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What Is DSP Advertising, and Do You Need It?

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Jason Hancock
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What Is DSP Advertising, and Do You Need It?
Demand Side Platforms

What Is DSP Advertising, and Do You Need It?

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What Is DSP Advertising, and Do You Need It?
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Are you wondering what DSP advertising is and whether your department, brand, or company needs it?

Thanks to its many advantages, DSP advertising is dominating the ad scene. In 2021, DSP advertising accounted for almost 90% of all display ad spending. 

By 2023, programmatic ad spending is projected to exceed $133 billion. 

Thanks to its increased efficiency, reach, and ROI, DSP advertising is set to remain the dominant avenue for buying ads and managing campaigns. 

Make sure your company doesn’t get left behind, and keep reading to discover how DSP marketing works and what its advantages are. 

What Is DSP Advertising?

DSP stands for demand-side platform. What is a demand-side platform? It is a form of software that allows advertisers to automate their ad inventory buying. 

Through demand-side platforms, marketers can buy inventory from multiple publishers while automatically getting the best prices and reaching new markets. 

One area where people get confused is between DSP advertising and programmatic advertising. 

A DSP is not the same as programmatic advertising. Instead, it is a tool or interface that allows marketers to use programmatic advertising. 

Think of it like this. Instead of stockbrokers buying stocks directly from individual companies, they buy stocks through the stock exchange. 

Nowadays, advertisers are doing the same. Rather than purchasing ads directly from a myriad of publishers, they can use a DSP to automate (and optimize) their ad-buying process. 

In essence, DSPs act as a middle-man party. However, they serve more functions than simply facilitating inventory purchasing. 

DSPs also provide media buyers with functions like:

  • Campaign management across multiple SSPs
  • Auto-optimization of campaigns
  • Provisions of third-party data for improving targeting from DMPs
  • Real-time reporting and advanced analytics features 

Traditionally, advertisers used DSPs to buy unsold or remnant inventory. Thanks to their advantages, DSPs have now become the go-to avenue for advertisers to purchase ad space.

How DSPs, SSPs, and Ad Exchanges Work Together

If you’re wondering what DSP advertising is, it’s also important to know how DSPs, SSPs, and ad exchanges work together. 

Demand-side platforms allow advertisers to buy inventory and carry out programmatic advertising.

SSP stands for supply-side platform. Supply-side platforms allow publishers to sell their inventory. 

In the middle lies the ad exchange. Ad exchanges are the linking point between DSPs and SSPs.

The most common way advertisers buy inventory from publishers is via real-time bidding (RTB) auctions. These auctions are fully automated and require zero manual intervention from either party. 

The advertiser sets their highest bid amount, and the publishers set their lowest bid amount. Bids get automatically processed in real-time to select which ads to display. 

Take note, this is a simplified outline of how DSPs, ad exchanges, and SSPs work together. One RTB media transaction typically involves multiple DSPs, ad exchanges, and SSPs. 

Because programmatic advertising automates the bidding and ad placement process, this keeps the process streamlined. It also allows various DSPs, ad exchanges, and SSPs to work together. 

The Benefits of DSP Advertising

Now that we’ve briefly covered how DSP marketing and ads work, is it right for your business? 

As you can see from the statistic we mentioned earlier, DSP advertising is commanding the lion’s share of ad spending these days. Here are some of the reasons why marketers, brands, and companies are leveraging DSPs. 

Improved Targeting

One of the big reasons why so many advertisers are opting for programmatic advertising is it allows for improved targeting.

Targeting is critical to just about any campaign’s success. Demand-side platforms provide advertisers with a wealth of data, including:

  • Behavioral data
  • Contextual data
  • Demographic data

Behavioral data gives advertisers access to information on a user’s interests and behavior. Including things like what websites users have visited recently. As well as what ads they’ve interacted with and products they’re recently purchased. 

Demographic data consists of things like users’ locations, gender, age, job title, etc.

Contextual data mostly consists of website-specific or app-specific information. Including things like the page content, categories, the URL, etc. 

DSPs import this type of data from either a DMP or a third-party data broker. By syncing cookies with the DMP, the DSP can then make it available for targeting. 

Some types of data also get passed long within the bid request between ad exchanges and SSPs. This data can include things like browser types, operating systems, and device advertising IDs. Contextual data can also be collected in this way. 

Enhanced Reach

Another benefit of DSP advertising is it enhances advertisers’ reach.

Through artificial intelligence and acquisition algorithms, DSPs allow advertisers to reach a wide range of publishers and access a more diverse ad inventory. 

Instead of relying on manual methods, advertisers can tap into unique targeting abilities. For instance, with Amazon DSP advertising, ads can be served based on shoppers’ product searches. 

Thanks to this, advertisers can reach audiences laterally and bi-laterally. They can serve ads to their target market and reach a wider target audience. 

Improved ROI

One of the reasons why DSP advertising is so widely used is it allows advertisers to maximize their ROI. Maximizing ad spend is always important. But it’s doubly critical when global recessions loom large

Advertisers can optimize and manage campaign efficiency at the click of a button. For instance, they can:

  • Blacklist websites and audiences
  • Practice ad retargeting across numerous ad exchanges
  • Place limits on the frequency ads are displayed to the same user within a specified timeframe
  • Conduct behavioral profiling

DSP advertising also gives advertisers access to larger inventory volumes. Without any additional effort, they can display ads on vast numbers of websites.

Additionally, the automated nature of DSP advertising shortens the order-to-cash cycle. It also offers the ability for real-time reactions to outside conditions. Including variables such as news, stock market swings, and weather. 

This allows advertisers to serve more relevant ads to users. Higher ad relevancy results in a better ROI and allows advertisers to fully maximize their ad budgets. 

Better Analytics

Demand-side platforms also give advertisers better and more streamlined analytics. If they’re not doing DSP marketing, advertisers have to transfer campaign data from multiple platforms. They may also have to rework their analytics processes. 

Is Your Company Looking to Leverage DSP Advertising?

DSP advertising began as a way for advertisers to buy up surplus inventory. Now, it’s burgeoned into the primary model. 

Is your organization looking to leverage DSP advertising? 

If so, one of the most important decisions you’ll need to make is which DSP solution to choose. 

Version2 specializes in algorithmically-driven performance solutions and programmatic media strategy. With us, you don’t have to choose between DSPs. 

We know that no DSP can do it all. Our methodology combines all of the best DSPs in one platform, giving our advertisers access to leading artificial intelligence and acquisition algorithms.

Contact us today to get started.

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