With Demand-Side Platform (DSP) ads, it’s a lot easier for advertisers now to access and buy digital advertising space across different media and publishers to reach their target audiences.
However, even though DSP platforms started in 2007, many advertisers today still get lost in the advertising technology terms and talk.
We’ve made it easier for you to grasp them here.
Traditional Ad Buying vs. DSP Ad Buying
First, we will compare what advertisers have been used to—which is traditional ad buying—with this method using the latest advertising technology, DSP ad buying, in terms of process, price, reporting, campaign optimization, and efficiency.
Ad Buying Process
In the traditional ad buying process, the advertiser negotiates prices with digital publishers (the websites where their ads will appear) and directly makes the purchase after a series of communications and spreadsheets going back and forth between them. It’s complicated and time-consuming, which eventually makes it an expensive process.
With programmatic advertising, DSP platforms automate the process through real-time bidding (RTB), allowing advertisers to buy ad space almost instantly across millions of websites. An algorithm collects and assesses relevant data and decides which ads will be shown at any time, in terms of who will see the ad and where it will be placed.
In traditional ad buying, there’s a pre-agreed price between the advertiser and the publisher, which creates a risk for the advertiser of overpaying for ad placements. With programmatic advertising, there is RTB based on the demand and supply of ad spaces or inventory.
In terms of reporting, in traditional ad-buying, there is scattered data across various media and publishers which the advertiser or advertising agency collects into an understandable report. This takes a lot of time.
With programmatic advertising using DSP platforms, there is transparent, real-time reporting enabling advertisers to make informed decisions and prompt changes to their campaigns as their campaigns run.
In terms of campaign optimization, in traditional ad-buying, advertisers can analyze and optimize only after the campaign is over.
With programmatic advertising using DSP platforms, there is adjustable targeting and real-time optimization. This means that advertisers can easily adjust campaigns without disrupting them. If a campaign is performing well, they can promptly decide to invest more resources into it. If the campaign is not performing as expected, they can perform prompt damage control by quickly pulling it out.
In terms of efficiency, in traditional ad-buying, the process can be slow and quite inflexible, taking a lot of human resources, time, and money. It also leaves a lot of room for error.
With programmatic advertising using DSP platforms, since the process is automated, costs are reduced, and advertising return on investment (ROI) is increased. It’s a lot faster, more efficient, and cheaper.
What is a DSP?
Demand-side Platforms are ad technology (adtech) software that allows brands, advertisers, and ad agencies to buy ad impressions (how often your ad is shown) through automation. Technically, they should just be called “DSPs”, but they have also come to be popularly called as “DSP platforms” (doubling the term, “platform”).
DSP platforms allow advertisers to buy media placements across different media and publishers–all at the same time, even before the publishers’ webpages load.
An advertiser using a DSP can immediately set up a campaign, target their audience by demographic or by interest, and buy ad impressions from an ad exchange (pool of impressions from several publishers) for a bid price.
Similar to Paid Search, DSP platforms allow advertisers to optimize based on their set Key Performance Indicators (KPIs) such as effective cost per action (eCPA) and effective cost per click (eCPC).
DSP platforms use the audience targeting information to go through the inventory in ad exchanges, ad networks, or supply-side platforms (SSPs) and choose the best available impressions for the advertiser’s campaign. DSP platforms can determine the right ad to show on the right media or publisher within 100 milliseconds.
Where ad exchanges are the marketplaces, ad networks are the ad brokers who aggregate ad inventory from publishers and sell them to advertisers. Supply-side platforms (SSPs) are adtech platforms that facilitate the sale of publisher inventory through ad exchanges. SSPs serve publishers, while DSPs serve advertisers.
The Growth of DSP Platforms
DSPs began almost two decades ago when RTB started. Most of the ad space purchased then were for browsers for desktops and laptops.
Today, advertisers can programmatically purchase inventory using DSPs across a broad range of devices and media, using a variety of ad formats such as banner, connected TV, display, mobile, native, search, social, and video ads.
There are full-service DSP platforms offering a complete range of services and a team of experts to support advertisers. There are also self-serve DSP platforms that allow advertisers to do everything themselves, as well as DSP platforms offering services between full-service and self-serve ones.
