What is a Demand-Side Platform (DSP)? – A Complete Guide

By Techfunnel Author - Published on August 23, 2021
Demand side platforms Guide

There wasn’t always such ease in buying and selling ads. Online advertising markets have evolved, automating and optimizing the buying and selling of ad spaces and coordinating supply and demand between ad exchanges.

Publishers can now reach a wider range of advertisers and advertisers benefit from lower prices and better tools to track campaign results thanks to supply-side platforms and demand-side platforms.

What is a Demand-Side Platform (DSP)?

With the aid of automation, demand-side platforms allow advertisers to buy advertising. They are a powerful marketing automation tool because they provide advertisers with a means of buying traffic at scale at a low cost.

Demand-side platforms work in two important steps. Advertisers begin by uploading their creative, selecting targets, and setting a budget. Using the dashboard, you can do all of this.

DSPs search through publishers’ networks to find sites and mobile apps that meet advertiser requirements and bid on their placement on the advertiser’s campaign creative. Within milliseconds, the DSP places the ad, manages the payment, and resolves the bid.

How a DSP Works

A DSP connects to ad inventory supply sources, which means that tons of publishers are making available their inventory. This is highly technical, but in simple terms, a DSP connects to ads. Advertisers can buy advertising space across a variety of publisher sites and apps based on impressions.

Nowadays, the new generation of DSPs do not only connect to ad networks and exchanges like the old ones, but they also support cross-channel media buying.

A DSP can be utilized to access the following platforms:

  • Facebook
  • LinkedIn
  • Direct publishers
  • Instagram
  • Google keyword search
  • Ad inventories

As a result of these new demand-side platforms, media buyers can run top-to-bottom campaigns from beginning to end. Targeting audiences include targeting audiences in each phase of the funnel, from awareness to interest to consideration, and finally to conversion.

In addition to seeing such ads while they are browsing websites or playing games on an app, the person will see them whenever she consumes content on a website.

Before, media buyers managed multiple campaigns from multiple sources such as Google, social media such as Facebook, Twitter, and controlled them from different dashboards. Things have changed, however.

In the new generation of DSPs, multiple channels of advertising are combined into one user interface. DSP platforms enable media buyers to manage campaigns from multiple channels, optimize, analyze, and gain insights onto them in one interface.

Why is Demand-Side Platforms Important?

With demand-side platforms, advertisers can manage their advertising across a large number of real-time bidding networks with little effort, instead of manually contacting hundreds of publishers.

By using automated machines to handle repetitive tasks, marketers can streamline the process of setting up campaigns and managing them.

Why Use a Demand-Side Platform?

A demand-side platform is a marketplace where publishers list their advertising inventory and where advertisers can buy mobile, search, and video ads.

Rather than managing advertising across just one real-time bidding network, as is the case with Google Ads, these platforms allow for the management of advertising across multiple networks. Programmatic advertising is enabled by DSPs and supply-side platforms.

What Are the Main Components of a DSP?

  • Bidder

    As part of a real-time bidding (RTB) process, the bidder is the most vital element of the DSP. In RTB, the bid is executed in milliseconds, so being as quick as possible is very important.

    Various data centers are used by most DSPs to reduce latency. Based on historical data, demand-side platforms produce forecasts of impression bids.

  • Servers that offer ads

    Publishers’ advertising elements are delivered to their websites by the DSP ad servers. It’s not just that. As well as tracking impressions and conversions, ad servers also keep track of a campaign’s performance, allowing it to be optimized.

    Fraud prevention is also included, to detect fake ads. Ad servers can be integrated with a demand-side platform or independent from it.

  • Campaign tracking and reporting

    DSPs need to be able to track and record various data regarding the effectiveness of ads, including impressions, ad viewability, clicks, click-through rates, conversion rates, and ad spends. Ad campaign optimization is then performed using the data from the reporting dashboard.

  • Profiling of users

    Users see the ads served by DSPs and DSPs record information about them. A profile is built over time based on what type of content the user consumes, where he or she clicks on advertisements, and how often they do so.

  • Budget supervisor

    A DSP’s banker or cashier can be referred to as this element. Defining the budget parameters of the campaign, for example, defining a campaign’s maximum budget, is what it does. Rules for how the budget is spent can also be defined by the budget manager.

  • Integrations

    Advertising space is integrated through DSPs and advertising exchanges. They can also integrate with other tools to enhance their functionality, including platforms for managing data, analytics platforms, payment gateways, and brand safety solutions, which improves their risk management abilities.

What Are the Types of Demand-Side Platforms?

  1. Self-serve DSPs

    Advertisers can buy advertising with self-serve DSPs. The advertiser’s team or their agency is responsible for campaign ideation, execution, and reporting.

  1. Full-service DSPs

    When it comes to DSPs, they behave more like agencies. Account managers provide additional services. From the beginning of the campaign to the end, an external team in the DSP takes responsibility. Although the campaign execution is less flexible and controllable, it’s more convenient for the advertiser.

Pros of Using a DSP

  • Efficiency: It makes sense to use a DSP if you manage campaigns across multiple networks. The dashboard provides easy access to all the settings.
  • Data: To offer advertisers as much information as possible, many DSPs partner with third-party data providers. One network is often unable to provide everything.
  • Targeting: The more data you have, the more precise your targeting will be. The better the targeting, the better the post-click landing pages and the greater the chance of conversions.
  • Support: Customers can often receive additional support when using demand-side platforms rather than a traditional helpdesk model.
  • High-quality inventory: In addition to accessing the major networks, DSPs will also have access to various others. You may want to look into demand-side platforms if you want more premium inventory.
  • Enhance brand integrity: If buying from a DSP, marketers have the choice of inventory type. This means that in-app ads will have a higher level of engagement than mobile or desktop ads.

Cons of Using a DSP

  • Some DSPs do not offer such a useful feature as Ad fraud detection. It is, therefore, possible to buy fake impressions. Financial losses may be severe for your business.
  • Some DSPs charge a monthly platform fee along with their inventory costs. Your overall ad spends may increase if your DSP platform has hidden costs.

What are the Differences between DSP and SSP?

Publishers use the supply-side platform (SSP) to reach ad exchanges with their inventory. By using an SSP, publishers will be able to define ad space rates based on the advertiser, as well as filter ads by an advertiser and other criteria.

Demand-side platform refers to the technology used to meet consumer needs. Multiple ad exchanges can be managed by one interface by buyers of digital ad inventory.

A common buyer is a trading desk, an agency, or an advertiser directly. Buyers of digital inventory must be able to bid on them through demand-side platforms connected to SSPs.

In the programmatic ecosystem, DSPs and SSPs are connected to different parts. Demand-side platforms (DSPs) are tools that advertisers use to help manage ad-buying, rather than supply-side platforms that publishers use to automate the decision-making process for whether or not to sell advertising space, which is the supply-side of demand-side platforms.

Final Thoughts

Demand-side platforms are the most suitable for some businesses. Multiple ad exchanges are included, including premium inventory, making it more efficient.

However, it may not be worth it for those advertisers who advertise on just a few platforms to integrate a DSP into their tool stack.

Techfunnel Author | TechFunnel.com is an ambitious publication dedicated to the evolving landscape of marketing and technology in business and in life. We are dedicated to sharing unbiased information, research, and expert commentary that helps executives and professionals stay on top of the rapidly evolving marketplace, leverage technology for productivity, and add value to their knowledge base.

Techfunnel Author | TechFunnel.com is an ambitious publication dedicated to the evolving landscape of marketing and technology in business and in life. We are dedicate...

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