What is a DSP? Everything to Know for Successful Digital Marketing
100 milliseconds is the amount the time it takes for a webpage to load. It’s also all the time that is needed for advertisers to place a relevant ad in front of their target audience. Want to know what is a DSP? Keep reading to find out with Media Shark!
This same process would take days, if not weeks, with traditional advertising methods. But online advertising technology, a.k.a adtech, is changing the way online advertising is sold and bought.
Two of these technologies support programmatic ad placement, demand-side platforms (DSP), and supply-side platforms (SSP). In this article, we’ll focus on DSP.
The technologies are pieces of software that can be described as demand-side platforms or supply-side platforms. As the name suggests, DSP describes the automated purchase of ads. What is DSP?
What Is DSP?
DSP is an acronym for the demand-side platform. Demand-side platforms are an advertising technology that allows advertisers and agencies to buy search, display, mobile, video, and natives ads from various sources using a single interface. It’s a software application that enables advertisers and agencies to manage programmatic ad campaigns.
Adtech, sometimes called martech (as in marketing technology), has been nudging human ad buyers and salespeople out of the picture. As digital platforms for advertising became more commonplace, humans continued to be the buyers and sellers of digital ads. Like most technologies, DSP removes the inefficiencies and costs of manual media buying processes like humans negotiating ad rates and faxing ad insertion orders.
Types of DSPs
There are two types of demand-side platforms: self-serve DSPs and full-service DSPs. Let’s take a look at the difference.
Self-service DSPs are exactly what they sound like. Advertisers are responsible for designing, administering, and optimizing ad campaigns on their own. As a do-it-yourself method, self-service DSP saves money. It also provides the advertiser with complete control of ad their campaigns. Self-serve may be a good fit for businesses without the necessary in-house expertise or advertising budget for a successful campaign.
Full-service DSPs have account managers and sales reps to help advertisers manage their campaigns. The upside of full-service DSPs is that an advertiser can outsource an entire ad campaign. The downside is a bigger price tag and less flexibility to make changes. More humans mean more collaboration, which can slow things down.
How Does It Work?
Before we dive into the actual mechanics of DSPs, let’s make sure we understand the participants in a programmatic advertising transaction. Some advertisers use DSPs, publishers who use SSPs, and the marketplace where these two parties virtually meet up.
Advertisers
Advertisers are the businesses with the product to sell. Advertisers spend the money on ad placement and make money by selling the product advertised. An advertiser begins the DSP process by using the DSP’s campaign builder tool. First, the advertiser establishes the criteria for their target audience; then uploads the ad creatives.
Publishers
Publishers sell ad placements to advertisers. Publishers make money by publishing ads for the products of other businesses to drive customers to the advertiser’s web page. They have an inventory of ads from multiple advertisers wanting to sell their products. Media owners use a supply-side platform, SSP, to call up their ad inventories.
Ad Exchanges
Ad exchanges are the open marketplace where advertisers and publishers meet. It’s a place where billions of ad impressions are negotiated through what is essentially an auction. It allows advertisers to purchase impressions from a variety of publishers that target specific consumers based on historical browsing behaviors and geographic location.
In milliseconds, the ad exchange contacts the DSP about the availability of an ad impression. The DSP automatically evaluates the ad impression to see if it aligns with the advertiser’s audience targeting criteria. If it does, the DSP bids to buy the ad impression in an auction. It’s called real-time bidding or RTB.
The advertiser that offers the highest bid wins the auction, and their ad gets displayed on the publisher’s website. But like all auctions, not everything gets sold. Meaning, in this case, not all publishers ad impressions get purchased by advertisers.
Are Ad Exchanges the Same as Ad Networks?
Although these terms are often interchanged, they’re not the same thing. Ad networks are companies, whereas ad exchanges are platforms. The best way to understand the difference is through an analogy with the buying and selling of stocks.
A stock exchange is an open marketplace to buy and sell stocks. Now think of a stockbroker who calls you at home at night to tell you about a great investment. Ad exchanges are like the stock exchange, and ad networks are like the stockbroker. They have the same ultimate goal: to buy and sell programmatic ads.
There are advantages and disadvantages to both methods. Advertisers and publishers who prefer buying and selling ads in bulk may prefer ad networks over ad exchanges. Advertisers and publishers who need a high level of transparency may prefer ad exchanges.
The Big Picture
Enough of the mumbo jumbo. Let’s look at this from the perspective of a consumer surfing the web; we’ll call her Jane.
Jane is visiting a website. The website (publisher) has an ad inventory available. The website communicates with the ad exchange. The SSP passes along Jane’s browsing history and any other relevant targeting information to multiple DSPs (advertisers). The advertisers bid via their DSPs to have their ad placed on the page that Jane is viewing.
The Nitty Gritty Picture
It’s tough to spend money on something that you don’t understand. Don’t let that hold you back from trying DSPs. Let’s break down the basic architecture of a typical demand-side platform.
The user interface is the dashboard. It’s where advertisers can see and manage all the different elements of their ad campaigns.