The global DSP system market size is projected to reach US$38,480 million by 2028, from US$8.1 million in 2021, at a compounded annual growth rate of 31.3% for the period 2022 to 2028.
The Top Platforms
You can buy display and video ads programmatically here. Amazon allows brands to reach out to exclusive Amazon audiences on multiple devices such as mobile, desktop, and over-the-top/OTT media services. Advertisers run their campaigns on the Amazon website and app, Fire TV, and Amazon-owned sites such as IMDb.
Epom DSP is a self-serve DSP providing more than 30 targeting options, including targeting through app name, carrier code, language, OS version, and URL, aside from the standard by-demographic and by-interest targeting.
Google Marketing Platform (Google Display Network, Display & Video 360/DV360)
An online advertising and analytics platform launched by Google in 2018, this platform unifies DoubleClick’s advertising services, which it acquired in 2008, and Google’s own advertising and analytics services. A lot of big advertisers buy ads on the Internet through this platform.
Its DV360 is its DSP platform, in addition to other services such as Campaign Manager 360 for ad management and measurement, Google Analytics for web analytics, Google Surveys for market research, Google Tag Manager for tag management, Looker Studio/Google Data Studio for web analytics, and Search Ads 360 for search advertising within the Google Marketing Platform.
Advertisers can run omnichannel ad campaigns using this unified platform. Its targeting options ensure that ad impressions show in brand-safe environments and ads aren’t served on sites that give no response or are dubious.
SmartyAds DSP is a self-serve DSP platform with omnichannel programmatic media buying. It is integrated with ad networks such as AdColony, InMobile, Pubmatic, and Smaato. Its geofencing ads allow advertisers to target users within their localities.
What are DSP Ads?
DSP ads are advertisements shown on different media and publishers’ sites using ad space purchased from DSP platforms. Here are five examples:
Amazon Dynamic ads
These ads are called “dynamic” because they automatically update the creative (ad) based on customer behavior on the webpage. Dynamic ads include coupon codes, customer reviews, and special deals that the ad creative shows on Amazon sites.
With Amazon DSP, you can have Dynamic eCommerce and Responsive eCommerce ad creatives. With Dynamic eCommerce Creatives, you have to manually create a different ad creative for each available Amazon size option. With Responsive eCommerce Creatives, you don’t have to create multiple ads of different sizes, as Amazon will automatically pick the suitable size to show. You can select up to 10 creative sizes in a Responsive eCommerce creative.
Programmatic native ads
These ads show blend-in content with an editorial look on the websites where they’re published, so they tend to be less bothersome for users. They are viewed 52% more than regular display ads, with an average click-through rate (CTR) of 0.2%. These ads are recommended if you want to drive new quality traffic to your website.
In-app programmatic ads
These ads are run exclusively on mobile apps where users spend 86% of their mobile screen time. In-app ads have an average CTR of 0.58%, higher than the average CTR for mobile browser ads of 0.23%. This is recommended for app promotion through paid mobile user acquisition methods.
Programmatic OTT ads
The video ads that you see before, after, or while watching video content are known as over-the-top or OTT ads. They are full-screen video ads that display on TV sources. OTT ads are not clickable, though. They also cannot always be skipped. OTT ads are best when the advertising goal is to create brand and product awareness.
Programmatic Video ads (OLV)
These are online video advertising (OLV) on websites. They can direct viewers to product detail pages or a brand’s website. They are often used for big brand awareness campaigns, explaining the brand's products and driving engagement. Although expensive, they are five times more engaging than traditional display ads and have the highest average CTR at 1.84% among digital ad formats.
Advantages of DSP Ads
These are the five key benefits of using DSP ads:
Increased targeting capabilities
Although standard targeting options for all DSPs are by-demographic and by-interest, each DSP offers specialized options such as app name, behavioral data, carrier code, language, OS version, URL, geolocation, and brand-safe environments. Better targeting enables more personalized ads and post-click landing pages, increasing the likelihood of conversions.
Real-time bidding (RTB) and optimization
RTB not only allows advertisers to perform faster and more efficient media buying, it also gives them more control over their buying. They can cut down on wasted ad impressions by serving ads to targeted and relevant audiences, minimizing fraud risk and costs. They can also promptly optimize their campaigns as they receive real-time insights from DSP analytics reports. Everything is adjustable from a single dashboard.
