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

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. 

What is a DSP?

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 SSP?

SSP stands for supply-side platform. A supply-side platform (SSP) is 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 an Ad Exchange?

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. 

This is all done behind the scenes with an automated auction system known as real-time bidding.

Summary of Differences

If the information above is still confusing, don’t worry. We’re going to summarize the key differences between DSPs, SSPs, and ad exchanges so it’s a bit easier to visualize. Each platform has a distinct role and purpose, and understanding the differences among them can significantly enhance your advertising strategies.

Purpose and Function

  • DSPs are designed for advertisers and allow them to purchase digital ad inventory across multiple platforms, providing tools for managing bids and optimizing ads.
  • SSPs, on the other hand, are utilized by publishers to manage, sell, and optimize available ad space, effectively maximizing revenue.
  • Ad Exchanges serve as the marketplace where the buying and selling of this ad inventory occur, connecting DSPs and SSPs.

Main Users

  • Advertisers and agencies are the main users of DSPs as they provide them with access to ad inventory from numerous publishers.
  • SSPs are primarily used by online publishers to automate the selling of their ad inventory.
  • Ad Exchanges are used by both publishers and advertisers to buy and sell ad space, often in real-time bidding environments.

Ad Inventory Access

  • DSPs provide advertisers with access to a wide range of ad inventory from various SSPs and ad exchanges.
  • SSPs manage and distribute their ad inventory to multiple DSPs and ad exchanges.
  • Ad Exchanges host the ad inventory from various SSPs, providing a diverse selection for DSPs.

Pricing Models

  • DSPs often operate on a cost-per-action (CPA) or cost-per-mille (CPM) basis, allowing advertisers to choose the pricing model that best fits their campaign objectives.
  • SSPs typically use dynamic pricing models to maximize publisher revenues, adjusting prices based on market demand.
  • Ad Exchanges facilitate real-time bidding, allowing prices to fluctuate based on real-time demand and supply.

Optimization and Control

  • DSPs provide advertisers with various targeting and optimization options, helping them reach their target audience effectively.
  • SSPs offer features such as private marketplaces and price floors to give publishers more control over their ad inventory and revenue.
  • Ad Exchanges allow for real-time transactions, providing both advertisers and publishers with the opportunity for optimal pricing and placement.

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.

There are several huge advantages to Performance TV over other programmatic methods, as well as over traditional marketing strategies such as cable TV advertising.

  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. 

SSP vs. DSP vs. Ad Exchange: Final Thoughts

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.