Advertising

DSP, SSP, and Ad Exchange: What’s the Difference?

7 Min Read

Understanding programmatic advertising is understanding the individual technologies that combine to create it: DSP, SSP, and ad exchanges being key components. Programmatic advertising has enabled a myriad of businesses to advertise across platforms without having to engage an expensive third party like an advertising agency. Below we walk through the basic components of programmatic advertising—as well as why there may be better solutions out there when it comes to your Connected TV buy. 

DSP vs. SSP vs. Ad Exchange

A quick Google search of “programmatic advertising” or any of the associated terms can be enough to make your head swim. Between the acronyms and the confusing charts, it can feel overwhelming, but it doesn’t have to be. Looking at each step of the process of buying a programmatic ad, from DSPs to Ad Exchanges and SSPs, can help simplify the programmatic landscape. After all, programmatic was intended to improve the ad buying process for advertisers and publishers alike, rather than confuse.

Real-time Bidding & Programmatic Advertising

Real-time bidding (RTB) and programmatic advertising are often conflated but are not exactly the same thing.

Programmatic advertising is a way that advertisers can buy ads without having to work directly with media buyers or advertising agencies. Instead, they use technology, much of which we’ll get into in a minute, to buy their ads and target their audience. This eliminates human error and gives more control to advertisers, while also allowing publishers an opportunity to make available their unsold inventory.

Real-time bidding is a specific type of programmatic advertising. RTB is an auction for available inventory. If an available placement matches the appropriate attributes for a campaign (think: within the advertiser’s target audience and within premium content), the advertiser’s platform will bid on the impression. This ad impression may fit into multiple advertisers’ criteria, meaning that there will be multiple bids on the placement. The highest bidder is what will be seen by the viewer. While this may seem like quite a few details to parse out, this happens almost instantaneously for the viewer.

Advertisers may also use programmatic advertising to buy from a specific advertiser and secure placements ahead of time. In this case, this would not be considered real-time bidding, but is still a type of programmatic advertising.

• Learn More: Cable TV Advertising Rates Explained

What is an SSP?

SSP stands for supply-side platform. A supply-side platform (SSP) is a software that enables publishers to make their inventory, including display, mobile, and CTV, available to advertisers. Rather than needing to work with each advertiser individually to share what inventory is still available, publishers can essentially add their available impressions to a marketplace to allow access to anyone looking to advertise.

SSPs also allow publishers to ensure they are offering their inventory only when it makes sense for their business. They can set floor pricing to ensure that their inventory is only being sold at a price that works for their specific goals. 

What is a DSP?

So what is a DSP vs. SSP? DSP stands for a demand-side platform. Where a supply-side platform is a tool for publishers, a DSP is a piece of software that allows advertisers to access available advertising inventory. Advertisers can use a DSP to buy inventory across display, mobile, and CTV/OTT.

Within the demand-side platform (DSP), advertisers can set the desired amount they want to spend, outline campaign flight dates, and select their target audience. The DSP will work to find available impressions that fit within all of these criteria. Since the cost to use a DSP is often much lower than the cost of engaging an advertising agency, they allow small and medium-sized businesses to access inventory that their larger competitors may instead be buying through a third party.

What is an Ad Exchange?

Now that we’re clear on an SSP vs. DSP, what about a SSP vs. ad exchange? Or DSP vs. ad exchange for that matter? An ad exchange is a marketplace of ad impressions. Both advertisers and publishers can utilize this space to buy ad impressions or make their ad impressions available respectively. This marketplace is available to anyone who is looking to advertise across display, video, mobile, and CTV, whether that’s a small or medium-sized business owner or an ad agency.

An ad exchange makes it easy for advertisers to determine where to find inventory, without having to reach out individually to a variety of publishers, and publishers can make their inventory available to monetize every impression rather than waiting to be contacted directly.

How Do They Work Together?

With all the individual pieces in place, how do all these tools work together?

A DSP, SSP, and ad exchange work together to get ad impressions live. A publisher will make their inventory live with the use of an SSP to essentially “plug in” to an ad exchange. From there, an advertiser will use a DSP to connect to the ad exchange to determine what ad impressions fit the criteria outlined within the setup (as a reminder, this may include audience targeting, inventory type, etc).

When it comes to the DSP vs. SSP, they have slightly different objectives. The publisher is looking to sell their inventory at the highest price possible, while the advertiser is looking to minimize their costs and buy at a lower price. While it may seem like an SSP vs. DSP standoff, the SSP and DSP work together to balance out the pricing and make sure the advertiser’s bid price and publisher’s floor prices are taken into consideration before an impression is purchased. 

• Learn More: What is OTT Advertising? Here’s All You Need to Know

How Does Performance TV Fit In?

SSP vs. DSP? All clear. A DSP vs. ad exchange? Check. But where exactly does Performance TV fit into all this? Similar to a DSP, Performance TV allows advertisers to access TV advertising inventory, in this case, specifically Connected TV inventory. However, there are some advantages to Performance TV.

1. Set-Up: Performance TV keeps it simple to set up a campaign in just a few steps. Upload your creative then select your campaign parameters, including target audience and flight dates, and you’re ready for launch. DSPs, on the other hand, often require enlisting a third-party, such as a media buyer, which comes with additional costs and can cause delays or lead to human error.
2. Ad-Quality: Performance TV runs on Living Room Quality inventory, meaning that your CTV ads will only run on non-skippable CTV inventory on a smart TV or a CTV-enabled device. Ad exchanges have a lot of inventory available and not all of it is of the same quality. Your ad may run on an easily ignored screen like a web browser, end up in skippable inventory or play before unsafe, user-generated content you may not want your brand aligned with. When running a programmatic ad campaign, it’s not always clear exactly where your ad is being shown, which can lead to wasted ad spend.
3. Reporting: Performance TV is all about the numbers, with TV campaign tracking that you can’t get anywhere else. When running a campaign on Performance TV, you’ll have access to essential campaign numbers in a fully customizable dashboard. Not only that, but you can easily integrate your data into Google Analytics, making it easy to switch between your performance channels and optimize. Programmatic campaigns often employ multiple DSPs, with individual reports, making it more time-consuming and less consistent. You may spend more time formatting reports than reading them.
4. Pricing: With Performance TV, pricing is transparent and includes a host of benefits. You’ll have access to the aforementioned customizable reporting dashboard, a creative suite, as well as tens of thousands of third-party audiences via its integration with Oracle Data Cloud—all at no additional cost. Programmatic advertising can make it confusing to know how your ad budget is being spent with lots of upcharges and various DSPs using different pricing models ranging from a percentage of the overall campaign to a flat rate cost, as well as additional non-transparent fees for adding target audiences. 

Connected TV Is Changing the Game for Advertisers

Programmatic advertising helped pave the way to easily reach your target audience across screens. But now, there is an even better way to buy ad impressions on the living room screen, through streaming TV advertising platforms like MNTN. As ad technology continues to progress, so should your ad strategy. 

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