DSPs 101: What Are They, and Why You Need One

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DSPs 101

A demand-side platform (DSP) is a programmatic advertising tool that enables advertisers to manage their advertising. It facilitates this by using an independent third party to bid on the advertiser’s inventory and buy it at the most competitive price. In other words, you have more control over where your ads appear, which results in more efficient marketing campaigns that aren’t wasting money on places that don’t convert well. If you’re not already familiar with DSPs and how they work, here’s an overview.

An Introduction to Demand Side Platforms (DSP)

A DSP is a type of software that enables advertisers to bid on ad inventory through an automated auction. It automates the process of buying advertising space or access to user data across multiple ad exchanges.

A Quick Overview of Ad Networks

Ad networks serve as a go-between for advertisers and publishers. Advertisers want to place ads on websites where they’ll be seen by people interested in what they’re selling, and publishers want to make money by displaying those ads on their sites.

According to StackAdapt, “The ultimate goal of a DSP is to help advertisers maximize the efficiency of their marketing campaigns by purchasing the most relevant impressions in real-time at the lowest possible cost.” Businesses can use a DSP for retargeting, site personalization, search marketing, or just about any other form of digital advertising.

4 Types of Demand Side Platforms

  1. Data Management Platforms (DMP)s
  2. DSP Demand Side Platforms
  3. Audience Targeting Platform
  4. Reporting and Measurement Platform

In a world of increasing transparency, businesses have to be open and honest with their customers. A Demand Side Platform (DSP) is a tool that can help you do just that.

The Ad Network Conundrum

Advertisers have long struggled with the conundrum of ad network inefficiency. Ad networks serve as the middlemen between publishers and advertisers, aggregating ad space from multiple publishers and selling it to advertisers in an auction-based system. The problem is that this system is often inefficient, with high fees and low transparency.

3 Main Functions of a DSP

  1. Targeting Ads – DSPs provide the targeting abilities that ad networks do not offer, as well as retargeting ads to those who have already visited your site or interacted with your content on social media or other sites.
  2. Bid Management – You can bid on ad inventory in real-time, according to how much a user is worth to you and what your campaign objectives are.
  3. Optimization & Reporting – The optimization part of a DSP ensures that you only pay for impressions (views) and clicks (responses) that result in conversions. Reporting features make it easy to monitor campaign performance metrics such as cost per conversion and time spent on site.

CPM vs. CPC

CPM is the cost per thousand impressions. It’s based on the number of times an ad is shown rather than how many people click on it. CPC (cost-per-click) is different because advertisers only pay when someone clicks on their ads.

CPM is still an effective advertising model if you sell a product or service that benefits from exposure. However, CPC might be better for your business if you want to increase conversion rates.

A DSP is a powerful tool to help you manage your ad campaigns more effectively. By understanding how DSPs work, you can make the most of this technology to improve your results.