Digital advertising has changed a lot in recent years. Businesses used to have to manually locate and buy ads in many different markets. Thanks to modern ingenuity we now have a platform called DSP. As an advertiser for your business, it’s important to understand DSP meaning and its advantages?
In the early days, Digital advertisements weren’t always as simple to buy or sell as they are now. We know that DSP means Demand-Side Platform, but what is that? In this post, we take a look at DSPs and how businesses can take advantage of using them for digital advertising.
What DSP Means and What It Is
The software that allows an advertiser to purchase from ad exchanges as well as manage their campaigns is called a demand-side platform or DSP. It includes an ad exchange that is a software-based market and is automated where ad publishers sell the stock of ads and where advertisers bid in real-time. This concept is a challenging one for many to grasp due to all the components it includes.
Since 2012 the sale share in real-time bidding has grown exponentially. In the USA, China, and the UK, the figures continue to grow. Besides, research anticipates further growth where RTB will hit $25 billion by 2025. So, the time to understand RTB advertising is now.
When we consider the purpose of the demand-side platform, it is to allow advertisers to buy the impressions across a spectrum of publisher sites. Further, these impressions target specific user groups based on specific criteria, location, for example.
A DSP is a method used by an advertiser to view ad space that is available for purchase and then chooses which it should buy. Google Display & Video 360 competes with Amazon Advertising, Trade Desk Inc., and MediaMath Inc. When an advertiser requires YouTube, most of the time, they must use Google DSP.
You probably already know some vendors that sell DSP technology. Some of them include Facebook Ad Manager, DataXu, X+1, Google’s Invite Media, Turn, along with many others. Some DSPs specialize in specific channels for ads like mobile or video.
How DSPs Work
With a DSP, the advertiser provides the design and the ad content. They decide their target market and provide their maximum budget. The DSP then looks for opportunities for them over all the possible systems and finds ad space for the advertiser at the lowest cost and meets their targets.
The DSP then begins buying the ads until they use all the funds in the budget.
What is the Difference Between an Ad Network and a DSP?
It’s easy to think that Ad Networks and DSPs do the same thing since there are a lot of overlaps. DSPs integrate a lot of what ad networks have traditionally offered. They provide access to a broad array of inventory and include targeting capabilities.
What is DSPs differently is the advantage of being able to buy, serve, and track ads from one place. This platform provides the ability to optimize campaigns easier as well. DSPs have opted to offer a flat fee payment rather than the markup scheme used by ad networks.
What Are the Benefits for Media Buyers to Use DSPs?
When the government spends almost $1.7 million on strategies for media buying, it sends a clear message.
Advertisers want one thing to create an ad campaign that is correctly focused on the target customer so that it achieves the desired outcomes. You can’t do that without the right data and tools, and that is what DSPs are providing, so it makes sense for media buyers to take advantage of it. Some of the benefits include:
World Reach and Unification
The most important thing to learn before partnering with a DSP is what traffic verticals and formats they support. Nearly all DSPs partner with RTB exchanges, and some give access to premium inventory, yet others don’t. As well some DSPs have partnerships with local premium partners, but others connect to international Ad Exchanges.
Targeting Effectively
Demand-side platforms would be missing a step without effective targeting. This step takes user data to make the information relevant to the audience. So what can DSPs target?
- geolocation, county, city, time zone
- gender, marital status, income, level of education, language, interests
- devices in use (cellphone, computer, tablet)
Along with this, many other options can place caps on the frequency of appearance, among others.
Correct Inventory Choice and Brand Integrity
Successful RTB campaigns rely on the correct inventory choice. Since you can pre-define the type of inventory for purchasing, DSPs make it a lot easier. As an example, higher engagements occur with in-app ads over mobile or desktop ads.
By adding some of the applications to the whitelist, an advertiser can make the inventory selection period shorter. It thereby allows for the nearly immediate posting on sites that have the best performance, thus upholding brand integrity. Eliminating insufficient inventory or blocking fraudulent or possibly harmful sources by blacklisting keeps a brand image safe.
The Data: Reporting and Analytics
One of the significant advantages you’ll find is in the data and reporting tools. DSPs give advertisers real-time tracking on the performance of their ad campaigns. Besides, DSPs offer click-through rates, website traffic, page view, engagement rates, among other reporting in a granular statistical reporting format.
It doesn’t matter that the ads run on different Ad Exchanges, DSPs collect data from each source and then consolidates it into a unified report. Data and reporting let advertisers know what’s effectively working and what isn’t.
What’s the Big Difference Between DSPs and SSPs?
Looking at demand-side platforms and supply-side platforms are becoming more complicated. This is because the line is getting blurred. The definitions of what makes a DSP or SSP is evolving.
Currently, the determining factor seems to rely on how an organization sells itself. Many think this system is a terrible way of doing this.
