What CMOs Need To Know About Demand Side Platforms (DSPs)

A Demand Side Platform is quite complex, blurring the lines with ad servers, data management platforms and other ad technologies. Columnist Alistair Dent focuses on explaining its traditional role, as a buying platform for programmatic display.


The programmatic display space is full of technological acronyms these days. In this column, I’ll explain the role of one of them — the Demand Side Platform or DSP — to help CMOs make critical decisions about their strategies.

A DSP’s place in the tech landscape is to respond on behalf of advertisers to bid requests from Supply Side Platforms.

Here’s how it works. A publisher page loads with an ad slot on it. That ad slot is a piece of code from the SSP that (as quickly as possible) reads factors from the page/user (content, domain, browser and so on) and shares them with the DSP. The DSP checks those factors against the criteria set by the advertiser and decides whether to bid and how much.

This is complicated by the fact that each SSP connects to multiple DSPs and vice versa. So several parties will be comparing bids for each impression.

When you also account for each SSP running on many publishers and each DSP running for many advertisers, you reach a point where every impression triggers a flurry of activity, and the billions of impressions trigger billions of flurries. It all has to happen before the page finishes loading to the user.

As an advertiser, it means that running your activity through a DSP takes you from a direct relationship with a publisher to being a small cog in a very complex machine.

There are three typical reasons to run your display through a DSP: cost savings, efficiency and optimization.

Cost Savings

When inventory is made available to DSPs, it goes into an auction. Everybody entering those auctions has different criteria, different budgets and different pacing, meaning that even the advertiser with the highest bid won’t be in every auction. The result is that low bids can still get some impressions.

By entering an auction with low bids but broad targeting criteria, you’re opening yourself up to show more widely, but only when costs are low. Across the thousands or millions of websites you might serve ads on, at least some of those impressions will be available cheaply.

For your budget, you can deliver a lot more advertising, even on premium inventory. Cost savings are not uncommon, leading to potential improvements in traffic for your budget. Even though click-through and conversion rates on those ads might be lower, it’s possible to drive improvements in CPA and ROI overall.

Buying Efficiency

Running a display campaign is a time-consuming effort. Negotiating with each vendor, linking them to the ad server, applying tracking pixels unique to each placement, adding conversion tracking and click tags, sending IOs (insertion orders), monitoring campaigns and reporting from a large number of data sources… ugh.

By moving all your buying into a single platform, there are plenty of benefits that directly address these difficulties:

  • No IOs. You don’t need a separate relationship with every publisher or network. Just buy the ads, then pay the invoice.
  • Technology integrations. Almost every DSP connects well to one or more ad servers, applying pixels and click trackers automatically.
  • Reporting. One set of stats from the platform instead of separate reports from each publisher or network.

The list goes on, but overall, it means you can make a single change and apply it to every publisher you’re appearing on, a facility unobtainable without using a DSP.

Real-Time Optimization

This is the real magic of using a DSP for your display buying. Instead of evaluating a campaign’s performance at the end of the campaign, within a day you can see which placements, which content, which remarketing lists aren’t working.

You can tweak a bid for a target, and it’ll work across all websites. You can add a demographic filter, and it’ll work across all content.

By treating display across all ad networks the same way you’d treat PPC or the GDN, you can bring the benefits of ongoing campaign optimization to display campaigns.

A DSP also gives you access to third-party data, allowing you to create more targeting options than before, especially when those data points overlap.

What About My Trading Deals?

DSP-based campaigns don’t totally preclude your ability to negotiate deals with your top partners. There are a variety of systems built into most DSPs to help allow this, most importantly the Private Marketplace (PMP).

A private marketplace allows publishers to make their inventory available programmatically, but without being a totally open auction. Only approved advertisers (i.e., those with a deal with the publisher) can take part.

Auctions are likely to have a floor price, and they may provide exclusive access to higher-quality inventory, richer ad formats and so on. There is often a minimum spend agreed to become part of a private marketplace.

How Do I Choose A DSP?

This is the tricky bit. Each major DSP is different — different ad networks, different bidding algorithms, different tech integrations and different user interfaces.

The most common reasons for choosing one DSP over another are their tech integrations. If you’re a heavy PPC advertiser, then a DSP that integrates to your paid search platform can enable some new features (integrated cross-channel attribution, search to display retargeting).

If you use a specific ad server or attribution tech, if your eCRM (electronic customer relationship management) and DMP (data management platform) technologies work together, then your DSP should be able to buy against those audiences.

Think about your entire ad tech ecosystem, and make sure that you’re using a platform that helps tie it all together.

There is a cost associated with using a DMP, typically a percentage of the spend. It almost always pays itself back, but the cheapest isn’t always the right option for you.

Some opinions expressed in this article may be those of a guest author and not necessarily Marketing Land. Staff authors are listed here.

(Some images used under license from Shutterstock.com.)


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