A Demand-side platform (DSP) is a crucial component of the digital advertising ecosystem that automates the process of buying ad space across online platforms for advertisers. DSPs allow advertisers to manage multiple ad campaigns, target specific audiences, and optimize ad spending to achieve efficiency.
This guide will provide an overview of how Demand-side platforms work and key features to look for.
Key Highlights
- Demand-side platforms (DSPs) are software solutions that automate the ad-buying process for advertisers.
- Real-time bidding, integration with ad exchanges, and Supply-side platforms are key components of DSPs.
- Choosing a Demand-side platform involves looking for advanced targeting, optimization features, support, and contextual brand safety.
- DSPs and SSPs sit on opposite sides of the programmatic process, DSPs on the buyer’s side, and SSPs on the seller’s side.
How Do DSPs Work?
The process involves technologies such as Real-time bidding (RTB) and connection to ad exchanges and Supply-side platforms to simplify and streamline ad buying.
The following list explains the steps of creating a campaign and buying ad space using a DSP:
- The advertiser creates the campaign and sets targeting criteria within the DSP.
- The SSP and ad exchanges send notifications to the DSP that there are ad spaces available.
- The DSP evaluates the available impressions to check for relevance and determines their value. Then, the Demand-side platform sets a bid for the maximum amount the advertiser is willing to pay for these ad units.
- An SSP or ad exchange gathers bids from multiple DSPs and selects the highest bidder.
- If the buyer’s DSP wins the bid, the ad server will display the ad on the user’s device in real time.
- DSPs monitor and optimize the campaign performance, adjusting the bids as necessary to maximize ROI.
This whole process takes place as the page is loading, and can be completed in under 100 milliseconds.
It is important to understand the role of the other components like publishers, buyers, ad servers, Supply-side platforms (SSPs), and ad exchanges that play a critical role in the buying and selling of digital ad space.
Publishers and media owners use Supply-side platforms to organize, manage, and monetize their ad inventory. SSPs gather information about the available ad spaces and send it to ad exchanges.
The auction process happens in the ad exchange. These are digital marketplaces for buying and selling advertising impressions. Ad exchanges connect automatically to multiple buyer-side platforms exchanging information about available ad units and carrying out the transaction itself.
Key Features of a Demand-Side Platform (DSP)
When choosing a DSP, advertisers should first look into their ad campaign needs. Then, look for the features that will help the campaign succeed.
Still, all Demand-side platforms share common components:
- Ad bidder
This component is in charge of placing bids on ad inventory for the advertiser during real-time bidding (RTB) auctions. The DSP can have multiple bidders in geographically distributed data centers so they can receive and respond to bids in real time. Usually, the same data centers where SSPs and ad exchanges are located. To accelerate the response time, bidders usually have a cached version of the ad campaign criteria.
- Integrations
DSPs connect to supply-side sources, such as ad exchanges and Supply-side platforms to get information about available inventory and place bids on it. Often, to refine ad targeting, Demand-side platforms integrate data processing tools, such as Data Management Platforms (DMPs). These solutions allow marketers to leverage data and target the audience efficiently.
- User profile database
This interface is shown in a dashboard where advertisers can create and manage their campaigns. They can set targeting criteria, placement, and frequency capping. This interface also displays the reports prepared by the reporting database.
- Reporting database
This feature stores the data collected by the campaign tracker, processes it, and creates detailed reports. These reports are sent to the user interface for marketers to analyze the data.
- Campaign tracker
This component collects the campaign’s performance data, like impressions, clicks, and notifications and sends this data to the reporting database.
- Banker
This feature controls the campaign spending so advertisers don’t get over budget. In programmatic bidding, multiple bids are sent each second, which increases the chances of overspending. The banker stops the bidding when reaching the budget limit.
- Ad server
Ad servers are the components that display the winning ads to the user, both in SSPs and DSPs. However, in Demand-side platforms, the ad server is also responsible for storing creatives. Ad servers can be external or internal, which means some DSPs connect to an external ad server.
Demand-Side Platform Types
Depending on how the platform delivers the services you have two types of DSPs:
- Self-serve DSPs: These platforms provide the tools for advertisers to buy ad space. The campaign creation, monitoring, and management are the responsibility of the advertiser. These solutions have the advantage of providing more control to advertisers over their campaigns.
- Fully managed DSPs: These platforms provide additional service via an account manager. They work more like an agency, taking control of the campaign. It offers more convenience but also means advertisers relinquish control over their campaigns.
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The Role of DSPs in Programmatic Advertising
Demand-side platforms (DSP) are essential in the landscape of programmatic advertising, revolutionizing the way advertisers buy digital media.
One of the critical advantages of using DSPs is the ability to access vast amounts of data for targeting. The platform uses various data types, including demographic, behavioral, and contextual data, to create highly personalized ad experiences. This success is driving the growth of programmatic advertising, which is forecasted to reach 91% of digital advertising spending in 2024.
While 11 years ago programmatic advertising was only displayed on desktop or mobile, now we are seeing it in digital-out-of-home advertising, Connected TV (CTV).
Perion, a leader in the ad tech industry, leverages DSP technology integrating multiple data sources and AI-driven algorithms to optimize ad performance. A notable case study involves Perion’s successful collaboration with multinational athletic apparel retailer Lululemon. The digital programmatic out-of-home campaign achieved unprecedented results.
The goal of the campaign was to drive brand awareness and increase in-store traffic in Germany. The agency leveraged Perion technology Hivestack to deliver a targeted DOOH campaign. The campaign reached the target audience through outdoor screens in relevant environments, such as gyms, transit stations, and train platforms. The campaign achieved a 640% increase in brand image, a 208% increase in interset, and a 314% increase in footfall traffic.
