What is the difference between DMP and DSP?

  • Post Category:Mobile Advertising
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  • Post last modified:April 22, 2020

Thanks to technology, the world feels like a small place now. Businesses can now collect data in all their departments and make accurate decisions.
Business strategies, marketing, advertising, and other factors in businesses solely depends on data.
As a mobile marketer, you must understand how data and its timing influence your campaigns. You must act quickly or fail.
We will discuss the differences between a DSP, DMP, and how they work if combined. 
So, why should you stick around?
Because understanding these three factors will enhance your marketing strategies as you can use the tools to bid, serve, and place digital ads.

A little spoiler on the DSP and DMP

Before we get to the nitty-gritty of how the DMP and DSP can work in tandem, it’s worthwhile to note that they can both operate independently. 
Therefore, we will begin by understanding them individually.

What is DSP?

A demand-side platform (DSP) is the medium that bridges the distance between the advertisers and web owners. 
Publishers send their inventory through the supply-side platform (SSP), and within milliseconds, the DSP decides on the best offer for the buyer and purchases the ad space. 
DSPs allow marketers to optimize their KPI, such as effective cost per action (eCPA). They can then tweak things a little to get desired results. 
This has made the advertising process easier by eliminating the middlemen as there’s no need for negotiating, as it is in the traditional advertising methods. 

What is a DMP?

A demand management platform (DMP), helps a marketer to analyze the first hand, second hand, and third-hand data. 

  • First-hand data is the information you collect from your buyers.
  • Second-hand data is the information you collect from partners such as Facebook’s ad manager.
  • Third-hand data is mostly purchased from a data collection company.

In today’s market, where consumers expect specialization, the ability to track all your buyer’s engagements across different platforms is just what you need to boost your sales.
For example, if a firm knows its technical life, shelf life, and service life, it can combine this information with the customer’s data to understand when customers may require a new product. And focus on them when they’re ready to make a purchase.

Programmatic advertising

Collecting data to help in campaign success isn’t a new school of thought. It’s just an update of the old strategies, and that includes the segmentation powered by DMPs.
Programmatic advertising technology is such a system that utilizes the DSP to place and bid ads in real-time. This makes sure that ads are displayed to the right buyers at the right time. 
For example, tracking pixels allows marketers with data of the web visitors who visited an ad but never converted. They can then follow-up on them.
Omnichannel data information that DMPs provides helps companies to personalize their ads more for more conversation rates.

What’s a DSP used for?

They are like brokers between the publishers and advertisers. The DSP’s communicate with supply-side platforms (SSP) via ad exchanges to place ads.
The media buyer uses DSP, which uses RTB (real-time bidding) to negotiate the cost per impression in the SSP. An impression’s value is determined on a CMP (cost per thousand) basis. When the negotiations are over, the ad appears on the publisher’s site.
The best part of a DSP is that it allows an advertiser to control a campaign’s budget as they set their CMP.

What’s a DMP used for?

It enables personalization, segmentation, and real-time insights as well as the buyer’s cycle management. 
The ability to track the customer’s journey and their uninstallation of apps helps marketers to optimize their campaigns to increase retention rates. And customize their customer’s experience with their brand.

DMP vs. DSP: Is there a difference?

To cut the long chase short. Here is a summary of what a DMP is built for:

  • Multichannel and omnichannel marketing 
  • Audience segmentation (demographic, behavioral, psychographic, etc.) 
  • Analysis of retention, engagement, and acquisition 

On the other hand, DSPs aren’t designed to collect huge data. They were created to help marketers to place bids, buy impressions, and optimize campaigns. 

What is a DMP and DSP hybrid?

As technology advances, marketers are opting to combine both the DSP and DMP. This is more convenient and efficient as you can control everything from one channel.
Yet, using the hybrid version or platforms independently depends on the needs of a company.

Why use the combined DSP and DMP version

Here are facts that are in favor of using the hybrid.

  • The marketing team only needs one person to manage the tools, instead of two.
  • It simplifies the analysis of customer data and digital ad purchase
  • Customer spending habits and strategies are forthright.

Why use the DSP and DMP separately

Here are the reasons why some companies still prefer using the two platforms individually.

  • Every customer data is complex and different and requires analysis to understand
  • Report of customer data is vital to your business model as a whole and not the marketing division only.
  • Your customer’s acquisition may be different in all channels, and so is your digital marketing platform.

Are You Still Confused About the Whole DSP and DMP Concept?
The more you research and read, the more you may feel like you’re going down the rabbit hole. 
This is absolutely understandable, the marketing terms and concepts are increasing every day, and it can be overwhelming.
Take it easy on yourself.
Breathe deeply.
And then, visit our blog for a detailed explanation of all the above concepts.
Related:
What is the difference between a DSP and SSP?

If you wish to evaluate us as a mobile advertising platform for your next project, feel free to reach out to us at [email protected]

Alvin

Alvin is the Founder and CEO of MobileAds.com. He is a go-getter, and adventurous guy who believes in working smart to gain success in his business ventures and in life. He also founded RichMediaAds.com and MobileLanders.com.

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