Dashboard Graph from the Mobinner Demand Side Platform
What is a DSP? If you’re new to the online advertising industry, then you might feel like you’re drowning in a sea of acronyms.
CPA, CPI, CPM, eCPM, CPC, DSP, SSP… It can be overwhelming. There is a lot of ground to cover in the beginning and the actual ecosystem that makes online advertising work can be bewilderingly complex.
Like every industry, digital advertising has its own language and jargon that you need to learn before you can really start addressing the main ideas. In this article, you’ll get a general idea of one of the critical parts of this ecosystem: the DSP or Demand-Side Platform.
Mobinner is a DSP. Friends and family often ask us what it is that we do exactly and, when we say we’re a high-performance DSP, they generally seem more confused than they were before.
So, we’re going to explain exactly what a DSP is, how they work, and how they fit into the larger online ad ecosystem.
The Ad Ecosystem
But before you can understand a part of this complicated ecosystem, you’ll need a quick overview of the ecosystem itself.
In its simplest form, the current programmatic advertising process involves five key parts:
The Advertiser, the DSP, the Ad Exchange, the SSP (Supply Side Platform), and the Publisher.
The Ad Exchange isn’t always there between the DSP and the SSP. Often, SSPs and DSPs communicate with one another without an intermediary.
The two driving forces of this system are the Advertiser and the Publisher.
The whole system exists to efficiently connect the former to the latter.
The Publisher is someone with an audience that he wants to monetize. This could be a mobile app, a blog, a news site, a browser game, or any number of online services or content providers.
The Advertiser is generally someone with a product, an offer, or a message that he wants to put before an audience. And he’s ready to pay for that access.
It’s all about getting the two to meet
Publishers are generally concerned with one thing: their eCPM (or Effective Cost per Mille) and monetization. The publisher generally doesn’t care about much beyond that (excepting things like brand image, legal compliance, user experience, etc. But eCPM is king).
This is because the publisher has a game, site, or blog to run. He needs to keep publishing content and creating value for his audience; otherwise, he might lose them. Every hour spent dealing with advertisers is an hour he doesn’t spend maintaining or improving his core product.
Likewise, advertisers can’t hunt down the sites that they would want to post on for two reasons.
One, they simply can’t (actually getting in contact with webmasters and other publishers can be difficult).
Two, they don’t actually have the ability to serve advertisements. Even if they could, advertisers wouldn’t have enough information to make informed decisions regarding the value of the traffic.
To effectively and efficiently place ads, a DSP and an SSP are needed.
But, what do each of those do?
The SSP offers Inventory
So in order to save time and more efficiently place ads on the sites where they’ll be the most effective, both publishers and advertisers use different tools. For publishers, that tool is the Supply-Side Platform.
Now, for the most part, a publisher’s primary concern is filling their page with paying ads as quickly and easily as possible.
So, they put their traffic and audience (their “inventory”) up for sale on Supply Side Platforms (SSPs). These are platforms that unite thousands or tens of thousands of sites, apps, and other traffic sources in one place.
But they’re not just for publishers. An advertiser can come and place an ad directly from the SSP on any of the inventory they have available. He can also specify all kinds of parameters regarding what kind of ad he wants to be shown, what kind of impressions he wants, and at what price.
But the important thing to remember is that the SSP is a portal to “inventory” (the supply of space on pages or apps that publishers want to fill with ads).
DSPs allow advertisers to use multiple SSPs
SSPs gather available inventory that can be used to display advertisements. However, there are a lot of SSPs out there.
So, advertisers often want to run campaigns across a multitude of SSPs in order to maximize results. Demand-Side Platforms allow them to do this.
Instead of dealing with all the different SSPs themselves, advertisers deal with a single DSP. The DSP, in turn, runs the same ad campaign across multiple SSPs at the same time.
This gives advertisers access to a much greater amount of inventory than they would get with a single SSP.
Without a DSP, running a campaign on multiple SSPs would be an extremely cumbersome and unorganized process.
The Value of the DSP
How else does the DSP add value?
By allowing users to buy adspace through multiple SSPs, DSPs offer advertisers three things: Targeting, Precision, and Reach.
Thanks to user-tracking systems such as cookies, we know a lot about each impression. Beyond just where the click is coming from (geographic location), we can often determine all kinds of demographic data points.
These points include basic things like location and language, but we can go further nowadays. Thanks to modern cookies and cross-site tracking, much more in-depth information can be gleaned. Does the impression come from someone interested in computers? Or does he prefer football? When is his birthday? What device is he using?
