Demand-side platforms (DSP) and supply-side platforms (SSP) make the process of publishing an ad efficient and near-instantaneous. Gone are the days when ad buying and selling included manual insertion orders, sit-down meetings, and contracts.
So, what is a DSP, and how does it work? Let’s dive in.
What is a DSP?
A demand-side platform is a type of software used by advertisers to buy mobile, search, and video ads from a marketplace on which publishers list advertising inventory. These platforms allow advertisers to manage their accounts across many real-time bidding networks—such as Google Ads and Facebook Ads Manager—as opposed to logging into each one individually. DSPs and SSPs enable programmatic advertising.
What is programmatic advertising?
Programmatic advertising is the process of buying and selling ads with software and publishing those ads contextually based on complex algorithms. Most online advertising is done programmatically through real-time bidding and direct deals.
This type of advertising enables businesses to automatically bid for ad impressions that are the most valuable based on their goals.
First, specify who you want to reach with your ads, and how much you’re willing to spend. From there the platform automatically facilitates bids on your behalf against the other advertisers trying to reach the same audience.
How does this work? When a prospect lands on a page, such as a Google search for a type of product, algorithms determine which ad to display in real time. These algorithms use data such as browsing history, time of day, and IP address. The business who bid the highest for the impression based on this data wins the placement.
This kind of advertising is ideal for businesses that want guaranteed ad placements in premium locations. Homepages of big-name publishers, for example, will often sell their ad space via programmatic direct deals. The publisher provides the advertiser with details about its website visitors. If those visitors are the advertiser’s ideal audience, then the advertiser can choose to purchase a portion of publishing space for an upcoming campaign.
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.
How a DSP works
Demand-side platforms are independent of individual networks. If you’re managing ads through Google Display Network manager, you’re buying impressions on Google publishers only. If you’re using the Facebook Ads Manager to buy ads, you’re buying impressions on Facebook or Instagram specifically. DSPs are independent of these networks. Using third-party software that allows you to purchase, analyze, and manage ads across many networks from a single place gives you more control over your campaigns.
Demand-side vs. supply-side platform
In the programmatic advertising picture, demand-side platforms give advertisers all the information they need to buy advertising from a publisher. DSPs don’t own or purchase media directly from publishers but instead communicate with an SSP through an ad exchange.
Supply-side platforms allow publishers to list their inventory on the ad exchange and they communicate with DSPs about the details of an impression. Together they enhance the digital advertising landscape and make the process of bidding on ads and managing ad inventories easier than ever before.
Example of programmatic advertising
Let’s say a marketing manager visits your demo landing page. She didn’t request a demo, but she’s expressed interest in your product by visiting your page. This makes her more valuable to you than somebody who’s never visited your website or interacted with your brand.
In that case, your DSP will likely bid higher for her impression. Whether you win the bid will depend on how valuable this impression is to other businesses. Maybe this same person abandoned her cart on an ecommerce website. If that’s the case, the ecommerce website may bid more to serve an ad that gets her to the checkout page. It all depends on the budget of the bidder and the value of the impression.
This process is facilitated automatically by the SSP, DSP, and the ad exchange between advertisers and publishers.
Why do you need a demand-side platform?
Using a DSP has advantages and disadvantages—and each platform is a little different. It’s important to understand your options before investing in this type of software.
Pros of using a DSP
- Efficiency: If you’re managing campaigns across many networks, a DSP allows you to view and adjust all of your advertising from one dashboard. This enables marketers to reach and activate customers at scale.
- Data: Many DSPs partner with third-party data providers to offer advertisers as much information as possible. Often it’s more than a single network can provide. Additionally, many DSPs allow customers to import their own data from a CRM or a DMP (data management platform).
- Targeting: More data gives advertisers pinpoint targeting capabilities. Better targeting means more personalized ads and landing pages, which means a higher likelihood of conversion.
- Support: Demand-side platforms will often provide support beyond the traditional help desk-style customer support of a single network.
- High-quality inventory: DSPs will have access to the major networks and then some. If you’re after more premium inventory, a demand-side platform may be what you’re looking for. Some have more access than others, though, so it’s important to compare offerings before you pick one.
Cons of using a DSP
- Cost: DSPs can require significant investment, so it’s important to understand the minimum monthly or campaign spend required before selecting an option. A managed DSP, such as The Amazon Managed Services DSP, may require $35,000 ad spend or more. A self-serve option may only require $3,000 – $12,000 for a campaign, but needs a greater investment of time to manage the process.
- Complexity: Whenever you aggregate data, you run the risk of overcomplicating things. Some advertisers may find demand-side platforms too complex to learn. In this case, sticking with individual advertising channels makes sense.
- Time: You need to be prepared to invest time up-front to learn and incorporate new software into your tech stack. Alexa Wieczorek, Growth Marketing Manager at Electronic Arts, says 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.”
Assembling your marketing stack
For some businesses, a demand-side platform can increase efficiency and their broader reach to prospects across multiple ad exchanges, including more premium inventory. For advertising who don’t have a large advertising budget, the cost and complexity of a DSP may outweigh the benefits. In this case, using a small number of individual platforms such as Google and Facebook will likely be sufficient.
No matter how you manage your digital advertising, getting the most out of your ad spend requires connecting all of your ads to relevant, optimized landing pages. Find out how easy it can be to create landing pages for all your advertising campaigns and audiences by signing up for the Instapage 14-day trial today.
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