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Glossary Index

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Glossary term

Demand-side platform (DSP)

Quick definition

A demand-side platform (DSP) aggregates access to supply-side partners so that advertisers can easily message their consumers or clients across those different channels in a single place.

Key takeaways

 

Demand-side platforms work with supply-side platforms (SSPs) to more efficiently place ads online through real-time bidding. 

Advertisers have the option to work with omnichannel DSPs or focus on one or two channels. 

DSPs should integrate with third-party providers instead of trying to provide a one-stop solution themselves to all digital advertising needs.


Q: How does a demand-side platform work?

A: A demand-side platform works in conjunction with a supply-side platform, which is a platform that aggregates advertising inventory sources. An ad inventory source is anywhere you might be able to deliver, write, or place an ad. An example of a destination is ESPN.com. You might be able to work with ESPN directly to put your ad on there, or you can work with a supply-side platform to deliver an ad to multiple places. Those places could include ESPN.com, NBA.com, CNN, and more. 

Typically, supply-side platforms have a particular focus, like video advertising. They aggregate all video inventory, or as many videos as they can. Other supply-side platforms might aggregate as many display ads as they can, or have multiple focuses. 

Supply-side platforms aggregate all the ad space, and they're basically like brokers for all these inventory destinations. Then the demand-side platform has a lot of potential media buyers. Advertisers will work with DSPs because they have ads they want to put somewhere and they don't want to work one to one with ESPN.com or NBA.com. They want to be as broad as they can and reach a wide range of sources in an efficient way.

A DSP will figure out where to place the ads based on the parameters that you want. It makes the process more efficient because it sees a wider view, which is why it's able to optimize. If you’re only working with ESPN.com and then you’re only working with NBA.com, information is not talking to each other. You're working in a silo, and you can’t optimize very quickly. So when you aggregate all the information together, you get a fuller view. 

A demand-side platform is where a lot of advertising technology is consolidated and aggregated. Not only can a company push their advertising out to multiple locations in real-time using ad exchanges, but they can use the optimization algorithms of a DSP to figure out where to place their ads, or use brand safety tools to prevent fraud and placement on unsavory sites.

Q: What is the difference between a DSP and a data management platform?

A: A data management platform (DMP) is a storehouse to manage data and push it to destinations like DSPs. It also has advanced ways to segment audiences. Ideally, a DMP is the single source of truth for audiences, so it’s basically pulling all the audiences and audience data into a single place and adding other datasets to help identify audiences more precisely or to more granularly define audience segments. 

A DSP can house information too, but it's not as robust. It typically only includes information from those who have viewed your ad, unless you manually upload more information, like a list of cookie IDs. But a DSP doesn't natively get a view of all your other sources, so typically what ends up happening is a DMP and a DSP working in tandem.

Q: What are the benefits of using a DSP?

A: A DSP is a single point of access, so advertisers are saving time, energy, and money. The optimization is more efficient, and you’re getting rid of waste. You also don’t have to learn multiple ad platforms, or worry about updating multiple platforms.

If you’re working with a location like ESPN.com, you could probably manually set up some kind of third-party measurement, verification, or brand safety option, though there's no readily made integration with ESPN.com. But a demand side platform works with those third parties to provide additional tools for the advertiser.

Also, all your measurement is coming from one place, so you get a full picture across inventory sources. And if a particular ad isn't getting the results you want, you can use retargeting to reach the right customer.

Programmatic advertising benefits the consumer as well. They don’t see the same ad repeatedly and get annoyed. They will also see ads that make sense to them, as the advertiser has been able to better map the customer journey. And if the governance laws are being upheld, the consumer can trust their information is being handled appropriately.

Q: Are there benefits to using a DSP that aggregates multiple ad types?

A: One benefit is that you avoid running into issues with silos. If you use a native-only DSP, that information only lives in a native world. You have to manually compare it to information pulled from a video-only DSP or a display-only DSP. 

In this case, you could end up sending the same user multiple ads at these different locations because there's no frequency management across channels. A customer could get annoyed, or you could be wasting money because you’re unwittingly sending them with the same message multiple times. 

On the other hand, if your company only works with a few channels or wants to focus on only a few channels, do you really need an omnichannel DSP? Maybe if the omnichannel platform serves all my needs and it has technology that helps me do the things that I want to do. But if a single-channel DSP has capabilities unique to that specific channel, it would make sense to focus there. 

If you’re advertising on multiple channels, it doesn't quite make sense to advertise on multiple single-point solutions, because then you run into the silo of information problem and you're not working as efficiently. A single-channel DSP might be better for a company that has a smaller, more focused advertising strategy. There are also DSP options that combine one or two channels, like search and social, that can meet a company’s goals.

Q: Do demand-side platforms have limitations?

A: Because a DSP isn’t a data management platform, it doesn’t aggregate audiences. They might do some light audience management, but generally must be used with an analytics solution.

Not all DSPs have all channels. It's a challenge to aggregate everything because each channel is different. It takes a lot of hard work to consolidate and make everything work together. Because of resource limitations, each DSP will choose to go in a particular direction based on their particular customer set and market needs.

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