Other major criteria that modern DSPs can target are age, sex, country, city, user interests, website category, app category, device, operating system, OS version, browser, browser version, and much more.
Via advanced third-party cookies and data analysis, all of this information and more can be gleaned from user behavior and settings. This allows for extremely precise targeting and the maximization of online ad spend value.
Modern targeting allows for all this and more.
The advertiser tells the DSP exactly what kind of ad format he wants to use and on what kind of sites. Then he can set more specific demographic parameters regarding whom he wants his ads to reach.
This information determines which impressions the platform is going to bid on.
A Demand-Side Platform bids on potential impressions based on the criteria they fulfill: the better the impression fits the desired profile, the higher the bid, the more likely the ideal customer will see your ad.
By bidding in real-time (more on this here) the DSP works on a per-impression basis. That way an advertiser isn’t buying bulk impressions of which only a percentage may fulfill his criteria.
With a DSP, each impression is judged, bid upon, and delivered based on the advertiser’s targeting preferences. This allows for significantly more effective ad placement.
DSPs work with multiple SSPs, which greatly increases the reach that a given campaign can have. But it goes further than that. DSPs can also get better real prices than individual advertisers could get working with SSPs or publishers directly. Why? Because DSPs aggregate volume and can consistently bring a large number of buyers to an SSP.
Because of this, SSPs are often willing to make strategic partnerships with a DSP allowing for greater control and better pricing. By going through a DSP, all advertisers can benefit (for a price) from these strategic partnerships.
Through these strategic partnerships and programmatic bidding, a DSP can maximize the reach and value of ad spend.
Further, since DSPs have partner Ad Exchanges and SSPs all over the world, the advertiser is not limited to a specific geographic area or audience by the DSP.
Real-Time Bidding (RTB) is the protocol that makes the whole system work. In the past, an advertiser would pay a calculated fixed price for a block of impressions and, if some of them didn’t fulfill the criteria, then no big deal… at least not for the publisher.
But for the advertiser, it’s wasted money.
Programmatic advertising helps to avoid this situation and increase efficiency on all sides.
Programmatic advertising is kind of like automated stock trading.
Parameters are set, but the buying and selling is handled by an automated system that programmatically matches inventory to advertisers on a per-impression basis.
Real-Time Bidding changed everything
With Real-Time Bidding the SSP can auction off every single impression individually. This is either done directly through the SSP or through an Ad Server.
This system is good for both publishers and advertisers. For advertisers, it allows them to be very selective in terms of how much they think X impression at Y site in Z ad position is really worth to them.
Thanks to cookies and big data, there is a lot more information regarding the impression itself factored into the bid.
So how does RTB itself work? Think of it as an auction. The SSP has an impression to sell, and it presents it to the bidders. The bidders are the different DSPs and the advertisers that they represent.
Real-Time Bidding is the auction system itself.
This whole system works through various RTB frameworks, one of the most popular being OpenRTB. In this system, the Ad Exchange (or the SSP itself) acts as the RTB Server, and the DSPs are the Clients.
The RTB Server receives an impression to sell. Then it sends out a bid request to all its associated DSPs. Within around 120 milliseconds the DSPs respond either with their bid or a “no bid,” meaning they’re not interested in the impression at all.
The RTB server then determines who wins the impression and the advertisement attached to the winning ad is served.
This system is an improvement over older ones for both publishers and advertisers. For publishers, this allows them to sell ad space more efficiently. For advertisers, it allows them to buy only the impressions they want.
Got all that?
If you’ve never dealt with DSPs or SSPs or the various ways of determining cost in online advertising, then it can be a little bit overwhelming the first time you look under the hood.
There’s a lot of complexity out there that you just don’t normally think about.
Most people don’t think about the carefully timed series of explosions that occur thousands of times per minute in their car’s engine as they drive home. Or the thousands upon thousands of computations that take place every second to make the stock market run.
It just works behind the scenes (well, usually).
This has given you a general overview of one of the key parts of the modern online advertising ecosystem. DSPs make the purchase of online ads significantly easier for advertisers. By using a DSP, advertisers can choose from literally billions of impressions per day.
With a DSP, placement, payment, tracking, and analysis all happen in one convenient place. The rest can just stay behind the scenes.
A Demand-Side Platform is an online service that allows advertisers to buy adspace on a huge array of inventory by giving them access to multiple Supply-Side Platforms at the same time.
The advertiser can select different demographic parameters and then, based on these parameters, the DSP bids on corresponding impressions with Supply-Side Platforms. Each impression is bid on individually through a system called Real-Time Bidding.
Mobinner is a High-Performance DSP, come how we can help you drive conversions and grow your business!