A demand-side platform (DSP) is a software solution that allows advertisers and marketers to purchase digital ad inventory across various ad exchanges, networks, and publishers in real-time, using a single interface. It streamlines the media buying process and helps advertisers to target specific audiences more effectively.
To understand what a DSP is and how it fits into the programmatic ad-buying process, one must understand the entire ecosystem. This diagram from Moloco illustrates it perfectly:
The diagram outlines the process of programmatic advertising and real-time bidding (RTB), illustrating the relationships between different elements in the ecosystem, such as advertisers, publishers, ad exchanges, DSPs, and supply-side platforms (SSPs).
- Advertiser: A business or individual looking to promote their products or services through digital advertising.
- Demand Side Platform (DSP): A software platform that allows advertisers to purchase ad inventory across multiple ad exchanges in real-time, streamlining the media buying process.
- Ad Exchange: A digital marketplace where advertisers (through DSPs) and publishers (through SSPs) buy and sell ad inventory in real-time using an auction mechanism.
- Ad Network: Ad networks act as intermediaries between advertisers and publishers, aggregating ad inventory from multiple publishers and selling it to advertisers.
- Supply-Side Platform (SSP): A software platform that enables publishers to manage, sell, and optimize their ad inventory across multiple ad exchanges.
- Data Management Platform (DMP): An optional centralized platform that collects, organizes and analyzes large volumes of data from various sources. It enables both advertisers and publishers to create audience segments based on user behavior, interests, and demographics, helping them target ads more effectively and efficiently.
- Publisher: A website or app owner that displays ads to monetize their content.
How Does Real-Time Bidding and Programmatic Advertising Work?
- The advertiser sets up a campaign in their chosen DSP, including targeting criteria, budget, and creatives.
- When a user visits a publisher’s website or app, the publisher sends an ad request to the ad exchange via their SSP, including details about the user and the available ad space.
- The ad exchange matches the ad request with relevant advertiser campaigns in real-time.
- Advertisers, through their DSPs, bid on the ad impression based on the targeting criteria and their bidding strategy.
- The highest bidder wins the auction, and their ad is served on the publisher’s website or app.
- The user visits a publisher’s website or app.
- The publisher sends an ad request to the ad exchange via their SSP, including information about the user and the available ad space.
- The ad exchange matches the ad request with relevant advertiser campaigns, and an auction takes place.
- The highest bidder wins the auction, and their ad is served on the publisher’s website or app.
- The user sees the ad, and if they find it relevant or interesting, they may click on it, resulting in a visit to the advertiser’s website or landing page.
A DSP fits into an overall marketing stack as a tool for programmatic advertising, complementing other marketing components like customer relationship management (CRM) systems, content management systems (CMS), marketing automation, and web analytics tools.
Why Do Companies Implement A DSP?
There are four key challenges that a DSP can overcome for a company looking to better invest and track its advertising budget:
- Fragmented ad purchasing: Buying ad inventory across multiple networks and publishers can be time-consuming and inefficient.
- Ineffective targeting: Companies struggle to find and reach the right audience segments for their campaigns.
- Difficulty in managing budgets: Allocating and optimizing budgets for different campaigns and platforms can be challenging.
- Lack of real-time insights: Companies need access to real-time data and analytics to make informed decisions and optimize their campaigns.
What Is The DSP Implementation Process?
There are quite a variety of features, functionality, targets, and integrations available for every DSP, so selection and implementation of the platform within your MarTech stack should be a careful process.
- Evaluate your needs: Determine your advertising goals, target audience, and budget to choose the right DSP for your business.
- Research and select a DSP: Compare different DSPs based on their features, costs, and target companies to find the best fit.
- Set up the account: Create an account with the chosen DSP and set up your payment information.
- Create and upload your creatives: Design your ad creatives and upload them to the platform.
- Set up targeting and bidding: Define your targeting criteria, such as demographics, location, and interests, and set your bidding strategy.
- Launch and optimize campaigns: Launch your campaigns and monitor their performance using real-time analytics, making adjustments as needed to optimize results.
