Full DSP Guide: what is Demand Side Platform (DSP)?

Ad Tech industry is full of jargon and buzzwords, complicated for understanding technologies and abbreviations. Scopes of the concepts are blurred and sometimes you need to spend huge time understanding simple, in fact, things. In this blog post, we’ll define what is DSP and how it works, point out the cons and pros of using Demand side platforms, outline the main DSP features. Moreover, we give you a piece of advice on how to get the most suitable DSP for your business.

Demand Side Platforms (DSP) became a revolutionary solution and have almost completely automated digital advertising. They have become indispensable tools in programmatic media buying. DSPs allow advertisers and agencies to buy across a lot of sites at the same time. All of this is done instantly and efficiently, in just a blink of an eye.

So let's figure out what the DSP is and how it works.

 WHAT IS DSP (DEMAND SIDE PLATFORM)?

DSP (Demand Side Platform) is a software that allows media buyers to buy ad slots on the publishers' websites. Publishers from their side use SSPs to sell their advertising space.

The main DSP goal is to buy advertising at the best price and to show it to the user who exactly matches the needs of the advertiser or Ad agency. In this case, it becomes important to set the right targeting options (gender, geo, device, etc.).

DSP works with various advertising formats (video, banner, mobile, display, native, pop, push, social) and monetization models (CPI, CPA, CPC, CPM, etc.) Choosing suitable ad type and monetization model allows you to make ads productive.

 HOW DOES DSP WORK?

Demand Side Platform is a part of the complex programmatic ecosystem. It's not an independent tool. To work and be profitable, DSP directly interacts with various supply sources. It can be SSPs (Supply Side Platforms), DMPs (Data Management Platforms), AdExchanges.

Here is the 5-step simple guide on how DSP works.

1 - Advertiser sets up an advertising campaign. 

(choosing ad type and monetization model, add creatives/links, set targeting options and budget, etc)

2 - DSP connects to Ad Exchanges and SSPs to receive ad inventory placement requests (so called bid-request) from publishers' websites.

3 - When DSP determines the suitable ad slot it starts the bidding process. The bidding process is based on target parameters to maximize the match.

 ( the bid price is defined on the advertiser’s pre-set options)

4 - DSP automatically calculates the largest cost of that inventory and sends the bid response back to the Ad Exchanges or SSP

5 - The highest bid wins the auction and the ad is displayed on the website

The whole process takes milliseconds despite the fact it seems quite complicated. 

 BENEFITS AND DRAWBACKS | The next step for DSP understanding

Not all DSP’s are equal or have identical functionalities. But there are some major benefits and drawbacks of Demand Side Platforms which you should definitely know. 

Benefits of using DSP:

• Transparency of purchases

Most DSPs track substandard offers and check ad fraud.

• Traffic sources around the world

Software platforms sell inventory that comes directly from suppliers. And suppliers work with websites and mobile applications. As a result, the advertiser gets access to quality traffic sources around the world.

• Budget savings

DSP platforms allow you to buy impressions on platforms with high-quality audiences. So, media buyers do not overpay for empty traffic.

• Precise targeting

DSPs enhance their functionality with user data to help media buyers target specific audiences. You can definitely reach potential customers with personalized messages.

• Analysis and statistics

Ads are analyzed right on the DSP platforms. This allows you to improve results without wasting your budget.

Drawbacks:

1. Not each DSP has such a necessary feature as Ad fraud detection. So there is a risk of buying fraudulent impressions. You may face huge business financial loss.
2. Lots of DSPs have various cost models associated with their inventory, as well as monthly platform fees. Some DSP platforms may have hidden costs that will add up to your overall Ad spend.

 THE MAIN DSP FEATURES | Delving into DSPs

Each DSP has its unique features but some important things need to pay attention to. Here is our kit of indispensable DSP features for the qualitative media buying process.

Real-Time Bidding = Transparency

Due to RTB, the publisher gets the maximum income, as it automatically accepts the most profitable offers. The advertiser will receive increased conversion rates and CTR. Users see the advertisement that is relevant to them. RTB requires everyone in the supply chain to provide an authenticated signature to the impressions they touch. It will provide media buyers with more visibility and transparency.

Ad fraud detection = Saving budget

Ad fraud is a big problem for programmatic media buying. Fraudulent clicks, bots, proxies, suspicious IPs can greatly distort the results and potentially damage the reputation of your brand. So DSP must provide IVP tools (fraud/viewability checkers). It prevents the loss of the advertising budget.

Advanced targeting = Higher ROI

Wider targeting options provided by DSP mean that ads will be delivered to the right audience and at the right time. Due to the correct choice of the targeting types, it is possible to reduce advertising costs. Also, advertisers will be assured that money is not wasted in their campaigns and will see an improved ROI.

Reports = More control

It's necessary to track your campaign performance. Advanced reporting provides you with in-depth insights into how users engage with your ads. You can explore all the strengths and weaknesses of the campaign. Also, you will be able to optimize the advertising campaign, minimize budget expenditures and increase ROI using data from reports.

Ad formats = Wider audience reach

If the DSP can run omnichannel advertising formats it allows you to unlock the full potential of your traffic. You will be able to use various advertising formats and reach a wider audience.

Support = Saving time

While the level of support needed may not be obvious from the start, understanding how frequently the DSP is updated and how quickly they’re able to respond to advertiser feature requests or technical needs is very important to consider.

 BUILD OR RENT | How to make the right decision

If you’re thinking about building DSP from scratch you should note two main things: it will be expensive and time-consuming. Before starting to build DSP you should think about some points.

The strong development team should be seen as the foundation for future success. Lack of experience can become a disruptive factor in the development phase. You can often hear about some problems people meet while working with outsourcing companies: miscommunication, unfinished work, as a result - wasted money.

It takes a long time to get the product going. You will never be sure you get your solution on time. Besides, it’s not a big secret to anyone that building your solution means first of all huge investments. It is often almost impossible to calculate the final cost of product development. You must be ready to increase your budget at any time.

Nowadays AdTech market provides a huge amount of different solutions. One of them is White label DSP. It’s the perfect choice for those players who want to expand their business and don’t want to waste time. Here are some benefits of choosing White label DSPs:

1. white labeling requires not such big investments as building platform from scratch
2. white labeling will save time, which you can be used to boost your business
3. if you choose white label DSP you will just pay for expertise
4. you can choose the most suitable DSP for your business

The above points are key getting a demand-side platform for your business needs. So, the right DSP allows you to increase profits and move your business to the next level. If you need a free consultation with experienced team just contact our team. 

Here is the basic information for a better DSP understanding from Pragmaspace. We've highlighted the main questions and hope now you do know what is DSP and how it works; pros and cons of using DSP; main DSP features.

If you enjoyed this post, subscribe to our newsletter. We have lots of useful content exactly for you.