The ad server stores and manages the ad codes. Ad servers are in charge of both making split-second decisions about which ad to display on a website and then serving the selected advertisement.
The bidder analyzes the ad inventory suggested by the SSP and offers the correct bid during a real-time bidding auction. The bidder as forecasting capabilities based on historical data.
The data platform keeps track of the interactions between the bidder and the ad server.
The banker, or cashier, ensures that spend stays within the campaign’s budget.
The campaign tracker gathers all the performance data: click-through rates (CTR), win rate, impressions, cost per impression, clicks, etc. The information gathers by the campaign tracker is sent to the reporting database.
The reporting database consolidates all the performance metrics of a marketing campaign. The results can are viewed on the user interface dashboard. Saving business data
The user profile database captures and stores information about website users, such as demographics and conversion data. It helps advertisers to build a target audience.
Advertisers in the market for a demand-side platform should consider these core elements listed above when assessing any DSP.
Benefits of DSP
DSPs have features that dramatically improve an advertiser’s ability to manage and optimize ad campaigns. Targeting, budgeting, and optimizing are the main themes in our list of benefits.
Analytics in the Moment
DSPs allow advertisers to have a real-time view of how their ads are performing. This data is typically presented in an easy to understand visual format. DSPs can consolidate data into one customized report even though an ad might be placed on multiple ad exchanges at the same time
Even better than having hard data to create a marketing campaign is hard data to measure the success of a marketing campaign. How many actual impressions are made? How many clicks? How much spend?
Precise Targeting
Hard data about consumer behaviors and preferences is what advertisers need to develop relevant marketing strategies. After decades of having to make significant advertising investments based on vague marketing research, advertisers can now make solidly informed decisions.
DSPs provide data that allow advertisers to target and segment audiences based on the following factors.
They are targeting by demographics: Choosing a target based on a potential buyer’s gender, level of education, age, occupation, income, race, and marital status.
They are targeting by behaviors: Choosing a target based on a potential buyer’s activities on the Internet, like their browsing history and product purchases.
Targeting by devices: Choosing when, where, and on what device an ad appears in front of potential buyers.
Targeting by locations: Choosing a target based on their country, city, state, or zip code. Also known as local PPC.
Targeting by contexts: Choosing a target based on the website, content, URL, website category, or mobile app they’re visiting.
Retargeting, or remarketing, is another benefit of DSP. It allows an advertiser to follow website visitors after they’ve left the advertiser’s website. The idea is to keep your brand in front of the buyer until they take action.
Back to our potential buyer, Jane!
Jane is visiting a website during her lunch hour while she eats at her desk. She loses track of time because the content is so amazing. Next thing you know, her boss is standing right in front of her. She closes her browser. Is Jane lost forever? No, when Jane gets home, she browses the web for movie ideas, and an ad captures her attention – it’s an ad from the website she visited during lunch. That’s how retargeting works.
Better Budgeting
Digital ad budgets are increasing. Programmatic ads are a growing portion of those budgets.
Programmatic ads are often sold by “cost per” performance-based methods. These methods include:
Cost per Mille (CPM): cost per 1,000 views; most common and often the most affordable method; best for awareness campaigns
Cost per Install (CPI): cost per app installed
Cost per Click (CPC): best for driving traffic to a landing page
Cost per Action/Lead (CPA/CPL): best for campaigns aimed at generated leads
Cost per View (CPV): best for video advertising campaigns
As we reviewed earlier in this article, the actual price paid by the advertiser is determined by the real-time bidding selecting the highest bidder. Advertisers identify a campaign’s spend by adjusting budget settings in the DSP campaign builder tool. As ad impressions become available, DSPs can automatically optimize the bid amount to fit your campaign goals and budget.
Accessing the Globe
DSPs provide access to a massive inventory of ads. Most DSPs provide access to global ad exchanges, giving advertisers access to global markets.
Preventing Ad Fraud
Advertising is big business, and fraudsters know it. Advertisers using DSPs need to learn about ad fraud to prevent wasted advertising dollars. DSPs are answerable for ad fraud, but keep in mind hundreds of thousands of websites move through the ad exchanges. It’s a constant battle for DSPs.
Ad fraud has been around since advertisers began advertising online. Researchers estimated that fraudsters would steal nearly $6 billion from advertisers in 2019. Fraud takes many forms, such as ad placement fraud, malware, and adware, mobile apps ad fraud.
It’s beyond the scope of this article to describe each type of fraud, but let’s take a brief look at ad placement fraud perpetrated by dishonest publishers. A publisher could make an ad invisible on a website, but an impression will still be reported. A publisher could mask the actual website where the ad appeared. Why do either of these matter in the big world of online advertising?
It means that an advertiser is paying for impressions that never actually ‘impressed’ a potential buyer, and it means the advertiser is paying to advertise to an audience that does not align with their target customer.
Are You Ready to Grow Your Digital Media Presence?
Who knew that a simple question like “what is DSP?” could have such a complicated answer!
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