Know How Demand Side Platform (DSP) And Supply Side Platform (SSP) Play A Key Role In Programmatic Advertising
The internet has revolutionized the way the world connect, consume, and exchange information. Advertising also changed along with it, as marketers considered the internet as a potential medium to communicate with consumers. Thus online advertising or digital advertising began.
The internet offers advertisers the display add spaces or ad inventory to serve their ads and to reach potential consumers. The ad spaces are purchased by bidding or directly between advertiser and publisher.
The massive amount of data available across search, social and display is helping marketers to connect with the more precise audience. But this only possible when marketers can use the available data and turn it into actionable insight.
The traditional digital advertising involves human negotiations and manual insertion orders in purchasing of ad inventory. But the recent high advanced technological shift has made a drastic changes in advertising. Now online advertising adopted artificial intelligence to add more efficiency and accuracy and it is known as Programmatic marketing or advertising.
The programmatic marketing or advertising with use of artificial intelligence replaces human tasks like selecting the optimized ad space, bidding, negotiation, sending insertion orders to publishers.
Programmatic marketing or advertising by removing humans, is making ad buying more efficient and cheaper. Even though humans replaced, they are required to optimize campaigns and plan strategies.
As an advertiser to earn benefits of programmatic advertising the understanding of its functions is necessary.. The main components of programmatic marketing are DSP and SSP. The role of DSP and SSP is essential to complete the functioning of programmatic advertising.
This blog will give you a detailed outlook of DSP and SSP of programmatic advertising.
What is DSP (Demand Side Platform) ?
Demand Side Platform (DSP) is a web-based platform for the advertisers, which allows them to purchase inventory across multiple channels through a single interface. The multiple channels can be ad exchanges, ad networks.
DSP programmatic algorithms and artificial intelligence execute automated purchasing of ad inventory. A purchase is generally made as a real-time bidding process, making the buying and selling of ads cheaper and reliable.
The algorithms built into the platform perform real-time bidding based on data, bidding strategies, and parameters.
DSP functions based on the consumer information and data that DMP offers. Data Management Platform (DMP) is a platform to collect and store data. And also DMP analysis and organize data. Through the integration of DMP to DSP, transfers the data collected and analysed to DSP which helps in buying decisions.
DMP provides the DSP with the audience targeting options based on geographic location, demographics, device targeting, contextual targeting. By the help of targeting options and data, DSP targets the groups which are more likely to engage with the ad.
How DSP functions?
The basic functionality of DSP is as follows;
In the very first step, the advertisers have to set up their campaigns in DSP, including targets and creatives(ads).
When a user is loading a web page, ad exchange sends a request to DSP telling there is an impression(ad request) available.
Each time DSP receives a request, it analyses the data about the user.
After analyzing the user data, DSP decides how much the particular user is worth based on their relevance to the advertisement.
Then DSP assigns a value that impression and bids a CPM automatically.
So there are millions of users loading a page at the same time, ad exchanges will send all these available ad space requests to DSP. Then DSP evaluates each impression according to the requirement of the campaign and starts the bidding process. All this happens in milliseconds with accurate timing and ad is served to the user.
Here is an explanation through an example;
As an advertiser you are running a campaign to sell a sports shoe perfect for basketball and your target audience is college going students with an age group of 16-21. And you have set this campaign details in DSP.
DSP integrated to the multiple ad exchanges will check for the users who satisfy all the parameters of the campaign.
Assume there is user 1 who is a 35 years businessman and accessed a website. The DSP gets the request of the impression.
Assume there is user 2 who is college student age 22 play basketball and accessed a website. Then ad exchange sends the impression availability request to DSP.
Finally, assume a user 3 who is college student aged 19 years plays basketball and the DSP gets the request.
Then finally DSP evaluates all these three users and will match the ad against their data and target parameters of the campaign. Then it will bid on the impressions based on this information.
In this case, bidding will probably be like below;
While all the above users can potential consumers, it is user 3 who fits the parameters of the campaign. So the algorithms and analytics of the Demand Side Platform targets the user 3 automatically and starts the bidding with artificial intelligence.
DSP functional info graphic
Benefits Demand Side Platform offers for the advertisers
These are the benefits DSP offers which make it more useful for programmatic marketing.
Real Time Bidding
Demand Side Platform with its designed algorithm and artificial intelligence allows advertisers to reach over 250,000 online ad opportunities every second with a chance of getting an ad space for every 200 milliseconds. And all this is possible with a single interface across multiple channels.
Before DSP the multiple interfaces for the multiple channels has been difficult and tedious to advertisers. Advertisers used to log in and log off various ad exchanges to bid the impressions they provide.
