Demand-side platforms (DSP) and supply-side platforms (SSP) make the process of publishing an ad efficient and near-instantaneous. Gone are the days when ad buying and selling included manual insertion orders, sit-down meetings, and contracts.
So, what is a DSP, and how does it work? Let’s dive in.
What is a DSP?
Advertisers use a demand-side platform (DSP) software to purchase mobile, search, and video ads from a marketplace where publishers list their advertising inventory. These platforms provide a central location for advertisers to manage their accounts across multiple real-time bidding networks, such as Google Ads and Facebook Ads Manager, eliminating the need to log in to each network separately. The use of DSPs, along with supply-side platforms (SSPs), enables programmatic advertising, which streamlines the buying and selling of advertising inventory by automating the process through software.
What is programmatic advertising?
Programmatic advertising is the process of buying and selling ads with software and publishing those ads contextually based on complex algorithms. Most online advertising is done programmatically through real-time bidding and direct deals.
Real-time bidding
This advertising approach allows businesses to bid automatically for ad impressions that align with their objectives. You can select the audience you want to target with your ads and set your budget. The platform will then manage the bidding process on your behalf against other advertisers who are also targeting the same audience.
Here’s how it works: when a potential customer visits a page, like a Google search result for a particular product, algorithms kick in to determine the best ad to display in real-time. These algorithms leverage data such as browsing history, time of day, and IP address to determine the most relevant ad to display. The business that bids the highest for that particular impression based on this data wins the ad placement.
Programmatic direct
This kind of advertising is ideal for businesses that want guaranteed ad placements in premium locations. Homepages of big-name publishers, for example, will often sell their ad space via programmatic direct deals. The publisher provides the advertiser with details about its website visitors. If those visitors are the advertiser’s ideal audience, then the advertiser can choose to purchase a portion of publishing space for an upcoming campaign.
According to Statista, US advertisers’ programmatic ad spend is projected to grow from $106 billion in 2021, a 41% increase over 2020, to almost $142 billion in 2023.
Programmatic advertising is a rapidly growing industry, and demand-side platforms (DSPs) are playing a key role in this growth. DSPs allow advertisers to purchase, analyze, and manage ads across multiple networks from a single dashboard, giving them more control over their campaigns. In this article, we’ll explore how a DSP works, its benefits and drawbacks, and why businesses of all sizes should consider using this technology.
What is a Demand-Side Platform?
Demand-side platforms are third-party software that enable advertisers to purchase ad space across multiple networks, including display, mobile, and video. Unlike Google Display Network Manager or Facebook Ads Manager, which only allow advertisers to buy impressions on specific networks, DSPs are independent of individual networks. They give advertisers access to a range of ad exchanges, where they can bid on impressions in real-time.
How a DSP Works
To understand how a DSP works, it’s important to first understand the programmatic advertising ecosystem. There are two key players in this ecosystem: demand-side platforms (DSPs) and supply-side platforms (SSPs). DSPs give advertisers all the information they need to buy advertising from a publisher. They don’t own or purchase media directly from publishers, but instead communicate with an SSP through an ad exchange.
Supply-side platforms allow publishers to list their inventory on the ad exchange, and they communicate with DSPs about the details of an impression. When a user visits a website or app, the publisher’s ad server sends an ad request to the SSP, which responds with information about available ad inventory. The DSP then bids on this inventory in real-time, based on the advertiser’s targeting criteria and budget. If the advertiser wins the bid, their ad is served to the user.
Example of Programmatic Advertising
Let’s say a marketing manager visits your demo landing page. She didn’t request a demo, but she’s expressed interest in your product by visiting your page. This makes her more valuable to you than somebody who’s never visited your website or interacted with your brand.
In that case, your DSP will likely bid higher for her impression. Whether you win the bid will depend on how valuable this impression is to other businesses. Maybe this same person abandoned her cart on an ecommerce website. If that’s the case, the ecommerce website may bid more to serve an ad that gets her to the checkout page. It all depends on the budget of the bidder and the value of the impression.
Benefits of Using a DSP
Efficiency: If you’re managing campaigns across many networks, a DSP allows you to view and adjust all of your advertising from one dashboard. This enables marketers to reach and activate customers at scale.
Data: Many DSPs partner with third-party data providers to offer advertisers as much information as possible. Often it’s more than a single network can provide. Additionally, many DSPs allow customers to import their own data from a CRM or a DMP (data management platform).
Targeting: More data gives advertisers pinpoint targeting capabilities. Better targeting means more personalized ads and landing pages, which means a higher likelihood of conversion.
Support: Demand-side platforms will often provide support beyond the traditional help desk-style customer support of a single network.
High-quality inventory: DSPs will have access to the major networks and then some. If you’re after more premium inventory, a demand-side platform may be what you’re looking for. Some have more access than others, though, so it’s important to compare offerings before you pick one.
Drawbacks of Using a DSP
Cost: DSPs can require significant investment, so it’s important to understand the minimum monthly or campaign spend required before selecting an option. A managed DSP, such as The Amazon Managed Services DSP, may require $35,000 ad spend or more. A self-serve option may only require $3,000 – $12,000 for a campaign, but needs a greater investment of time to manage the process.
Factors to consider when choosing a DSP
Choosing a DSP requires careful consideration of several factors. Here are some important things to keep in mind:
- Platform features and capabilities
The first thing you need to consider is the platform’s features and capabilities. Look for a DSP that offers advanced targeting and optimization features. Make sure that the platform can integrate with your existing tech stack and third-party tools.
- Data access and quality
Data is critical in programmatic advertising, so it’s important to choose a DSP that offers access to quality data. Look for a platform that provides access to a wide range of data sources and can integrate with your own first-party data.
- User experience
The user experience is important when it comes to managing your campaigns effectively. Look for a platform that offers a user-friendly interface and makes it easy to manage your campaigns.
- Support and training
Implementing a new DSP can be a daunting task, so it’s important to choose a platform that offers excellent support and training resources. Look for a provider that offers phone and email support, as well as a knowledge base and user community.
- Pricing and budget
Finally, consider the pricing and budget requirements of the DSP. Look for a provider that offers transparent pricing and has no hidden fees. Make sure that the platform’s pricing model fits your budget and campaign goals.
Conclusion
In summary, a demand-side platform (DSP) is an essential tool for any marketer looking to run programmatic advertising campaigns. By providing access to multiple ad networks and data sources, DSPs enable marketers to target and engage audiences more effectively, driving better campaign results.
When choosing a DSP, it’s important to consider factors such as platform features, data access and quality, user experience, support and training, and pricing and budget. By carefully evaluating your options and selecting the right DSP for your business, you can achieve better campaign performance, drive more conversions, and achieve your marketing goals more effectively.