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Do you ever get confused between a DSP, DMP, and SSP? Not only with the acronyms themselves, but what they mean and what each one does? Of course, we’re talking about programmatic advertising and ad exchanges today. But what are these three acronyms and how do they affect your experience? By the end, you should know what they mean, what they do, and the most important ones for your business.
In case you didn’t know, programmatic advertising is an attempt to help publishers sell their ad space and advertisers scale their marketing efforts. Traditionally, advertisers were active across several platforms creating campaigns and trying to boost exposure. With the development of so-called ad exchanges, it meant advertisers could suddenly purchase ad placements for multiple platforms all in one place.
Depending on what you need, the platform allows you to choose:
After setting the permutations, the platforms seek ad placements that meet this need. In the past, the only way of achieving this was to stick with the major advertising platforms or find publishers and ask them directly for ad space.
On the one side, advertisers create their campaign as normal; choose where they would like their ad to appear and how much they’re willing to pay to make it happen. With this, they never exceed the budget, and the ad should appear for the target audience. On the other side, publishers make ad space available while laying out details of the audience.
As soon as somebody lands on the page, data is exchanged between platforms and an ad is chosen based on the highest bidder. Normally, the advertiser pays for impressions rather than clicks. As you may know, this is calculated using CPM (cost per 1,000 impressions).
To understand what happens behind the scenes, this is where we focus on DSPs, DMPs, and SSPs.
Firstly, we have a demand-side platform (DSP). As the name suggests, this is where advertisers congregate to purchase ad space. Thanks to AI and machine learning, it all takes place automatically for agencies and brands. DSP software normally offers social ads, mobile ads, search ads, display ads, native ads, video ads, and more. Of course, the opportunities are also spread across various platforms and publisher sites. With this, it’s no longer necessary to contact them individually. As a business, this saves lots of time and money (and headaches!).
How do we know our ads will end up in the right place? Well, we buy inventory targeted to specific actions, locations, individual user behaviors, demographics, or online activity. The role of the DSP is to gather all ads from brands and aggregate exchanges to decide the best impressions for advertisers.
Experienced advertisers may have picked up on the similarities between DSPs and ad networks. While they certainly offer similar services, a DSP is more detailed and automates more of the process. Also, advertisers find optimization much easier using a DSP.
With a DMP, we have a data management platform and an opportunity for marketers to access first, second, and third-party data. As well as gathering data, a DMP organizes it for marketers, who can then use it to segment audiences, boost targeting, and more. Though DMPs can deal with all sorts of data, the most common currency is web browser cookies.
As marketers, we have desired attributes for our audience, and we can use a DMP to choose sets of cookies that contain these attributes. For example, we can base it on demographics, interests, behaviors, etc. After sending these to advertising platforms, they know to keep these cookies in mind when delivering ads.
Often, DMPs inform DSPs; ad delivery is more accurate because of this information. DSPs buy advertising using this information and advertisers have more control.
If a DSP is a demand-side platform, you may have guessed that an SSP is a supply-side platform. This time, the software is available for publishers who have ad space and impressions to sell. These days, SSPs are available for anybody with impressions that might pique the interest of advertisers. This could be major social media platforms, website owners, or any other publisher with an inventory.
Just like Amazon connects buyers and sellers, SSPs provide the software for publishers to meet advertisers because it connects with a DSP. Using an ad exchange, the DSPs and SSPs are in constant communication. Sellers find buyers for their ad impressions, and advertisers find sellers of the ad space they need.
For publishers, they should consider choosing an SSP because there are features to manage inventory while selling. Rather than settling for a low price, publishers shop the market and sell their impressions for a high CPM. Why go to individual buyers when you can use an SSP and ad exchange and have potentially hundreds battling for your ad space?
One of the important features for publishers are price floors; this allows publishers to set a minimum price for a single impression. This way, advertisers can’t buy the ad space for rock-bottom prices.
To summarize the ecosystem of programmatic advertising, it all starts with the DSP. Advertisers create an account and then make ads; they highlight the perfect ad slots and what they want to achieve from campaigns. To help understand more about each customer, DMPs hold information and share this information with the DSP. From here, the DSP shares all the information with an SSP using an ad exchange.
While the advertisers were creating their ads, publishers were listing their inventory. Essentially, ad exchanges are the middle ground between a DSP and an SSP. Using real-time bidding, an ad is chosen for a specific impression using predetermined prices. The SSP posts the ad after winning the auction and, hopefully, this generates leads and clicks for the creator.
We mentioned the similarities between a DSP and ad inventory, but another of the core differences is actually the real-time bidding (RTB) system. As you will have seen when using individual ad networks, like Facebook or Instagram, real-time bidding allows auctions to take place automatically in real-time.
In this guide, we’ve talked about several different processes and communications between platforms. However, it’s important to mention that much of this actually occurs while a website loads up. When a user clicks onto a website, they don’t want to wait 20 minutes while an ad is sorted for them. Therefore, it’s important that the bidding is in real-time and allows an ad to load in time for the user to see. In most cases, transactions take milliseconds from start to finish. If it took longer, the user would click back, and the website would unfairly lose traffic.
We know that some advertisers use ad networks, and you might not feel compelled to switch away from this system if all has been working well. Yet, it’s important to understand the differences before you make a decision that could affect (and hinder) your marketing strategy.
On the face of it, ad exchanges and networks have the same aim. For example, the definition of a native ad network is to connect publishers and media buyers. After collecting inventory from the publishers, it then makes this available to advertisers. As advertisers, we set our requirements and get the ad space pertinent to our goals.
An ad exchange has a couple of additional features in its favor including the automatic nature of the process and real-time bidding. Recently, some ad networks have started to introduce RTB, but the vast majority don’t offer this function for users.
As advertisers, we must retain control and reach out to those who really need us. Otherwise, it’s just a waste of resources. Therefore, you’ll be glad to see the extra control advertisers are afforded with ad exchanges. This includes more granular campaigns and transaction details.
If you allow us to confuse matters slightly, it is important to realize that many ad exchanges are connected to ad networks. Also, traffic from ad networks is often sold through an ad exchange. Although this blurs the lines a little, the fact remains that users have more control in an ad exchange and most ad networks don’t offer real-time bidding.
At this point, you should have a fundamental understanding of the programmatic advertising ecosystem. We mentioned that DMPs inform and send information to a DSP, and this is why we’re starting to see DMP-DSP hybrid solutions enter the market. With this hybrid option, everything is in one place which makes the process much easier (it’s one less login to remember if nothing else!).
The benefits of a hybrid system include a stronger connection, lower cost, having everything under one umbrella, and streamlining the process (great for communication and cost!).
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