giant says it has saved $1.5 million in supplier fees on the Index relationship alone, leading it to seek out other preferred supplier deals with SpotX (recently acquired by Telaria) in October, and PubMatic in March.

GroupM and Index have developed discounts, products and deal structures as part of the preferred relationship. In particular, reducing the exchange fee, or “take rate” that Index places on each bid, has led to $1.5 million in savings in programmatic supply chain costs.

Fee reductions increase based on GroupM’s spending volume and are reinvested back into the auction.

“It’s about bringing buying power to programmatic,” said Evan Krauss, SVP of buyer development at Index Exchange. “The more GroupM spends with Index, the lower fees we take. The net bid increases and buyers win more of the impressions they are trying to get.”

The partnership hasn’t just saved GroupM money, it has also unlocked operational efficiencies by better packaging inventory across publishers based on ad formats and pricing.

Previously, buyers would have to set up separate deal IDs, or programmatic direct integrations, for every single type of ad unit sold by a single publisher. Index has helped GroupM package similar ad formats across publishers with a single deal ID, reducing friction for buyers. The solution has been used so far by 75 brands.

“Buyers don’t have to set up hundreds of deal libraries,” said Michael Moore, director of programmatic development at GroupM. “That felt like low-hanging fruit in terms of operational efficiency.”

Read More at Campaign US