The ABCs of DSPs
DSP, RTB, DMP, SSP … OMG! What does it all mean? With a little bit of knowledge and the right partner, you can be up and running in a short time, but before you begin working with a DSP, it is important to understand how they
DSPs (demand side platforms) can be an effective
tool for online acquisition. Simply put, DSPs allow an
advertiser to access large amounts of inventory on a biddable basis. Similar to pay-per-click (PPC) search advertising, marketers can bid to a specific allowable and via
the DSP’s technology. You bid only on inventory that is
predicted to achieve your goals.
The marketplace begins with Web publishers. Many
publishers generate more ad impressions than they can
sell, while others are smaller and do not have a sales
force. Excess ad impressions have historically been sold
through ad networks that pay rock bottom prices to take
the impressions from the publishers, then mark them up.
Publishers realize less revenue and advertisers pay more.
Ad exchanges, which allow publishers to offer their
ad impressions to the marketplace on a biddable basis,
emerged as a secondary marketplace. Advertisers place
bids for the inventory and — if the bid is accepted —
the impressions are sold. While there is a fee to trade
on an exchange, it is significantly less than the margin
captured by ad networks.
In order to take full advantage of the exchange marketplace, advertisers need a DSP to access inventory.
There are a number of functions the DSP performs:
❯ ❯ Access❯to❯inventory❯via❯seats❯on❯exchanges:❯
There is often a registration fee. DSPs own seats
on all of the exchanges and can access inventory
on behalf of their clients.
❯ ❯ RTB❯(real-time❯bidding)❯capabilities: In order to
bid, you need access to a bidding engine, as much
of the inventory trading is done in real time, with
each ad call sold to the highest bidder.
❯ ❯ Optimization❯algorithms:❯
DSPs offer technology that
identify and bid higher on
desirable impressions, while at
the same time recognizing low-value impressions
and bidding accordingly.
❯ ❯ Access❯to❯third-party❯data:❯Several companies
offer data for targeting purposes, which gives advertisers the ability to identify and bid higher on
impressions that deliver an exact target.
❯ ❯ Analytics:❯Ads served, clicks, conversions and
audience metrics are just a few of the data points
generated. DSPs’ reporting capabilities allow advertisers to make sense of the information.
But how do you decide which DSP to work with?
Consider the following questions:
❯ ❯ Do❯you❯want❯to❯trade❯yourself❯or❯let❯your❯DSP❯
trade❯on❯your❯behalf?❯Generally, you are better
off letting the experts manage your campaign. If
you continue to scale to a point where you need
more visibility, you can then manage things on
❯ ❯ Do❯you❯need❯a❯DSP❯that❯offers❯a❯self-serve❯op-
tion?❯If you have no intention of taking control of
your account, you don’t.
❯ ❯ Which❯supply❯sources❯are❯accessed❯through❯the❯
DSP?❯More inventory means more bidding options.
❯ ❯ Will❯the❯DSP❯disclose❯its❯pricing❯model? DSPs
are for-profit entities and are entitled to take
a margin. But when they are selling against ad
networks taking 50-percent (or higher) margins,
they have to take less. The range (on top of media
costs) that a competitively priced DSP should be
charging is 15 percent to 25 percent.
❯ ❯ How❯are❯reports❯delivered❯and❯when?❯The quicker reports are available via a technology interface,
the lower the chance that the DSP is manipulating the numbers.
❯ ❯ How❯much❯visibility❯into❯where❯and❯when❯your❯
ads❯run❯is❯required? If you require transparency,
make sure it is available via standard reports.
Expect it to take a week or two before the DSP algorithms begin to hone in on the right inventory sources
at the right bid price. Once that happens, you can begin
to scale your campaign and realize the true impact of this
new, dynamic media marketplace. ■