Anna VintsevskaDigital advertising has changed dramatically recently and has become more data-driven. More and more companies embrace programmatic advertising strategies to maximize the conversion of their advertising efforts.
This is where the demand side platform (DSP) plays a key role. DSP advertising helps ad agencies and advertisers effectively manage their campaigns. They can customize bid size (CPM), determine the necessary limit of impressions or clicks, and use pixels for data collection. These and other tools allow you to run ad campaigns with targeting parameters in mind, thereby ensuring more accurate targeting.
So, what is, basically, a demand-side platform? And how can you leverage it for maximized ROI. Keep reading to understand the essential DSP components, principles of its work, different types, emerging categories, key benefits, and ways of making money with a demand-side platform.
Demand-side platform meaning: an overview of DSP components
These days, with the DSP solutions, the buying of ads has been simplified. So, what is a DSP in advertising, and how exactly do they improve the tracking effectiveness?
What is a demand-side platform (DSP)?
DSP, meaning an automated online advertising buying platform, lets both advertisers and agencies buy and manage digital ad inventory across multiple ad exchanges and online resources in real time. DSP definition also involves software that facilitates the process of purchasing and selling ad space. An advertiser connects to the demand-side platform to buy and place ads online, track results, and optimize their digital advertising across various channels and formats, such as banners, video, and audio ads on online radio and music services, dynamic personalized creatives, native blocks, and retargeting.
The DSP digital advertising solution interacts simultaneously with several web services, among which are:
programs that distribute ads - SSPs;
traffic aggregators - Ad Network;
advertising exchanges - Ad Exchange;
data management platforms - DMP;
publishers - owners of advertising platforms.
DSPs are used for broadcasting advertising to the most interested audience while saving labor costs and marketing budget.
The DSP platform is suitable for advertising networks that want to gain full control over the process of buying and optimizing advertising inventory for their clients. Advertising agencies can also get advertising inventory directly, manage ad placements, and set prices and rules for accessing inventory. Nevertheless, DSP allows large brands and advertisers to independently manage their campaigns and optimize engagement with their target audience.
Why are demand-side platforms important?
Today, DSP ads have simplified the process of closing deals. When purchasing traffic, customers do not need to analyze platforms on their own, negotiate the terms and cost of clicks, or sign contracts. Everything happens automatically. In such a way, advertisers can flexibly optimize campaigns, narrow or expand the target audience, manage the purchase, and promptly control the process. At the same time, impressions can be purchased simultaneously from different sites and owners without the influence of the human factor on the result, thus saving time and money.
How do demand-side platforms work?
Now that we know what a demand-side platform is, it's important to understand how it interacts with a supply-side platform (SSP) as the DSP vs SSP relationship forms the backbone of programmatic advertising.
First, the Supply-side platform receives a signal that a user has visited a web page and sends requests to the demand-side platform.
Second, the DSP processes the user information. The system takes user profile data from its database and the DMP with demographic data, behavioral data, and contextual data.
Third, the DSP bids or refuses the auction based on user data and specified targeting.
After, the SSP checks the bids and gives the right to place an ad to the bidder with the highest bid. In this case, the buyer who wins the auction pays the cost of the second-highest bid for the display.
Finally, the ad of the advertiser who won the auction pops up on the page.
Components of a demand-side platform
A typical DSP consists of several key components:
Integrations: Demand-side platform software must integrate with various ad exchanges, ad networks, and data management platforms (DMPs) to get ad inventory and audience data.
User Interface: A user-friendly interface allows advertisers to easily create and manage their campaigns, set targeting criteria, and monitor performance.
User Profile Database: This database stores information about the advertiser's target audience, including demographics, interests, and behaviors.
Reporting Database: The demand-side platform collects and stores data on campaign performance, such as impressions, clicks, conversions, and cost per acquisition (CPA).
Banking: The demand-side platform controls financial transactions between the advertiser and the ad exchange.
Campaign Tracker: This component monitors campaign performance in real time and provides insights into campaign optimization.
Ad Server: The ad server delivers the advertiser's ads to the websites or apps based on the targeting criteria.
Bidder: The bidder is the core component of a DSP, responsible for analyzing available inventory and determining the optimal bid price for each ad impression.
