Although programmatic advertising is designed to simplify the process of media-buying, the mechanism behind it doesn’t seem that simple. Num...
Although programmatic advertising is designed to simplify the process of media-buying, the mechanism behind it doesn’t seem that simple. Numerous abbreviations and complex schemes are often making it even more confusing, so for a better understanding, it is important to narrow the topic down and start with the key concepts. In this post, we are going to focus on the DSP - the very best friend of the digital advertiser within the programmatic landscape.
What is DSP?
DSP is an abbreviation for a demand-side platform that serves as a part of a programmatic media-trading environment. It enables advertisers to purchase inventory they need based on specific criteria and launch advertising campaigns for both brand development and conversions. Within DSP advertisers can configure targeting and retargeting, choose multiple formats and channels, and get the most suitable ad placements for the desired prices in real-time. There are many types of DSPs, some of which are integrated into ad tech platforms, while some are completely independent (such as SmartyAds DSP). The same algorithms that enable media-buying at the DSPs are also used at Google and Facebook Ads.
On the other side of the programmatic landscape lie SSPs - supply-side platforms, which are dedicated to gathering publishers in one place and helping them sell their inventory and increase revenues. DSPs provide marketers and advertising agencies with access to several SSPs, ad networks, and ad exchanges to make the process of media-buying as fast and simple as possible.
How does the demand-side platform work?
Once the advertiser has signed up at the DSP, it is time to set up a campaign and start bidding. To understand better how it operates, let's take a more detailed look at the process of programmatic media buying:
At first, the advertiser is choosing the campaign parameters, such as type of traffic, time and frequency, target audiences, blacklists, etc. At the same time, the publishers are adding their inventory via the SSP (supply-side platform) that sends requests to the ad exchange.
Next, the demand-side platform starts searching for a suitable inventory for the campaign and automatically sends bid responses to the ad exchange. The pricing is defined by the advertiser’s settings and user data. The process of such matching takes milliseconds, while the user waits for the website page to load.
The winner of the auction is defined based on the highest bid among advertisers and the final price is determined by the type of auction. Once there is a match, the deal is sealed and the user sees a targeted ad at the publisher’s website.
With complex programmatic algorithms, the whole process is automatized and takes less than a second to make a purchase. What are the benefits of using DSPs for digital advertisers?
One of the core features within the demand-side platform is a wide range of targeting options. Thanks to this, advertisers can send their message precisely to the potentially interested website visitors, and the users get more relevant ads. There are several parameters by which marketers can segment their target audience:
Geolocation - countries, cities, regions, zip code, time zones or other areas defined by GPS;
Categories - a specific business vertical, matched with context and users’ interests;
Demographics - age, gender, marital status, level of income and education, etc;
Technical specifications - connection type, device, OS and browser;
Language - the one set as a default on the user’s device or browser;
Time - certain dates or days of the week, time of the day;
Frequency capping - how often can the same user get the same ad.
All these criteria can do a lot for the creation of highly individualized campaigns for several segments of the target audience. Each DSP may use different kinds and sources of data, so choosing the right DSP specialization is essential for successful targeting and retargeting within campaigns.
Depending on the DSP’s specialization, advertisers can get access to specific types of inventory, such as premium, local, or remnant. Therefore, it is important to do some research and choose the DSP focused on the needed inventory when it comes to non-standard niches and requirements. At the same time, almost all of them integrate publishers on a global scale, allowing advertisers to choose the inventory supporting the right formats and based at any location of the world. Programmatic advertising created an unprecedented opportunity to connect media-traders from anywhere in the world and the DSP is the perfect tool to grab this opportunity.
Cost-efficiency and transparency
First of all, the demand-side platform removes lots of manual work and intermediaries which significantly reduces extra costs. At the same time, it allows advertisers to customize and optimize their campaigns on-the-go, giving them much more control over the ad spending. DSPs work with precise pricing models, such as CPA, CPC, or CPM - the cost is defined by a specific number of actions or impressions which makes the whole process even more transparent and cost-efficient.
What are the major formats used at the DSP?
Formats supported by the DSP usually vary depending on its specialization, but some of the most popular include: Banner ads - the most traditional and highly-customizable option suitable for almost any website or app. Video ads - a highly engaging and versatile format 5 times more effective than traditional ones, according to our research. They are especially good to showcase your product in more detail. Native ads - These ads are a great solution to banner blindness and ad blockers. Native ads perfectly mimic the web environment, so much that they often don’t even look like ads. Rich media - being the most engaging and trendy format, rich media vividly shows how advertising can be both fun and effective. Rich media ads can float, expand, or even serve as a mini-game, educating, and entertaining the user at the same time.
The demand-side platform is a key instrument for every marketer interested in programmatic advertising. It allows advertisers to buy the needed inventory within seconds and launch personalized cost-efficient campaigns without tons of manual work and extra intermediaries.