What Is a Sales Funnel and How Does It Work?
by Isabel Greenfield
8 Min Read
7 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 how does a DSP work and what are you really buying?
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.
Still not quite clear? Programmatic advertising has the same fundamentals as any kind of transaction – there is a buyer and a seller. DSP advertising is a tool used on the buying side, AKA the advertiser’s side, of the transaction when buying advertising impressions.
This software allows advertisers to buy media placements across mediums, including display, video, mobile, and even Connected TV, as well as across different publishers.
Advertisers who use DSP advertising are able to set up their campaign, buying ad impressions from an ad exchange (a pool of impressions from various publishers) for a predetermined bid price.
Additionally, they can use the DSP technology to target their audience, whether it’s by demographic (ex. Adults 18-34) or by interest (ex. Have purchased plant-based meat). DSPs use the bid price and audience targeting information to sift through inventory available from the ad exchange and select the best impressions available for your campaign.
Maybe we’re getting ahead of ourselves here. Let’s back up and define—what exactly is programmatic advertising? Programmatic advertising is a way of buying ad placements that is automated.
Instead of the manual process of campaigns being bought, set up, and maintained by humans, programmatic advertising uses ad exchanges and other algorithmic software that allows for machine-driven buying of inventory.
Programmatic advertising helps you to take ad buying into your own hands, allowing you to set up your campaign immediately and to track results in almost real-time. And for publishers with ad inventory, it easily allows them to make these impressions available to advertisers without having to work with a multitude of companies directly.
There are multiple ways that an advertiser can buy advertising programmatically. They can buy guaranteed placement from specific publishers if they want to control exactly where their ads are showing up.
Another popular programmatic option is real-time bidding (RTB), which purchases ad impressions in an auction format. When the software recognizes an ad impression that fits the parameters the advertiser laid out in the demand side platform, such as target audience and content type, it will bid for that placement. If it outbids the other campaigns and wins the placement, the ad will show up seemingly instantaneously for the viewer.
The definition of DSP can be even better understood within the context of its counterpart – SSP.
SSP stands for Supply Side Platform and is the other side of the transaction when it comes to programmatic ad buying. Where you, the advertiser, use a DSP to plug into the ad exchange and purchase advertising, publishers utilize an SSP in much the same way to make their inventory available to you.
The SSP allows publishers to add their inventory to exchanges and set a floor price, meaning that they can guarantee their inventory is sold for a minimum price that aligns with their business goals.
So while advertisers use a DSP to try to get ads at the best (read: lowest) price for their desired inventory, publishers use SSPs to help ensure that they can sell their inventory at the highest possible price.
The DSP, SSP, and ad exchange work together to find a middle ground that works for all parties involved.
We just covered a lot of information there, so I think a quick summary is in order. Why exactly are DSPs so valuable to the digital advertising ecosystem? Here are the reasons:
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:
There are a few different ways demand side platforms use to make money:
While DSPs help you access CTV/OTT inventory, they are not without their faults, many of which Performance TV addresses. While we’ve done an in-depth breakdown of DSP vs. Performance TV, let’s review a few highlights:
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 and traditional cable TV advertising methods. The extra data and insights CTV provides will allow you to optimize your campaigns along the way and get more from your budget.
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