One way of understanding the difference is to look at who the end customer is or who they represent in the marketplace. In a DSP, the end customer is the advertiser. It is the job of the advertiser to find ads that will result in the most impressions and at the lowest possible cost.
While many dislike the use of the word cheap, the fact is the return on ad spend ROAS) is an essential part of the work of the DSP. One of the main elements driving ROAS is the cost of the impression.
What to Look For in a DSP?
There are many considerations when you are looking to partner with a demand-side platform. Let’s look at a few that can help to make a choice that is more straight forward. The perfect platform should have these characteristics:
Autonomous
Is the platform stand out because of its strength, and why? It shouldn’t take a look to understand all it has going for it. Do they have an in-house team of developers and engineers who update their products to improve their abilities?
Impartial
The advertiser must be able to choose an ad supplier freely and objectively. It is the only path to reach the set key performance indicators (KPI). A DSP that is impartial is a perfect platform.
Able to be Modified
When setting an ad campaign, the advertiser should be able to filter or modify out specific ad suppliers. They should be able to choose partners for collaboration that they feel meet their objectives. If your DSP limits your abilities, that should be a sign to keep looking.
DSPs and Real-Time Bidding
Demand-side platforms increase their value exponentially due to the access they have to digital ad space. This access across many different ad exchanges through real-time bidding takes them up a few more notches, too. It results in advertisers getting the most up-to-date data on the impressions for their display ads.
Why is this important? This data means you can reach viewers across many devices, the ones where they are most, and then choose which space is the most critical to your campaign.
Are DSPs Replacing Ad Networks?
The short answer is “sort of,” since much of what Ad Networks offer is now being consolidated under the heading of demand-side platform offerings. These offerings even include access to a broad spectrum of inventory and targeting capabilities.
Traditional ad networks may seem to be disappearing, but in actuality, the lines between ad networks and demand-side platforms are disappearing. Some ad-networks have learned a trick or two, and are offering products that are very similar to what DSPs have. So, gone but not gone is closer to the answer.
The Future for Demand-Side Platforms
In 2020 the display ad spend is expected to exceed US$68.87 billion. This figure is an increase for 2018 by US$20 billion, but that’s just the beginning. By 2021 that figure is expected to rise even more.
Artificial intelligence and machine learning have also impacted advertising platforms and continue to make recommendations based on interactions with consumers. It is astounding that marketers will gain valuable insights from these emerging technologies. The collected data is changing the way marketers nudge consumers in their buying journey.
AI and ML will be able to tell marketers more about ad space placement due to the data they are collecting now. The future for DSPs is just beginning.
Which DSP to Choose?
Find the most compatible DSP for your brand can be as simple as a Google search, or not. These days there are many DSPs out there that can be chosen. It can be very challenging.
You can begin weeding out once you ask these questions:
- What is the pricing structure?
- Do they have an onboarding cost?
- Monthly retainer or percentage of the ad spend?
- What customizations are available (day parting, frequency capping, geo-targeting, retargeting, etc.) for consumer targeting?
- Does the firm have security measures in place to prevent or minimize ad fraud?
- What are the strengths and weaknesses of their technical support?
It will be simpler to decide once you have the answers to these inquiries to find the DSP that is right for you.
Five Mistakes to Avoid
Obviously, to rush head in when you have a lack of experience can lead to errors and ones that could be avoided with timely advice. Keep clear of these that follow aren’t made by advertisers to optimize a campaign.
Disregarding the Demand-side Platform
Without a DSP, it’s impossible to buy the right bid and convincing the customer in real-time.
Lack of Clarity in KPIs
Clear KPIs are imperative for proper optimization by campaign managers. Advertisers must be very clear on the KPIs for RTB campaigns.
Not Hiring an Expert Team
Digital advertising is very complicated; not having the right team or not having a team at all leads to failure. A one-person army can’t achieve all the targets needed.
No Interest in First-Party Data (FPD)
The majority of companies gather FPD based on online and offline communications. This data is critical for marketing. It is used to help advertisements more targeted.
Inflexibility in Channel Selection
Advertisers must run campaigns across many channels. It helps identify which channels or combinations of channels have the best marketing outcomes. So, restricting this is problematic.
Many advertisers get less than optimal results when they make these mistakes, so it’s best to avoid these problems early on.
Media Buying Through a Demand-Side Platform
Understanding how media buying works through a DSP is critical for any advertiser. The question is, do you want to attract new customers and what is the best way to do that. Media buying is one way you can explore.
There are several stages to media buying that you should be aware of:
- Pre Launch
- Campaign Launch
- Post Launch Analysis
It’s important to know what each step entails, to make the most of media buying, and to achieve the best outcomes.
Next Steps
If a DSP seems like the missing piece to your marketing or business associates are suggesting you should look into partnering with one, that’s excellent news. The first step is defining what success means to you. Having a set of goals before you begin is a great way to start.
Media Shark is ready to empower your business and help you understand the DSP meaning and how it fits your business. Get in touch today!
