What Is a Demand Side Platform (DSP)?

There’s no shortage of technology to manage your customer data, customer data platforms, demand side platforms, and data management platforms. But these platforms are not the same. Each serves a different purpose for managing customer data. Let’s look at one that tends to cause confusion—the demand side platform (DSP).

What is a demand side platform? Or DSP? It’s technology marketers use to help them programmatically buy advertising from multiple ad exchanges and ad networks.

An ad exchange is also a technology platform. It enables publishers to sell their ad inventory directly to buyers through a marketplace. Ad exchanges are different from ad networks which work as an intermediary to aggregate ad inventory from publishers and sell it on their behalf (think Google AdSense). In fact, an ad network can also sell inventory to an ad exchange.

Imagine trying to manage your advertising manually for different ad networks or publisher sites. It would be next to impossible to decide where to advertise, coordinate all the content and assets, bid for premium locations, and track performance across campaigns. A DSP solves these challenges by giving you one place to manage all your advertising and doing much of the heavy lifting for you.

Many components make up a demand side platform. For example, the ad server stores the creative and, in some cases, serves the ad. The bidders place bids on inventory. The campaign tracker tracks and manages impressions, clicks, win notifications, and so on. And then, there is a component to manage the budget, reporting tools, and more.

Publishers that offer advertising space list their available inventory using a supply-side platform (SSP)—also known as a sell-side platform. The SSP communicates inventory availability to ad exchanges, providing details of ad impressions (who typically sees the ads). It’s a similar process for ad networks.

The DSP connects with these ad exchanges and decides which ad space to buy based on a brand’s target market requirements, such as demographics, location, buying behavior, and budget. The DSP also knows what type of ad to purchase, including display, video, mobile, or search ads.

With an exchange, ad space is purchased through an auction, where the DSP performs real-time bidding against other brands who want the same ad space. The ad space, of course, goes to the highest bidder.

A few examples of DSPs include DataXU (acquired by Roku in 2019), Amazon DSP, Bidswitch, StackAdapt, Acuity Ads, and many more.

There are several types of DSPs that support various needs:

• Mobile DSP: Supports advertising on mobile devices, including smartphones and tablets. Mobile DSPs track device models, operating systems, screen sizes, and more to help improve the ad experience on a mobile device. Mediasmart and Adikteev are examples of mobile DSPs.
• Self-serve DSP: A self-serve DSP provides the advertiser complete control over the ad buying process, from selecting inventory to targeting and campaign management. Examples include BidMind, Targetoo, and StackAdapt.
• White-label DSP: A demand side platform you purchase outright and re-brand to your company is called a white-label DSP. You can customize it to work for your company, including connecting to the SSPs and ad exchanges you prefer. Examples of white-label DSPs are SmartyAds and Targetoo.
• Managed DSP: A full-service or managed DSP does all the work for an advertiser, including providing an account manager who oversees the campaigns from start to finish.

The benefits of a DSP are clear:

• It’s faster to find and purchase ads, especially if you advertise across many publisher sites and ad networks.
• It’s more efficient. You manage your advertising across all networks and exchanges from a central location, making it easier to manage the budget and track overall performance.
• All ad performance data comes into a central location, improving the ability to target the right audiences in the right locations.

It all sounds good, but a DSP can also be expensive and complex to use. A brand will often have at least one resource dedicated to managing advertising and the DSP (unless you go with a fully managed DSP).

A demand side platform is not the same as a data management platform (DMP). The two work together to improve advertising performance. A DMP aggregates customer data from various third-party sources and some first-party sources that have been anonymized. It then analyzes that data and generates audience segments that help improve ad targeting. The DMP pushes the anonymous audience segments to the DSP and collects response data to enhance its analysis of future segmenting.

Although a DMP sounds similar to a customer data platform (CDP), the two are actually complementary (see DMP vs. CDP article). DMPs are primarily used to support advertising, while a CDP supports all marketing activities. Also, DMP data is short-term, continually updating as advertising data changes, while a CDP stores customer data long-term to help improve the customer lifecycle.

And then there’s the privacy element. CDPs develop a 360 degree view of customers using mostly first-party data with some second-party and third-party data. They also key that customer data on tangible customer attributes (PII). On the other hand, a DMP stores mostly third-party customer data, keyed on anonymous identifiers, like cookie ID (non-PII).

Successful digital advertising comes with placing ads in the right places at the right time for the right audiences. It’s a complex process that requires adtech to do it well. A demand side platform is the best tool to help brands programmatically target and reach their audiences, so it’s critical to understand what it enables and how it can work for your company.