What is a Demand Side Platform (DSP)?

In order to understand what a DSP is, it’s important to understand Programmatic Advertising as a whole.

In the not-so-distant past, in order to have your advertisements placed in an online publication or website, you got a hold of a sales rep and did a direct purchase. For the purposes of this article, we’ll call any web property that accepts advertising a ‘site’, which might be a publication, an association website, a game, an app, a streaming service, or any other web property that accepts ads.

There are some advantages to this approach, you might get a ‘deal’, they might be able to provide you with a particularly advantageous advertising inventory or location on the site, but there were also some disadvantages. Often when buying media there’s a minimum budget that a site would like to see to make the transaction worthwhile, the sales process can include trying to pitch you on things you don’t need or want, and to extend the reach of your campaign, you have to go through the same process with every site that you want your brand represented on. 

Around the 2010s, new technologies emerged to facilitate the buying of online advertising placements. An interconnected system of technologies emerged to make the buying and selling of online advertisements across a vast reach of sites easy and frictionless. 

The system includes some basic capabilities:

Someone needs to be able to sell advertising space under some economic model and allow ads to appear on their site in a reasonably controlled manner they’re comfortable with.

Someone needs to coordinate across all of the potential buyers of that advertising space and make a reasonable decision around which ad gets placed in which scenario.

Someone needs the ability to ‘order’ up access to advertising spaces that make sense for the brand they are promoting and their business goals.

Buying advertising space using a system of these components, in essence using ‘programs’ to buy advertisements, is called Programmatic Advertising.

What is Programmatic Advertising?

Programmatic Advertising is the process of enabling sites to efficiently sell advertising to buyers in real-time without having to communicate with them directly. Using software to buy and sell advertisements enables both parties to utilize complex algorithms to optimize the economic value for each party while still delivering a positive experience for viewers of the ads.

Ok then, so What is a Demand Side Platform (DSP)?

The ability to ‘order up’ access to advertising spaces is the ‘Demand’ side of the programmatic display advertising system.

 

The name Demand Side Platform naturally evolved for this piece of adtech. 

 

Anatomy of a Demand Side Platform

It would be unrealistic to imagine a tool that was simply a list of all of the available advertising inventory across all of the sites that would like to create additional business value by selling advertising space outside of their direct sales channel. The number of advertising placement opportunities, ad sizes, and price points would be nearly endless.

The adtech industry has solved for this by creating an alternative means of efficiently setting up advertising campaigns on the buyer side or ‘demand’ side.

A Demand Side Platform (DSP) consists of:

1 - A User Interface that enables the easy definition of an advertising campaign. 

The campaign definition includes the usual advertising campaign buying parameters such as overall budget and campaign timeline. The campaign definition also includes advertising creative. In order to make this system of buying and selling online advertisements possible, the adtech industry has evolved to allow for a well-defined number of ad sizes.

In some situations, a DSP may indeed have direct access to inventory on a particular site or publication. In most cases, however, targeting models are used and advertising might be placed on a very wide variety of sites that are offering advertising inventory supply based upon a range of advertising targeting factors. 

The campaign definition then also includes the audience targeting parameters. 

These advertising audience targeting parameters might include:

Using ‘Identity’ solutions that enable the targeting of advertising by any number of demographic factors

Limiting ad placement by a specific geographic area

Retargeting solutions that follow around someone who’s visited your own site

2 - Some type of Campaign Reporting needs to be provided so that media strategists and buyers can ascertain how a campaign is doing, make optimization decisions and be able to report to the larger business campaign results. 

3 - The heart of a DSP is the RTB or Real-Time Bidder. As the adtech industry evolved, a system of bidding for specific advertising impressions was needed in order to clear markets and allow transactions to take place at a very large scale and at rapid speed. Behind the User Interface (UI) that a media strategist or buyer sees is a very advanced technology stack that places bids and reports on results at the speed necessary for advertisements to appear on a site but not impede the site visitor experience.

A Real-Time Bidder is a complex and sophisticated piece of technology and requires massive computing power to operate. 