Access to a wider range of inventory
Good DSPs have access to the major networks and more. If you’re after premium inventory, DSPs are the way to go. DSPs offer four main ways of offering and acquiring inventory in the programmatic ecosystem: through open auctions, private exchanges, preferred deals, and programmatic guaranteed deals.
Optimizes campaign frequency and prevents user overload
DSP ads allow brands to limit the number of times a user sees an ad. This ensures that your campaign is viewed the optimal number of times throughout the entire campaign, without overwhelming and turning off the user and potential customer.
Better measurement and reporting
Many DSPs partner with third-party data providers to offer advertisers as much information as they can. They also allow their customers to import their own data from their customer relationship management (CRM) and data management platforms (DMP). All this information is integrated into more and better advertising metrics and real-time reporting.
DSP Ads: Challenges and Considerations
As with any technology, there are also challenges to overcome and issues to address with DSPs:
Integration with other advertising platforms
If you use more than one DSP, which is what most advertisers do to negotiate lower fees, have new features, and have more market pulse, it can get unwieldy monitoring campaigns at both performance and pacing levels. This also adds more daily operational workload in having to maintain several DSP platforms.
To address this, advertisers avail of metaDSPs which are adtech platforms that add a layer on top of their DSPs to centralize campaign creation, tracking, reporting, and operations. This unifies all the input sources so advertisers can have a global vision of all their campaign activations. They also don’t have to train traders on each of their DSP platforms.
Data privacy and security concerns
Due to data privacy and security issues, web tracking as we know it will be gone soon. Since 2022, Google has been phasing out third-party cookies running on Chrome, and this will be fully completed by 2024.
With Chrome having over 70% market share for browsers, this will transform how brands track, target, and engage with their potential and actual customers. Safari (with 8.89% market share) and Firefox (with 7.69%) have already phased out third-party cookies.
Forty-nine percent (49%) of digital media professionals said third-party deprecation was their top digital media challenge as early as 2020. With the shift towards a cookieless digital world, brands must explore new ways to predict consumer behavior without collecting personally identifiable information through third-party cookies.
This means a strategy shift towards using first-party data, contextual targeting, OTT advertising, and selecting partners with personally identifiable information (PII) solutions already in place.
Today, 70% of programmatic publishers and 86% of adtech vendors say they’re ready for third-party cookie deprecation, but only 40% of brands are.
Ad fraud and viewability issues
These are not only specific to programmatic advertising and DSP platforms; they’re an issue in online display advertising in general. The online marketing industry revolves around impressions but how does an advertiser know that their ad is being clicked and seen by an actual person? These clicks and impressions can come from a bot instead of a human.
Although programmatic advertising is now a huge industry at almost $100 billion in 2022, ad fraud is also big business, estimated at around $65 billion worldwide in 2021.
Google, along with a few other companies like AppNexus, have been working on detecting fraudulent clicks before they appear in advertisers’ analytics reports, but it is not yet perfect. So, we recommend that advertisers publish their ads only on reputable websites and work only with publishers and networks they have vetted and trust. We also recommend avoiding advertising in countries with high fraud rates.
Cost and budget management
How much exactly are you spending on your programmatic advertising, how much of it goes to your actual campaigns (working media), and how much is spent on various fees and charges (non-working media)?
Many agencies, technologies, and intermediaries are involved in the programmatic advertising process to make digital media buying and campaign delivery easier. Of course, they charge fees for their services.
However, it is often impossible for advertisers to determine exactly what they are charged for. Three industry studies have shown that less than 50 cents of every US dollar spent go to working media. So, take a closer look at your estimated programmatic ad spending costs before investing.
DSP Marketing: How To Get Started
Once an advertiser sets up their targeting, creatives, and campaigns in a DSP, the DSP then bids on impressions offered by ad exchanges and SSPs.
Every time a DSP receives a request from an ad exchange or SSP informing them that there is an impression available, the DSP analyzes the data about the user and decides how much this specific user is worth based on their relevance to the media buyer or advertiser.
