Demand-side platforms (DSPs) and supply-side platforms (SSPs) have made the process of publishing an ad efficient and nearly instantaneous. Gone are the days when ad buying and selling involved manual insertion orders, in-person meetings, and lengthy contracts.
What is a DSP?
A demand-side platform (DSP) is a type of software used by advertisers to purchase mobile, search, and video ads from a marketplace where publishers list their advertising inventory. These platforms allow advertisers to manage their accounts across multiple real-time bidding (RTB) networks, such as Google Ads and Facebook Ads Manager, without having to log into each network individually. DSPs, along with SSPs, make programmatic advertising possible.
What is programmatic advertising?
Programmatic advertising is the automated buying and selling of digital advertising space using software. Ads are placed contextually based on complex algorithms that analyze user data and behavior. Most online advertising is now done programmatically, either through real-time bidding (RTB) or direct deals.
Real-time bidding (RTB)
Real-time bidding (RTB) is a type of programmatic advertising that enables businesses to automatically bid for ad impressions that are most relevant to their target audience and goals. Advertisers specify who they want to reach with their ads and how much they are willing to spend. The RTB platform then automatically places bids on the advertiser’s behalf against other advertisers who are trying to reach the same audience.
How does RTB work?
When a potential customer lands on a webpage, such as a Google search for a specific product, complex algorithms determine which ad to display in real time. These algorithms use data such as the user’s browsing history, time of day, and IP address to determine which ad is most relevant to the user. The business that bid the highest for the impression based on this data wins the placement, and their ad is displayed to the user.
Programmatic direct is a type of programmatic advertising that involves a direct deal between an advertiser and a publisher, without the need for an ad exchange or auction. This type of advertising is ideal for businesses that want guaranteed ad placements in premium locations, such as the homepages of big-name publishers.
According to Statista, US advertisers’ programmatic ad spend is projected to grow from $106 billion in 2021, a 41% increase over 2020, to almost $142 billion in 2023.
Programmatic advertising shouldn’t be confused with display advertising. It refers to ad sales on search networks, and any other network bought with software. However, when you buy ads through networks such as Google Ads individually, you’re not necessarily using a demand-side platform.
In programmatic direct deals, the publisher provides the advertiser with detailed information about its website visitors, such as demographics, interests, and online behavior. This allows the advertiser to carefully select ad placements that are most likely to reach its target audience. The advertiser then purchases a specific amount of ad inventory at a fixed price, and the publisher guarantees that the ads will be displayed in the agreed-upon locations.
Programmatic direct offers several advantages over real-time bidding (RTB), the other main type of programmatic advertising. With programmatic direct, advertisers can:
- Guarantee ad placement: Advertisers have guaranteed placement of their ads in premium locations.
- Negotiate pricing directly with publishers: Advertisers can negotiate pricing directly with publishers, which can lead to lower prices.
- Target specific audiences: Advertisers can target specific audiences with greater precision.
- Control ad quality: Advertisers have more control over the quality of the ad placements they purchase.
However, programmatic direct also has some drawbacks:
- Higher cost: Programmatic direct deals are typically more expensive than RTB deals.
- Less flexibility: Advertisers have less flexibility to adjust their campaigns in real time.
- Limited inventory: Programmatic direct inventory is typically limited to premium publishers.
Overall, programmatic direct is a valuable tool for businesses that want to reach their target audience with high-quality, brand-safe ads. However, it is important to weigh the costs and benefits of programmatic direct before deciding whether it is the right choice for your business.
How a DSP works
Demand-side platforms (DSPs) operate independently of individual advertising networks. For instance, if you’re managing ads through Google Display Network Manager, you’re restricted to purchasing impressions from Google publishers. Similarly, if you’re using Facebook Ads Manager, you’re limited to buying impressions on Facebook or Instagram. DSPs, on the other hand, transcend these individual networks. By employing third-party software, you gain the ability to purchase, analyze, and manage ads across multiple networks from a single platform, providing you with greater control over your advertising campaigns.
Demand-Side vs. Supply-Side Platform
In the programmatic advertising landscape, demand-side platforms (DSPs) empower advertisers with the necessary information to purchase advertising space from publishers. DSPs don’t directly own or acquire media from publishers; instead, they communicate with supply-side platforms (SSPs) through an ad exchange.
