Flipping Inventory, now on Bravo.
Yesterday at Marketecture Live, The Trade Desk CEO Jeff Green used a blunt analogy on stage to describe how SSPs operate.
During a closing conversation with Ari Paparo, Green argued that many SSPs are not truly optimizing for publisher yield. Instead, he suggested, some operate more like house flippers — buying low, selling high, and capturing the spread.
“It actually moves you from being a real estate agent, where you’re representing the seller and you make 4% or 3% or whatever on the take,” Green said. “Instead, you’re essentially flipping houses, where you buy the house and sell it for as much as you possibly can.”
The discussion stemmed from Paparo asking why a publisher would choose OpenPath — a direct integration product from TTD that does not explicitly optimize for publisher yield — over an SSP that claims to do so. Green’s response was essentially that the incentives of many SSPs may not actually align with publisher revenue or advertiser interests.
Why This Matters:
This is a continuation of an argument Green made on TTD’s Q4 earnings call last month.
On that call, he criticized parts of the ad supply chain for adding inefficiency and “exploiting” complexity rather than simplifying it. Here’s what he said during the analyst Q&A:
“The thing that I really want to emphasize is that at a moment where many agencies are focused on principle-based buying, and I think not doing as good of a job of representing their clients as they could, and that SSPs, in some cases, are convoluting the ecosystem more than they have in the past, the need for OpenPath is great, and you can expect to get criticism from those players that don’t want a more efficient supply chain. OpenPath is very simple in the way that it works.
We plug in as directly as possible to the seller or the publisher, and then we charge them 4.5%, which is meant to be nearly break-even, just slightly profitable, so that we can create a more efficient supply chain. Instead of relying on sell-side players that haven’t always cared about supply chain efficiency, we’re trying to simplify it. I would argue that many of them still today don’t spend much time thinking or talking about the efficiency of the supply chain, and instead spend much of their time trying to exploit it. I’m not surprised at all that OpenPath ruffles feathers and bothers people.”
The answer also touched on rumors that agencies Dentsu and WPP had possibly “exited” using OpenPath.
Experts React:
Here was the rest of that exchange from the Marketecture event, where Paparo responded to the SSP framing:
Ari: Makes sense. Although I don’t believe any major exchange or SSP has been successful with a pure, call it an agent model, where all they do is try to increase publisher yield without any demand side. Almost all of them have been forced to have demand in order to create a business model.
Jeff: I agree, but that doesn’t change my point.
Interesting, but not surprising. TTD’s criticism of SSPs seems to be sharpening as the company rolls out more supply chain tools.
Our Take:
Can’t we all just get along? No?
But seriously, TTD needs to make the case that there are supply chain issues to highlight the innovations it has rolled out over the past year. (And, to be clear, there are supply chain efficiency issues, especially with certain players.) And rather than criticizing the open web overall — which would run counter to TTD’s core message — pointing at specific actors makes strategic sense.
Beyond SSPs, conflicted agency principal-based buying also appears to be a growing part of that narrative. How the agencies respond, well, we’ll see.
(PS, Marketecture Live was great and everyone should attend again next year!)