If worth it, the DSP ad is placed on the impression after a speedy RTB process.
Setting up a DSP ad campaign basically involves seven steps:
1. Set your advertising campaign goals
These can include but are not limited to:
- Automating media-buying activities;
- Targeting audiences outside your familiar network;
- Increasing brand awareness and reaching new audiences;
- Retargeting existing users on websites they visit;
- Building an in-app or mobile web presence;
- Generating more installs for your apps or more in-app purchases;
- Boosting traffic, engagement, sales, or any other advertising metric;
- Decreasing ad spend and taking more control over your cost per mille (CPM) or cost per thousand impressions; and
- Improving ad campaign performance or ad ROI.
2. Choose the programmatic ad campaign type
Choose the ad campaign type based on your defined advertising goals.
For example, if you want to build brand awareness and reach the widest audience possible or retarget display campaigns, programmatic banner ads are recommended as they are the least expensive (based on a Google average CPM of less than $2.80). They have a 0.35% average CTR, though, which means you have to serve the ad at least 350 times to generate a click.
3. Sign up for the right DSP
There are three main types of DSPs: mobile, white-label, and self-serve. Know which one fits your brand’s needs best.
Mobile DSPs are connected to mobile ad exchanges where app developers and app publishers offer their mobile and tablet impressions to media buyers.
White-label DSPs are ready-to-use and can be customized for your specific needs. They are platforms you purchase outright instead of signing up for.
Self-serve DSPs, like white-labels, give you complete control over the ad-buying process. But, compared to white-labels, self-serves are the easier way to start with programmatic ad-buying. They are recommended for advertisers or small advertising agencies just beginning programmatic advertising.
To find a good DSP, make sure the DSPs in your shortlist have the following features:
- No platform fee. You can register, place a deposit, and promptly begin buying media;
- Basic targeting options: browser, demographic, interest, language, location, OS, and Interactive Advertising Bureau (IAB) categories;
- Support of all major IAB banner, mobile, and video ad formats;
- Partnerships with at least 15 different SSPs;
- Real-time analytics without reporting delays;
- Easy-to-navigate interface, especially for beginners;
- Live chat with a technical support team; and
- Data transparency, allowing you unlimited access to your advertising data.
Additional desirable features for the long-term growth of your business would be automated optimization, geo-fencing, and other advanced settings.
4. Estimate your advertising campaign budget
Set a CPM for your budget based on what you can afford and what you consider is enough to win the impression. The average CPM is around $1.75. You can start with this value and later on test CPMs to find the optimal one for you.
Also, set your start and end dates, limits for impressions and ad spend, and frequency cap. Limits for impressions can be daily or lifetime. Frequency caps are the maximum number of ad views by the same user.
5. Define your basic targeting options
Based on your clearly defined buyer personas, set your targeting options for user segments, device hardware, language, OS, browser, geo-fence, and other targeting selections.
6. Select and upload your creative types
Since you already know which type of advertising campaign you want, you should have already prepared your creatives for this type of ad campaign. All you need to do is to upload them to your DSP.
7. Optimize your campaign
Any decent DSP should have a real-time reporting feature with analytics for your campaigns’ CTR, cost-per-click (CPC), overall spend, the value of each conversion, total sales, and other important metrics. Analyze these insights, identify the snags or congestion in your programmatic display ad campaign, and optimize them based on your analysis. Also, retarget users who didn’t convert.
Growth Collective’s pre-vetted marketing experts can help you with all these, so you don’t have to worry about your DSP ad campaigns anymore.
Successful DSP Ad Campaigns
To see how brands have succeeded online using automated DSP ads, here are three good real-life cases:
Auto Trader’s 90% CPA reduction
Auto Trader attracts around 55 million cross-platform visits every month, but their click results were not what they desired. The company has its own in-house programmatic trading team, but targeted digital campaigns are very intensive, and they wanted to optimize ad spend.
So, they partnered with a new DSP which enabled them to focus and precisely choose the high-value audiences they wanted to reach given their limited investment.
With this pivot, automating their campaign meant they only had to pay for the customers who were most likely to click on their ads. This left their in-house team with more time to focus on manually testing and tweaking their automated strategy.