Types of demand-side platforms
Now, let's discuss the most demand-side platform categories. Typically, such solutions fall into three categories, namely self-serve, white-label, and full-service. Each type has its particular benefits, and your choice should depend on your internal capabilities. The point is to clarify how hands-on you want to be with campaign management.
Self-serve DSPs
A self-serve demand-side platform is a solution that empowers advertisers to independently oversee every stage of the ad-buying process. Once you subscribe to the platform, you will have access to tools that will let you upload creative assets and bid across multiple ad exchanges. Such a solution also allows you to fine-tune campaigns based on performance data without relying on intermediaries.
The main benefits of such a model are complete control, wide-reaching access to inventory, and potential cost savings. The latter advantage is primarily associated with the fact that no agency fees or middlemen are involved.
White-label DSPs
Here is an option that we at Teqblaze recommend to most of our customers. A white-label demand-side platform is a solution that provides a customizable version of a standard DSP. Such solutions allow businesses or agencies to brand and configure the platform as their own. This approach differs from a traditional subscription-based model. The point is that you are essentially purchasing the software infrastructure, which can be efficiently tailored to your specific needs. There is a rich field for customizing algorithms, branding, and integrations.
Basically, white-label DSPs are ideal for companies that want to create a proprietary ad-buying solution. Such a demand-side platform offers maximum flexibility in configuring the features and scaling. They are also quite efficient when it comes to connecting with various ad exchanges and supply-side platforms (SSPs).
Full-service DSPs
Full-service demand-side platforms are popular among businesses that lack the internal bandwidth or prefer not to handle campaign execution themselves. The point is that full-service DSPs offer excellent manageability delegated to a team of specialists. In such conditions, the provider of the platform handles everything from strategy and bidding to optimization and reporting.
Such an approach perfectly fits businesses that want to focus on creative development or broader marketing efforts. Surely, the lack of operational control is an important drawback of such an approach because it creates additional limitations to business flexibility. In addition, a full-service demand-side platform typically comes at a higher cost compared to other demand-side platform types.
Emerging specialist DSP categories
The domain of programmatic advertising constantly evolves. This means that advertisers are branching out into new formats and channels. Such evolution has led to the development of specialized DSPs that are tailored to specific categories and needs in media buying.
Mobile DSPs
Mobile demand-side platforms operate within broader DSP ecosystems. However, such solutions are notable for their special focus on mobile inventory. A mobile demand-side platform is also integrated with mobile ad exchanges. They allow developers and publishers to make ad spaces on smartphones and tablets available in real time. Mobile DSPs largely rely on automation and real-time analytics to evaluate inventory and identify high-value impressions. Using automation and real-time analytics, mobile DSPs evaluate this inventory to identify high-value impressions. Once a match is made and a bid is approved, the ad is delivered. It is typically triggered when a user installs, opens or interacts with an app.
Video DSPs
With the rapid growth of video marketing, video DSPs become increasingly popular. These are the tools that enhance video-centric advertising practices. Basically, a video demand-side platform offers access to extensive video ad inventories and advanced targeting options. With video DSPs, advertisers can easily connect with viewers who are more likely to engage. In addition, such solutions tailor ad delivery to both content and audience. As a result, video DSPs allow businesses to maximize reach and relevance.
Connected TV (CTV) DSPs
Connected TV is another popular medium for digital advertising. This notion refers to internet-enabled televisions and devices that allow users to stream content via corresponding platforms. The most popular CTV streaming services are Netflix, Hulu, and Amazon Prime. CTV technologies allow users to bypass traditional cable or satellite systems.
CTV DSPs are built specifically for this expanding market. They allow marketers to access ad placements within streaming environments. A CTV demand-side platform also allows marketers to apply a great diversity of formats, such as pre-roll, mid-roll, and post-roll video ads. In addition, CTV-oriented DSPs provide companies with significant loads of relevant data. Such information helps advertisers to ensure greater precision and targeting in one of the most promising advertising domains.