SSPs enable publishers to list their ad inventory on the ad exchange and provide DSPs with detailed information about each impression. Together, DSPs and SSPs streamline the digital advertising landscape, simplifying the process of bidding on ads and managing ad inventories.
Example of Programmatic Advertising
Consider a marketing manager visiting your demo landing page. While she hasn’t explicitly requested a demo, her interest in your product is evident by her visit, making her a more valuable prospect compared to someone who has never interacted with your brand.
In this scenario, your DSP is likely to place a higher bid for her impression. The success of your bid depends on the perceived value of this impression to other businesses. For instance, if this same individual abandoned her shopping cart on an e-commerce website, that e-commerce site might be willing to bid more for an ad that could entice her to complete her purchase. Ultimately, the outcome of the bidding process hinges on the budget of each bidder and the perceived value of the impression.
This entire process is facilitated seamlessly by the SSP, DSP, and ad exchange, acting as intermediaries between advertisers and publishers.
Why Do You Need a Demand-Side Platform (DSP)?
Using a DSP offers both advantages and disadvantages, and each platform has its unique features. It’s crucial to thoroughly understand your options before investing in this type of software.
Advantages of Using a DSP
- Enhanced Efficiency: If you manage campaigns across multiple networks, a DSP enables you to view and manage all your advertising activities from a single dashboard. This centralized approach streamlines campaign management and empowers marketers to reach and activate customers at scale.
- Data-Driven Targeting: Many DSPs collaborate with third-party data providers to provide advertisers with comprehensive insights into their target audience. This extensive data often surpasses what individual networks can offer. Additionally, numerous DSPs allow customers to import their own data from CRM systems or data management platforms (DMPs).
- Pinpoint Targeting Capabilities: The abundance of data available through DSPs equips advertisers with the ability to target their campaigns with extreme precision. This enhanced targeting capability translates into more personalized ads and landing pages, ultimately leading to a higher likelihood of conversion.
- Comprehensive Support: Demand-side platforms generally provide a level of support that extends beyond the traditional help desk-style customer support offered by individual networks. DSPs often offer dedicated account managers and technical support to assist advertisers in optimizing their campaigns.
- Access to High-Quality Inventory: DSPs typically have access to a vast network of publishers, including major networks and exclusive inventory sources. If you’re seeking premium ad placements, a DSP can provide access to a wider range of high-quality inventory options. However, it’s important to compare the inventory offerings of different DSPs before selecting one.
Disadvantages of Using a DSP
- Cost: DSPs can be a significant investment, and it’s essential to understand the minimum monthly or campaign spend requirements before selecting a particular platform. Managed DSPs, such as The Amazon Managed Services DSP, may require a minimum ad spend of $35,000 or more. Self-serve DSP options may have lower minimum spend requirements, ranging from $3,000 to $12,000 per campaign, but they demand a greater time commitment for managing the process.
- Complexity: Integrating a DSP into your existing marketing technology stack can be a complex undertaking. The process involves learning to navigate the DSP’s interface, understanding the nuances of programmatic advertising, and optimizing bidding strategies. Some advertisers may find the overall complexity of DSPs overwhelming and may prefer sticking with individual advertising platforms.
- Time Commitment: Implementing a DSP requires a substantial upfront investment of time to learn the platform, integrate it with your existing systems, and establish effective campaign management processes. Alexa Wieczorek, Growth Marketing Manager at Electronic Arts, highlights the time commitment involved, stating that “DSPs can take 1-2 months or more to ramp up, especially if it’s in-house where you develop your own bidding algorithm.”
Building Your Marketing Stack
For some businesses, a demand-side platform (DSP) can enhance efficiency and expand their reach to potential customers across multiple ad exchanges, including more premium inventory. However, for advertisers with limited advertising budgets, the cost and complexity of a DSP may outweigh the benefits. In such cases, utilizing a select few individual platforms, such as Google Ads and Facebook Ads, may be sufficient.
Regardless of your approach to managing digital advertising, maximizing the effectiveness of your ad spend requires connecting all your ads to relevant and optimized landing pages. Discover how effortless it is to create landing pages for all your advertising campaigns and target audiences by signing up for the Instapage 14-day trial today.
Demand-side platforms offer a powerful tool for advertisers to manage and optimize their digital advertising campaigns across multiple networks, reaching a wider audience more efficiently. However, carefully consider the costs, complexity, and time commitment involved before implementing a DSP to ensure it aligns with your marketing goals and resources.