Demand Side Platform (DSP): What Is It & How Does It Work?

by Isabel Greenfield

8 Min Read

As the advertising world continues to evolve, technology does as well, and sometimes it’s hard to keep it all straight. Programmatic advertising and the tools that go along with it, like demand side platforms, have made it easier than ever for advertisers to access ad inventory across publishers and reach their target audience.

But, what is a demand side platform and how does it work?

What Is a Demand Side Platform?

A Demand Side Platform (DSP) is a software-based platform that allows advertisers and agencies to buy digital ad inventory from multiple ad exchanges in an automated, centralized, and efficient manner using real-time bidding technology.

DSP vs Supply Side Platform

While demand side platforms help advertisers purchase ad inventory, supply-side platforms (SSPs) enable publishers to manage and sell their available ad space programmatically.

SSPs work on the opposite side of the transaction, optimizing inventory pricing and ensuring ads are served to the highest-bidding advertisers.

Learn more about DSP vs SSP.

DSP vs Data Management Platform

Unlike DSPs, which execute media buying, data management platforms (DMPs) focus on collecting, organizing, and analyzing audience data to enhance targeting.

DMPs feed valuable insights into DSPs, enabling advertisers to refine their campaigns and reach the most relevant viewers.

Learn more about DMP vs DSP.

Demand Side Platform Benefits

Why exactly are DSPs so important to the digital advertising ecosystem? Here are the reasons:

1. Streamlined Campaign Control

DSPs offer a unified platform to oversee campaigns across multiple ad exchanges and networks, reducing complexity and making campaign management more efficient. This all-in-one approach minimizes manual work, allowing advertisers to focus on strategy and performance.

2. Precision Audience Targeting

With robust targeting tools, DSPs enable advertisers to reach specific consumer segments based on demographics, interests, and online behavior. This data-driven approach ensures ads are shown to the most relevant audiences, increasing engagement and conversions.

3. Optimized Real-Time Bidding

DSPs leverage real-time bidding (RTB) technology to secure high-value ad placements at the best possible price. This automation ensures advertisers efficiently allocate their budgets while maximizing campaign impact.

4. In-Depth Performance Insights

Comprehensive analytics and reporting features provide advertisers with real-time data on campaign performance, audience engagement, and ad effectiveness. These insights empower marketers to refine their strategies and drive continuous optimization.

5. Maximized Advertising Efficiency

By automating the media buying process and using real-time data to optimize bids, DSPs help advertisers stretch their budgets further. This results in a more cost-effective ad strategy with improved ROI and better overall performance.

How Does a Demand Side Platform Work?

So again, a DSP automates the process of buying ad inventory across multiple sources, streamlining programmatic advertising for advertisers. Here’s how it typically works:

Integration with Ad Exchanges: A DSP connects to various ad exchanges and supply-side platforms (SSPs) to access a wide range of available digital ad inventory from websites, apps, and other digital platforms.
Advertiser Campaign Setup: Advertisers set up their campaigns within the DSP, defining the budget, targeting criteria (such as demographics, interests, and location), bid strategies, and the creative assets to be used.
Audience Targeting: The DSP uses data and algorithms to identify and target specific user segments that match the advertiser’s criteria, ensuring ads are served to the most relevant audience.
Real-Time Bidding (RTB): The DSP participates in real-time bidding auctions on behalf of the advertiser, where ad impressions are bought and sold in real-time based on the advertiser’s budget and targeting criteria.
Ad Serving: Once a bid is won, the advertiser’s creative is served to the user on the publisher’s site or app. This happens in milliseconds, ensuring that the ad is displayed to the user almost instantaneously.
Performance Measurement: The DSP tracks the performance of the campaign in real-time, collecting data on impressions, clicks, conversions, and other key marketing metrics.
Optimization: Based on performance data, the DSP automatically adjusts bidding strategies and targeting criteria to improve campaign performance and ROI. Advertisers can also manually make adjustments based on insights gained from the data.
Reporting: The DSP provides detailed reports to the advertiser, offering insights into campaign performance, audience reach, and ROI, helping advertisers make informed decisions for future campaigns.

In essence, a DSP simplifies and optimizes the digital ad-buying process, making it more efficient and effective for advertisers to reach their desired audiences.

How Does Targeting Work In a DSP?

