The Insider’s Guide To Understanding Demand-Side Platforms
In our previous posts, we explored the importance of programmatic buying and the types of programmatic deals that are possible. Now, in this post, we take a closer look at the role of demand-side platforms (DSPs) in programmatic advertising. Agencies, advertisers and ad networks use DSPs to help them manage programmatic ad buying across ad exchanges (a digital marketplace that enables advertisers and publishers to buy and sell ad space).
A DSP is essentially an automated buying platform that advertisers and agencies use to purchase digital ad inventory from an ad exchange or a supply-side platform (SSP) as efficiently as possible. An SSP is a DSP, but from the publisher’s perspective—it automates the sale of ad impressions for media owners and publishers. The ad inventory typically includes banner ads, mobile ads, in-stream video, search ads, etc.
Every DSP is connected to multiple ad exchanges. Publishers stock up ad exchanges with their impressions and advertisers pick the ones most appealing to them. It’s a win-win because advertisers have more choice and publishers make their inventory more widely available—all in one place.
Why a DSP matters
To better understand why a DSP matters, it’s crucial to remember the need for automating the media buying process. Picture this: you’re a media buyer at an ad agency; the typical buying process involved you, the publishers (where the ad will appear) and the audience (people who will view the ad), and a bunch of emails and spreadsheets going back and forth while you negotiate on prices. The process was time-consuming, cumbersome and often prone to error.
With a DSP, you can buy ad inventory across multiple websites at the same time; instantly and efficiently.
How a DSP works
It reduces the need for negotiations between sellers and media buyers. Plus, it automatically analyzes which impressions are worth bidding on and at what price (based on the advertiser’s targeting requirements) in a process known as real-time bidding. The analysis takes only milliseconds. DSPs might pay more for impressions in a certain location or to reach a consumer who might find that ad interesting and relevant. Most DSPs work in tandem with a data management platform (DMP) to provide advertisers with precise audience targeting options. A DMP stores audience data coming from multiple sources and then allows advertisers to create target audiences for their campaigns based on first-party and third-party data.
How do I know which DSP is right for me?
There are many DSPs to choose from. Your choice of DSP depends on a number of factors. For example, what type of data you need (first-party or third-party) and how many ad exchanges the DSP is plugged into (because that can affect reach). Other criteria when it comes to choosing a DSP include cost, how much hands-on training and support is required, and user experience. Every DSP has different features, targeting options and inventories for different types of traffic, such as desktop and mobile.
Major companies operating in this space include MediaMath, which has an omnichannel DSP that allows marketers to manage omnichannel campaigns across social, video, display, mobile and native. Marketers benefit from this DSP by being able to focus on delivering greater consumer experiences and driving better business results from spends.
In our next post, we’ll explore DMPs in greater detail and how they work with DSPs to help marketers reach their target customers more effectively and efficiently.