How To Evaluate Your DSP Effectiveness
Monitoring these KPIs helps you evaluate the performance of your DSP selection and investment, ensuring that you’re maximizing the efficiency and effectiveness of your digital advertising campaigns for your desired action. Actions may be tracked by cookie tracking, click-tracking, landing page conversion-tracking, phone call tracking, or promotional code redemption.
- Effective Cost Per Action (eCPA): Measures the average cost of acquiring a desired action (e.g., conversion, sale, sign-up) through the DSP. A lower eCPA indicates a more cost-effective campaign.
- Effective Cost Per Click (eCPC): Represents the average cost per click for your campaign. A lower eCPC indicates that you are paying less for each click, making your campaign more cost-effective.
- Cost Per Mille (CPM): Measures the cost per thousand ad impressions. A lower CPM means that you’re paying less for every thousand times your ad is shown, which can indicate better value for your ad spend.
- Click-Through Rate (CTR): The percentage of users who click on your ad after seeing it. A higher CTR indicates that your ads are more appealing and relevant to your target audience.
- Conversion Rate (CVR): The percentage of users who complete a desired action (e.g., purchase, sign-up) after clicking on your ad. A higher CVR indicates that your campaigns are driving more valuable actions from users.
- Return on Ad Spend (ROAS): The revenue generated from your advertising campaigns divided by the total ad spend. A higher ROAS indicates a more profitable investment in the DSP.
- Reach and Frequency: Reach refers to the number of unique users exposed to your ads, while frequency measures the average number of times a user sees your ad. Optimizing reach and frequency ensures that you’re reaching a broader audience without overexposing your ads.
- Viewability Rate: The percentage of ad impressions that were actually viewable by users (e.g., not hidden or below the fold). A higher viewability rate indicates that your ads have a better chance of being seen and interacted with by users.
- Inventory Quality: Evaluating the quality of available ad inventory, such as brand safety, viewability, and ad placements, ensures that your ads are displayed in appropriate contexts and have a better chance of generating positive results.
- Platform Features and Capabilities: Assess the DSP’s targeting options, reporting and analytics tools, optimization features, and integrations with other platforms in your marketing stack.
A List of Leading DSPs
- Adobe Advertising Cloud – Advertising DSP is the first independent demand-side platform that brings cross-screen and cross-channel integrations for planning, buying, measurement, and optimization. It’s the only omnichannel DSP that supports connected TV, video, display, native, audio, and search campaigns.
- Google Display & Video 360 (DV360) – Part of the Google Marketing Platform, DV360 enables advertisers and marketers to plan, execute, and manage their programmatic ad campaigns across various channels like display, video, native, and more.
- MediaMath – a leading omnichannel demand-side platform that empowers advertisers to reach and engage their target audiences across various channels, including display, video, mobile, and social media. With its advanced AI-driven optimization, granular targeting, and customizable reporting capabilities, MediaMath’s DSP enables effective, data-driven marketing strategies that deliver better results and higher return on investment.
- Microsoft Xandr – Microsoft’s DSP, in partnership with Xandr, offers premium programmatic advertising solutions that enable advertisers to access high-quality inventory and reach their target audiences across Microsoft’s properties and Xandr’s marketplace. With advanced targeting options, extensive reach, and data-driven insights, this DSP delivers highly effective and personalized ad campaigns that drive better engagement and performance.
- The Trade Desk – The Trade Desk is a buy-side platform providing access to all RTB inventory for display, television, video, social, mobile, and more. Media buyers using our products can run campaigns in every online media channel and report on how each channel combines to influence their customer.
- Yahoo! Advertising’s DSP – now part of Verizon Media, provides a unified programmatic advertising platform that allows advertisers to manage and optimize campaigns across diverse channels, including display, video, native, and mobile. Leveraging Yahoo’s extensive inventory, data-driven targeting, and advanced optimization capabilities, this DSP helps advertisers reach their target audiences effectively and efficiently while maximizing their return on ad spend.