“What is a DSP, and how does it work?”

A demand side platform, or DSP, is a software platform that allows advertisers to buy space for online advertising. It is part of a more extensive system known as programmatic advertising, which automates much of the advertising process. On the other side of the system is the Supply Side Platform, or SSP, where publishers offer available space. In the middle are several ad exchanges, where the bidding, buying, and selling of ads and space happens.

In this article, we will go over topics, including the demand side platform, what is DSP in advertising, real-time bidding, and media buyers’ inventory.


Old School Advertising

To begin to break this down, it is helpful to think about traditional advertising in a newspaper or magazine.

The magazine publisher reserves a certain amount of space for ad inventory, knowing that digital advertising is a significant source of revenue. The cost of social media or Amazon advertising will depend on several factors. Different parts of the magazine have different values for advertisers. For example, a spot near the front is more likely to be seen than display ads on the last few pages. A full-page is more noticeable than a smaller ad.

Advertisers also have to make choices based on their audience strategy, trying to determine the population they want to reach. The media buyer needs to research who is buying which magazine and how their advertisement complements the content of the magazine. A beer company might note that many football fans also have an interest in beer. They will then buy space in a sport’s magazine to attract football fans.


Internet and Mobile Advertising

Many of the same principles remain in effect when thinking about internet advertising.

The online publisher is still trying to get the best price for space on a website or mobile app. The advertiser is trying to get the largest audience and an essential click-through rate at the lowest price.

The most significant differences are the amount of potential advertising space and the speed at which media buying and selling have to happen. Whenever a user lands on a web page, advertising space becomes available. Whenever a web page loads, information about the user is sent to the ad network, where it becomes part of the process of determining what ads the user will see. A bidding war happens quickly in the background, leading to the unique advertisements that pop up on the web page.


Programmatic Advertising

This background bidding war is where programmatic advertising comes into play. The publisher offers available space for display advertising, by using a supply-side platform, which is information that is sent to an ad exchange, or a multiple ad exchange.

Advertisers declare a budget and ask for space that will be seen by particular audience segments by using a DSP platform. In the ad server, bids are taken automatically from several advertisers and, in milliseconds, space is awarded to the highest bid. The top demand side platforms are connected to multiple ad exchanges, meaning they can negotiate for space through numerous channels.

As this process continues, the advertiser will use the DSP ad’s data reports, perhaps linked to a data management platform, to improve its audience strategy. The DSP advertising can report the number of times the digital ad was displayed, and the number of times users interacted with the ad. If an ad impression has an excellent click-through rate on a particular site, the advertiser can raise the maximum bid for getting displayed on that site, or use a more direct purchasing process.


What Is A DSP In Advertising?

What is DSP meaning advertising, and what DSPs have search engine capabilities? The primary way that DSPs are helpful to advertisers is by streamlining the whole buying and selling process. With the speed of the internet, there is no way that a marketing team could negotiate promptly. There are just too many potential ad impressions opening and closing all the time. 

Other ways that DSPs can help an advertiser include:

  • Targeting and Retargeting. Because DSP online advertising does some of the work of data management platforms, ads can be developed and sold for specific audience segments. Each time the campaign runs, information returns to the advertiser. This allows it to be finetuned for the target audience. This process extends the life of an ad campaign, saving money on development.
  • Audience Segmentation. Much of the programmatic marketing system is about gathering information. The DSP ad exchange is receiving information about users, which it uses in the bidding process for ad buyers. It then sends that information along with user data action reports. This information allows advertisers to make more informed decisions, targeting users by age, location, or technology platform.
  • Automatic Bidding. The heart of web DSP is the bidding process. Space is sold quickly and efficiently whenever advertising space becomes available.
  • Ad Variety. Some DSPs are ad specific to promote ad buying. For example, a native ad platform will only work with this style of advertisement. Some of the top demand side platforms allow advertisers to negotiate for native ad space, traditional display ad space, and mobile ad space.
  • Reporting. One of the most helpful things for an advertiser is the analytics and reporting part of a DSP website. This information can allow a business to get a better handle on its advertising budget. Most importantly, DSP analytics help advertisers see how effective its campaign performance is in real-time.


How to Get the Best Use from a DSP

Using DSP is a crucial marketing investment that is essential for advertising opportunities.

Once we’ve answered the question, “how do DSPs work?” we can discover other ways that DSPs can help you in your advertising. There are some essential ideas to consider to get the most value out of this advertising platform:

  • Know Your Budget. Your advertising budget is a crucial factor in working with DSP definition advertising. If it is too low, you will be consistently outbid for space. If you have a limited advertising budget, you may want to use a direct sales model.
  • Learn Your Audience. For a mobile DSP to work well for you, it needs information about the kind of spaces you want. The more your instructions are targeted toward a specific audience, the better the platform can negotiate for meaningful ad inventory space and targeting options.
  • Consider the Best Ad Format. If you only want to work with native advertising DSP, you will want to use a native ads platform. Otherwise, you can work with a broader DSP that will search for more options.
  • Have a Goal. The system works best if you know what you are looking for in terms of click-through rate, effective cost per click, or the number of views. If you have determined some of these goals ahead of time, you can use DSP analytics more efficiently for their advertising campaigns.