There is an enormous opportunity to solve for a vast number of specific advertising use cases, whether that be reaching certain specific audiences, or allowing certain types of optimization control. The founders of Beeswax thought that there was a need in the industry to create this engine (an RTB stack) and in essence lease it out to creative entrepreneurs and businesses in an affordable model such that each of these RTB users would actually have what amounts to their own bidder, without having to invest the development, operation and maintenance of such a complex and expensive technology stack.

This means that to build a modern DSP, you can leverage an existing advanced RTB engine and lay your own UI, targeting parameters and optimization and reporting models on top of it, and perhaps by bringing your own data to the table, build an adtech business of your very own!

This model also allows savvy media buyers, such as larger agencies, to build a DSP that meets the needs of their specific sets of customers or even for larger brands to bring these capabilities in-house.

 

Why It's Time for Your Own Real Time Bidder

Well, If There’s a ‘Demand Side Platform’, Doesn’t There Need to be a Supply Side Platform (SSP)?

Absolutely. There needs to be a corresponding piece of technology that is connected to sites that are selling advertising. These technologies let sites manage their on-site advertising inventory and connect to the larger adtech ecosystem in order to enable them to efficiently sell their advertising spots. 

The SSP needs to be able to tell which of the ad spots that it has available from the demand side might be a fit for a given bidding situation for an advertising impression. It also needs to be able to effectively participate in the bidding process, to enable the site to load the winning advertisement, to report back through the ecosystem pertinent data related to the advertising placement, and to help the site where the ad is placed to actually ‘monetize’ that transaction.

Supply Side Platforms provide an essential service to sites, enabling them to create additional revenue streams from their audiences to support the viability of their business.

There are multiple leading SSPs in the adtech universe and a range of special-purpose SSPs. Each SSP provides a value proposition to a site, enabling them to position themselves as being able to provide the most value in the exchange of advertising space for revenue. Providing the ability to place ads on mobile devices as they’re entering a drive-through quick-serve restaurant line presents a bit of a different challenge than placing an audio ad into a streaming media service.

That means that to meet your goals, you may need access to multiple SSPs. Each of those SSPs will want some type of commercial relationship to ensure that they’re going to be promptly paid for placing your ads with a site, who in turn expects to be paid. 

Setting up commercial relationships and technical integrations with a range of SSPs can take time and financial investment. Fortunately, Beeswax has done much of the legwork for you here! 

Beeswax can get you started with any of the major SSPs and most of the niche ones, having the ‘pipes’ and business relationships already in place. As your media spend scales, you can create direct relationships with the SSPs that matter to your strategy and take on the responsibilities of satisfying payments to them directly.

Having access to multiple SSPs enables you to provide extensive reach for your campaigns, as a given site that would be ideal for a certain set of ad parameters may not be available via a given SSP.

 

New call-to-action

Putting it All Together, DSPs, SSPs and the Adtech Ecosystem

Moving from left to right in the infographic below, an advertiser, perhaps working through an agency or perhaps in-housing their programmatic campaigns sets a campaign up in their DSP. The DSP is connected to multiple SSPs that provide reach to all of the sites that are making ad space inventory available that might matter for those campaign parameters.

 

Demand Side Platform Ecosystem

Demand Side Platform Ecosystem - Image Courtesy Marketing & Growth Hacking

 

A ‘bid’ traveling through this interconnected system has a ‘life’ that can be quite interesting! Click here to learn more about the Life of a Demand Side Platform Bid

 

Types of Demand Side Platforms

Walled gardens such as social media sites, streaming media platforms, and larger e-commerce sites will often provide their own DSP to enable the sale of ad inventory to their users whether on or off of their sites.

Outside of these walled gardens, there are DSPs that specialize in mobile, streaming media, gaming, search advertising, or other types of specialized site targeting. 

There are more generalized DSPs that have access to a wide range of advertising inventory across numerous sites. Many DSPs are extending the reach of their platforms to move into some of these specialized areas so that media strategists and buyers can get all of their work done within one tool that they’re familiar with.

