What you need to know about demand-side platform (DSP)

What you need to know about demand-side platform (DSP)

Ever heard about DSPs? These platforms can revolutionize buying and selling ads. Learn all about what is a demand-side platform and what it does. 

Buying and selling ads used to be a person-to-person act, but many times it was an unreliable and expensive process. That’s why DSPs, or demand-side platforms, were developed. These bidding systems are gaining their place in the market and your brand should keep up with the news.

Advertising online wasn’t as easy as it is nowadays. In fact, even today, some companies might still face some trouble when dealing with paid media and buying ad spaces. For that reason, demand-side platforms were developed. They aren’t the most common programmatic media buying system yet, but they are getting there.

As big data usage grew over the years, many brands felt the need to appeal to technology in order to keep control of their database. Mainly because working with paid media needs to be a certain action as a way of not losing money. To really have a return on investment, advertisers started looking for different solutions.

Consequently, the DSPs were developed. This software is used by publishers and advertisers to show their inventories and buy ad space. Not only it assists in improving digital marketing strategies, but it also provides an upgrade in the company’s investments.


#Subscribe and stay on top of news on our blog


What is DSP?

A demand-side platform, or simply DSP, is a software that acts as an intermediator between media buyers and publishers. This programmatic ad buying system works with real-time bidding (RTB) and is becoming quite popular in recent years.

Seeing that it works like an auction, the main objective of this platform is to buy impressions on the inventory and display for the users. Of course, each user sets a configuration in a way that only impressions that meet target requirements are shown to them — and for the best, minimum price available.

More than that, in a single DSP system, it’s possible to launch, optimize, and analyze ad campaigns. It’s not only about buying ad space, but it’s also a complete advertising technology to assist marketing professionals in their job.

They were actually developed to help advertisers buy inventory and make working with paid media an easier process. The entire process of selling and buying ads becomes simpler with a DSP since there is less human interaction at both ends.

We say this because in the past buying ads directly from sellers could be more expensive than it should, creating questionable relationships with buyers.

How does DSP work?

The demand-side platform works with third-party data that allows purchasing ads from several different sources. Through an ad exchange, where publishers can list their inventory, the DSP communicates with a supply-side platform (SSP).

The advertiser can provide characteristics about the desired target audience such as gender, age, location, income, and so on. Then, the DSP analyzes all inventories available to decide which of them match the desired requirements. Once it has found an inventory of interest to the user, the software will automatically calculate the value and make a bid.

This type of technology works through machine learning and, even though it seems like it’s a complex and time-consuming work, the system does it all in a matter of milliseconds. 

What is the structure of a DSP?

  • Integration system: A demand-side platform has the edge of being able to integrate with multiple sources, such as supply-side platforms and DMPs. This last one helps improve ad targeting and verification.
  • Bidder: This part of a DSP is responsible for placing bids on inventory during real-time bidding auctions. Actually, there are multiple bidders to manage all the real-time demand without any consequences.
  • Ad server: While some DSPs might connect with an external ad server, it is still an important part of its structure. It’s the element that will display the ad to the user, as well as store creatives and ad markup.
  • Campaign tracker: As the name says so itself, this feature tracks campaign performance and results. 
  • Banker: This trait prevents the user from overspending in a bid. Due to the large number of bids happening in real-time, it can be easy to cross a budget line. So this characteristic of the DSP will regulate and avoid spending too much.
  • Reporting database: This is where data from the campaign tracker is stored. Additionally, it generates reports from that information.
  • User profile database: In case there’s the need to check the user profile, it’s possible to see some details like their segmentation group and ads of interest.
  • User interface: This is where advertisers manage their ads and campaigns. They can set configurations and view reports about their results.

#Subscribe and stay on top of news on our blog


When to use a DSP

Overall, you should use a demand-side platform when there is a constant need to purchase ad space. However, you can go a little further to understand exactly when the need to acquire a DSP solution exists.

For example, do you want to increase the chances of audience engagement with your ads? This is an important action to improve the company’s metric. Therefore, a DSP will do exactly what the brand needs. Even more, the real-time bidding feature provides immediate updates while things are happening. That way, the company’s approaches will be more assertive.

Can DSP boost marketing and sales results?

Yes, it surely can. Because it provides efficiency and a high-quality inventory, it’s possible to innovate and boost any strategy the company currently follows. These are some benefits of a DSP that can help with marketing and sales strategies:

  • effective targeting;
  • integration with other software;
  • right inventory;
  • reporting and campaign analytics;
  • budgeting.

While being able to integrate with other software, like the SSP and DMP, its inventory becomes complete and of quality. In addition, personalizing the target audience with the data available from a DMP system will enhance general outcomes.

Also, as we’ve seen before, the DSP has a reporting database in its structure. This means all results will be analyzed and stated in a thorough archive inside the platform. Besides, analytics are equally included.

While some people may say that a DSP can be expensive and not worthy of an investment, most times it’s the opposite. Since the platform has bidders that can control the amount spent, avoiding overspending, there’s no need to worry about going over a budget.

In fact, the DSP works with a method that the highest bidder doesn’t pay exactly what they offered. Actually, they pay the second-highest bid plus $0,01.

What is the difference between DSP, CDP, and DMP?

We’ve addressed what is DSP at the beginning, but we also need to talk about CDP and DMP. These three systems are all related somehow, but they perform different functions and have distinct features.

What is CDP?

Customer Data Platform is a software that was developed with the aim of knowing the customer better. It works with a thorough data collection, from names and demographics to online and offline behavior. Nothing goes past the CDP. 

This platform has a strong connection with marketing teams. The data it collects is valuable to these professionals since they can create personalized content and ads for each individual customer or segmentation group — CDP itself puts together clients with similar interests and habits.

What is DMP?

Data Management Platform is a system that also works with data collection, but it was created mainly for sales teams. Also, the data it collects is restricted to identity information. This means names, age, and location are known, but not time spent online or which pages were visited.

Through a DMP, questions like who is visiting the website and what are they looking for are answered. Hence, the company will know what action steps to take next. Who to talk to, what to offer, which approach to use, etc.

DSP x CDP x DMP

The difference between DSP, CDP, and DMP is mainly in the way they function. While DSP is a real-time bidding system for ad purchases, CDP is a real-time data collection tool, and DMP is a software that assists to improve audience targeting.

The way they collect data is a key difference. The DSP can gather only campaign level data, while DMP and CDP have a much more complete database. Moreover, a demand-side platform can’t transport data to other tools nor allows managing data by itself. Because of that, integration with a data management platform or a customer data platform is essential.

That way, getting to know better who is your audience and making more accurate bids in the DSP. It’s more common to see Data Management Platforms integrated with a DSP, however, a CDP has its advantages since it’s a more complete solution.

Seeing that Customer Data Platforms are still quite new in the market, we might be looking into a potential groundbreaker. DSP and CDP together will make a company practically unbeatable in their marketing strategies.

Found any interesting here? Learn more about what is a CDP and its benefits by checking Arena’s solutions — or talk directly to a consultant.


CDP: the biggest challenge in marketing and sales