For example, consider there are two ad exchanges ‘1’ and ‘2’ respectively. So when you are bidding the ad spaces made available by ad exchange A login is required. If you want to bid the ad spaces in the ad exchange ‘2’, a log out from ad exchange ‘1’ and a log out from ad exchange ‘2’ is required.
This process of bidding takes time and might cause advertisers to lose bids.
But Demand Side Platform allows advertisers to log in to multiple channels at once using a single interface. The bidding takes place at the real time and cuts down the wasted time.
Real time statistics
DSP’s monitor the campaigns in real time and provide the statistics to allow the advertisers to re-adjust the campaign their campaigns on the run.
The real time statistics enables the advertiser to ;
- Track the ad views.
- Schedule the ad to show up in ad spaces.
- Track clicks, conversions, sales, installations (If a campaign is to advertise the product)
- Set the budget to spend on each ad
DSP helps advertisers to target the right audience at the right place in the right context. DSP by allows advertisers to ensure targeting based on ;
- The type of device they use
- The operating system they use in the devices.
- Networks, social media platforms, websites, they visit.
- The internet browser they use.
- Users IP addresses for a more personalized campaign.
- Age group, financial capability, career, job, geographic location etc.
- Re-target the consumer at different websites to continuously cover the same target audience.
What is SSP ( Supply Side Platform) ?
Supply Side Platform (SSP) is a web-based platform for the publishers, which allows them to sell ad inventory across multiple channels through a single interface.
Do you think that you have read same lines about Demand Side Platform in this same blog? Yes that’s because SSP is similar to DSP. SSP serves to publishers to sell their inventory where as DSP serves advertisers to purchase inventory.
Advertisers adopted DSP as part of programmatic marketing, to reduce the cost of human ad buyers to negotiate with publishers over inventory prices. This technology made ad purchasing more efficient for the advertisers.
However publishers had problem with programmatic purchasing. The problem for publishers is that the programmatic purchasing risk the price of their inventory go down. As result, SSP’s were created to help publishers to aggregate and manage their inventory sales through multiple ad exchanges and ad networks as single interface.
In addition SSP also allows publishers to set the price floors for their inventory so that they can sell for a minimum price. And also SSP’s can be used to dictate which advertisers can and can’t purchase inventory.
How SSP functions?
SSP exchanges information with DSP, ad exchanges and ad networks. SSP evaluates the requirement of the ad spaces received from multiple channels.
Then SSP sends the availability of ad spaces of publishers to ad exchanges and ad networks with a preset minimum price.
Ad exchanges and ad networks send the requests to buy ad spaces to Demand Side Platform.
The DSP analytics and algorithms will select the optimized ad space required for the campaign and bids price.
After the bidding SSP places the ad of the highest bidder in the ad space
The counterpart functionality of DSP is the functionality of SSP to help publishers to sell their ad inventory for maximum prices.
SSP functional info graphic
Benefits Supply Side Platform offers to the publishers
Supply Side platform offers wide range of benefits to publishers by allowing them to manage and monitor their ad inventory. These are few benefits by SSP;
SSP’s use data to analyse, compare and retrieve statistics to provide insights. Using this insights publisher can know what works and what does not work. SSP allows publishers to select the ad sizes and formats which gets the most value. And also publishers can optimize their inventory in real time for effective strategy.
Dynamic price floors
With SSP’s publishers can set a price floor for the ad inventory, which ensures a steady revenue stream. SSP allows the publisher to be flexible in pricing strategy. The publisher can change the price of the inventory which is not sold thus selling out remaining inventory completely.
SSP allows publishers to dictate which advertiser have a right to bid on the inventory. And also advertisers to the blacklist.
As a publisher, nobody wants to display adult content, tobacco, alcohol and controversial ads on their websites. Such ads on the website may scare off the visitors affecting the brand value of the site.
Insights and reports help publishers to understand the value of their digital inventory and its worth in the market. SSP allows the publisher to know who bought ad space, at what time and what was the ad displayed. These granular reports help publishers to optimize sale strategy for the long run.
Finally, If Programmatic marketing is the most advanced way of serving ads online, then Demand Side Platform (DSP) and Supply Side Platform (SSP) are the tools which contribute to the technology to make it superior.
Although they are the most advanced technologies, there is nothing too sophisticated about DSP, SSP and programmatic marketing. Every marketer can learn how to use them.
Through this blog, we made an easy explanation to understand the DSP, SSP and their functions and benefits they offer for advertiser and publisher respectively.
Now it’s your turn
What do you think of these automated targeting tools in online advertising?
Have you ever used them before?
Will you consider to adopt these techniques for your campaign?
Do you think this will be the future of advertising?
Let us know by commenting below.