At some point, anyone who ad­ver­tis­es online is going to encounter the subject of search engine ad­ver­tis­ing and the various ad networks. These networks allow online ad­ver­tis­ers to host their ads and banners on many different platforms. The challenge is finding the ad­ver­tis­ing inventory that is both cost efficient and allows you to reach your personal goals and target group. A demand-side platform attempts to automate and optimize this search.

What is a demand-side platform?

Many websites provide free space for ad­ver­tis­ing, which can be bought or rented by whoever offers the best price. This generally happens in an online mar­ket­place for ad­ver­tis­ing inventory (i.e. Ad Exchange), which creates an interface between supply and demand. In this process, the demand-side platform (DSP) rep­re­sents the demand. This is where ad­ver­tis­ers who use ad space (i.e. agencies or busi­ness­es) go to run their ads.
The platform itself doesn’t offer ad space, however; instead, it just pools im­pres­sions of other networks for the ad­ver­tis­ers. Ad­ver­tis­ers then have the op­por­tu­ni­ty to au­to­mat­i­cal­ly compare the offers of many different ad networks, mar­ket­places and side sell platforms. Once a suitable ad­ver­tis­ing inventory is found, the DSP initiates real-time bidding and the ad­ver­tis­er can purchase ad space from a provider (SSP). The entire process is carried out au­to­mat­i­cal­ly within a few mil­lisec­onds.

Image: Mobile Advertising Ecosystem
The mobile ad­ver­tis­ing ecosystem: from publisher to ad­ver­tis­er

The aims of a demand-side platform

The aim of a DSP is to automate and thus optimize the process of buying ad­ver­tis­ing inventory with the help of different al­go­rithms. This increases the ef­fec­tive­ness of ad­ver­tis­ing campaigns, since this method finds the best place­ments for banners and ads. This means the winning bid doesn’t only obtain the optimum range for its ads, but also that these ads reach more potential customers through precise targeting and re-targeting.

Ad­ver­tis­ers use DSPs for op­ti­miz­ing various data. An optimal con­fig­u­ra­tion is cal­cu­lat­ed using

  • data about de­mo­graph­ics,
  • search histories,
  • search queries,
  • and data gathered using cookies.

Demand-side platforms bundle all the rates of many different networks together on a single platform. This gives ad­ver­tis­ers access to more im­pres­sions and the bundled ranges of different networks. Ad­di­tion­al­ly, the database and the interface of different ad servers allows a precise con­fig­u­ra­tion of the campaign, meaning you can spend your budget as ef­fi­cient­ly as possible. This, along with real-time bidding and the ability to compare offers directly, means ad­ver­tis­ers achieve the best possible results for an ad placement.

The process of buying ad­ver­tis­ing inventory

In the past, acquiring ad­ver­tis­ing inventory was a drawn-out process that involved choosing a network, de­ter­min­ing the maximum bid, and spec­i­fy­ing a target audience. This process, which once would have required several workers, is now automated by DSPs. The platform collects all the data about the available ad­ver­tis­ing inventory from various networks. The cost of inventory is cal­cu­lat­ed using RTB data and au­to­mat­i­cal­ly paired with the ad­ver­tis­er’s pre-de­ter­mined budget.

The process relies on the same bidding system that you may know from Google AdWords: Ad­ver­tis­ers put forward a maximum bid, which indicates the highest price they are willing to pay for an ad. During the real time bidding process, the system au­to­mat­i­cal­ly deploys the ad space that best suits the ad­ver­tis­ers and their target audience.

How can I work with a DSP?

Demand-side platforms function in a similar way to service providers that serve different customers. Agencies, ad­ver­tis­ers, and busi­ness­es can use DSPs to purchase different ad­ver­tis­ing inventory, i.e. displays, videos, mobile ad­ver­tis­ing, or search ads.

Two of the best-known platforms of this kind are:

Self-service DSP vs. full service DSP

Ad­ver­tis­ers have two options when it comes to DSPs: they can either go for a full service DSP or a self-service DSP.

Full service DSP

With a full service model, the DSP assumes all the tasks as­so­ci­at­ed with acquiring inventory, including pur­chas­ing, mon­i­tor­ing, op­ti­miza­tion and analysis. The greatest advantage for ad­ver­tis­ers is that they don’t need a media team in order to be rep­re­sent­ed on the real time bidding mar­ket­place. Generally, full service providers offer their customers different in­ter­faces and graphical user in­ter­faces so as to enable in-house use of the platform.

Self-service DSP

Opting for a self-service DSP, on the other hand, involves fi­nal­iz­ing a license agreement between the ad­ver­tis­er and the DSP provider. This contract states that the company assumes re­spon­si­bil­i­ty for the man­age­ment and dis­tri­b­u­tion of their ads. This method is generally as­so­ci­at­ed with more effort and costs, as it requires an ex­pe­ri­enced team of media experts to manage the account. Ex­pe­ri­ence and know-how plays a pivotal role here, as without a strong strategy, real time ad­ver­tis­ing can quickly become expensive and thus in­ef­fi­cient, even with the demand-side platform.

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