What Is a DSP? Demand Side Platform Advertising Explained

What Is a DSP? Demand Side Platform Advertising Explained

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 how does a DSP work and what are you really buying?

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.

How Does a Demand Side Platform Work?

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.

What is Programmatic Advertising?

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. 

What Is the Difference Between DSP and SSP?

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.

Why Are Demand Side Platforms Important?

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:

  • Efficiency: DSPs allow advertisers to buy from multiple ad sources through one platform, streamlining the media buying process.
  • Targeting Capabilities: With a DSP, advertisers can leverage data from various sources to target ads more effectively toward specific audience segments.
  • Real-Time Bidding: DSPs provide access to real-time bidding (RTB), a method that allows for real-time decisions on ad placements, enhancing the effectiveness of ad spend.
  • Campaign Optimization: DSPs offer tools for analyzing and optimizing campaigns based on performance data, facilitating better decision-making and improved return on investment.
  • Cost-Effectiveness: By allowing for programmatic buying and precise targeting, DSPs can reduce wasted ad spend and increase the overall efficiency of advertising budgets.

What Are Examples of Demand Side Platforms?

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:

  • 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?

Now that you are a programmatic expert, you may be wondering how Performance TV with MNTN compares to DSP marketing.

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:

  1. Pricing: As mentioned above, DSPs make money in a few different ways, including monthly fees or percentages of overall campaign costs. Unfortunately, there are often hidden fees when it comes to accessing various audiences, which can add up quickly. Performance TV is all about price transparency, as well as access to great tools. Included within the cost is access to a creative suite, as well as a customizable reporting dashboard and the ability to tap into tens of thousands of third-party audiences via its integration with Oracle Data Cloud—no hidden fees allowed.
  2. Reporting: Speaking of the Performance TV reporting dashboard, this is another efficiency that DSPs do not offer. While DSPs provide essential insight into campaign performance, it is often delivered piecemeal, meaning that you’ll be spending more time deciphering performance rather than optimizing it. With the Performance TV dashboard, all of your campaign data is available in one spot and can be customized for the view that makes the most sense for your business. Plus, your information can be added to your Google Analytics account, making it easy to track your CTV campaign along with your other performance channels.
  3. Ad Quality: There is a lot of content out there and it’s not all created equal. When buying through a DSP, there is a lack of transparency as to what content your ads are actually running on. The content may not be brand safe or your ad may run on skippable inventory meaning your creative is not viewed to completion. Performance TV offers Living Room Quality, which ensures that your ad is only running on non-skippable CTV inventory that runs through your smart TV or CTV enabled devices (not a phone, tablet or the like). Additionally, it’s served only on top-tier streaming services so you can be sure your ad is showing up only on quality content. 
  4. Set-Up: DSPs often require a third-party, such as an advertising agency or media buyer, which adds more back-and-forth communication, as well as additional cost. Performance TV keeps it simple: upload your creative, select your audience and flight dates and launch your campaign. In the words of one of our favorite TV personalities, how easy is that?

DSP Advertising: 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 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.