DSPs employ advanced targeting techniques to ensure ads are delivered to the most relevant users, maximizing engagement and campaign effectiveness. Though these options vary between DSPs, here are some common ways audiences are targeted:

Demographic Targeting: Uses factors like age, gender, income, and education level to segment audiences and craft tailored ad experiences.
Geographic Targeting: Serves ads based on users’ locations, ranging from broad areas like countries to hyper-specific zones like zip codes, enabling precise regional marketing.
Behavioral Targeting: Analyzes online activities, including browsing habits, purchase history, and past engagements, to deliver ads aligned with users’ behaviors.
Contextual Targeting: Matches ads with topically relevant web content, ensuring a natural fit between the advertisement and what the user is currently viewing.
Device Targeting: Optimizes ad delivery based on the type of device a user is on—whether mobile, tablet, or desktop—ensuring a seamless and engaging viewing experience.
Interest-Based Targeting: Leverages insights on users’ hobbies, activities, and preferences to serve ads that resonate with their unique passions.
Retargeting: Re-engages users who have interacted with a brand’s website or app, nudging them to complete actions like making a purchase or signing up for a service.

Demand Side Platforms Examples

Now that we’ve answered the question of “what is a DSP,” perhaps you want to check out a few concrete examples. Below is a list of some commonly used services:

Is Amazon a DSP?

Yes, Amazon operates a DSP called Amazon DSP, which enables advertisers to purchase display and video ads programmatically. This platform allows brands to reach audiences across Amazon-owned properties and a network of premium third-party sites.

Is Google a DSP?

Yes, Google provides a DSP known as Display & Video 360 (DV360), which gives advertisers access to programmatic ad buying across multiple channels. This includes inventory on YouTube, Google’s extensive ad network, and other high-quality publishers.

Is Facebook a DSP?

No, Facebook does not function as a DSP. Instead, it operates within a closed ecosystem, offering its own advertising solutions that do not connect to external ad exchanges or facilitate programmatic buying outside its platform.

Other DSP Examples

The Trade Desk
MediaMath
Adform
Roku Oneview
Adobe Advertising Cloud DSP

How Do Demand Side Platforms Make Money?

There are a few different ways demand side platforms use to make money:

Transaction Fees: DSPs often charge a percentage of the ad spend that advertisers push through their platform, which can also be considered as a technology fee for using the platform’s software and services.
Flat Monthly Rate: Some DSPs charge a flat monthly rate for access to their service.
Data and Analytics Services: DSPs might offer advanced analytics and data insights as additional services to advertisers, generating income by providing valuable data-driven insights and recommendations.
Managed Services: Some DSPs offer managed services where they take over the campaign management for the advertiser, charging for the professional services involved in designing and executing advertising campaigns.
Platform Licensing: DSPs may also license their technology to other businesses or agencies for a fee, allowing them to use the platform under their own brand.
Premium Features: DSPs can monetize by offering advanced features, such as specific targeting capabilities or integration with certain data providers, for an additional cost.

How Does Performance TV Stack Up?

Want the power of a DSP without the complexity? MNTN’s self-serve CTV platform gives you all the benefits of a DSP—automated media buying, premium inventory, and performance tracking—without the hidden fees or black-box algorithms. You stay in control, optimizing campaigns with real-time insights and AI-driven efficiency.

Here’s what you get with MNTN Performance TV:

Premium CTV Inventory – Access top-tier streaming networks with guaranteed, high-quality ad placements—no open exchanges or low-quality inventory.
Automated Optimization – AI continuously refines your bids and targeting to maximize performance without manual adjustments.
MNTN Matched – Advanced audience targeting ensures your OTT ads reach the right viewers at the right time for higher engagement and conversions.
Verified Visits™ Attribution – Ties ad impressions directly to site visits and conversions, giving you full-funnel visibility into campaign performance.
Reporting Suite – Delivers real-time insights on performance, audience engagement, and ROI so you can adjust your strategy with confidence.

Ditch the complicated DSPs—run smarter CTV campaigns with MNTN’s self-serve software—sign up today to get started.

Demand Side Platforms: Final Thoughts

The programmatic world is making it easier than ever for businesses to access available advertising inventory. With the demand side platform definition in hand and an understanding of the technology offerings out there, there is no better time to tap into the world of CTV advertising and reach your target audience where they are watching.

Streaming TV advertising using Performance TV can help alleviate some of the downsides of programmatic buying through a DSP. The extra data and insights CTV provides will allow you to optimize your campaigns along the way and get more from your budget.