3 Key benefits of DSP
Buying advertising traffic through a DSP platform greatly simplifies the processes of media buying. Among the advantages, we can highlight the following:
Reduced money and time spent
DSP media buying allows you to get only the most relevant and targeted traffic. You can also use an open auction to buy traffic from premium sites cheaply. By integrating into the programmatic ecosystem, advertisers can manage huge volumes of data and reach a wide audience with minimal costs for such volume. Automation on the platform frees up time for more global tasks.
Fast optimization
DSPs display traffic acquisition statistics in real time. The marketer controls the progress of the campaign and can quickly change settings to avoid spending the budget on inefficient traffic sources.
Accurate audience targeting
DSP algorithms work with huge data sets, learn in the process, and accumulate accurate data about users: what interests users have, from which smartphones and browsers they visit the network, what banners they click on, and what they add to the cart. This allows advertisers to target very narrow audience segments.
How do demand side platforms make money?
Now, let's take a look at different business models that DSP platforms apply to generate income. In many cases, such solutions combine multiple streams to support their operations and technology infrastructure. Let's take a closer look at the most common DSP monetization strategies:
Transaction fees. It is one of the most common revenue streams for a demand-side platform. This fee is typically calculated as a percentage of the advertiser's total media spend. A transaction fee has other names, such as a technology fee or a platform fee. However, basically, all these names denote the same concept. It is also important to note that a transaction fee is charged in exchange for access to the DSP's software tools, bidding algorithms, and real-time access to ad exchanges. This cost model is rather flexible, as it aligns revenue with usage.
Subscription of flat-rate pricing. Many DSPs use a subscription-based model. In this case, advertisers or agencies pay a fixed monthly or annual fee for platform access. The flat-rate pricing model offers predictable costs. It is often preferred by companies that run consistent or large-scale campaigns. One of the main benefits of such an approach is that it may include unlimited usage within certain parameters.
Data and analytics services. Many demand-side platforms can offer their users value-added services. For example, deep analytics, dashboards for monitoring campaign performance, audience insights, and tools for predictive modeling. Many demand-side platform providers offer such features as optional add-ons for additional fees. If such functionality is implemented properly, it will be demanded by the advertisers, ensuring a higher revenue stream.
Managed services. In addition to offering self-service capabilities, some DSPs act as full-service providers. As has already been mentioned, in full-service DSP platforms, providers manage campaigns on behalf of clients. This includes strategy development, media planning, creative execution, and ongoing optimization. Fees for these managed services are typically based on a combination of flat rates, retainers, or performance-based pricing.
Platform licensing. There is a common practice where DSPs license their technology to third-party businesses, such as agencies, ad networks, or media buyers. Through white-label or licensing agreements, these clients gain access to the DSP’s infrastructure under their own branding. With such a model, a demand-side platform generates steady revenue while expanding the market reach.
Premium features and integrations. Some demand-side platform providers charge their customers for advanced features, such as granular targeting options. Other possible premium features include access to exclusive inventory, API integrations, and partnerships with third-party data providers. Quite often, these features are locked behind a paywall or offered in tiered pricing packages.
Explore the possibilities with TeqBlaze’s white-label demand-side platform
TeqBlaze offers a white-label solution that can be customized to meet your specific needs. Our customizable, scalable, and privacy-compliant demand-side platform offers advanced features such as AI-powered keyword expansion, KPI-based price optimization, and auto-optimization tools. The advanced solution emphasizes privacy regulation compliance and offers complete transparency and custom branding options, allowing advertisers to adjust traffic sources based on precise metrics.
One of Teqblaze's notable success stories showcases a startup that utilized the White-Label SSP & DSP Bundle, which allowed both the buying and selling of ad inventory on a single platform. The startup managed to achieve exponential growth in its user base within a short timeframe, which highlights the effectiveness of Teqblaze's solutions for businesses of all sizes and programmatic experience levels.
Final word
DSPs hold a great potential for managing and boosting advertising campaigns. With a diversity of benefits and monetization practices, demand-side platforms can bring many advantages to both DSP owners and advertisers using them. While working with DSPs, make sure to follow some of the best tips and practices. For example, if you want better control over your ad traffic, create multiple ad accounts and additional customizable settings. This will allow you to spend less money. Order our product demo and stay on the cutting edge of digital advertising technology for your future digital success.
And contact us if you need any further help with mastering a demand-side platform and its business potential.
