Demand Side Platform (DSP) – A beginner’s guide

It is now very much easier to buy and sell ads online than done in a conventional manner. Over time, online advertising has streamlined and optimized the process of buying and selling spaces. With the advent of Supply Side Platforms (SSP) and Demand Side Platforms (DSP), publishers can access an extensive reach of advertisers. Advertisers can benefit from lower prices and robust tools for tracking ad performance.

The Demand Side Platform (DSP) is a programmatic advertising platform that enables advertisers and other media buying agencies to bid automatically on display, video, mobile, and search ad inventory from various publishers. By automating the decision-making process determining how much to bid for an ad in real-time, DSP makes the ad-buying process significantly faster, cheaper, and more efficient. DSP’s main unique selling point is that advertisers can target custom cohorts across several publishers, utilizing DSP’s targeting capabilities rather than buying ad spaces from publishers. A robust DSP makes it much easier to control and track all digital ads in one place.

The importance of DSP

DSP facilitates managing advertising across several real-bidding networks, thereby eliminating the need for advertisers to manually contact different publishers with advertising offers. By this, advertisers are relieved from the laborious task and can focus their time crafting efficient marketing campaigns.

The working of Demand Side Platform

Advertisers mainly use DSPs to replace manual ad buying through full-fledged real-time bidding platforms. Below is a summary of how DSPs operate.

1. The process starts with advertisers who upload the ads they plan to publish  after selecting their target audience

2. Ad exchanges and supply-side platforms (SSP) make publishers’ ad inventories available to DSPs.

3. SSP offers ad inventory to DSP through ad exchanges which bids on the impression based on relevance to the targeting criteria.

4.The advertiser then places real-time bids in competition with other advertisers for the ad impressions.

5. Finally, the DSP will buy the ad inventories, and the ad is shown on the publisher’s site.

This whole process is undertaken in milliseconds

The main components of DSP

We can now discuss briefly about the main components of DSP.

1.Bidder– Bidder is the utmost major component of DSP as it places bids on ad servers on a real-time bidding process.  DSPs will be equipped with several bidders to ensure that they can receive and respond to bids from SSPs and ad exchanges located in the same data center within the required timeframe (under 200ms)

2. Ad Server– The ad server is another vital component of DSP as it tracks the conversion and impression data, facilitating ad campaign optimization. It is possible to detect false advertising inventory using fraud prevention features in an ad server. Some DSPs have their own ad servers, while others integrate with external ones. 

3.Campaign Tracker and Reporting – This essential element of DSP effectively tracks and records the ad effectiveness, comprising various factors such as ad impressions, ad viewability, clicks, CTR conversions, ad spend etc. These parameters are presented on a reporting dashboard to optimize the ad campaign.

4.User Profiling – Whenever a viewer visits the DSP-served content, DSP records their information. As a result, it develops user profiles that allow them to categorize and attribute some traits and characteristics depending on what content they use, where they click on ads, and what content they consume. Marketing campaigns can be tailored and ads can be optimized more efficiently using this information.

5.Budget Manager – Essentially, this component is the banker of DSP, allowing the advertiser to specify the budget parameters for the campaign, such as determining the maximum budget for the campaign and the rules for spending it.

6.Integrations – In addition to integrating with ad exchanges and Supply Side Platforms (SSP) for ad space, DSPs also integrates with Data Management platforms, analytics platforms, and payment gateways to ensure effective risk management.

7.Ad Exchanges and SSP integration– A capable DSP can be connected to multiple ad exchanges and supply-side platforms, facilitating a comprehensive cross-channel reach from a single platform by consolidating and centralizing the ad-buying process.

Now we can briefly discuss about the different kinds of DSP’s

1.Self Service DSP – Through efficient programmatic advertising methodology, advertisers can buy ad impressions effortlessly and economically through Self -Service DSPs. Advertisers mainly sign up for self-service DSP with a primary motive for ideating, executing, managing, and reporting marketing campaigns, effectively eliminating third parties.

2.Full-Service DSP – Integrated with an external team, a full-service DSP takes responsibility and controls the marketing campaign from start to end.  Although this is a convenient alternative to self-service DSPs for advertisers, it is more expensive and gives them less control and flexibility over campaign execution.

Advantages of DSP to advertisers

Here are some of the benefits advertisers and media buyers can reap by using DSPs to execute their campaigns efficiently

1. Automation through Real time Bidding (RTB)- Within milliseconds of the user loading the page, the ad impression is analyzed, and the bid is placed based on budget, value, and target. This whole process is streamlined and automated effectively through RTB.
2.  Broader range of publishers and ad inventory – In contrast to working directly with publishers, advertisers can reach a wide range of publishers through a DSP, getting access to a more diverse and global ad inventory. Often, ad inventory is categorized by different traits and characteristics, which helps brands choose carefully where to place their ads
3. The user activity data that DSP collects is used to enhance targeting, improve ad rotation and provide remarketing capabilities.  A robust user-targeting functionality allows advertisers to reach the right users across all digital platforms they use.
4. Advertisers appreciate having access to a centralized dashboard where they can gauge the performance of their marketing campaigns. With this valuable information, advertisers can optimize their campaigns to be pertinent and valuable to their target audience.