Discover the Power of Programmatic Advertising with Perion. Contact our experts
How Do DSPs Help Advertisers?
DSPs expand advertisers’ reach to a wider, often global ad inventory.
There are several advantages of using a DSP for advertisers instead of buying ads the traditional way.
- Real-time bidding and automation
The main advantage of a Demand-side platform is, undoubtedly, the automation of the buying process. Real-time bidding helps advertisers ensure they are paying for the ads within budget. It also saves time, because the whole negotiation and buying process takes milliseconds and requires no manual intervention from the advertisers.
- A broad selection of inventory
Instead of having to search and reach publishers personally, advertisers using a DSP can reach multiple suppliers in one single platform. DSPs expand advertisers’ reach to a wider, often global ad inventory. Leading Demand-side platforms also offer inventory segmented according to criteria that help advertisers choose where their ads will be placed.
- Advanced user targeting
Demand-side platforms gather and process information to refine the campaign and the audience targeting. Advertisers using a DSP can ensure the ads reach the right user at the right time. The DSP also uses data to optimize ad frequency and detect remarketing opportunities.
- Reporting and analytics
One of the main characteristics of Demand-side platforms is their ability to consolidate information about the campaign’s performance in a centralized dashboard. Advertisers can analyze and use this information to optimize their campaigns.
How Does a Demand-Side Platform Help Publishers?
While DSPs are platforms designed to help advertisers, they give some benefits to publishers too. When publishers engage a DSP as part of the programmatic selling process, they can optimize their yield for their ad space.
The DSP’s advanced targeting capabilities ensure the ad space goes to the highest bidder. This feature improves yield management and helps publishers monetize their inventory.
What is the Difference Between a DSP and an SSP?
Demand-side platforms and Supply-side platforms are programmatic software solutions that work on opposite sides of the programmatic buying process. While Demand-side platforms help advertisers buy ad space, Supply-side platforms help sellers offer ad inventory.
Retail media | Traditional media | |
Targeting and personalisation | Uses first-party data to deliver personalized ads. | Involves broader, less targeted advertising methods. |
Measurement and attribution | Offers precise measurement and attribution capabilities. | Often struggles with attribution |
Digital integration | It is inherently digital but integrates with physical channels. | Involves mainly offline channels. |
Differences Between Ad Networks and DSPs
Ad networks and Demand-side platforms may seem similar in that both offer audience-targeting, but the capabilities differ greatly. DSPs provide advanced features for real-time bidding and audience targeting. However, ad networks offer targeting to a restricted set of audience segments.
How to Choose a Demand-Side Platform
Look for platforms that provide granular targeting options, such as geolocation, device type, and retargeting, to ensure your ads reach the most relevant audience.
When choosing a demand-side platform, selecting the one that will align with your advertising goals is important. Besides checking it has all the core elements, there are a couple of considerations to make when comparing DSPs.
For instance, the platform’s reach. Many demand-side platforms advertise their global reach as a key advantage. Still, while global traffic is important, it is more important to have the right type of traffic.
Here are other factors to consider when selecting a demand-side platform.
- Support
Check the level of support offered by the platform. Assess whether the platform provides support during the setup only or if it includes ongoing maintenance and technical support. How quickly they respond to advertisers’ requests for technical assistance and resolve issues, is also important.
- Sophisticated targeting
Effective audience targeting is at the heart of programmatic advertising. A robust DSP should offer advanced targeting capabilities, allowing advertisers to reach specific audiences. Look for platforms that provide granular targeting options, such as geolocation, device type, and retargeting, to ensure your ads reach the most relevant audience.
- Campaign management
The DSP should offer a user-friendly interface that allows advertisers to manage budgets, track performance metrics, and adjust bids in real time. Comprehensive reporting features are critical for analyzing campaign effectiveness.
- Contextual brand safety
Ensuring the ads appear in relevant and safe environments is a critical part of maintaining brand reputation. A reliable DSP should include contextual brand safety features that analyze the content of web pages where your ads may appear.
How Perion Demand-Side Platform Helps Advertisers and Publishers
Perion’s technologies connect advertisers and publishers across leading digital channels. Integrating all channels, the platform connects the company’s supply and demand assets, enabling cost-effective ad placement for brands and publishers.
Enhance your marketing strategy with Perion’s programmatic technology.
FAQs
What is a DOOH DSP?
A Digital-Out-of-Home Demand-Side platform is a specialized form of DSP that allows advertisers to purchase digital ad inventory on digital out-of-home ( DOOH) media, such as digital billboards, connected TVs, and screens in public places.
DOOH relies on location and contextual relevance for effective targeting and these DSPs automate and optimize the buying and ad placement process.
What type of user data do DSPs use?
DSPs use various types of user data to optimize ad targeting, including demographic data (age, gender, income level), behavioral data (online activity, purchase history), contextual data (the content users are viewing), and local data.
What is a mobile DSP?
These platforms are specifically designed to manage and optimize mobile ad campaigns. It focuses on buying mobile ad inventory, data like device type, location, and user behavior to target ads on mobile and websites.
How do DSPs make money?
Demand-side platforms can generate income in several ways. Many charge a percentage of the ad spend as transaction fees or a technology fee for using the platform. Other DSPs charge a flat monthly rate while others charge for managed services or upsell advanced analytics services. In most cases, the platform uses a combination of fees and rates.
What is the opposite of a demand-side platform?
The opposite of a demand-side platform is a Supply-side platform (SSP) DSPs are used by advertisers to buy ad space, and SSPs are used by publishers to sell their available ad inventory to advertisers in an automated and efficient manner.
