How Demand Side Platforms Can Help your Business
Author: Hugo Abreu
Role: Product & Innovation Manager at Mobidea
You might have noticed that terms like supply side platforms and demand side platforms are cropping up more and more often in the advertising world.
In case you asked someone what that actually means, you’d probably get a long-winded, roundabout answer that would simply mean “it’s complicated.”
If you were a bit luckier, however, you’d get an answer that’d be something like this: “A demand side platform is a software, or a tool, that is used for buying and managing advertising space.”
Well, isn’t that what ad-markets are for?
The answer is yes, and no. DSPs are indeed similar to classic ad markets, but with several key differences, which will be discussed in depth in the next segment:
Differences between Ad Networks and DSPs
Ad networks are platforms that record publisher’s inventory (offered ad space), and take note of various factors, such as age, location, and gender of the potential audience. They then divide this inventory in chunks of impressions that are defined by these factors. Afterwards, it sells these chunks to advertisers.
In other words, you can go online, and buy a bulk of 1000 impressions on a certain site that targets, say, Hispanic millennials from New York. This way, you get the most bang for your buck, as you know the impressions you bought will reach your key demographic.
DSP does a similar thing. However, it pushes it all one step further. First of all, most DSPs aggregate multiple ad markets, forming a sort of mega market. Then, they place bids on the impressions for you. To be able to do this, though, another piece of software called supply side platform has to do its part – that’s essentially the same thing, but on the publisher’s side.
Compared to ad markets, the key difference is this real-time bidding method which is completely automatic, and it happens almost instantly. In essence, if you’re an advertiser and you want to buy ad space targeting a certain demographic, the DSP looks at the available inventory from publishers that match your offer, and then it analyzes whether or not anyone else is bidding for the same space. If there are multiple bidders, the impressions go directly to the highest bidder.
This dynamic system has turned out to be quite effective, and it’s slowly edging out old-school ad markets. In fact, most of the ad market companies are recognizing this and are either completely switching to DSPs or are offering some form of DSP service in addition to their standard offer.
How does this help?
It seems more than obvious that some marketers aren’t going to like this but it’s the truth: the fact is that DSPs reduce the amount of work a human has to do.
This effectively makes the whole process much cheaper, and less error-prone. There will still be more than enough work for humans, though: a human still needs to design ad campaigns and strategies. The DSPs only reduce the workload on the transactional level, leaving marketers to do the most important work.
The whole supply side – demand side philosophy is more suited to our modern day, hyper-dynamic market.
Indeed, real-time bidding allows for a much greater flexibility and transparency in your transactions.
Instead of having to buy premade packets of impressions in bulk, this process happens for every single impression, which means that you get almost absolute control of who sees your ad, and when.
What to bear in mind when selecting a DSP
There are already numerous well-established DSPs out there. Covering them – and their pros and cons – would probably be best suited for an article on its own.
In lieu of that, here are a couple of things to bear in mind when deciding on what DSP service you’d like to use:
• First of all, you must have a clear understanding of how real-time bidding will work with your ad strategy. Your budget plays an important role, as different DSPs have different thresholds, ranging from thousands of dollars, to only $500, or even no minimum budget prerequisites.
• What channels you want to use. Do you plan on using mobile and social ad space, too? Are video ads part of your strategy? Again, different DSPs have different rules and pricings for this.
• The pricing model of the DSP itself. Naturally, these services aren’t free. Some DSPs offer flat fees, while others use a percentage-based model. In addition, there might be monthly, or annual fees, the minimum amount of inventory that you have to buy in a certain time-period, and other hidden costs. Be particularly wary of too-good-to-be-true deals.
• The bidding algorithm itself. As it was already stated, this is the key feature of all DSPs, and where they vary the most. Of course, the exact algorithm is a mysteriously guarded secret, but there is always at least some general info on which factors influence the bidding the most.
• The included analytics, or how the DSP works with the analytics package you’re already using. It’s obvious that damage done by insufficient feedback on how your ads are performing outweighs the benefits of using DSP bidding methods.
• How scalable it is. If there’s a possibility that you might have to change the length or scope of your ad campaign, it’s important to know if your DSP can handle it. For that reason, pay attention to what sort of workload it can handle, and what issues can crop up with rescaling.
• Almost all of the above can be much easier to handle if the client support is good. This means that the support and amount of available information should also be on your mind when choosing the perfect DSP for you.
All in all, even if you’re satisfied with your current ad platform, it’d be smart of you to look into what DSP can offer.
Due to the fact that it’s gonna be a question of when, and not if, they’ll completely edge out traditional ad markets.