Martech in Demand: What is a DSP and Why Should You Consider It?

Martech in Demand: What is a DSP and Why Should You Consider It?

What is a DSP and why does it matter to me? If this question is weighing on your mind, you’ve come to the right place.
As data-driven marketers, our world is filled with acronyms and abbreviations, making it all too easy to get lost in a sea of shorthand expressions.

But DSPs (Demand-Side Platforms) are powerful programmatic ad buying tools, especially during a growing focus on dynamic mobile audiences.

According to data from a 2018 survey conducted by Advertiser Perceptions, 67% of advertisers expect mobile advertising spend to increase over the next 12 months. On average, advertisers were allocating 55% of this spend to programmatic advertising.

These advertisers are also frequently tasked with managing their mobile campaigns in-house, without support from an agency or third party.

What Is a DSP? Martech Demystified

If you’re in this position, DSP is an acronym worth embracing, as these platforms can be vital in helping achieve reliable ad spend efficiency through automation. Read on to learn more about DSPs and what separates the best from the rest.

What is a DSP?

A DSP is a system that automates the process of buying digital advertising across display, mobile, social, search, and video channels. Each DSP offers advertising inventory from numerous ad exchanges and lets you target ads to your desired audience in real time.

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DSPs provide transparency into impressions and conversions, helping marketers maximize the ROI on their digital advertising budget. DSP management usually falls within the realm of in-house marketers, ad agencies, or agency trading desks that specialize in real-time advertising.

DSPs are similar to supply-side platforms (SSPs), also known as sell-side platforms. The difference is that while DSPs help marketers to seamlessly buy media through numerous ad exchanges, publishers use SSPs to sell media through multiple ad exchanges and maximize how much their ad space sells for.

How does a DSP work?

DSPs are the matchmakers in automated buying. The role of the DSP is to facilitate the buying and selling process between advertisers and publishers, while providing greater control and transparency around audience targeting, pricing and campaign optimization.

DSPs do this by sharing real-time data about the inventory flowing through the connected ad exchanges. Essentially, when an impression becomes available at the ad exchange, it is announced via the DSP in real-time. At that point, advertisers can express interest and set parameters for real-time bidding.

What are the advantages of a DSP?

Simply put, DSPs save time and frustration. Without DSPs, it’s unlikely that programmatic advertising would even exist. Historically, the process for buying ad inventory was facilitated via phone calls and emails between the advertiser and the publisher. This process was tedious, confusing, and the antithesis of real-time. DSPs allow marketers to instantly buy ad inventory, even across multiple sites and channels.

Speed and sanity are not the only advantages. DSPs allow marketers to target key audiences across varied channels, including (and especially) mobile. DSPs also provide campaign performance data to allow marketers to shift marketing spend toward the most effective tactics.

What are the challenges to consider?

Not all DSPs offer the same scope of features and support. Before evaluating if a DSP is right for you, start by defining your objectives and expectations for programmatic advertising. It is also important to consider how the DSP will be integrated into your martech infrastructure. For example, if you have a Customer Data Platform (CDP) like Arm Treasure Data, how easy will it be to sync data between the platforms?

Here are some key considerations when evaluating a DSP:

  • Features: DSPs offer a variety of budget pacing, geotargeting, audience data enrichment, cross-device targeting, forecasting and fraud protection tools to help marketers reach their desired audience at scale. Check to see how your DSP performs along these dimensions.
  • Reach: DSPs can vary in how many ad exchanges they are plugged into. Inventory may also be focused on a specific channel (e.g., mobile web, video) or a specific country. Make sure you know going in what kind of reach you’re seeking for the specific audience groups you’re looking to target.
  • Media Buying: What type of ad inventory are you looking to secure for your campaign? While DSPs allow you to access ad inventory at market-competitive rates, they don’t always have access to premium inventory with publishers you’re looking to target. Buying ads directly from publishers or through ad networks with close relationships with tier-one publishers may still give marketers more control over who will view their ads and whether they’ll likely convert into a paying customer.
  • Targeting: Sophistication in targeting capabilities is a key differentiator in DSPs. DSPs help marketers tailor ad buys to specific audience segments based on whom they’re trying to reach (for example millennial homeowners who like to shop at Walmart). If you’re looking to target specific audiences through specific channels, make sure your DSP can support that level of targeting with sufficient reach and scale.
  • Support Needs: Will you manage your own campaigns or are you looking for someone to manage and/or develop creative for your campaigns? Offerings vary across DSPs.
  • Cost: What are you willing to spend? Fees can be up to 20% of ad spend. Pricing structure and terms of use are also important considerations. Factors such as fees, minimums, and contractual commitments can add up.
  • Reporting: How fresh do you want the data to be? Do you want customized reporting? Again, capabilities vary.Ease of Use: Some DSPs are definitely more plug-and-play, while others may require a few calls to the help desk. Depending on who will be using the system, this can be a huge factor.

What should you look for in a DSP vendor?

Once you’ve narrowed down the options based on your needs, you may be wondering how to further refine the list. Based on the input of other advertisers, the quality of the audience offered by the DSP should top your priorities when choosing a vendor.

The 2018 DSP Report Executive Summary highlights targeting capabilities and reporting features as key considerations. In terms of analytics and insights, advertisers were specifically looking for details on audience reach, post-campaign performance, and training and application QA. From an account management side, advertisers valued responsiveness, technology expertise, and a good working relationship.

Arm Treasure Data: Your partner in demystification

So there you have it: a quick breakdown of DSPs and the factors to consider when adding one to your martech stack. At Arm Treasure Data, we’re all about clearing the air, especially when it comes to data. Our CDP gives marketers a cohesive, meaningful view of customer data across your marketing programs. And because it easily integrates with others systems like DSPs, you can ensure that the impact of your media buys are measured and optimized to reach the right audience.

To learn more about Arm Treasure Data enterprise CDP, request a demo or call us at 866-899-5386.

Henry Li
Henry Li
Henry is Director of Business Development for Digital Marketing at Arm Treasure Data. He's passionate about helping marketers be successful by using data to better plan, launch and optimize marketing campaigns. When he's not following trends in the ever-changing adtech and martech spaces, he enjoys scuba diving, grilling, and scenic road trips.
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