Selecting the right DSP then means deeply understanding your strategy and business goals and doing your best to map these to a DSP provider.

 

Compare Beeswax: Better than a DSP & More Efficient than Building One Yourself

Self-service vs Managed Demand Side Platforms

There are specialized or even general-purpose DSPs that are bundled with a managed service. 

In a managed service DSP offering, the same organization runs campaigns for you as who owns the underlying technology. 

An advantage to this is that these groups have deep expertise in how to optimize campaigns using their tech stack. Their assumption is that they can provide more value by making sure that campaigns are run ‘right’ per their model and algorithms. An additional benefit is that you don’t have to find a services provider or learn to run campaigns yourself. For smaller organizations, this can be a great choice starting out. 

The drawback to this approach of course is that you’re now tied to a managed service provider when you make your DSP selection, and if it turns out that it’s not a great fit for you, transitioning can be more difficult.

Another option is to use a self-service DSP. In this scenario, you’re using the UI that they’ve built, largely using the data and algorithms that they bring to the table and you have little control over the direction of their product. You do get your ad campaigns to market much faster and have far less investment involved.

A third way is using the Beeswax bidder, which means that you’ll have the ultimate control over the implementation of your strategy, using your data and algorithms. In this scenario, rather than pay a managed service provider to run your campaigns, or use someone else’s DSP, you ‘own’ your platform. It can evolve how you need it to and you can produce real business results and value using your own secret sauce.

 

A Guide to In-Housing Your Programmatic Strategy

Advantages of Using a DSP

There may be a case where you’re wanting to run advertising campaigns in a very narrow industry, and that having direct, personal relationships with a few sites or publishers in that space can be advantageous. You can take advantage of other products that they offer such as being part of e-newsletters, special events such as webinars, or be able to take advantage of the deep knowledge that they likely have about their audience.

For many online advertising use cases, however, using a DSP can make a lot of sense.

DSPs can give you:

Granular Control -  over your campaign creative, targeting and budget and access to aligning your advertising with your own proprietary data or the ability to leverage data from a very wide range of adtech ecosystem data providers

Reach - across a vast range of sites and audiences

Time Savings - you can have campaigns up and running in minutes, without having to play phone tag, negotiate, hand advertising creative off, reconcile billing, and settle up payment.

Data - as your audience interacts with your advertising, you can learn a great deal about what they care about, what messages resonate with them, whether or not they will re-engage with your brand in certain circumstances, and more.

 

Learn How Iotec Extends their Programmatic Reach Between 20 and 50%

Growth of Ad Spend Through Demand Side Platforms

Given the many advantages of procuring advertising space through a DSP, it’s no surprise that the programmatic advertising market continues to rapidly expand. According to Statista, programmatic advertising budgets will increase to $127 billion over the course of 2021. eMarketer sees a $4 billion increase in direct media bought programmatically, a nearly $3 billion increase in video programmatic spending, and a nearly $4 billion increase in mobile programmatic ad spending. 

 

Global Growth in Programmatic Advertising Spend to 2021

Demand Side Platform (DSP) Growth

Demand Side Platform (DSP) Growth Courtesy Statista

Important Factors When Using a Demand Side Platform

Two big issues that have caused challenges in the programmatic advertising space are fraud and brand safety. It seems that in every market there are bad actors and this industry is no exception. There are tools that help to sniff out and avoid fraudulent ad serves and clicks. These serves and clicks can not only consume part of an advertising budget but can skew the campaign analytics, causing more spend to be diverted to fraudulent advertising industry sources. 

Another issue that causes a bit of a challenge is that all brands want some control over the context of where their ads are served. Whether it be content about alcoholic beverages, firearms, or other sensitive topics, some brands want to be very careful about what outside brands and experiences that their own ads are connected to or the types of content that they support with their advertising.

