What Is a DSP and How Does It Work?

what is a dsp

In the past, digital ads were bought and sold in a manual manner by real people; publishers and ad buyers. This method of buying digital ads was not only expensive and unreliable, but in some cases, advertisers were not able to buy enough ad inventories for specific ad campaigns.

DSPs were made to make the buying and selling of ads inventories cheaper and more reliable, by programmatic bidding.

What is A DSP?

how does a DSP works

How a Demand-Side Platform works

A demand-side platform (DSP) is a system for advertisers to purchase and manage ad inventories from multiple ad exchanges through a single interface. This is normally done as a real-time bidding process, making the buying and selling of ads cheaper and more reliable.

Today, the term ‘buying’ has now been replaced by the term ‘demand.’ On the other hand, publishers and media owners are now considered as a ‘supply-side.’

Thus, we have the DSP (Demand-side platform), which are used by advertisers to buy ad inventories and the SSP (Supply-side platform), used by publishers and media owners to sell their available ad inventories.

Additional Resources:
Advantages of Programmatic Media Buying
What is a Mobile Ad Server & Why Would You Need It
How to Create HTML5 Banner Ads

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How Does a DSP Work?

The way a DSP works is highly technical, however in simple words, a DSP connects to ad exchanges, where tons of publishers have made their ad inventories available, allowing advertisers to buy available ad inventory placements across a multitude of publisher’s websites and mobile apps based on impressions.

The prices of these impressions are determined by a real-time bidding process (RTB), that takes place within milliseconds, as a user loads a web page or interacts with an app.

Different from the traditional ways of buying media, with a DSP, there is no longer a need for a human to negotiate prices with the publishers, as all of this is done automatically. The impressions will simply be won by the highest bidder.

What’s the Difference Between Ad Networks & DSPs?

Ad networks allow advertisers to buy ad inventory in bulk rather than one impression at a time. Put simply, ad networks gather ad inventories from various publishers, grouping them up and then selling them as slices to advertisers. However, not all ad networks support Real-Time Bidding (RTB).

DSPs are unique as they offer the same capabilities as what ad networks used to provide, with an addition to a suite of audience targeting options. The advantage of DSPs over ad networks is that they provide advertisers with the ability to do real-time bidding on ads, serve ads to a multitude of platforms, track and optimize – all under a single interface.

Some targeting options offered by a DSP include:

  • Geo-targeting
  • Demographic targeting
  • Keyword targeting
  • Contextual targeting
  • Device targeting
  • Re-targeting
  • and more.

DSPs are also used for retargeting campaigns. This is possible because they are able to manage large volumes of ad inventories and recognize ad requests with an ideal target audience, targeted by the advertiser.

Additional Resources:
Ad Server for Advertisers: Why Should You Use It
What is a Mobile Ad Server & Why Would You Need It
How to Create HTML5 Ads

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Self-Serve VS Full-Serviced DSPs

There are two types of DSPs that you need to be aware of. Some DSPs offers a self-serve platform, which is an excellent way to manage your ad campaigns. Then there are managed or full-serviced DSPs, which can be a costly option.

The advantage to using a self-serve DSP is its lower cost entry. You don’t have to commit a large upfront advertising budget to get started. That said, you have to be responsible for the targeting, bidding, budgeting and optimizing of your ad campaign. Some advertisers prefer using a self-serve DSP because they prefer to manage their campaign in their own way.

Full-serviced DSPs on the other hand provides you with account managers that will dedicate their time to manage your campaign. With a full-serviced DSP, you will rely on the account manager towards the success of your campaign, from planning, budget distribution and choosing targeting options.

A full-serve DSP is usually more expensive as you’ll have to commit towards a minimum ad budget per campaign. Choosing to go for a full-serviced DSP means you lose some control of your campaigns. However, there are also advertisers who prefer this option because they do not want to dwell in any technical work.

What Is A DMP?

A data management platform (DMP) is a platform that stores audience data, usually coming from multiple sources. It allows advertisers to create target audiences for their campaign based on 1st party and 3rd party audience data.

A DMP acts as a single platform that consolidates online and offline data from various advertisers, creating demographics, behavioral and affinity segments which are then used as targeting options in digital advertising. Performance data from live campaigns are then fed back into the DMP, improving the accuracy of the data.

Most DSPs usually integrate with a DMP to provide advertisers with super sharp audience targeting options. You’ll find the options to use a DMP within a self-serve DSP interface.

DMPs are becoming increasingly important for advertisers, as it allows advertisers to reach their specific target markets while reducing wastage in advertising.

More on Data Management Platforms (DMP)

Major Demand Side Platforms (DSP)

Every DSP have different features and capabilities. For example, different targeting options and inventories for different traffic like desktop and mobile. Most DSPs work with dynamic bids based on maximum CPM, set by the advertiser.

Some major DSPs we work with are:

Did we miss anything in this post? For any questions, just reach out to us and we’ll be happy to help.

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Additional Resources:
Ad Server for Advertisers: Why Should You Use It
What is a Mobile Ad Server & Why Would You Need It
How to Create HTML5 Ads

 

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2 Responses to What Is a DSP and How Does It Work?

  1. Bidsopt July 24, 2017 at 8:28 pm #

    Thanks for sharing this article. It is very useful to us

    Mobile Advertising

  2. Murthy April 24, 2018 at 4:01 pm #

    Detail post. A very clear idea I have got about DSP and DMP now. Thanks for sharing useful posting.

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