The digital marketing industry is constantly evolving. Advertising tools are getting more complex and advanced, and it’s getting hard to keep an eye on all aspects of the execution of digital marketing strategies. On the other hand, companies constantly seek savings and new technologies that can drive their revenue, save their time, and help them to scale up.

One of the available solutions are demand-side platforms. What are DSPs, how do they work, and how can they contribute to modern advertising?

What are demand-side platforms?

Demand-side platforms, shortly called DSPs, are tools that automate the ad-buying process. They are a part of the programmatic advertising concept which is the process of automatically buying and selling advertising space online. DSPs connect publishers with business owners and help them to display ads of various types across a number of platforms. All the bidding is completed through DSP software.

The solution is constantly gaining in popularity. In the US, 85% of digital advertising spending was purchased via DSP in 2020. The main feature of the DSPs is real-time bidding, meaning that ads are purchased in real time, with full control over the audience and spending. As the result, the majority of transactions via digital advertising platforms are done through this software.

How do demand-side platforms work?

Although demand-side platforms are quite similar to standard ad networks at the first glance, they are different models of purchasing ads. Both approaches are based on

programmatic advertising, however, via DSPs, you can advertise on more than one platform. For example, if you bid through Google Display Network, you advertise only on Google. DSPs are, on the contrary, independent software that allows bidding, launching, and managing ads on multiple platforms via one interface.

In addition, DSPs offer custom targeting criteria that are much more advanced than predefined audiences offered by standard ad networks. This makes demand-side platforms the next step in the evolution of ad networks.

So, what does ad buying with DSPs look like? The general process is the following:

1. The advertiser prepares creatives and decides on targeting and budget.
2. DSP software searches for the right platforms that fit the advertiser’s criteria. At the same time, you compete with other advertisers interested in reaching the same audience, and costs are calculated and determined by algorithms.
3. If your bid wins the auction, the DSP places the ad and manages As the result, the ad is displayed on the publisher’s website.

All the steps listed above happen within milliseconds. Algorithms choose placements and calculate costs fully automatically, without the advertiser’s active engagement. To achieve the best possible match, the DSP software utilizes behavioral data (information about the user’s behavior, interests, interactions, and purchases), contextual data, and demographic data (information about the user’s location, gender, age, job title, and more).

Pros and cons of demand-side platforms

Although demand-side platforms can bring significant value to businesses, it’s worth learning the pros and cons of the solution before investing in DSP software. Let’s take a look at the benefits and drawbacks.

Pros of DSP

●     Automation of media buying

DSP software helps to automate the decision-making process related to

investments in digital advertising by delivering aggregated information on costs and opportunities. Media purchase and negotiation processes are no longer performed by humans but are replaced with machines.

●     Reaching more publishers

With DSP, you have plenty of advertising networks at your disposal, and you don’t need to limit yourselves to a single platform. You can freely reach a wide range of platforms and publishers through a single interface and choose the most optimal placements for your campaign.

●     Advanced targeting

As DSPs provide excellent targeting options across a variety of platforms, they will help you to reach a specific audience much more efficiently than via standard ad networks. Their algorithms are based on advanced behavior and contextual data, which helps to launch much more personalized ads, attract high-quality traffic, and increase CTR and conversion rates.

●     Advanced analytics

DSP software provides a detailed overview of the campaigns’ performance in one, consolidated dashboard equipped with advanced analytic tools. This presents you with information that allows efficient ad optimization.

●     Efficiency and scalability

DSP software helps to quickly set up and adjust campaigns and manage them effortlessly. Instead of manual adjustments, you will be able to spend time on more productive tasks, such as strategy planning, and use your marketing resources more wisely. This will help you raise efficiency and scale up your business.

●     Transparency and safety

Last but not least, most of the DSP platforms provide full transparency of ad placements and offers. They are also equipped with mechanisms protecting advertisers against ad fraud and cybersecurity threats.

Cons

Despite the obvious benefits, demand-side platforms come with a few drawbacks that we feel obliged to list.

●     Costs

Although DSP can bring savings in the long term, it requires some initial investments. In case you’re not planning to advertise regularly and on a prominent budget, using standard ad networks might be a cheaper option. Also, remember to carefully analyze the payment model of the DSP of your choice to search for hidden costs.

●     Complexity

DSP provides companies with great complexity. Again, this makes it a great tool for regular, multi-level campaigns, but rather not for simple, occasional advertising.

●     Ad fraud

Although some DSPs are equipped with protection measures, using marketing automation tools comes with the risk of buying fake clicks or traffic and doesn’t guarantee fraud-free impressions.

Top DSP companies

So, what are the top DSP companies that you can choose from? Let’s check a few examples of the most recommended tools available on the market in 2023.

• Display & Video 360 – as a part of the Google Marketing Platform, it’s a trustworthy and reliable product that provides access to the huge GDN as well as to other major networks.
• MediaMath – the tool uses advanced predictive algorithms that support the bidding process. It also helps to adjust its interface and workflows to the individual needs of advertisers, which ensures great comfort and experience.
• Adobe Advertising – the complex platform that connects video, display, audio, and TV It provides great tools to launch, manage and optimize ads and offers flexible pricing options.

The Summary

Demand-side platforms can be a great choice for enterprises aiming at launching regular, complex campaigns. They are capable of reducing the manual workload and increasing the efficiency of reaching target audiences.

If you wish to explore more opportunities for digital advertising, follow our blog or feel free to contact us – we will provide you with more tips on how to efficiently advertise online.