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What is a Demand Side Platform? A Breakdown of DSPs and How They Work

A breakdown of what demand-side platforms are, how they work, the benefits of using DSPs, and how Media Now uses DSPs to enhance our client's digital advertising.

As a growing number of businesses look for ways to automate paid ad transactions and management, DSPs are becoming increasingly popular in programmatic advertising. In 2020 alone, 88.7% of all U.S. mobile display ad dollars went through automated transactions. This means that if you want to gain a competitive edge, DSPs in digital advertising can be the key. 


Let’s get into what a DSP is, how it works, and the benefits of using DSP ads for your business.



What Is a DSP? 

If you're new to the concept of demand-side platforms (DSPs), your first question is likely, "What are they?" A DSP enables advertisers to purchase inventory from ad exchanges easily and more efficiently manage ad campaigns. DSPs use data from several sources to perform analytics in real-time, which allows them to evaluate ad impressions to determine the best placement for bids.  


DSPs automate decisions, purchases, and bids via real-time bidding systems often used for programmatic advertising, referring to the automated buying and selling of ads online. Through a DSP, advertisers can choose different criteria for display advertising and serve as many as millions of impressions. These display ads consist of image or video ads on web pages and platforms like YouTube and social media. 


DSPs in Advertising: How a Demand Side Platform Works

DSPs can easily automate ad transactions in real-time, purchasing ad impressions in as little as milliseconds using programmatic advertisingIf businesses want to get started with DSPs, they'll first need to set a specific budget around cost-per-click and cost-per-action metrics. With a budget in place, you can indicate how much the platform should spend in an auction. 


A primary reason why advertisers should use DSPs is that they allow for a more affordable and streamlined digital ad experience. Advertisers can easily manage all ads using a centralized DSP demand side platform, which keeps campaigns consistently organized. This expands advertisers' reach as they can manage campaigns in one place without the need to switch between Facebook, Google, and other platforms. 


Apart from expanded reach, advertisers can benefit from improved tracking and reporting with DSP access to third-party data providers. This isn't typically doable with a single network. Advertisers can even target their DSP ads more precisely to their audiences, which leads to more conversions. 



What Are the Benefits of Demand Side Platforms for Online Advertising? 

There are several key benefits of DSPs that make them ideal to use for most advertisers. These advantages include: 


Real-Time Bidding Automation 

A DSP can help automate the transaction process between sellers and advertisers. The DSP almost instantly analyzes the ad impression and bidding through streamlined analytics and media buying based on the advertiser's budget and target audience. 


Expanded Reach 

DSPs can also reach more people across a wide range of platforms without the need to use each one individually. Using a DSP, advertisers can manage campaigns for every channel while more easily expanding their reach. Advertisers can also set certain criteria to ensure that ads go to the right platforms. 


Improved User Targeting 

DSPs allow access to more data, improving user targeting and optimized remarketing and ad rotation. This helps make sure that ads reach the right people at the right time. 


Better Optimization 

Improved reporting and tracking of campaigns also allow for enhanced optimization capabilities. With more in-depth insights into ads' performance, advertisers can take the necessary steps to boost performance in future campaigns. 


FAQs About Demand Side Platforms and DSP Advertising

Below are a few frequently asked questions about DSPs.

If DSPs are buying ads now, what does that mean for human ad buyers?   

DSPs are more appealing to many advertisers because they're cost-effective, although human input is essential to get the most from ad campaigns. 


So, DSPs are replacing agencies, then? 

While DSPs are improving efficiency to the point where they work directly with advertisers, many marketing teams can still benefit from working with agencies. Agencies can assist with strategy and setting an appropriate budget and certain criteria for ad campaigns and DSP ad transactions. 


What are the major demand-side platforms? 

Many vendors sell DSP technology today, including Google's Invite Media, X+1, MediaMath, DataXu, and many other vendors. Some of these focus on mobile, video, or other specific channels, and some also use their own purchasing platforms for DSP media buying. 

To Get the Most from Programmatic Ads, Experience Matters  

If you want to benefit from a demand-side platform and optimize your ad campaigns effectively, consider working with trusted partners like Media Now Interactive for programmatic buying solutions. By partnering with a proven, trusted agency, you can develop highly targeted campaigns that yield outstanding results with DSP marketing while staying within your budget.


About the Author

@Janine Pollack is the Integrated Marketing Director at Media Now Interactive and self-appointed Storyteller in Chief. As content lead for Media Now’s Insight Lab, she partners with those who know best to bring to life the brand's commitment to knowing more so we can do more together. Before joining Media Now, Janine worked with a variety of companies ranging from Fortune 500’s to start-ups to get their messaging heard.