Demand Side Platform (DSP): A Simple Explanation

From tiresome days of boardroom meetings for finalizing manual ad insertion to programmatic ad placement, online advertising has evolved leaps and bounds over the decades. Advertisement buying and selling in the programmatic era now rely on several complex algorithms that are managed within simplistic interfaces. One such interface that enables advertisers to buy ads online is the Demand Side Platform (DSP).

In this blog, we will discuss:

  1. 1. What is the Demand Side Platform (DSP)?
  2. 2. How Does a Demand Side Platform Work?
  3. 3. DSP vs. SSP: The Difference
  4. 4. The Role of Data Management Platform (DMP) for DSP
  5. 5. Key Features of a DSP

What is the Demand Side Platform (DSP)?

Demand Side Platform is software for advertisers (or ad companies) to automate the buying of ad impressions. It is an interface that manages the interaction of marketers with ad exchanges and data exchanges. Along with image banners, it is capable of running ad impressions for other Rich media formats and video.

An ad exchange is the marketplace for ad impressions and enables you to bid for buying ad impressions in the available inventory. Data exchange for a DSP is usually interaction with Data Management Platforms, which helps in targeting the intended audience. There are a series of complex algorithms that power these exchanges for a Demand Side Platform to faster execution, easy optimization, and efficient budget utilization.

DSP offers a dashboard that enables advertisers to serve ads, adjust Real-time bidding on ads, track ad performance, and optimize them. With custom KPI metrics available for performance tracking, Demand Side Platforms are capable of running ads for full-funnel requirements (branding, user acquisition, and retargeting).

How Does a Demand Side Platform Work?

A Demand Side Platform facilitates the transaction of ad impressions. It does not own media, but it connects the advertising companies with the publisher. In a way, it replaces the traditional role of ad networks with the dashboard, where the advertiser can adjust their campaign using by defining the target audience, bid amount, overall budgets, ad format, and other such parameters.

In the programmatic (or automated) ad model, DSP provides advertisers the pieces of information necessary to purchase ad space from a publisher. It is delivered by communicating with a Supply Side Platform (software that helps publishers to sell their ad impressions) through an ad exchange. Ad Exchange works as a mediator between the Demand Side Platform and the Supply Side Platform.

How Demand Side Platform (DSP) Works

In simpler terms, DSP helps you choose the audience and the ad expense. Relying on the real-time bidding process, the DSP decides the price to serve ads to the target audience while they surf across the internet. A DSP can run ads to target users across devices and platforms. It implies that you can target the users on their smartphones as well as desktops while they are using an installed app or exploring websites.

DSP vs. SSP: The Difference

Demand Side Platform and Supply Side Platform work on similar technology to a great extent, but their end-users are different. In an upside-down view of the programmatic ad selling, the DSP may look like SSP and vice versa. This is the reason why these two platforms are often confused. Here are some differences between the DSP and SSP:

Demand Side Platform (DSP)Supply Side Platform (SSP)
As Demand Side Platform aims to buy the ad space, the approach is more buyer-centric, i.e., buy more ad space in less amountSupply Side Platform, often referred to as the seller-side platform, tries to sell the ad space to the highest bidder.
Since the ad performance depends a lot on quality and optimization, DSPs offer a range of options to narrow down on high-quality ad impressions.Focus on the quality of buyers is limited at the SSP end. They are concerned that the ad doesn't hurt the brand of the inventory, which is not a fundamental challenge generally.
DSP may adopt different KPIs depending on the goal of the advertiser's campaign.SSP tend to sell the spaces on limited KPIs, such as Cost per Mille and Cost per Click.
DSP offers multiple functions on the interface for buying, serving, and tracking.SSP offers functions limited to advertiser categories and setting margins/ minimum bid.

The Role of Data Management Platform (DMP) for DSP

As mentioned above, the Demand Side Platform interacts with data to pick the target audience. This is where the Data Management Platform (DMP) comes into play. DMP’s collected data points of the audience help in the precision of targeting with the ads. To leverage this, DSP is layered with a DMP which maintains demographics and user behavior points of various devices and users.

Applying these data points in the algorithm enables the DSP to bid for the impression accordingly. While there are several bidders for an ad impression, the highest bidder wins it. However, the precision in targeting allows the advertiser to serve ads to selected users only, which eventually leads to reduced cost of the ad.

Realtime Bidding in Demand Side Platform (DSP)

Key Features of a Demand Side Platform

Campaign Management: Campaign management allows advertisers to track campaign performance conveniently. When your campaign is run with different ad exchanges, the availability of a holistic campaign within the DSP helps you make the right and timely decisions.

Audience Targeting Options: Competitive market and tight budgets mean that advertisers have to be pinpoint accurate in choosing their target audience. The richer your DSP offers the option to target the audience, the better it is for your ad performance. Demand Side Platform, like RevX, is powered by Audience Intelligence to build smarter campaigns and add more precision in targeting.

Bidding Strategies: Even though DSP automates decisions, bids, and purchases in real-time, there is a lot you can control with the bidding strategies. Different options (such as fixed price, dynamic, and options) can train your DSP that's powered by Machine-Learning to bid better and access vast numbers of available impressions.

Real-time Analytics: As online advertising is highly dependent on data and real-time decisions, it is essential to remain aware of your ad performance with real-time analysis. It helps you make moment-based marketing decisions to scale campaigns and gain higher Returns on Ad Spend (ROAS).

Access to Premium Inventory: One of the most crucial functions of the Demand Side Platform to avail the relevant inventory on which quality users are likely to engage. Access to premium inventory is available for DSP when they have partnered with leading ad exchanges.

Creative Support: Utilization of different ad formats and creatives can be a significant contributor to your ad performance. With creative support available within DSP, you can see how your ads will appear on different platforms to the users.

Final Note

Demand Side Platform aims to enable an advertising environment that is easy to use for marketers. Even though with Artificial Intelligence and Machine Learning empowering core functions of Demand Side Platforms, there are several complexities in algorithms to deliver better ad performance. DSP introduces several advantages to your ad campaigns, such as efficiency in the budget, better data utilization, high-quality inventory, among others.

To see how RevX Demand Side Platform can perform for your advertising campaigns, book a demo now. Write to us at marketing@affle.com.

Reference

1. Demand-side platform - Wikipedia

Nishant kadian

Nishant Kadian takes care of content marketing for Affle. With RevX, he likes sharing his learning on the programmatic ad technologies that enable advertisers with branding, user acquisition and retargeting.

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