The Road to ATS London is a series of specialist posts on technology, data and the business models emerging in the programmatic eco-system, all to be published in the run up to ATS London. Tickets for ATS London on Monday September 14 are now on sale. We do sell out every year so make sure you get your ticket while still available.

Programmatic has killed the ad net star, they say. General industry consensus suggests ad nets can't compete in an environment of automated buying and selling. Old school sales houses, yes. Scaled ad nets who depended wholly on outsourced inventory, definitely.

But the model as as whole is showing it can and will evolve. The old dog is learning some nifty new optimisation tricks In this post we will discuss how one evolved solution, the Supply Side Network, is flourishing in programatic.

What is a SSN?

Before diving into the detail of how to build a SSN model, we probably should take time to define what it is first - so let's do a potted history of the ad net and see how we get to the SSN.

The traditional ad network was all about managed buys and managed supply with some optimisation in between.

In a lot of these cases ad nets would get IOs and not have the inventory to fulfil campaigns. They would buy from other ad nets if they required extra impressions to make DR campaigns work.

This supply and demand problem became so acute that ad exchanges (Right Media being the first) emerged into the eco-system to facilitate trading between networks.

The arrival of ad exchanges accelerated the demise of the traditional ad net, with agencies greedily eyeing the burgeoning programmatic opportunity. SSPs compounded ad net woes further by aggregating premium publisher inventory, effectively shutting them out from top-tier supply.

They were now forced to buy into the auction model - but had increased competition from not only ATDs but also the likes of savvy marketer-first retargeters, such as Criteo, who were locking pubs into first look deals.

The fall-out was pretty severe: stalwarts like Specific Media and Adconion struggled to stay on plans. Faced with mandates and a "black box" model that now was no longer commercially palatable to agencies, traditional scaled ad nets started to get squeezed out of budgets.

This ultimately lead to the inevitable pivot or a hasty sale. Despite this the ad net survived, and evolved.

One of the more interesting models to emerge was the SSN. The Supply Side Network is effectively an aggregated data and inventory play built on third party technology. By tapping into scaled demand through the likes of Google and AppNexus, the SSN could effectively forgo the direct sales staff route, selling in to agencies.

While direct sold to agencies is always welcome in terms of increased CPMs, the opportunity to programmatically sell cross-channel inventory into data-driven demand has allowed multiple offerings to succeed in a market that had called time on the ad net model.

It must be pointed out that these SSNs are wildly profitable businesses with solid margins, but will never grow beyond £50 million.

Any revenue beyond the aforementioned amount would require a direct sales team proprietary technology, and a sizeable managed service approach - effectively the antithesis of the SSN model.

How do I build a SSN?

The first place I would start is aggregating inventory in a specific vertical. There are many options - travel, food, gaming, etc. Before starting ExchangeWire, I aggregated a bunch of telco enthusiast sites, targeted specific brands, and sold into their agencies.

At the time the only exchange in the market was Right Media, but it had severe minimums on inventory requirements to trade.

Campaigns were "hand sold" and delivered via an open source OpenX ad server. It wasn't very sophisticated (no data, tech or customisation) but you can see the value of the vertical.

The next thing you need to think about is technology. For this kind of model you have really only got three choices:

1) Google: Easy to use tech but has closed APIs, restrictive technology and has a competitive media business (the SSN always needs to smash AdSesne yield)
2) IPONWEB: If you are massively scaled and have ambitions to increase revenue, it could be a good option to build
3) AppNexus: Built with ad nets in mind, the solution has been developed with open API framework that helps with customisation and differentiation

In the TraderTalk special below, we speak with Nigel Gilbert, VP, Strategic Development, EMEA at AppNexus, about how SSNs are building on the AppNexus platform.

One of the other key pieces discussed in the TraderTalk episode is data, and the ability to build segments around your first party and third party data.

The ability to leverage data in this way is a key capability of the SSN. This is how it will beat AdSense in the mid-to-long tale - and deliver value to its publisher clients. A DMP lite is required here, a tool that allows you to manage and execute cookie segments.

Beyond the core SSN skills, it is important to customise your solution so that you remain differentiated. Maybe you can build a UI for clients, or perhaps a specialised ad unit (bespoke native or rich media ads could be options here).

By doing the latter your SSN could possibly scale beyond its own managed inventory by tapping into third party supply.

How much can SSNs actually survive on a commercial basis? The answer: a lot. As long as you can differentiate on inventory, data and beat AdSense yield, a successful model exists.

With more demand going programmatic the opportunity to capture budget is increasing. As I have said before in many posts, panels and at industry gatherings: the ad network is not dead, it is just evolving.