Martech Landscape: What is a demand-side platform (DSP)?

Demand-Side Platforms (DSPs) are used by digital advertising buyers — advertisers, agencies, ad networks — to help them manage programmatic ad buying across ad exchanges. In this installment of Marketing Land’s MarTech Landscape Series, we explain what DSPs are and why ad buyers use them.

What do demand-side platforms do?

DSPs are the flip side of supply-side platforms, which are software platforms used by publishers to manage the sale of their digital advertising inventory on ad exchanges. Whereas SSPs are used to help publishers sell as much inventory at as high a price as possible, DSPs are used by digital ad buyers to reach their target audiences and bid in automated auctions as efficiently as possible.

Much of the power of DSPs comes from their ability to automate decision-making on how much to bid on an ad impression in real time — the moment it becomes available on a publisher’s website or app — based on the advertiser’s targeting requirements.

DPSs can be used to buy most types of digital advertising, including display, mobile, search and video.

How do DSPs help ad buyers buy more efficiently?

DSPs automate the ad-buying process, reducing the need for back-and-forth negotiations between media buyers and sellers.

With a DSP, digital advertising buyers can access inventory across multiple ad exchanges. The DSPs automatically analyze which ad impressions are worth bidding on and at what price in a process known as real-time bidding. The analysis and auction take just milliseconds.

How do DSPs use data for targeting and bidding?

DSPs can pull in data from multiple sources to target audiences and inform bidding strategies.

Publishers make data available that can be used for contextual targeting, as well as information about the user that has triggered an impression, such as demographics, location, device or browsing and purchase history.

DSPs also typically partner with third-party data brokers like DataLogix and Acxiom and data exchanges such as BlueKai and eXelate and make audiences available for targeting (Sometimes data is limited depending on a DSP’s pricing tiers). The audiences are usually presented in predefined segments for advertisers to select, though some DSPs tout their abilities to custom develop and optimize audiences based on targeting criteria and campaign performance.

Advertisers can also typically bring in their first-party data from a CRM and overlay it on third-party audience data for lookalike targeting and/or use it for retargeting campaigns.

Most DSPs track outcomes from ad clicks — cost per acquisition, ROI and so on — and automatically optimize the campaigns to achieve the ad buyer’s designated KPI targets.

What are some of the major DSPs?

Major companies in this space include AppNexus, AudienceScience, DataXu, DoubleClick Bid Manager, MediaMath, One by AOL, Simpli.fi, The Trade Desk and Turn. Some agencies operate trading desks, which are essentially in-house DSPs.