The sole relevance of programmatic media buying is constantly rising. According to MarketingDive, digital advertising will make up more than half of the total global media spent, which is more than it ever did before. With such eye-opening statistics, it’s extremely hard to undermine how important programmatic advertising is, and how important it will be in the near future.

What are the Demand-Side Platforms?

As we’ve previously discussed in our blogs, programmatic advertising is definitely something that cannot be undermined in the modern era of digital advertising. We’ve covered Supply-Side Platforms as well as Real-Time-Bidding; a programmatic process that allows Advertisers(DSP) and Publishers(SSP) to interact, and still many questions remained unanswered for newly founded advertisers.

What is DSP? How does it work? How do I choose a good one?  Is it worth to build one on your own?

All questions that will be covered in this post.

What is DSP?

In plain English, Demand-Side Platforms are basically software used by advertisers to buy traffic. Advertisers have the full freedom to choose different ad formats and publishers to tailor their advertisements to their campaign needs. And all of that is done in real-time, astonishing, isn’t it? However, that’s not all there is to it. If advertisers choose to manage their campaigns without the help of ad networks or professional individuals; then that type of DSP is called the Self-Serve Demand Side Platform. On the other hand, if they do choose help from ad networks or individuals, then we’re talking about Full-Service Demand-Side Platforms.

Choosing between these two is mainly focused on personal preference. If you’re working with large amounts of traffic then it’s probably a lot better to have full control over key parameters such as bidding and targeting. By choosing Self-Serve DSP’s you’re gaining real-time insight into key metrics that greatly assist you in your campaign. If that’s too much info for you, and you’re not that into numbers, you can always settle for Full-Service DSP’s.

How does it work?

An infographic that shows how a Demand-Side Platform works.

By using Supply Side Platforms, publishers transfer their impressions into Ad Exchange where DSPs evaluate those impressions based on specific parameters such as cookie matching, targeting settings, as well as pricing. By analyzing these parameters, the DSP then determines the value of the impression itself. If it’s valuable, the DSP sends a bid, which is also the highest bid that the advertiser is ready to pay for that specific ad.

This whole process is being done through Real-Time Bidding simply because it’s much easier to negotiate over prices in an automated process that lasts only a few milliseconds than to focus on outdated targeting methods that are ancient history when compared to RTB.

Key features & metrics

As far as DSP is concerned, there are some key features and metrics that must be understood by the advertiser himself if he wants to aim for those sky-rocketing results.

  • Transparency and Clarity

DSPs allow advertisers to receive key insights about publishers which help them steer their ad spent towards only the highest traffic quality.

  • Automated KPI Optimization

These are basically automated optimization tools such as the bidding autopilot, which is comprised of a series of bidding rules that make automatic changes when necessary. Those changes mainly include methods such as whitelisting/blacklisting, bid pricing, traffic source analysis, and many more.

  • Queries per Second

Is a metric that tells the advertiser how many times does the DSP receives calls for bids on ad placements.

  • Real-time analytics

Ideally, the DSP interface must get as close as it can to real-time in terms of statistics. The better the real-time, the larger the timeframe for an advertiser to react timely and analyze his campaign.

  • Pricing

The cost always depends on the overall size of either campaign or media budgets. It’s also extremely dependent on DSP vendor preferences. For example, they might charge you with a flat fee, or they can choose to take commissions based on volume.

Is it worth to build a DSP on your own?

This, along with good DSP recommendations, is probably one of the most common questions asked by advertisers. You’ve might’ve heard this one before and it’s probably a cliché already, but if you want to do something right, do it yourself.

However, have in mind that developing complex platforms such as DSP’s requires a great deal of dedication, time and effort. By having that in mind we can easily distinguish two vital issues that must be taken into consideration before engaging in DSP development.

Competition

The main issue with newly founded DSPs typically revolves around getting exclusive traffic. Self-Side Platforms mainly send their bids to larger, more authoritative DSPs rather than smaller DSPs that don’t see as many impressions. Generally, DSP’s that spend approximately $5 000 – $20 000  are considered as small DSPs, which leads us to the next main issue.

Large Starting Budget

Before you start to think about DSP development, there are some key factors that must be taken into consideration. As we stated above, DSP’s main components are RTB bidders, ad servers, and data platforms. Developing such complex components requires huge amounts of investments.

Besides that, money might not be as big of a problem as finding an adequate software development expert. And even if you find a good software developer, the costs of both the building and maintenance of the platform itself are very high. However, if you’re already paying huge commissions to your DSP provider, it might be wise to consider making your own DSP.

What is a White Label DSP?

So you’ve decided to go with your own Demand-Side Platform. You have the money, but you don’t have the slightest clue how to start your project. Believe it or not, there’s a solution for that as well. This leads us to the third DSP type – White Label DSP.

White Label DSPs are basically technologies that can be used as a basis for DSP creation, sort of like a template. It’s fully customizable which means that it can be effectively tailored to your needs. Along with that, it actually requires minimum capital investments when compared to developing your own DSP.

So why DSP?

The reason is fairly simple.  Ad networks and agencies generate the best advertising opportunities while simultaneously having full control over budget distribution.

Enjoying the content? Make sure you follow MonadPlug for more!

Summary
Demand-Side Platforms: What are they and how do they work?
Article Name
Demand-Side Platforms: What are they and how do they work?
Description
This article aims at providing key insight into DSP platforms.
Author
Publisher Name
MonadPlug
Publisher Logo