Demand Side Platform

A demand-side platform (DSP) is a technology platform that automates the purchase of advertising and advertising space and makes it more efficient using different algorithms. A demand-side platform aggregates inventory from various sources, such as [ad exchange|ad exchange networks], [ad network|ad networks], and sell-side platforms (SSP), and calculates the price and delivery capabilities of the advertiser based on data from these networks and real-time bidding.

Demand-side platforms are intended to optimize the purchase of inventory and give buyers the opportunity to use different information for themselves automatically. The goal is to increase campaign efficiency and ensure that ads are only shown where it is most sensible with regard to buyers, for example with the greatest possible reach in different advertising networks and a predetermined maximum price for the advertising. Some DSP’s provide options for targeting and retargeting as well as interfaces to link these services to your own infrastructure.

General information

In the past, inventory purchases were made by people. They selected the network, determined a maximum bid, and provided criteria to deliver the ads to target groups.[1] These steps are automated with a demand-side platform. The DSP aggregates different networks and the inventory that is offered there. It also calculates the inventory price based on RTB data and uses the advertiser’s budget to purchase inventory.

This process is auction-based. The advertiser specifies an upper limit, and the DSP subsequently provides the advertising inventory made available by SSP’s and ad networks.[2] The advertiser can also specify segmentation and other criteria so that the purchased ads are used as sensibly as possible. Depending on the platform, demographic data, search histories, entered keywords, and other user behavior data are read with cookies can be used to control ad placement.

Demand-side platform provider

Known Demand-side platform providers include:

  • Invite Media
  • MediaMath
  • Turn
  • DataXu
  • X+1
  • DoubleClick
  • AppNexus
  • StackAdapt
  • Triggit

How it works

Demand-side platforms are primarily service and technology providers. The offer is aimed at agencies and advertisers. This is the demand side and it has a need for advertising and advertising space. The offer websites are ad networks, ad exchange networks and supply-side platforms (SSP). These publishers make ad impressions available on the demand side by offering them on marketplaces.[3] Both agencies and advertisers can use DSPs to buy display, video, mobile, and search ads. Usually ad impressions are being referred to here. The buyers are offered two main DSP features as advantages:

  • DSPs have access to multiple ad networks resulting in more impressions.
  • DSPs allow direct access to the real-time bidding of these networks, which means that the price per impression is automatically determined by a comparison of supply and demand.

This allows the purchaser to choose the best inventory prices and utilize the reach of multiple ad networks. The purchaser gives the DSP system the corresponding input and the system carries out the purchase of the inventory using the previously defined criteria. These criteria can usually be optimized to increase the efficiency of the campaign. The feedback of the system consists of success measurement with known KPIs such as clicks, sales or leads. Typically, these metrics are constantly monitored to verify the results of the automated system.

Practical relevance

There is a general distinction between self-service platforms and full-service platforms:[4]

  • Self-service DSP: Advertisers and agencies conclude a usage agreement with the provider and are responsible for controlling the tool with their own team. They should have extensive knowledge in online marketing and especially real-time bidding.
  • Full service DSP: Advertisers and agencies do not need their own team to book advertising. The DSP provider controls the tool and performs tasks such as purchasing, ad serving, monitoring and optimization in consultation with the customer.

Similar to real-time bidding, accurate knowledge of these processes is important when a self-service DSP is used, otherwise the campaign’s targeting will not be efficient. If the input is inappropriate or incorrect, the budget can be spent without an advertising effect. Either an agency is implementing the customer’s requirements competently or the advertiser knows exactly what he is doing with the individual adjustment buttons. Bids have to be issued, criteria for segmentation have to be determined, and advertising spaces may have to be included or excluded for the prevention of bad ads.

Demand-side platforms in the actual meaning of the word (full-service DSP) offer their customers interfaces, APIs and graphical user interfaces in order to be able to use the technological advantages of the platform effectively. The actual innovation is the algorithms used in the process. The degree of support performed by the computer (for example data crunching) depends strongly on the provider and their technological expertise. The term programmatic advertising is another term used with regard to such technologies. Realtime Bidding is just a kind of programmatic advertising.[5]

Insofar as some ad networks are also demand-side platforms, without the corresponding algorithms being used, there will be a problem with respect to the DSP single selling point feature. A conflict of interest exists as .[6] In individual cases, agencies and advertisers will have to check whether a demand-side platform meets their requirements for ad impressions trading and provides the required level of transparency and integrity.

Relevance to online marketing

In the last few years, more and more demand-side platforms have taken over the tasks of ad networks. The boundaries between DSPs and ad networks are blurred in the industry. However, the use of proprietary technology and well-functioning algorithms can serve as a distinguishing feature.[7] According to industry experts, DSPs are the next generation of Ad Networks. Critics criticize this for various reasons, for example, a possible conflict of interest with ad networks and other publishers, because there may be co-operation. An independent platform facilitates access to multiple ad networks and is not bound to just a few providers by siphoning off profit margins. This is where the benefits of DSPs become clear. Agencies and advertisers can use factors such as the transparency of the cost-accounting model or the neutrality in the market can be used in the decision for or against a demand-side platform.[8] If these characteristics are respected, demand-side platforms can substantially increase the return on investment.


References

  1. WTF is a demand-side platform? digiday.com. Accessed on 01/19/2016
  2. Here is a quick explanation of how a Demand-Side Platform, or DSP, works adage.com. Accessed on 01/19/2016
  3. Introduction to SSP DSP&Ad Exchange knowonlineadvertising.com. Accessed on 01/19/2016
  4. What is the difference between a full-service DSP and a self-serve DSP? quora.com. Accessed on 01/19/2016
  5. WTF is programmatic advertising? digiday.com. Accessed on 01/19/2016
  6. Teil 2: Real Time Bidding’s Brave New World mediascale.de. Accessed on 01/19/2016
  7. What separates Demand Side Platforms? brandscreen.com. Accessed on 01/19/2016
  8. Not Every Demand-Side Platform (DSP) Is Created Equal: What Is A True DSP? adexchanger.com. Accessed on 01/19/2016

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