Types of Demand Side Platform Auctions

The most prevalent type of programmatic campaigns are Open Exchange Buys or Auctions, where real-time bidding decides on the resulting CPM (Cost Per Thousand Impressions) rate, which can vary widely across the targeting setup within a campaign, for instance, which data source is used for targeting or which site the ad runs on.

 Other types of buys are various forms of direct relationships with sites:

A Preferred Deal is a direct deal with a site that is struck at a fixed CPM rate. There is no guarantee of inventory being available in this type of deal. 

Programmatic Guaranteed is also a fixed price CPM arrangement but there is a guarantee of some level of inventory being available under the deal.

A Private Marketplace is a real-time bidding arrangement with a price floor but only a select group of advertisers has access to this inventory

 

Learn How Keymantics Revolutionizes Programmatic Media Buying with Custom Algorithms

Factors to Consider When Selecting a Demand Side Platform

When considering a Demand Side Platform, a wide range of factors come into play in the decision. First and foremost is your strategy. Can the platform deliver on your unique situation?

Factors to Consider When Selecting a Demand Side Platform:

Ease of Set up

Ease of Use

Access to Ad Inventory

Desirable Targeting Options

Control

Integrations

Reporting

Billing Management (mark-ups for agency, multiple instances for clients)

Stability - Time in Business - Engineering Resources

Industry thought leadership & vision

Support and onboarding 


Other important aspects of selecting a DSP include campaign optimization, data access and reporting, workflow automation, data and inventory exclusivity, support, and pricing transparency. For more, read our article What to Look for in a DSP.

 

Why It's Time for Your Own Real Time Bidder

The Future of Demand Side Platform Technology

If you’ve been investigating this space, or even reading technology-oriented news, you know that there are big changes looming in how the advertising industry works and is structured.

Mobile device providers like Apple are beginning to limit how much intelligence App developers have access to without the user’s specific permissions. Facebook has made the biggest waves, but this is set to change a lot of how mobile device advertising works, as many other advertisers leverage data from apps in their own targeting off of the apps.

The bigger change afoot in the programmatic ecosystem is Google’s promise to deprecate the use of 3rd party cookies in the Chrome browser in 2022. 

This is going to change a lot with respect to how advertisers use data to target audiences. Google is signaling that they’re moving to a ‘context first’ model, which could potentially give sites more negotiating power, as they’ll have the primary targeting method used to allocate ads moving forward.

The Identity space is trying to rapidly adjust. There’s an entire world of companies and tech stacks designed to give insights into ‘who is behind the browser’ by connecting these 3rd party cookies, which are largely going away, to offline data such as incomes and credit scores. While the industry has actually been historically conscientious about using methods to mask who an actual person is (not revealing PII or Personally Identifiable Information), the fact is that consumers and regulators have grown increasingly uncomfortable with how advertising has been targeted until recently. 

Again, sites that have visitors that can sell ads begin to have an upper hand here, as the visitor cookie to them is First Party, which means that their cookies will work on their site. If they use a login, the login credential (email address) can be connected around the back end to largely the same data sources as that which powered 3rd party cookie audiences.

As consumers, you’ll see more of ‘you’ve had your 3 free articles this month, please register to see more’ as sites try to leverage their power to be able to tie users to offline data to replace the existing Identity ecosystem. Identity resolution will still exist to some degree, but to nowhere what it was barring a breakthrough solution (which many are working on).

Additional changes are coming from the ‘cord cutter’ movement. As consumers move to digital walled gardens for their streaming media, it becomes possible to buy audio and video ad spots programmatically. Similarly to sites that take advertising, not only do these platforms have login credentials that can be matched to offline data, but they also have PII such as location data and credit card data. How much these platforms will push the edge on forming their own ‘cookie’ type functionality is yet to be determined.

If you’re just starting out in researching the Programmatic Advertising space, we feel for the learning curve, we’ve all been there!

To help you along, you might find our Glossary of Demand Side Platform Terms helpful to get up to speed.

 

New call-to-action

Speak to an RTB Expert!

Let's connect!

One of our experts will be glad to take the time to understand your business goals and advertising strategy and see if a bespoke bidder is right for you.