Digital advertising is not just about an advertiser placing an advertisement creative on a publisher’s website. It involves platforms around the sell-and buy-side always work to make the most of the advertiser’s RoI and publisher’s revenue.
So, so as to obtain the ideal inventory for their creatives and the ideal ads for their stock, both buy-side and sell-side work with different platforms. One of such platforms is DSP or demand-side platform.
What is a Demand Side Platform?
A DSP or a Demand-Side Platform is a system which delivers demand management to advertisers / buyers. DSPs helps advertisers search for and purchase inventory from the marketplace. Demand-side platforms are also responsible for managing real-time bidding for advertisers. They maintain advertisers informed by sending them updates about upcoming auctions.
DSPs work to create advertiser campaigns successful, like what SSPs do for the publishers. An SSP (Supply-Side Platform) manages inventory for publishers and helps them get a better price and fill rates.
Some well-known demand-side platforms for advertisers are DoubleClick Bid Manager, MediaMath, AppNexus, LiveRamp, and DataXu.
Why Do Advertisers Need DSPs?
Back in the days, advertisers and publishers used to deal one-on-one. In such deals, they used to sit together and negotiate deals. If both parties agreed, an insertion order was signed and then the ads were placed. This was a time-consuming process, and the negotiation was not always appreciated by both the parties.
There was a need for a mediator to conduct the exchange without wasting time and striking a good deal for both parties in the same time. Therefore, the industry evolved and we have DSPs, together with SSPs, and advertising exchanges.
Demand-side platform quickly accountable for handling the buyer’s requirements, leading to profitable campaigns for them.
How does a DSP work?
Advertisers experience strong competition while bidding for impressions. At this time, it falls down on the DSP to battle on their behalf and win the ad impressions. Here is how DSPs work for advertisers:
In real time bidding, the auction begins when a user opens a web page to check the site content. The whole bidding process takes barely a few milliseconds. But there is a lot that happens in these milliseconds–from a user clicking on the site link to him/her viewing an advertisement on the screen.
On the demand side, it starts with the advertiser designing an ad campaign with the DSP. For Example, if an advertiser wants to target users between the age group of 20 to 40 who use Windows OS and are interested in learning programming languages, he/she can create the campaign based on these specifications and demographics
After receiving the effort instructions, the DSP actively starts searching for such users by calling multiple ad exchanges. If a target user appears, the SSP quickly forwards the user’s data to the ad exchange and ask it to find a creative that would be relevant for the consumer.
The ad exchange then contacts the DSPs searching for users with such specifications and conducts an auction. The winning bid is chosen based on the floor price set by the publisher and imaginative is placed. Here, the DSP bids on behalf of advertisers, based on the established budget.
Similarly, advertisers set up numerous campaigns so as to market their product, and increase leads and conversions. And every campaign follows the identical process involving a DSP.
Pros of a Demand-Side Platform
Better targeting: The granular campaign targeting and configurations provided by DSPs help advertisers get leads on valuable users who have high odds of conversion.
Better campaign management: Generally, a DSP uses algorithms to fulfil the needs of the advertiser. This is accomplished by putting the advertiser’s requirement first and looking for the stock accordingly. Advertisers can also check the progress anytime using the DSP’s dashboard.
Access to many different stock: A DSP stays in touch with numerous ad exchanges and always tweaks its applications to improve targeting. This provides advertisers access to various inventory for running advertisements.
Assistance from experts: DSPs usually assign a service person to help the advertiser in the event of technical difficulty or support for any other matter.
Saves time and effort: locating the perfect inventory and placing bids might be troublesome and time-consuming process for advertisers. DSP do the legwork of finding stock and placing relevant ads, allowing advertisers to focus on campaign plans and business development.
Disadvantages of a Demand-Side Platform
Complexity: Sometimes, managing a DSP and product marketing strategy can be overpowering for advertisers. As an example, establishing a targeting campaign and assigning different targeting variables can take time to find out for advertisers. Consider it as a brand new software which requires the advertiser to take out time to understand its use.
Costly for small advertisers: Advertisers need to cover DSPs for their services. This can either be a monthly or an annual charge. Hence, for small advertisers or advertisers using a low budget, this may be a dealbreaker.
What Have We Learned?
With the increase of programmatic buying, technologies like demand-side platforms, supply-side platform, and ad exchanges emerged. Demand-side platform help advertisers manage their bids and advertising campaigns. By finding a valuable impression to placing the ad creative, DSP enables advertisers to buy mobile, search, and video ads from the market.
DSPs also offer better targeting options and save time for advertisers. They works on raising the return on ad spend (ROAS) by making advertiser campaigns successful. However, it can be complex for new advertisers to understand DSP’s functionalities. And advertisers with a small budget might find it hard to pay for the services of a DSP whatsoever.