Partnering with the right DSP for them led to a 90% reduction in their cost-per-acquisition (CPA) over six months, with 3 hours saved by their in-house team each day. It also enabled Auto Trader’s team to focus more on their programmatic creatives to extend their branch reach.
Auto Trader was a big winner in the Programmatic and Performance Marketing category in the 2018 Marketing Week Masters Awards.
John Lewis’ 346% higher ROI on a Black Friday
John Lewis, a UK-based department store popular for its high-end merchandise, had been experiencing a steady drop in profits over the last few years. They shared a common experience with other retailers impacted by the tech-savvy and brand-value fluency of the Millennial market.
To turn things around, John Lewis partnered with a DSP and bought programmatic ad inventory over the notorious Black Friday weekend and in the days leading up to it. The brand used historical data to infer that their predominantly Millennial market did a lot of research leading up to Black Friday.
So, John Lewis set up private marketplace deals with premium sites leading up to the Big Weekend to reduce inventory costs and higher bidding costs.
The DSP used a programmatic guaranteed strategy where the buyer negotiates a price and terms for inventory that’s reserved (therefore, guaranteed) for that buyer alone. This enabled John Lewis to secure a significant market presence for millions of ads during Black Friday.
They also partnered with The Telegraph on a programmatic direct deal for the Black Friday weekend using a highly-targeted and efficiently-optimized strategy.
Considering that there is always a huge demand for prime ad space over Black Friday, John Lewis’ strategies helped it avoid the oversubscribed and the notably increased costs of digital ad inventory available on the general programmatic marketplace during this period.
By partnering with a reliable DSP, John Lewis was able to reach high-value customers at the right time without the bloated marketplace costs. This resulted in a 346% higher ROI than their original target, creating a welcome boost in income for the struggling brand.
O2’s 128% better CTR
O2 is a telecom company that sells mobile phones and connectivity. Although they had been using TV ads for a while, these ads weren’t delivering the results they wanted. So, O2 decided to refresh their creatives and go for a targeted mobile audience using programmatic DSP ads with their O2 Refresh Campaign.
Using data insights from mobile user data, O2 hyper-personalized their ads by assembling profiles on every individual based on their O2 account activity. With these data, they can tell their customers useful things such as when they should upgrade, what they should upgrade to, and what other people had done when faced with similar circumstances.
O2 created more than 1,000 versions of their video ad, which could be integrated in real-time with their users’ devices and locations. Their DSP ads resulted in a CTR that's 128% better than their old ads.
1. Is Facebook Ads a DSP?
Facebook Ads Manager performs as a DSP as it allows advertisers to easily serve targeted and personalized ads programmatically. However, unlike other DSPs, it only offers its own (plus Instagram’s) ad inventory.
2. What is the difference between DSP and SSP?
DSPs serve advertisers while SSPs serve publishers. DSPs let advertisers buy ad inventory across several exchanges at the same time, while SSPs let publishers sell their ad inventory across different ad exchanges simultaneously.
3. Is Google a DSP or SSP?
Google Ads runs as a DSP, but unlike other DSPs, Google sells only its own ad inventory.
4. How Do DSPs make money?
There are four price models DSPs use. DSPs may charge a percentage of the advertisers’ spend, based on a minimal monthly fee, at a standard investment (initial fees + monthly fees) rate, or on arbitrage where the DSP earns a profit from bidding up to a predefined CPM for buyers and taking the difference between the bid price and charge price.
DSP Ads: Shaping the Future of Advertising
DSP ads are paving the future of online digital advertising because they solve a critical resource problem that has been troubling advertisers: limited resources. With several digital campaigns to manage, advertisers’ resource requirements can run out of control.
With DSP ads, advertisers basically need only to use one interface to manage ad exchange and data exchange accounts, improve their targeting, extend their reach, boost their efficiency, and optimize more flexibly.
Although there are challenges and issues surrounding the use of DSPs, the DSPs themselves are taking control to address these concerns with technological innovations. Advertisers also have to do their part in performing due diligence in selecting the DSPs they work with, examining costs and managing budgets, and avoiding ad fraud.
Compared to maintaining the traditional media-buying model against a globally exploding, hyper-competitive advertising world, DSPs are the way to go.