What is a DSP (Demand-Side Platform)?

What is a DSP (Demand-Side Platform)?

DSP stands for Demand-Side Platform, a software that is used for programmatic ad buying, typically via bidding in RTB auctions. DSPs are commonly used by advertisers, in-house marketing teams, advertising agencies or Agency Trading Desks (ATDs). By utilizing DSPs, media buyers get access to multiple SSPs, Ad Exchanges, and Ad Networks through a single interface, allowing them to purchase display, video, mobile, and search ads in real-time.
In the early days, digital ads were bought and sold by ad buyers and salespeople. DSPs were designed to minimize the need for negotiations between media buyers and publishers, making the process cheaper and more efficient. With the appearance of DSPs, the need for manual negotiation of the price has been completely eliminated.
DSPs are the flip side of SSPs (Supply-Side Platforms). DSPs serve the buyer side. Buying ad space in real-time through DSPs gives advertisers the ability to place the ad copy to the target audience in the right time and context.

How does DSP work?

Before using a DSP, an advertiser provides the platform with data about the desired target audience such as age, gender, location, income, etc. Then, the advertiser sets the budget settings. “Daily pacing” option allows to evenly distribute the budget throughout the day, and “lifelong pacing” option permits even budget distribution over the lifetime of the ad campaign. The advertiser may also use a “brand safety” option and block web pages with sensitive content to ensure his ad would appear only on reputable publishers’ sites.
A DSP collects data about available advertising inventory from multiple Ad Exchanges and Ad Networks. The DSP would analyze each inventory to decide whether it is valuable for the advertiser, whether it fits the requirements and targeting settings. If it does, the DSP would automatically calculate the maximum cost of that inventory and send the bid request back to the exchange. The cost of a bid is based on advertiser’s pre-set budgeting data and user information such as location, demographics and browsing behavior. Due to machine learning algorithms and prediction mechanisms, the analysis of the ad impression takes milliseconds.
The power of the DSP is in its ability to automate the decision-making process: decide on which impression to bid and calculate the maximum value of each impression. During the RTB auction, the system programmatically auctions off impressions to the highest bidder.

What are the main features of DSP?

  • Global Reach and Integration

Most of DSPs are integrated with major RTB Exchanges; however, some of them provide access to premium or high-class inventory while others – not. Some DSPs are connected to global Ad Exchanges, whereas others start partnerships with local premium publishers only. However, almost all DSPs give access to a range of inventory worldwide on the desktop and mobile screens and allow media buying in multiple currencies. When choosing a DSP, it is important to know what reach the platform is offering, across which platforms and audiences.

  • Big Data

Each DSP may specialize in different kind of data, like unique first-party data or third-party data that have been collected from DMPs (Data Management Platform). DSPs collaborate with DMPs to get access to audience data and use it for campaign optimization and retargeting. Some DSPs focus mainly on CRM data, whereas others only on the mobile data. Different DSPs offer different audience segments that are available for purchasing within its system. Hence, before choosing a DSP, it is crucial to inquire what data is offered by the DSP, on which segments and how big is the reach for those segments.

  • Targeting Options

DSPs have options to target : contextually (targeting specific URLs based on the topic of the page), geographically (location, county, city, time zone), behaviorally (according to user browsing behavior), demographically (gender, marital status, income, level of education), as well as device targeting (desktop, mobile, tablet), language targeting. Such options as frequency capping (how often the same ad would appear in front of the same user), dayparting (which part of the day) and cookie-level retargeting might also be available.

  • Platform Costs

Every Demand-Side Platform has its own pricing model. The cost associated with a DSP is linked to the price of the campaign and the media budget. Some DSPs would charge a flat fee while others would take a commission (%) of media spend. Other DSPs might have a requirement to purchase a minimum amount of inventory in a certain time period. DSPs might charge on a CPM, CPA, CPE, CPI or a CPC basis.

  • Reporting and Campaign Analytics

Demand-side platforms come with an interface, where advertisers can track the performance of campaigns in real-time. Most of DSPs offer granular statistical reporting on click-through rate, website traffic, page view, engagement rates and so on. Regardless of the fact that the ad campaign is run across different Ad Exchanges at the same time, a DSP consolidates information from all sources and delivers it as a unified report. Reporting ads advertisers helps to see what works and what not and to define a strategy for future campaigns.

  • Technical Support

Different DSPs offer a different level of tech support and tech assistance before, during and after setting up a campaign. Many DSPs provide help in the form of “how-to” manuals, online training or low-budget trial campaigns, while others offer 24/7 online support. In some cases, tech support fees are included into the cost of the DSP; in others, they are considered an extra service.
Managed Campaign Options: Self-service DSP or Full-Service DSP
The advertiser might choose a self-service DSP and manage a campaign autonomously, manually customizing targeting settings and optimizing the budget. Those advertisers who need support with setting up might select a managed DSP (full-service DSP). In this case, the advertiser will get an account manager from the vendor company, who will advise on how to plan a campaign, how to distribute a budget, which targeting options to choose, etc. The other option is a “hybrid” DSP that resembles a self-service DSP but goes together with personalized support services.

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